Advisory privilege

A recent decision of the Federal Court of Appeal has clarified the law around deal or advisory privilege. This form of privilege extends to shared privileged communications exchanged during the course of due diligence with the purpose of furthering a proposed transaction. In Minister of National Revenue v. Iggillis Holdings Inc., the Court overturned a controversial decision that had held that deal team or advisory privilege should not be recognized in Canada and which was influenced by a recent academic article and US jurisprudence.

The CRA, Canada's tax administration body, sought production of a memorandum that was shared between separately retained defense counsel. The memorandum had been prepared during the course of a commercial transaction and set out a strategy for completing the sale in such a way to obtain the most tax efficient basis for both parties. The Federal Court found that privilege over the document was lost when it was shared between the vendor and purchaser.

In a unanimous decision, the Federal Court of Appeal overturned the lower court's decision and confirmed that deal or advisory privilege is a legitimate legal doctrine in Canada and that it was not waived when the memorandum was shared. In affirming the notion of deal or advisory privilege, the Federal Court of Appeal acknowledged the policy rationale that underlies the doctrine — to serve legitimate business interests by facilitating efficient transactions. The Federal Court of Appeal rejected the lower court's suggestion that parties were using claims of deal privilege as a shield to protect abusive tax avoidance schemes. This appellate level decision represents a clear re-alignment with the established case law in Canada. The Supreme Court of Canada denied the CRA's application for leave to appeal.

Settlement privilege

The Supreme Court of Canada extended settlement privilege to Quebec's family mediation process in Association de médiation familiale du Québec v. Bouvier. In confirming that a rule of absolute confidentiality is not required in certain circumstances, the court applied its own precedent from Union Carbide Canada Inc v. Bombardier Inc. In Union Carbide, the court stated that the disclosure of protected communications will be sometimes necessary to confirm that a settlement has arisen from mediation. As a result, where necessary, courts can breach the presumed confidentiality of the family mediation process to adduce the presence or scope of an agreement between the participating parties.

Public interest privilege

In Vancouver Airport Authority v. Commissioner of Competition, the Federal Court of Appeal rejected the Commissioner of Competition's position that public interest privilege can be claimed as a class privilege. As a result, the Competition Bureau must now establish public interest privilege on a case-by-case basis.