The decision of the Alberta Court of Queen's Bench in Scott & Associates Engineering Ltd. v.
Ghost Pine Windfarm, LP addressed a variety of issues
respecting the assertion of privilege by the respondents, Ghost
Pine Windfarm, LP and Fortuna GP Inc. (collectively, Ghost Pine),
over redacted portions of otherwise producible documents and, in
particular, the redacted portions of an Asset Purchase Agreement
(APA). An application was brought by the applicant Scott &
Associates Engineering Ltd. (SAEL), challenging the validity of
such redactions, and it was argued that even if the privilege
claimed was proper, such privilege was displaced due to the
operation of the fraud exception to privilege, and because Ghost
Pine's state of mind was at issue.
Ghost Pine and Finavera Renewables Inc. (Finavera) entered into
the APA for the purchase of a wind farm project (the Ghost Pine
Project). Prior to the parties' entry into the APA, SAEL had
commenced litigation against Finavera, the basis of which was
SAEL's alleged interest in the Ghost Pine Project. This
litigation was ongoing at the time at which Ghost Pine and Finavera
entered into the APA.
After Ghost Pine purchased the Ghost Pine Project, SAEL
commenced litigation against, inter alia, Ghost Pine. In
the course of this litigation, Ghost Pine disclosed a redacted
version of the APA to SAEL, where such redactions were made by
Ghost Pine, on the basis of common interest privilege based on
either litigation privilege or solicitor-client privilege.
SAEL challenged, inter alia, the validity of the
privilege claimed by Ghost Pine over the redacted portions of the
McCarthy Tétrault Notes
Ghost Pine was successful in maintaining its claim of common
interest privilege over all of the redactions in the APA.
Mahoney J.'s comments, on the application of common interest
privilege to commercial transactions and the exchange of
information that is subject to solicitor-client privilege in the
context of such transactions, are noteworthy. Mahoney J. noted
that, in Alberta, common interest privilege has been extended past
the litigation context, and applied to parties that have a common
interest in bringing a commercial transaction to a successful
completion. In this context, for common interest privilege to
apply, there must be an expectation between the parties that their
communication was confidential.
Mahoney J. accepted that in commercial transactions, common
interest privilege could be based on litigation privilege. He then
reviewed the law, regarding the possible extension of common
interest privilege to information, which is subject to
solicitor-client privilege that is exchanged in the course of a
commercial transaction. In this regard, he quoted from a Federal
Court Trial Division decision, in which it was held that legal
opinions exchanged in the course of a commercial transaction could
be covered by common interest privilege, based on solicitor-client
privilege where the purpose of such legal opinions was to put the
parties to the transaction on an equal footing during negotiations,
and were for the benefit of multiple parties.
In his decision, Mahoney J. affirmed Ghost Pine's claim of
common interest privilege based on solicitor-client privilege over
certain redactions in the APA. In coming to this decision, Mahoney
J. noted the redacted information was subject to solicitor-client
privilege, and was directly related to the formulation and
provision of legal advice by Finavera's counsel to the parties
regarding the purchase and sale of the Ghost Pine Project, and that
the parties intended such communication to remain confidential.
Furthermore, because of the operation of common interest privilege,
Finavera's disclosure to Ghost Pine of information that was
subject to solicitor-client privilege did not result in a waiver of
This decision reaffirms the importance of privilege and the
extension, in certain circumstances, of common interest privilege
to information subject to solicitor-client privilege that is
exchanged between parties in the course of a commercial
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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