On July 16, 2015, the Supreme Court of Canada (SCC) denied leave
to appeal to an in-house counsel (referred to as Ms. X to protect
her identity) in the case of X v. Autorité des
marchés financiers. The SCC thus maintained the
decision of the Quebec Court of Appeal, which had ruled that an
in-house counsel could not claim immunity from disclosure by
relying on solicitor-client privilege to decline to appear before
the investigators of the Quebec securities regulator (the
Autorité des marchés financiers or AMF) when summoned
by them in the context of an investigation.
Ms. X has been in-house counsel in the legal department of a
public multinational company for a number of years. In December
2013, the AMF summoned her to appear before one of its
investigators to "testify as to everything you known about the
file" in the context of an investigation focusing on trades
made by the company. The AMF also issues an order prohibiting Ms. X
from divulging to anyone information relating to the investigation,
except to her lawyer.
A few days later, Ms. X made an application to the Superior
Court to have the summons and the confidentiality order issued by
the AMF declared illegal. Ms. X argued that the summons could
jeopardize the solicitor-client privilege she owed to the company
and that the confidentiality order would prevent her from
performing her duties as a lawyer within the company.
The AMF responded by seeking a summary dismissal of Ms. X's
application. The AMF argued that not all communications involving
the in-house counsel inside the company were protected by
privilege. For instance, pure business advice, as well as certain
communications in the ordinary course of the company's
business, was not privileged even if the in-counsel took part in
them. The AMF also argued that the Quebec Act respecting the
Autorité des marchés financiers contained a
privative clause, which prevented courts from interfering with the
exercise of the AMF's powers.
In first instance, the Superior Court found that Ms. X's
allegations were serious, particularly when taking into account the
risk that privilege could be violated given the vagueness of the
summons, and that a trial on the merits was required to determine
if the AMF's summons and confidentiality order were legal.
COURT OF APPEAL DECISION
The Quebec Court of Appeal reversed the Superior Court's
decision and dismissed Ms. X's application. Without directly
questioning the application of the presumption of confidentiality
established in the Foster Wheeler case, the Court of
Appeal was of the opinion that the potential for a violation of
privilege was speculative because the AMF's investigator had
yet to ask any specific question to Ms. X. The Court of Appeal
considered that Ms. X's application was premature, if even
valid, given the absence of concrete evidence.
With respect to the confidentiality order issued by the AMF, the
Court of Appeal held that it was necessary to ensure the integrity
of the AMF's investigation. Ms. X should raise the issue with
the Bureau de décision et de révision, a specialized
administrative tribunal, if she wants to have the order
Ms. X unsuccessfully sought leave to appeal from the decision of
the Court of Appeal before the SCC.
We can conclude from Ms. X's judicial saga that the AMF can
legally summon an in-house counsel to appear before its
investigators, despite the solicitor-client privilege owed by
counsel to his employer. At best, in-house counsel could make a
court application if he believes that specific questions from the
investigator violate privilege. This process can be difficult since
witnesses are not entitled to decline to answer questions asked by
the AMF investigator who summoned him; he would otherwise be at
risk of penal prosecution. In addition, caselaw established that a
witness cannot apply to have the Superior Court rule on objections
to the investigator's questions, unless the investigator were
to exceed his mandate or his jurisdiction, or in case of a
violation of the rules of natural justice or of procedural
In practice, these recent developments show why in-house counsel
ought to segregate the legal advice he gives to his employer from
other communications. The company should also engage external
counsel when an investigation is ongoing or anticipated, requiring
increased protection of solicitor-client privilege.
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