Canada: Deal Privilege May No Longer Protect Shared Legal Advice Following Minister Of National Revenue V. Iggillis Holdings Inc., 2016 FC 1352

A recent decision of the Federal Court of Canada may have significant implications for how commercial parties conduct themselves. During the course of due diligence, it is not uncommon for parties to wish to share privileged communications in furtherance of a proposed transaction. There had been increasing recognition in Canada that parties could do so, without waiving applicable privilege, under the concept of "common interest privilege." In Minister of National Revenue v. Iggillis Holdings Inc., 2016 FC 1352 (Iggillis), the Federal Court has cast considerable doubt on this practice. If this decision, currently under appeal, becomes the leading authority in this area, parties will have to change their practices in respect of due diligence and certain kinds of transaction planning. In particular, sharing privileged communications among parties to a commercial transaction will have to be avoided, unless the parties are represented by the same law firm.

Common interest privilege

Solicitor-client privilege protects communications between a lawyer and a client that are made for the purpose of seeking or giving legal advice, which are intended by the parties to be confidential. Normally, deliberately sharing a privileged communication with a third party is a waiver of privilege. The reason for this is that disclosure of a privileged communication to a third party is incompatible with the idea that it was intended to be confidential, which is at the core of the doctrine of privilege. However, a series of decisions by the Federal Court and provincial Superior Courts has acknowledged that parties to a commercial transaction may be permitted to share privileged legal opinions with one another in furtherance of their common interest in executing a transaction, without waiving privilege. Where parties share a "common interest" in getting the deal done, courts have been prepared to protect that common interest because there are economic and social benefits if parties engaged in commercial transactions are free to exchange privileged communications "without fear of jeopardizing the confidence that is critical to obtaining legal advice."1 Common interest privilege does not apply to every shared communication. Whether privilege has been waived will depend on the facts of each case and the expectations of the parties.

Prior to Iggillis, the leading Federal Court case in this area was Pitney Bowes of Canada Ltd. v. Canada2 (Pitney Bowes). In Pitney Bowes, the Canada Revenue Agency (the CRA) demanded disclosure of a legal opinion that one party to a proposed transaction had shared with the other parties. The Federal Court held that privilege had not been waived by distribution to the other parties. The Court noted that the opinions had been prepared for the purpose of distribution and sharing them benefited all the parties in advancing the transaction. The principles outlined by the Court in the Pitney Bowes case have been applied in several subsequent cases in both Federal Court and provincial Superior Courts to uphold common interest privilege over shared documents3.

The authority of this line of cases has been called into question in its entirety by the Federal Court's decision in Iggillis.


In Iggillis, the CRA was seeking a copy of a legal memorandum (the Memo) prepared in the course of a  set of commercial transactions. The Memo had been prepared by counsel to Abacus Capital (Abacus) to discuss the tax issues arising from the transactions and set out a series of steps to permit the sales to be completed on the basis that was most tax efficient to both vendors and the purchaser. Abacus' counsel circulated the Memo to the vendors' counsel to ensure that vendors understood the transaction steps to be undertaken and the associated tax and legal risks. The Memo was therefore important in advancing negotiations but would also, if disclosed, provide the CRA with a "road map" of possible arguments it could use to challenge the parties' tax reporting.

The Court found that the Memo reflected legal advice prepared by each lawyer for his respective client and was therefore protected by solicitor-client privilege. The issue was therefore whether that privilege had been lost when the Memo was shared. The Court held that it had been.

The Court noted that common interest privilege first arose when joint criminal defendants both received legal advice from a single counsel to permit the sharing of defence strategies. The doctrine had subsequently been applied in civil as well as criminal litigation and then to purely transactional contexts in which the shared documents were said to be protected by "advisory" (as opposed to litigation) common interest privilege. The Court distinguished cases of "joint client privilege" in which the parties both received legal advice from a single firm from cases in which separate but "allied lawyers" shared legal opinions in order to advance a coordinated legal strategy.

Relying on recent U.S. jurisprudence (including in particular the recent Ambac Assurance Corp v. Countrywide Home Loans Inc. decision of the New York Court of Appeals) and academic commentary, the Court concluded that advisory common interest privilege was irreconcilable with the doctrine and rationale underlying solicitor-client privilege. The Court was also concerned that the expansion of advisory common interest privilege had impeded the administration of justice by unfairly placing potentially relevant evidence off limits to other litigants, governmental authorities and the courts themselves. In the Court's view, advisory common interest privilege really serves only two purposes, neither of which was worth protecting: first, it enables transactions that anticipate litigation; second, it provides the claimants with a significant strategic advantage when litigation ensues by denying opposing parties and the Court access to important evidence.

The Court ultimately concluded that any advantages associated with advancing commercial transactions are outweighed by the costs to the administration of justice and the impairment of the "truth-seeking legal process" of the courts.

The Court stated that over-claiming common interest privilege in the deal context is a common practice which creates the potential for abuse, especially in the area of large-value merger and acquisition transactions. Further, protecting advisory common interest privilege promotes litigation and non-compliance with existing law by enabling high-risk transactions and protecting communications that could demonstrate unlawfulness. The Court appeared to accept at face value the CRA's assertion that advisory common interest privilege in the transactional context is typically asserted by parties with suspect motives. The Court saw such abusive tax avoidance schemes as greatly benefiting from common interest privilege but without providing meaningful economic or social benefits to society.

Based on the above analysis, the Court concluded that advisory common interest privilege could not protect the Memo in this case from disclosure to the CRA. The Court distinguished Pitney Bowes on the basis that it concerned joint-client representation, unlike the allied lawyer common interest privilege asserted by the parties in Iggillis. The Court went further, however, in stating that the Federal Court in Pitney Bowes had applied unsound jurisprudence that relied on the "false" policy rationale of fostering commercial transactions and was no longer good law.

Where does Iggillis leave us?

The decision in Iggillis has been appealed to the Federal Court of Appeal. However, until the Federal Court of Appeal weighs in, the status of advisory common interest privilege, previously commonly accepted in the transactional context, is now highly uncertain. This decision will place significant restrictions on the ability of parties to share privileged materials in the context of an acquisition transaction or other commercial arrangement between arm's length parties.

Iggillis effectively restricts the application of advisory common interest privilege in the deal context to situations in which the shared communications are also protected by a direct joint solicitor-client relationship, i.e., where all of the parties to the transaction are represented by the same counsel or firm. Privilege over the legal advice of "allied lawyers," such as where a vendor's and a purchaser's counsel collaborate on or share their analysis of the tax and legal issues, whether arising from a proposed transaction directly or from a previously existing piece of litigation or potential litigation, may now be considered to have been waived if it is shared with a proposed counterparty. In these situations, it will be significantly more difficult to resist production to the CRA, regulators or third parties on the basis of common interest privilege.

In this respect, Iggillis is very much at odds with Pitney Bowes. It is difficult to predict how other judges will reconcile the two decisions, which emanated from the same Court. Iggillis is the more recent decision, and considers developments in U.S. law which post-date Pitney Bowes. As such, at a minimum, the value of Pitney Bowes as a precedent is now very much open to question.

It is also important to note that Iggillis is also at odds with a number of decisions of provincial Superior Courts. Those decisions have typically arisen in the context of attempts to obtain privileged communications in civil litigation. Iggillis is not binding on provincial Superior Courts, so it will not, strictly speaking, affect the precedential value of prior Superior Court decisions. However, many of the Superior Court decisions have followed the reasoning in Pitney Bowes. Moreover, parties to commercial transactions will have to consider the risk of waiver, both with respect to future civil litigation and with respect to the tax authorities. As such, parties may end up choosing to take the more conservative approach mandated by Iggillis, regardless of what might be considered permissible in the provincial courts.

At the core of the decision is the conclusion by the Court that the benefits associated with the protection of privileged communications that are disclosed in the context of a potential commercial transaction were highly speculative, while the cost to the administration of justice was obvious (i.e. the suppression of relevant documents that a counterparty in litigation — in this case the taxing authority — might otherwise have access to).

Both of these conclusions appear to be open to significant debate, and will no doubt attract attention. Common interest privilege operates, in limited circumstances, to negate the waiver of privilege that would otherwise occur when a privileged document is shared with a third party. If this decision becomes the leading authority, and the act of sharing a privileged communication with a counterparty to a proposed transaction is to be viewed as a waiver of privilege, then that sharing will not take place. In those circumstances there is no benefit to the administration of justice.

Further, it has to this point been widely accepted that parties to transactions often have entirely legitimate objectives in seeking to assess a particular legal risk applicable to or affecting a counterparty through a review of privileged materials. Doing so can in certain transactions be critical to the parties being able to proceed, such as where the buyer of an asset or corporation will in effect inherit the risk in question. If, as a result of this decision, that practice has to cease, then there is legitimate reason to be concerned that the effect of this decision will be to impose a significant impediment to the execution of transactions going forward.


1. Fraser Milner Casgrain LLP v. Canada (Minister of National Revenue), 2002 BCSC 1344 at para. 14.

2. (2003), 57 DTC 5179 (Fed. Ct.).

3. See for example Trillium Motor World v. General Motors et. al., 2014 ONSC 1338 (CanLII), affirmed 2014 ONSC 4894 (CanLII)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Langlois lawyers, LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Langlois lawyers, LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions