Federal Court of Appeal Confirms that Common Interest Privilege can Apply in Commercial Transactions

March 22, 2018

By Michael Burgess

In its recent decision in Iggillis Holdings Inc v Minister of National Revenue [1] the Federal Court of Appeal held that solicitor-client privilege is not waived when an opinion provided to one party is confidentially disclosed to others whom have a sufficient common interest in a transaction. The Court overruled the 2016 application decision of Justice Annis,[2] in which he had held that a memo jointly prepared by counsel for the parties to an acquisition was not privileged.

Writing for the Court, Justice Webb began by explaining that a legal opinion, prepared jointly by counsel for both parties, should be considered on the same bases as two opinions prepared independently for each party. He reasoned “it may well be more efficient and the interests of the respective clients may well be better served if the lawyers collaborate on the opinion that is to be provided”.[3]

Having decided that the memo was privileged, the question turned to whether privilege was waived by disclosure of the memo to the parties. Justice Annis had raised concerns that maintaining the memo under the cloak of privilege would hinder the court’s ability to have all of the relevant evidence before it.[4] In the Court of Appeal’s view, however, the memo itself would not be admissible evidence because it only contained legal opinions about domestic tax law.[5] Opinion evidence is not admissible evidence for determining questions of law.[6]

The Court then considered the lower court’s reliance on US authority to reject common interest privilege.[7] It was an error to use foreign authority, backed by policy reasons, to override provincial legal authority in this case.[8] In the Court’s view, the following statement from Maximum Ventures Inc v De Graaf, a decision of the British Columbia Court of Appeal, applied and was not distinguishable on the facts:

Where legal opinions are shared by parties with mutual interests in commercial transactions, there is a sufficient interest in common to extend the common interest privilege to disclosure of opinions obtained by one of them to the others within the group, even in circumstances where no litigation is in existence or contemplated.[9]

In the end, the Court of Appeal agreed that “common interest privilege ‘is strongly implanted in Canadian law and indeed around the common-law world’”.[10] It serves to protect privileged communications disclosed to parties to a commercial transaction in appropriate circumstances, where the parties’ interests are aligned:

Based on the decisions of the courts in Alberta and British Columbia, solicitor-client privilege is not waived when an opinion provided by a lawyer to one party is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions. This principle applies whether the opinion is first disclosed to the client of the particular lawyer and then to the other parties or simultaneously to the client and the other parties. In each case, the solicitor-client privilege that applies to the communication by the lawyer to his or her client of a legal opinion is not waived when that opinion is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions.[11]

Iggillis is authority that those involved in commercial transactions may look to when interested in preserving privilege on issues of common interest. Overall, this should help negotiating parties have equal access to legal information and advice on these types of issues.

[1] Iggillis Holdings Inc v Minister of National Revenue, 2018 FCA 51 [Iggillis].

[2] Iggillis Holdings Inc v Canada (National Revenue), 2016 FC 1352.

[3] Iggillis, supra note 1 at ¶19.

[4] Ibid at ¶23.

[5] Ibid at ¶27.

[6] Ibid at ¶26 citing Syrek v Her Majest the Queen, 2009 FCA 53 at ¶28-30.

[7] Iggillis, supra note 1 at ¶28.

[8] Ibid at ¶31, 40.

[9] 2007 BCCA 510 at ¶14 applied in Iggillis, supra note 1 at ¶32-33.

[10] Iggillis, supra note 1 at ¶40.

[11] Ibid at ¶41.

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