Federal Court of Appeal Affirms Common Interest Privilege in Deal Context

On March 6, 2018, the Federal Court of Appeal (Court) released its reasons in Iggillis Holdings Inc. v. Canada (National Revenue) confirming common interest privilege as a valid exception to waiver in non-litigious circumstances. More specifically, in certain circumstances, parties with a common interest in the completion of a commercial transaction can share privileged legal advice with each other, on a confidential basis, without waiving privilege over the advice. This decision reverses a trial decision that had attracted considerable national attention and adopts the more generally accepted view of courts across Canada as to the scope of common interest privilege.


Abacus Capital Corporations Mergers and Acquisitions (Abacus) is comprised of a number of corporations, partnerships and trusts that provide tax advice in relation to corporate transactions. In this case, Abacus structured a series of transactions that resulted in an Abacus entity acquiring the shares of corporations that had been held by IGGillis Holdings Inc. and Ian Gillis (collectively, Gillis). Both Abacus and Gillis had separate legal counsel with respect to the transactions.

With input from counsel for Gillis, Abacus counsel produced a memo outlining each step in the transactions and the various tax implications associated with that step. The memo was sent to both Abacus and Gillis by their respective lawyers. Upon completion of the transactions, the Minister of National Revenue served Gillis with requirements to produce the memo under subsection 231.2(1) of the Income Tax Act (ITA).

The question before the court was whether the memo was subject to solicitor-client privilege such that it need not be disclosed to the Minister, and if it was, whether that privilege was waived by disclosure of the memo to a non-client.


At first instance, the Federal Court found that the memo was subject to solicitor-client privilege, but that the privilege was waived by disclosure of the legal opinion to a non-client. While the court accepted that common interest privilege in transactional circumstances is strongly implanted in Canadian law and indeed around the common law world, the court went on to state that this view was incorrect, holding that advisory common interest privilege was not a “legitimate or acceptable” application of solicitor-client privilege doctrine. As a result, the memo was to be disclosed to the Minister of National Revenue under subsection 231.2(1) of the ITA.


The Federal Court of Appeal overturned the lower court’s decision. Justice Webb, writing for the Court, agreed that the memo was subject to solicitor-client privilege and is protected from disclosure to the Minister, subject only to whether that privilege had been waived or whether it was also protected from disclosure by common interest privilege.

Given that Alberta and British Columbia were the relevant provinces for the definition of what constitutes solicitor-client privilege under subsection 232(1) of the ITA, the Court considered cases from those jurisdictions, including the case of Maximum Ventures Inc. v. De Graaf, in which the British Columbia Court of Appeal held that privilege is not lost or waived when confidential information is shared between parties that have a common interest in completing the transaction.

Justice Webb rejected the concern of the lower court that applying common interest privilege in the transaction context would deprive the court of all relevant evidence. Here, the content of the memo was strictly the legal implications of the transactions, which would ultimately be questions of law for the court to decide, rather than the subject of admissible evidence. Justice Webb also rejected the lower court’s reliance on a decision from the New York Court of Appeals (Ambac Assurance Corp v. Countrywide Home Loans Inc.) that had refused to extend common interest privilege to the transaction context. He held that foreign law had no application to the facts of this case.

Lastly, Justice Webb noted that there may be efficiencies to be gained and clients may be better served when dealing with complex statutes such as the ITA if lawyers collaborate on opinions that are to be provided to their clients in respect of a series of common transactions.


This decision helps to clarify the law with respect to the application of common interest privilege outside of the litigation context. This decision confirms that common interest privilege operates as an exception to waiver of solicitor-client privilege where parties sharing confidential information have a common interest in completing the commercial transaction at issue.

For further information, please contact:

Jeff Galway                  416-863-3859                
Bradley Berg                 416-863-4316
Laura Dougan               416-863-2187

or any other member of our Litigation & Dispute Resolution group.

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