Law Times

Law Times • march 26, 2018 Page 11 www.lawtimesnews.com Lawyers relieved by Federal Court of Appeal ruling Caution urged when sharing privileged documents BY SHANNON KARI For Law Times A recent decision of the Federal Court of Ap- peal appears to have sparked a collective sigh of relief from lawyers in- volved in structuring commer- cial transactions. The ruling issued March 6 in IGGillis Holdings Inc. v. Minister of National Revenue confirms the legitimacy of the judge-made doctrine of trans- actional "common interest priv- ilege" and overturns a decision released 15 months earlier by a Federal Court judge. "Solicitor-client privilege is not waived when an opinion provided by a lawyer to one party is disclosed, on a confi- dential 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," wrote Justice Wyman Webb for the unani- mous panel, with Justices Rich- ard Boivin and Donald Rennie concurring. The original decision by the applications judge sparked considerable legal commentary and concern by lawyers over the right to share confidential docu- ments without waiving privilege when there is a common inter- est, such as in a commercial transaction. David Outerbridge, a litiga- tion partner at Torys LLP in Toronto, notes there were "fairly significant working groups in the transactional bar," after the decision by Federal Court Jus- tice Peter Annis was released in December 2016. Outerbridge says there were concerns about what would happen if the decision was up- held. The Federal Court of Appeal ruling restores the "status quo" in this area of the law and brings certainty, suggests Maureen Littlejohn, a litigation partner at Davies Ward Phillips & Vine- berg LLP in Toronto. "The doctrine of common interest privilege is entirely con- sistent with our courts' evolv- ing approach to privilege and to waiver over the last several decades," she explains. The legal issues before the Federal Court stemmed from a request by the Canada Revenue Agency for a legal memo with tax advice in a proposed trans- action involving Abacus Capital Corporations acquiring shares of companies held by IGGillis Holdings. The memo — which was marked "privileged and confi- dential" — was on how to make the acquisition in the most tax- efficient manner. In the original application before Annis, the federal gov- ernment argued there was no "common interest" in the memo because the companies were on different sides in the proposed transaction. This argument was rejected by Annis. But he concluded that even if there was a common interest in the memo, it did not fall within solicitor-client privilege and the companies had to produce the document. "If advisory CIP [common interest privilege] mostly en- ables commercial transactions that anticipate litigation, then it undermines the administration of justice," wrote Annis in his December 2016 decision, which focused on whether there was a public policy benefit to such a doctrine. The judge, in his ruling, cited a New York Court of Appeals decision and an academic paper by a U.S. law professor as sup- port for his conclusions. The Federal Court of Ap- peal stated that the focus in- stead should be on the federal Income Tax Act and Superior Court-level case law in B.C. and Alberta, which were the juris- dictions related to the proposed transaction. "The issue in this case is whether under the law appli- cable in British Columbia and Alberta, the Abacus memo would be subject to solicitor- client privilege. The issue is not what, in the opinion of the Fed- eral Court judge the law should be based on certain policy con- cerns as identified by him," wrote Webb. "There is already Canadian law. It was not necessary to look at U.S. law," says Outerbridge. "The Federal Court of Ap- peal is saying it is not up to trial- level judges to change the law based on policy concerns," he explains. At the same time, he says, the appellate-level decision is rela- tively narrow in its analysis of common interest privilege. "It is not clear how far it goes beyond the scope of M&A transactions," says Outerbridge. FOCUS Medico/Legal Your case is too important. You deserve the right EXPERT WITNESS. Unparalleled expertise from our award-winning national team of experts CONNECTMLX.COM EXPERTS@CONNECTMLX.COM TOLL FREE: 855-278-9273 ✔ More than 2,000 medical malpractice, personal injury and class action cases. ✔ More than 300 lawyer clients assisted. ✔ Direct access to hundreds of specialists from all areas of healthcare expertise. ✔ A top provider of cost of care reports for your most catastrophically injured clients. Since 2001, we've become a leader in Expert Witness Services in Canada. ntitled-4 1 2017-10-24 2:41 PM In the Canadian tax practice, it is certainly not unusual when you are dealing with complex transactions and there is a common ground; that there is sharing outside of the litigation context. Mark Tonkovich See Focus, page 12 Maureen Littlejohn says a recent Federal Court of Appeal ruling restores the 'status quo' for lawyers involved in structuring commercial transactions. 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