Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m M A R C H 2 0 1 7 15 Advisory common interest privilege has been an important tool in commercial transactions. It is common practice for con- fidentiality or similar agreements between the parties to clearly express the parties' intention to maintain protection for privil- eged information through "common inter- est privilege." This is unsurprising because, though the parties will almost invariably not want to compromise privilege, in ana- lyzing and planning M&A deals, the bene- fits of sharing privileged information are numerous. For example, the purchaser of a business that is undergoing or likely to undergo litigation will probably be very interested to know what the lawyers to the target business have advised the target about that litigation. Another good example is what actually happened in Iggillis, where one party's external legal counsel completed a tax memo about the transaction that was shared with the other party's counsel, so that the parties would be on common footing where the tax issues were concerned. In Iggillis, the CRA challenged the assertion of privilege, seeking to get a copy of the tax memo, and it prevailed. The deci- sion runs contrary to much precedent; the court itself noted that advisory common interest privilege "in transactional circum- stances is strongly implanted in Canadian law and indeed around the common-law world." The court described advisory common interest privilege as a discrete form of privilege, providing protection to shared communications between parties and their counsel where the common legal interest relates to a proposed transaction. This approach is notably distinct from the common conception that common interest privilege is not itself a source of privilege; rather, it is an exception to the general rule that privilege is lost when disclosure is made to third parties. Put differently, the information that is shared is privileged for other reasons (e.g. solicitor-client or litiga- tion privilege) and the fact that the parties have a common interest in a commercial transaction permits the information to be shared without the established privilege being lost. The court's reasons speak to a concern that the availability of advisory common interest privilege would cause all commer- cial parties to improperly shield their nego- tiations and information sharing from the view of regulators and opposing litigants. This highlights the court's conception of advisory common interest privilege as a discrete form of privilege, rather than sim- ply an exception that permits privilege that is already independently established not to be compromised. The decision may have significant effects on how commercial transactions are negotiated and managed. It may make diligence and co-operative transaction planning more difficult. The decision itself addresses this concern, noting that "as far as the Court is able to determine, the con- clusion that CIP promotes the formation of commercial contracts in the jurispru- dence cited in support of this proposition, represents the unsupported opinions of judges." The Iggillis court considered this but appeared unmoved, noting that "those commercial transactions appearing to con- stitute much of the jurisprudence relating to advisory CIP (common interest privil- ege) are of no or questionable economic or social benefit to society" and commented further that CIP helps enable transactions of "questionable legality." Not only are corporate lawyers often reminded of their limits in straying into technical areas, but now the Federal Court is questioning the social utility and legality of the transactions on which we work. For- tunately, this is precisely the type of chal- lenge where good corporate lawyers can bring value: thinking of creative solutions to deal with technical impediments that complicate the consummation of commer- cial transactions. I would end by saying that if you read this column while crossing traffic, don't. But that would just be like the confusing cautions that appear at the bottom of every modern email, where the very last para- graph of the email you've read tells you that if the email wasn't intended for you it's confidential so don't read it. Neill May practises securities, M&A and corporate finance at Goodmans LLP in Toronto. The opinions expressed in this article are his alone. B A N K I N G O N C O R P O R AT E By Neill May nmay@goodmans.ca O P I N I O N It was a privilege …OCCASIONALLY AN ISSUE ARISES IN A TECHNICAL AREA THAT HAS THE POTENTIAL TO AFFECT COMMERCIAL PRACTICE BROADLY AND SIGNIFICANTLY. get told what not to do plenty. There are very good reasons for this. My children are young adults sensitive to my intentional ignorance of contemporary cool. My spouse is burdened by what is charitably labelled colour blindness but which we all understand is a fashion sense that straddles the border between criminal offence and undiagnosed behavioural disorder. And I benefit from many good Samaritan pedestrians' warnings triggered by my inability to walk without reading a book, my phone, a candy wrapper or whatever else I happen to be carrying. It happens at work, too. The task of a corporate commercial lawyer is often to mar- shal experts in increasingly complex specialized areas to address transactional issues. Those interactions often (predictably and properly) come with warnings for the mere generalist corporate lawyers not to stray into the specialized turf. But I will risk it just this once (don't tell anyone) because occasionally an issue arises in a technical area that has the potential to affect commercial practice broadly and significantly. Such is the case with the recent Federal Court of Canada decision in Iggillis Holdings Inc. v. Canada (National Revenue), which overturned the concept of advisory common interest privilege. I

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