Powered by Privilege: Protecting
Communications with Counsel
CCCA National Conference
April 8, 2014
Calgary, Alberta
Panelists
• Brian Caruk
Justice and Solicitor General
Specialised Prosecutions Branch
Government of Alberta
• Arif Chowdhury
Associate
Fasken Martineau DuMoulin LLP
• Steve Smyth
Legal Counsel
Tervita Corporation
Introduction to Privilege
3 categories of privilege that are most relevant to commercial
disputes:
• Solicitor-client privilege
• Litigation privilege
• Settlement privilege
Solicitor-Client Privilege
Applies to communications between a lawyer and
the lawyer’s client, where the communication
relates to seeking or providing legal advice
Solicitor-Client Privilege
“Once privileged,
always privileged”
Blank v. Canada (Department
of Justice), 2006 SCC 39
R. v. Solosky [1980], 1 SCR
821
• The communication is made in the
context of a solicitor-client relationship
• The communication is made in the
course of seeking, forming or giving
legal advice
• The communication is intended to be
confidential
• Solicitor-client privilege belongs to the
client
Solicitor-Client Privilege
Who is a solicitor
for the purpose of
privilege?
• Any lawyer authorised to practice law
in the jurisdiction in which the advice
is given
Blank v. Canada (Department
of Justice), 2006 SCC 39
• This includes in-house counsel
• Foreign lawyers may be covered,
provided they are authorised or
reasonably believed to be authorised
by the client, to practise law in the
lawyer’s home jurisdiction
Solicitor-Client Privilege
Who is the client?
Balabel v. Air-India, [1988] 2
ALL ER 246 (CA)
Mutual Life Assurance Co. of
Canada v. Canada (Deputy
Attorney General) (1988), 28
CPC (2d) 191 (ONHC)
• The client is normally the person or
entity receiving the legal services, or on
whose behalf the legal services are
provided
• For in-house counsel solicitor-client
privilege protects communications
concerning legal advice between the inhouse counsel and typically the
employer
• A wholly owned subsidiary under the
management of the parent client may
be a client
• Applies when in-house counsel seeks
legal advice from external counsel
Solicitor-Client Privilege
What if a Third
Party is Present?
General Accident Assurance
Co. v. Chrusz (1999), 45 OR
(3d) 321 (ONCA)
• The presence of a Third Party does
not always waive solicitor-client
privilege
• In order to maintain privilege the
function of the Third Party must be
“essential or integral to the operation
or existence of the solicitor-client
relationship”
• Accountant, banker, consultant, etc.,
who is necessary for providing or
obtaining legal advice
Litigation Privilege
Applies to records and communications created for
the dominant purpose of litigation
Litigation Privilege
“The object is to
ensure the efficacy
of the adversarial
process and not to
promote the
solicitor-client
relationship”
Blank v. Canada (Minister of
Justice), 2006 SCC 39
• Litigation privilege protects
communications and records created
for the dominant purpose of
anticipated litigation
• Anticipated litigation cannot merely be
one purpose—it must be dominant
• Litigation needs to be reasonably
contemplated at the time the
communications were made or the
records are created
Litigation Privilege
What was the
dominant purpose?
• The purpose of the creation of the
records
Waugh v. British Railways
Board, [1980] A.C. 521, [1979]
2 All. E.R. 1169 (H.L.)
• When the records were created
Nova v. Guelph Engineering
Company (1984), 5 DLR (4th)
755, 50 AR 199 (ABCA)
• Who created the records
• Who authorised or instructed the
creation of the records
• What use was, or could be made, of
the records
Litigation Privilege
Who can create a
record protected by
litigation privilege?
• Records to which litigation privilege
may attach:
• Created by a lawyer
• Created by the party that is the
subject of the litigation
• Information collected by third
parties
• The dominant purpose must be for
litigation
Settlement Privilege
Applies to records or communications created for
or shared during the process of settlement
negotiations
Settlement Privilege
Settlement privilege survives
settlement as against third
parties
• A dispute must be ongoing or
contemplated
Podovinikoff v. Montgomery
(1984), 58 BCLR 204 (BCCA)
• Settlement discussions must be
intended to be confidential, at least
with respect to the Court
• The communication must be designed
to lead to a settlement; identifying as
“without prejudice” is not enough
• Settlement privilege also applies to
regulatory or quasi-criminal
proceedings
Settlement Privilege
Sable Offshore Energy Inc. v.
Ameron International Corp.,
2013 SCC 37
Robichaud v. Clarica Life
Insurance Co. (2007), 53
CCLI (4th) 234 (Ont. SCJ)
• Protects admissions against interest,
offers of settlement and the settlement
agreement itself
• Strong policy reasons to encourage
settlement
• There can be an exception where
settlement discussions relevant to the
litigation apart from liability
Presentation Topics
• Legal Advice vs. Business Advice
• Common Interest Privilege
• Waiver of Privilege
• Extra-Territorial Considerations
• Expansion of the Crime-Fraud Exception
• Incident Investigation
Legal Advice v. Business Advice
No privilege attaches to in-house counsel’s
communications that provide business advice
Legal Advice v. Business Advice
“…it is, of course,
not everything
done by a…lawyer
that attracts
solicitor-client
privilege…”
R. v. Shirose, [1999] 1 SCR
565 at para. 50 sets out the
test for determining whether
solicitor-client privilege will
attached to the lawyer’s
advice
• Nature of the relationship
• Subject matter of the advice
• Circumstances in which the advice
was sought and rendered
Legal Advice v. Business Advice
“If an in-house
lawyer is conveying
advice that would
be characterized as
privileged, the fact
that he or she is
“in-house” does
not remove the
privilege, or change
its nature”
Pritchard v. Ontario, [2004] 1
SCR 809 at para. 21
Multiple Hats of In-House Counsel
•
•
•
•
•
Legal advisor
Risk manager
Policy advisor
Compliance monitor
Manager of lawyers and legal
expenses
• Business advisor
• Corporate investigator
Legal Advice v. Business Advice
NEP Canada ULC v. MEC OP
LLC, 2013 ABQB 540
• Solicitor-client privilege will only arise
when in-house counsel acts in his or
her capacity as a lawyer, either giving
advice or seeking instruction from the
client
Domcan Boundary Corp. v.
Enron Canada Corp., (2006)
53 Alta LR (4th) 309 (QB)
• Because in-house counsel can give
business advice as well, in-house
counsel can be questioned or
examined for discovery
Legal Advice v. Business Advice
Wexler v. Suncor Energy
Products Inc., [2007] OJ No
994 (SCJ Div Ct)
• Solicitor-client privilege does not
attach simply because the person in
possession of information is a lawyer
• In-house counsel can be examined
• Even though the in-house counsel
acquired information through his
position as counsel, he was not
entitled to assert blanket privilege
• Litigation privilege attaches to specific
records or communications
Legal Advice v. Business Advice
Privileged or
Not Privileged?
• Solicitor-client privilege claimed over
head office circular from a SVP
Toronto-Dominion Bank v.
Leigh Instruments Ltd.
(Trustee of), [1997] 32 OR
(3d) 575 (GD)
• It was circulated by the bank’s general
counsel/secretary to various divisions
• The circular had been prepared by inhouse counsel and contained legal
advice
Legal Advice v. Business Advice
Privileged or
Not Privileged?
• Solicitor-client privilege claimed over
head office circular from a SVP
Toronto-Dominion Bank v.
Leigh Instruments Ltd.
(Trustee of), [1997] 32 OR
(3d) 575 (GD)
• It was circulated by the bank’s general
counsel/secretary to various divisions
NOT PRIVILEGED
• The circular had been prepared by inhouse counsel and contained legal
advice
• Not privileged since general counsel
was acting as an executive, and wide
circulation meant the bank did not
intend for it to remain confidential
Legal Advice v. Business Advice
Privileged or
Not Privileged?
Royal Bank of Canada v.
Societe-Generale (Canada),
[2005] OJ No 4383 (SCJ)
• A subcommittee report and associated
documents were created at the
request of general counsel
• General counsel formed the
subcommittee to provide information
to assist in advising the Board after
receiving a demand letter
• The report was also disclosed to the
full committee, senior bank
executives, external auditors and the
Ontario Superintendent of Financial
Institutions
Legal Advice v. Business Advice
Privileged or
Not Privileged?
Royal Bank of Canada v.
Societe-Generale (Canada),
[2005] OJ No 4383 (SCJ)
• Although disclosed to external
auditors and the Ontario
Superintendent of Financial
Institutions, it was disclosed on the
basis it would not be disclosed to third
parties
• Report was marked “privileged and
confidential, prepared at the request
of counsel; solicitor-client
communications, subject to litigation
privilege”
Legal Advice v. Business Advice
Privileged or
Not Privileged?
Royal Bank of Canada v.
Societe-Generale (Canada),
[2005] OJ No 4383 (SCJ)
PRIVILEGED
• Documents created for in-house
counsel in order to provide legal
advice to the corporation are also
privileged
• Disclosing the report was not waiver
because only shared on the basis that
would not be shared with third parties
Legal Advice v. Business Advice
Best Practices
When Asked to
Provide Legal
Advice
• Clarify your role on request of an
assignment
• Note that role on the documents
created
• Distinguish the records created from
documents prepared by operations,
regulatory filings, etc.
• Retain outside counsel if your
assertion of privilege could be
challenged
Legal Advice v. Business Advice
Best Practices
When Participating
in Meetings
• Consider having in-house counsel call
and chair the meeting
• Create a separate document for legal
items
• Limit attendance to those required and
excuse third parties when legal matters
discussed
• Limit the circulation of minutes and
other documents
• Keep notes with in-house counsel
Legal Advice v. Business Advice
Best Practices for
Communicating
within the
Organisation
• Confirmation that legal advice has been
requested and that the information
requested is for that purpose
• Mark documents “privileged and
confidential” and/or “prepared at the
request of legal counsel for the purpose
of providing legal advice”
• Communicate legal advice separately
from business advice, and identify what
capacity you are acting in
• Limit the circulation of legal advice to
only necessary recipients
Common Interest Privilege
Common interest privilege is an exception to the
rule that disclosure to a third party is generally a
waiver of privilege
Common Interest Privilege
General Accident Assurance
Co. v. Chrusz (1999), 45 OR
(3d) 321 (ONCA)
Sopinka, John, Bryant Alan,
Sidney Lederman, The Law of
Evidence in Canada,
Butterworths, 1999
• This exception may apply where one
party shares privileged records or
communications with another party
having a common interest
• The records or communications must
have been shared on a confidential
basis
• There must be a sufficient common
interest: co-defendants, parties to a
transaction, fiduciaries, agents, etc.
Common Interest Privilege
“The point of
recognizing
common interests
is not as a means
of determining
whether privilege
exists. The real
issue is whether
privilege has been
lost.”
Pitney Bowes of Canada Ltd.
v. Canada, (2003) 225 DLR
(4th) 747
• This was a multilateral commercial
transaction where Pitney Bowes, with
partial financing from RBC, bought
railway cars, leased them to one party,
which then sub-leased them to another
party
• Parties agreed that on issues where
they were not adverse, they would
obtain opinions from one legal counsel
• CCRA sought two of these opinions:
one addressed to Pitney Bowed; the
other addressed to RBC and another
party
Common Interest Privilege
Pitney Bowes of Canada Ltd.
v. Canada, (2003) 225 DLR
(4th) 747
• The legal opinions were prima facie
privileged, but the question was whether
privilege was waived by sharing them
with other parties to the transaction
• The mere existence of a commercial
transaction will not mean there can be
no waiver by sharing privileged
materials with parties to the transaction
• Opinions must be in aid of completing
the transaction and for the benefit of all
parties—intended to be shared
• Parties want to negotiate with a shared
understanding of each other's legal
positions
Common Interest Privilege
“Those engaged in
commercial
transactions must
be free to exchange
privileged
information without
fear of jeopardizing
the confidence that
is critical to
obtaining legal
advice.”
Fraser Milner Casgrain LLP v.
Canada (M.N.R.), 2002 BCSC
1344
• Parties negotiating a commercial
transaction have a common interest in
completing the transaction
• Communications between both sets of
counsel and accounting advisors to
ensure the transaction was completed
in a commercially and tax efficient
manner
• Legal opinions exchanged between the
parties to the transaction during the
course of a commercial transaction
were still privileged as it concerned the
Minister of National Revenue
Common Interest Privilege
Re: Teleglobe
Communications Corp., 493
F.3d 345 (3d Cir. 2007)
Pitney Bowes of Canada Ltd.
v. Canada, (2003) 225 DLR
(4th) 747
• Where a parent company’s in-house
counsel represents both the parent and
its subsidiary on a matter of common
interest then joint client privilege will be
recognised
• Sharing of records or information within
the corporate family will not amount to
waiver among joint clients
• Since privilege belongs to both clients,
one cannot waive it for another in
disputes with third parties
• The privilege is waived in the event of
adverse litigation between the joint
clients
Common Interest Privilege
BEST PRACTICES
• Label communications or records
“subject to common interest privilege”
• Only circulate communications or
records between the parties that have
a common interest in litigation or a
transaction and not the outside parties
Waiver of Privilege
Privilege can be waived expressly or impliedly
Waiver of Privilege
“Although a waiver
cannot be
presumed, the
courts and the
commentators have
acknowledged
[implied] waiver
and given effect to
it.”
Glegg v. Smith & Nephew Inc.,
2005 SCC 31, [2005] 1 SCR
724
• Solicitor-client privilege belongs to the
client
• Solicitor-client privilege can be waived
by the client with informed consent
• Possessor of the privilege (1) knows of
the existence of the privilege, and (2)
voluntarily evinces an intention to waive
that privilege.
• However, waiver can be implied by the
actions of the holder of the privilege—
actions inconsistent with intent to
maintain privilege
Waiver of Privilege
S. & K. Processors Ltd. v.
Campbell Avenue Herring
Producers Ltd. (1983), 45
B.C.L.R. 218
• “However, waiver may also occur in
the absence of an intention to waive,
where fairness and consistency so
require. Thus waiver of privilege as to
part of a communication, will be held
to be waiver as to the entire
communication.”
• “Similarly, where a litigant relies on
legal advice as an element of his
claim or defence, the privilege which
would otherwise attach to that advice
is lost”
Waiver of Privilege
Waived or Not
Waived?
United Furniture Warehouse
LP v. 551148 B.C. Ltd., 2007
BCSC 68
• Dispute arose from purchase and sale
of furniture business
• Price could be adjusted after closing
according to inventory count
• Injunction sought against defendant
• In-house counsel for plaintiff swore
affidavit deposing that she believed
the plaintiff’s facts to be true and
claims to be valid
Waiver of Privilege
Waived or Not
Waived?
United Furniture Warehouse
LP v. 551148 B.C. Ltd., 2007
BCSC 68
• Defendants take position that inhouse counsel’s sworn statement
constituted a waiver of privilege over
the entire file
• The statement in the affidavit
summarised advice given by in-house
counsel to her client
• Prima facie solicitor-client privilege
attaches to materials assembled or
reviewed and discussed in order to
formulate legal opinion
Waiver of Privilege
Waived or Not
Waived?
United Furniture Warehouse
LP v. 551148 B.C. Ltd., 2007
BCSC 68
PRIVILEGE
WAIVED
• “In the ordinary course, the fact that a
client permits counsel to depose to
advice that has been given to the
client is sufficient to waive privilege in
relation to the material that was
assembled or reviewed and the
discussions that occurred in the
course of formulating the opinion.”
• Intentional expression of an opinion
based on review of the claims to
support injunction application was a
waiver of in-house counsel’s review
Waiver of Privilege
Waived or Not
Waived?
Talisman Energy Inc. v. PetroCanada Inc., 2000 ABQB 147
• Petro-Canada applied for an order
compelling Talisman in-house counsel
to answer questions objected to during
cross-examination
• Petro-Canada objected to an extension
of time to file a Reply in response to
Petro-Canada’s Amended Statement of
Defence
• In-house counsel swore to the advice
Talisman received to not file a Reply to
the original Statement of Defence, and
also Talisman’s belief that PetroCanada’s original defence did not
require a reply
Waiver of Privilege
Waived or Not
Waived?
Talisman Energy Inc. v. PetroCanada Inc., 2000 ABQB 147
• Petro-Canada argued that solicitorclient privileged had been waived by
Talisman giving evidence of privileged
communications and relying on its
own misunderstanding of the initial
Statement of Defence, in relation to
which it had received legal advice
• Waiver by pleading or giving evidence
of privileged communication OR must
the existence or adequacy of the legal
advice be at issue?
Waiver of Privilege
Waived or Not
Waived?
Talisman Energy Inc. v. PetroCanada Inc., 2000 ABQB 147
PRIVILEGE
NOT WAIVED
• “Waiver is triggered by demonstrating
reliance on legal advice for the
resolution of an issue, not by the mere
reference to having received it.”
• No waiver by Talisman’s affidavit merely
swearing to having received legal
advice in deciding not to file a Reply
• Court disagreed with Petro-Canada and
did not find that Talisman’s position was
that it misunderstood the original
Statement of Defence; Talisman
believed it did not need to reply until the
amendments were made
Waiver of Privilege
Waived or Not
Waived?
H.B. Nickerson Ltd. v.
Sommerville Belkin Industries
Ltd., (1985) 72 N.S.R. (2d)
289
• Defendant sought production of 61
documents that the Plaintiff claimed
solicitor-client privilege over
• Many documents were addressed or
copied to in-house counsel; while
others directed to him for his
information
• In-house counsel gathered documents
after being instructed to coordinate an
investigation to consider whether the
Plaintiff had a valid claim
Waiver of Privilege
Waived or Not
Waived?
H.B. Nickerson Ltd. v.
Sommerville Belkin Industries
Ltd., (1985) 72 N.S.R. (2d)
289
• A few of the documents had disclosed
elsewhere during discovery
• Court found that the documents had
been created for the dominant
purpose of contemplated litigation
• The documents originated with or
were received only by the employees
directly involved in the internal
investigation
Waiver of Privilege
Waived or Not
Waived?
H.B. Nickerson Ltd. v.
Sommerville Belkin Industries
Ltd., (1985) 72 N.S.R. (2d)
289
PRIVILEGE
PARTIALLY
WAIVED
• Since some of the documents had
been disclosed during discovery, both
solicitor-client and litigation privileges
had been waived
• The waiver extended to all relevant
documents dealing with the same
subject as the documents disclosed
during discovery
Waiver of Privilege
Waived or Not
Waived?
Biehl v. Strang, 2011 BCSC
213
• When this proceeding commenced a
single Statement of Defence was filed
on behalf of Mr. Strang and 2
corporate defendants, of which Mr.
Strang was director, officer and
shareholder
• As a result of a family law proceeding,
Mr. Strange was enjoined from
dealing with the companies and
counsel withdrew as counsel for Mr.
Strang as well as the companies
Waiver of Privilege
Waived or Not
Waived?
• The companies obtained new
counsel, but Mr. Strang represented
himself—being a law graduate
Biehl v. Strang, 2011 BCSC
213
• During discovery Mr. Strang has
resiled from aspects of the Statement
of Defence—the existence of a letter
• The Plaintiff argued that solicitor-client
privilege was waived and sought all
documents used to prepare the
content of the Statement of Defence
Waiver of Privilege
Waived or Not
Waived?
Biehl v. Strang, 2011 BCSC
213
• Mr. Strang during examinations stated
that he didn’t instruct filing of the
defence—no objections were made by
the companies to this evidence
• Instead, the companies sought to call
former counsel as a witness as to
whether Mr. Strang approved the filing
of the defence
Waiver of Privilege
Waived or Not
Waived?
Biehl v. Strang, 2011 BCSC
213
PRIVILEGE
WAIVED
• Mr. Strang understood the questions
being asked and volunteered that he
had not instructed counsel to file the
defence
• Instructions from the defendants to
their previous counsel were put in
issue
• Fairness and consistency require that
a party cannot disclose some
privileged information for their benefit
while protecting the full content of the
information from the other side
Waiver of Privilege
Waived or Not
Waived?
Biehl v. Strang, 2011 BCSC
213
PRIVILEGE
WAIVED
• The companies were not found to
have waived privilege, but would do
so if called the former counsel as a
witness
• Scope of the companies’ waiver only
to the extent to rebut Mr. Strang’s
assertions
• Waiver of privilege limited in scope to
communications between Mr. Strang
and former counsel regarding the
statement of defence
Waiver of Privilege
Best Practices
• In litigation avoid pleading or giving
evidence of state of mind or decision
making based on legal advice
• Ensure witnesses do not reference or
disclose privileged records while giving
evidence
• Keep documents confidential and limit
communication to 3rd parties that are
not agents or employees of the
company or legal counsel
• Employ non-disclosure agreements with
non-waiver of privilege clauses where
communications are circulated to 3rd
parties
Extra-territorial Considerations
What’s protected by privilege in Canada, may not
be in an American or European court proceeding
Extra-territorial Considerations
Canada
Kain, Brandon, Solicitor-Client
Privilege and the Conflict of
Laws, The Canadian Bar
Review, Vol. 90 2011 No. 2
• Canadian Courts appear to take the
view that solicitor-client privilege is
governed by the law of the forum
• Solicitor-client privilege over legal
advice provided by a foreign lawyer
should be determined by the domestic
law
• Advice provided by a domestic lawyer to
a foreign client should be determined by
the domestic law
• Whether foreign disclosure of
information results in waiver should also
be determined by the domestic law
Extra-territorial Considerations
United States
• Attorney-client privilege applies to inhouse counsel both with respect to
corporate client and in communications
with external counsel
• Communications between the client and
in-house counsel are often subjected to
heightened scrutiny because in-house
counsel provide business or non-legal
advice
• Attorney-client privilege that may apply
can be based on State law, Federal law
or sometimes even foreign law
Extra-territorial Considerations
United States
Sarbanes-Oxley Act
• Sarbanes-Oxley Act requires reporting
by in-house counsel of material
violation of law of breach of fiduciary
duty up the corporate ladder to the
CLO or CEO
• Reporting applies to any lawyer
involved in an SEC filing
• If the CLO or CEO does not provide
an appropriate response then counsel
must report to audit committee, an
independent committee of the board
or the full board of directors
Extra-territorial Considerations
United States
Sarbanes-Oxley Act
• Requirement applied to foreign
lawyers as well
• However, a foreign lawyer is not
required to comply with the reporting
requirement to the extent that
compliance is prohibited by applicable
foreign law
• The applicable law society rules of
conduct are relevant
• “non-appearing foreign attorneys” are
also exempted
Extra-territorial Considerations
United States
Sarbanes-Oxley Act
“non-appearing
foreign attorneys”
• Admitted to practice outside the US
• Must not hold himself or herself out as
practising or give legal advice
regarding federal or state securities or
other laws, unless done in
consultation with a US lawyer
• Appearing and practising before the
SEC only incidentally to, and in the
ordinary course of, their foreign
practice OR done in consultation with
a US lawyer
Extra-territorial Considerations
European
Community
• In-house counsel in Europe may not
receive the benefit of solicitor-client
privilege
Akzo Nobel Chemicals Ltd
and Akcroz Chemicals Ltd v
European Commission, EU Ct
of Justice, September 14,
2010, Case No: C-550/07 P
• Offices raided to search for evidence
of anticompetitive behaviour
• Company claimed solicitor-client
privilege over emails between the
company and their in-house counsel
• The Court rejected the position that
solicitor-client privilege arose between
the company and its in-house counsel
Extra-territorial Considerations
European
Community
Akzo Nobel Chemicals Ltd
and Akcroz Chemicals Ltd v
European Commission, EU Ct
of Justice, September 14,
2010, Case No: C-550/07 P
• “An in-house lawyer cannot, whatever
guarantees he has in the exercise of his
profession, be treated in the same way
as an external lawyer, because he
occupies the position of any employee
which, by its very nature, does not allow
him to ignore the commercial strategies
pursued by his employer, and thereby
affects his ability to exercise
professional independence.”
• “The in-house lawyer’s economic
dependence and the close ties with his
employer mean that he does not enjoy a
level of professional independence
comparable to that of an external
lawyer.”
Expansion of the Crime-Fraud Exception
Courts have begun to expand the crime-fraud
exception from solicitor-client privilege
Expansion of the Crime-Fraud Exception
R. v. Campbell, [1999] 1 SCR
565
• No solicitor-client privilege applies to a
communication to further a crime or a
fraud
• It is truly an exclusion because the
communication can be disclosed for any
purpose, even against the client
• There is some authority suggesting that
privilege should not attached to
communications made in furtherance of
any unlawful conduct
• This might include breach of contract,
torts, regulatory offences, etc.
Expansion of the Crime-Fraud Exception
Goldman, Sachs & Co. v.
Sessions (1999), 38 CPC (4th)
143 (BCSC)
• Defendants sought production of legal
advice regarding commencement of
the action and pre-judgment
garnishment
• The Court accepted that abuse of
process was a civil fraud falling under
the exception and ordered a review of
documents for wrongful purpose
• Intended crimes and frauds include
“breaches of regulatory statute,
breaches of contract, and torts and
other breaches of duty”
Expansion of the Crime-Fraud Exception
Dublin v. Montessori (2007),
85 OR (3d) 511 (ONSC)
• Claim included an allegation of
intentional or negligent infliction of
emotional harm
• Ontario Superior Court accepted that
an email from a board member to inhouse counsel was not privileged
because it was in furtherance of
tortious conduct
• The email may demonstrate intent to
inflict emotional harm to the Plaintiff
Expansion of the Crime-Fraud Exception
Northwest Mettech Corp. v.
Metcon Services Ltd. (1997),
78 CPR (3d) 86 (BCSC)
• Breach of fiduciary duty and breach of
contract are excluded from solicitorclient privilege
• The Plaintiff’s former employee was
alleged to have appropriated
confidential information and passed it
to his subsequent employer Metcon
• Metcon’s counsel was alleged to have
had communications with the
employee in preparing a patent
application
Incident Investigation
What to consider when investigating an incident,
collecting information and preparing a report.
Incident Investigation
Instructing the
Investigation
• The client should instruct in-house
counsel to investigate the incident for
the purpose of providing legal advice
to the client concerning anticipated
litigation
• In-house counsel should appoint an
investigation team
• Instructions to the investigation team
should make clear that the purpose of
the investigation is litigation and that
the information gathered is not to be
provided to third parties
Incident Investigation
Instructing the
Investigation
Gower v. Tolko (2001), DLR
(4th) 716 (MBCA)
• The investigation team can include inhouse counsel or external counsel
• The instructions to in-house counsel
or the retainer for external counsel
should clearly state that the role in the
investigation as as a solicitor and the
purpose of fact-finding is to provide
legal advice
• A report of fact-finding by counsel
likely will not be subject to solicitorclient privilege
Incident Investigation
The Investigation
Team
• The investigation team should protect
their work product, including all
records generated during the
investigation—not only the final report
• Any records generated during the
investigation and the final report
should only be provided to the
instructing counsel
• Instructing counsel should maintain
strict control over all records produced
by the investigation team as well as
drafts and the final report
Incident Investigation
Compulsory
Reporting
Statutory Privilege
• Occupational Health and Safety Act
(Alberta), s. 18(5) A report prepared
under this section is not admissible as
evidence for any purpose in a trial
arising out of the serious injury or
accident, an investigation or public
inquiry under the Fatality Inquiries Act
or any other action as defined in the
Alberta Evidence Act except in a
prosecution for perjury or for the
giving of contradictory evidence
• Similar provisions in other statutes
that compel incident reporting
Incident Investigation
Compulsory
Reporting
• Philip in preparation of a public
offering of shares filed a prospectus
with the OSC and a registration
statement with the SEC
Partial Waiver
Philip Services Corp.
(Receiver of) v. Ontario
Securities Commission (2005),
77 O.R. (3d) 209 (SCJ)
• Prior to filing, a board member
admitted fraudulently diverting millions
from the company
• Philip obtained legal opinions as to
whether the fraud issue needed to be
disclosed in its filings
• Philip did not disclose the fraud issue
Incident Investigation
Compulsory
Reporting
• After plunge in share price and
insolvency, Philip came under OSC
investigation
Partial Waiver
• Legal opinions had been given
voluntarily to auditors, who provided
them to the OSC pursuant to a
summons
Philip Services Corp.
(Receiver of) v. Ontario
Securities Commission (2005),
77 O.R. (3d) 209 (SCJ)
• The legal opinions provided to the
auditors in that capacity constituted only
a limited waiver
• The legal opinions remained privileged
with respect to the OSC; auditors did
not have authority to waive privilege
Incident Investigation
Compulsory
Reporting
Descôteaux v. Mierzwinski,
[1982] 1 SCR 860
Philip Services Corp.
(Receiver of) v. Ontario
Securities Commission (2005),
77 O.R. (3d) 209 (SCJ) at
para. 51
• “[R]estrictions on solicitor-client
privilege to attain other important
societal objectives are to be closely
scrutinized and restricted to what is
absolutely necessary for the
competing objective so as to achieve
the minimal necessary impairment of
solicitor-client privilege.” -G.D. Lane J.
Incident Investigation
Copying In-House
Counsel on
Records will not
Attach Privilege
Guelph (City) v. Super Blue
Box Recycling (2004), 2 CPC
(6th) 276 (Ont. SCJ)
Cusson v. Quan (2004), 10
CPC (6th) 308 (Ont. SCJ)
Humberplex Developments
Inc. v. TransCanada Pipelines
Ltd., [2011] OJ No. 5876
• The process of routinely submitting
copies of documents to a lawyer in
order to shield relevant and nonprivileged documents is improper
• Solicitor-client privilege only attaches to
records created to seek legal advice
• Litigation privilege only attaches to
documents created for the dominant
purpose of anticipated litigation
• Applies to both in-house and external
counsel
Incident Investigation
Records Prepared
During the
Investigation
• Litigation needs to be reasonably
contemplated at the time the
investigation was commenced and the
materials created
Litigation Privilege
• The investigation must be conducted
for the dominant purpose of
anticipated litigation
• In order to determine the dominant
purpose, courts will consider the
circumstances surrounding the
creation of the records
Incident Investigation
Records Prepared
During the
Investigation
• Purpose of the investigation and the
creation of the records
• When the records were created
Solicitor-Client
Privilege
General Accident Assurance
Co. v. Chrusz (1999), 45 OR
(3d) 321 (ONCA)
• Who created the records
• Who authorised the creation of the
records
• What use was, or could be made, of
the records
Incident Investigation
Records Prepared
During the
Investigation
• A bank employee was asked by inhouse counsel to conduct an internal
investigation after receipt of a human
rights complaint
Reis v. CIBC Mortgages Inc.,
2011 ONSC 2309
• The employee took notes throughout
her interviews
• The notes were provided to the bank’s
in-house counsel and were used by
the employer in drafting a response
letter
Incident Investigation
Records Prepared
During the
Investigation
Poirer v. Wal-Mart Canada
Corp., 2004 BCSC 1592
• In July 2003 the Defendant’s employee
became aware of irregularities and began
investigating
• Shortly after the supervisor advised
employee of conversations with in-house
counsel seeking direction and advice
• The investigating employee received
directions from supervisor to conduct
investigation
• Supervisor advised the employee that in
cases of serious allegations the matter is
brought to the attention of legal counsel and
that legal advice is obtained on the conduct
of the investigation
Incident Investigation
Records Prepared
During the
Investigation
Poirer v. Wal-Mart Canada
Corp., 2004 BCSC 1592
• Investigation and interviews regarding
employee conduct culminated in a
termination on October 6, 2003
• No litigation privilege since evidence
suggested that decision to terminate not
made until October 3, 2003
• Starting date for solicitor-client privilege
was August 1, 2003 since there was no
evidence on when advice regarding the
investigation was obtained
• Affidavit would better have been sworn
by the supervisor that obtained advice
Incident Investigation
Expert Opinions
Hydro One Network Services
Inc. v. Ontario (Ministry of
Labour) (2002), 118 A.C.W.S.
(3d) 144
College of Physicians of
British Columbia v. British
Columbia (Information and
Privacy Commissioner), 2002
BCCA 665
Bookman v. Loeb, (2009) 72
RFL (6th) 388, [2009] O.J. No.
2741
• Solicitor client privilege may not attach
unless requested for the purpose of
enabling counsel to provide advice to
the client
• Solicitor client privilege may not attach
to reports prepared prior to counsel
being retained or prior to contemplating
preparation of the report to legal advice
• Litigation privilege will likely apply if third
party is engaged in the course of
providing legal advice in anticipation of
litigation—privilege until trial
Incident Investigation
The Investigation
Report
R. v. Bruce Power Inc., 2009
ONCA 573
• Draft versions of the final report should
be circulated to investigation team
members with express instructions to
keep the information confidential
• All copies of draft versions should be
returned to instructing counsel or
destroyed
• Legal action, if any, should be taken
after the investigation report is released
• Company policy changes should be
taken prior to the release of the report
Presentation Download
http://www.fasken.com/arif-chowdhury/
Prepared with the research and assistance of:
Sierra Heisler
Student-at-Law
Fasken Martineau DuMoulin LLP
Dhruv Gupta
Student-at-Law
Fasken Martineau DuMoulin LLP
Authorities Cited
• Adam Dodek, “Solicitor-Client Privilege in Canada: Challenges for the
21st Century” (2011) Canadian Bar Association
• Akzo Nobel Chemicals Ltd and Akcroz Chemicals Ltd v European
Commission, EU Ct of Justice, September 14, 2010, Case No: C-550/07
P
• Balabel v Air-India, [1988] 2 ALL ER 246 (CA), 2 WLR 1036
• Blank v Canada (Department of Justice), 2006 SCC 39, 2 SCR 319
• Bookman v Loeb, (2009) 72 RFL (6th) 388, [2009] OJ No 2741
• College of Physicians of British Columbia v British Columbia (Information
and Privacy Commissioner), 2002 BCCA 665, 2 WWR 279
• Cusson v Quan (2004), 10 CPC (6th) 308, 133 ACWS (3d) 41
• Descôteaux v Mierzwinski, [1982] 1 SCR 860 (available on CanLII)
• Domcan Boundary Corp v Enron Canada Corp (2006), 53 Alta LR (4th)
309, 6 WWR 505
Authorities Cited (cont’d.)
• Dublin v Montessori (2007), 85 OR (3d) 511 (available on CanLII)
• Fraser Milner Casgrain LLP v Canada (MNR), 2002 BCSC 1344, 11
WWR 682
• General Accident Assurance Co v Chrusz (1999), 45 OR (3d) 321, [1999]
OJ No 3291
• Glegg v Smith & Nephew Inc, 2005 SCC 31, 1 SCR 724
• Goldman, Sachs & Co v Sessions (1999), 38 CPC (4th) 143, 93 ACWS
(3d) 231
• Gower v Tolko, 2001 MBCA 11, 196 DLR (4th) 716
• Guelph (City) v Super Blue Box Recycling (2004), 2 CPC (6th) 276, 134
ACWS (3d) 787
• HB Nickerson Ltd v Sommerville Belkin Industries Ltd (1985), 72 NSR
(2d) 289, 36 ACWS (2d) 323
Authorities Cited (cont’d.)
• Humberplex Developments Inc v TransCanada Pipelines Ltd, 2011
ONSC 4815, 210 ACWS (3d) 548
• Hydro One Network Services Inc v Ontario (Ministry of Labour) (2002),
118 ACWS (3d) 144, [2002] OJ No 4370
• John Sopinka et al, The Law of Evidence in Canada, 3rd ed (Toronto:
LexisNexis Butterworths, 1999)
• Mahmud Jamal, “The Supreme Court of Canada on Solicitor-Client
Privilege: What Every Practitioner Needs to Know” (2007) Canadian Bar
Association On-Line CLE
• Mutual Life Assurance Co of Canada v Canada (Deputy Attorney
General) (1988), 28 CPC (2d) 191, OJ No 1090
• NEP Canada ULC v MEC OP LLC, 2013 ABQB 54, 2013 AJ No 984
Authorities Cited (cont’d.)
• Northwest Mettech Corp v Metcon Services Ltd (1997), 78 CPR (3d) 86,
75 ACWS (3d) 822
• Nova v Guelph Engineering Company , 1984 ABCA 38, 5 DLR (4th) 755
• Philip Services Corp (Receiver of) v Ontario Securities Commission
(2005), 16 CPC (6th) 193, 77 OR (3d) 209
• Pitney Bowes of Canada Ltd v Canada, 2003 FCT 214, 225 DLR (4th)
747
• Podovinikoff v Montgomery (1984), 14 DLR (4th) 716, 58 BCLR 204
• Poirer v Wal-Mart Canada Corp, 2004 BCSC 1592, [2004] BCJ No 2571
• Pritchard v Ontario, [2004] 1 SCR 809, 1 SCR 809
• R v Bruce Power Inc, 2009 ONCA 573, 245 CCC (3d) 315
• R v Campbell, [1999] 1 SCR 565 (available on CanLII)
Authorities Cited (cont’d.)
•
•
•
•
•
R v Shirose, [1999] 1 SCR 565, at para 50, [1999] SCJ No 16
R v Solosky, [1980] 1 SCR 821 (available on CanLII)
Re: Teleglobe Communications Corp, 493 F3d 345 (3d Cir 2007)
Reis v CIBC Mortgages Inc, 2011 ONSC 2309, [2011] OJ No 1778
Robichaud v Clarica Life Insurance Co (2007), 53 CCLI (4th) 234, 160
ACWS (3d) 612
• Roger Cramton, George Cohen & Susan Koniak, “Legal and Ethical
Duties of Lawyers after Sarbanes-Oxley” (2010) Boston University
School of Law
• Royal Bank of Canada v Societe-Generale (Canada), [2005] OJ No
4383, 143 ACWS (3d) 257
• Sable Offshore Energy Inc v Ameron International Corp, 2013 SCC 37, 2
SCR 623
Authorities Cited (cont’d.)
• S & K Processors Ltd v Campbell Avenue Herring Producers Ltd (1983),
4 WWR 762, 45 BCLR 218
• “Solicitor-Client Privilege – Sarbanes-Oxley Act” (2013) Canadian Bar
Association Legal and Governmental Affairs
• Talisman Energy Inc v Petro-Canada Inc, 2000 ABQB 147, 262 AR 344
• Toronto-Dominion Bank v Leigh Instruments Ltd (Trustee of), [1997] 32
OR (3d) 575, [1997] OJ No 1177
• United Furniture Warehouse LP v 551148 BC Ltd, 2007 BCSC 68, 154
ACWS (3d) 564
• Waugh v British Railways Board, [1980] AC 521, [1979] 2 All ER 1169
(HL)
• Wexler v Suncor Energy Products Inc (2007), 223 OAC 141, [2007] OJ
No 994