The law of evidence in Quebec draws heavily on common law. Case
law from courts in the rest of Canada and in the United States
relating to solicitor-client privilege may therefore be relevant in
Quebec-based counsel should thus be aware of two decisions
handed down in 2013 by Delaware and Alberta courts, namely, a
decision of the Alberta Court of Queen's Bench in NEP
Canada ULC v MEC OP LLC1 and a decision of the
Delaware Court of Chancery in Great Hill Equity Partners v Sig
Growth Equity Fund2.
Both these decisions deal with the treatment of solicitor-client
privilege in a share purchase transaction. Both cases involved a
parent company selling the shares of a subsidiary to a third party.
Following the transaction, the third party and the subsidiary
merged. In both cases, after the merger, the third party discovered
privileged communications about the transaction involving counsel
for the subsidiary and the parent company on the subsidiary's
Based on these privileged documents, the third-party buyer sued
the parent company for damages, alleging that misrepresentations
were made at the time of the sale. The parent company naturally
objected to use of such privileged documents. However, the courts
found that the privilege which had initially belonged to the parent
company and its subsidiary had passed to the merged company that
was now controlled by the third-party buyer. Therefore, the buyer
could use the seller's privileged information to sue the seller
How can one avoid such a sticky situation? The courts suggested
that a clause could have been added to the contract of sale
specifying that privileged information relating to the transaction
was excluded from the sale. This indeed appears to be the simplest
solution. Otherwise, the parent company and its subsidiary should
be careful to ensure that no privileged information is left on the
subsidiary's server or that the parent company and the
subsidiary are not represented by the same counsel.
It remains to be seen whether the Quebec courts would take the
same approach as the Alberta and Delaware courts. In the meantime,
caution would be advisable.
1. 2013 ABQB 540.
2. C.A. NO. 7906 (NOV. 15, 2013).
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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