Canada: What's The Deal With Privilege?

Last Updated: February 1 2017
Article by John Sorensen


The Federal Court of Canada ("FC") judgment in Minister of National Revenue v. Iggillis Holdings Inc. and Ian Gillis (2016 FC 1352) ("Iggillis") is a recent and important decision concerning common interest privilege ("CIP") – also known as deal/advisory or "allied lawyer" privilege.  CIP is likely a misnomer, since it is not a separate privilege, but rather an exception to the general rule that disclosure of otherwise privileged information to a third party results in a waiver of privilege.  The CIP exception to waiver is intended to apply when privileged legal advice is shared amongst parties who share a common goal or seek a common outcome (for previous FC authority in a tax context, see Pitney Bowes of Canada Ltd v. R (2003 FCT 214) ("Pitney Bowes")). 

While the FC affirmed that deal/advisory CIP was an established component of solicitor-client privilege ("SCP")1 supported by copious case law, it was swayed by a recent academic article and US case, concluding that deal/advisory CIP is contentious because it evolved under a cloud of confusion with joint client privilege ("JCP")2 and litigation privilege.3The FC rejected deal/advisory CIP and adopted a restrictive approach inconsistent with not only with well-established CIP case law, but recent Supreme Court of Canada guidance affirming the quasi-constitutional strength of SCP.  It is a perplexing result in the sense that Canadian case law was disregarded in favour of a piece of writing from an American law professor, Grace Giesel, and a US case.  While in the short term the FC judgment may have ramifications for transactional work and the free exchange of information between lawyers, the judgment is under appeal to the Federal Court of Appeal ("FCA"), so the last chapter on deal/advisory CIP has yet to be written. 

Briefly putting the case in context: the Minister of National Revenue ("Minister") served requirements for information on the respondents pursuant to ss. 231.2(1) of the Income Tax Act (Canada) ("ITA"), which sought copies of a document defined in the judgment as "Abacus Memo" or "Memo" and which the respondents refused to turn over.  The refusal to disclose the Abacus Memo led to the Minister bringing a compliance order application.  Abacus Capital Corporations Mergers and Acquisitions ("Abacus") intervened and argued the Memo was subject to SCP.  The Abacus Memo described the sale of shares of the respondents' corporations (including pre and post sale transaction steps) and the application of the ITA to the steps.  The FC noted that counsel for both sides of the transaction consulted regarding tax consequences, including through email and on telephone calls.  By way of example, the FC cited how counsel worked together to resolve an issue concerning taxation of dividends, which solution affected the structure of the transactions.  The communications culminated in the Abacus Memo.  Absent from the communications between counsel was any express client request for advice. 

Principles summarized

The judgment has something for everyone.  It is lengthy and includes a law and economics theory of privilege, which may entertain academics.  However, practitioners need to know the principles that may be extracted, which were summarized near the end of the judgment.

"[298] Advisory CIP is not a valid constituent form of SCP and therefore has no application to the facts of this case for the following reasons:

  1. Advisory CIP was incorrectly accepted in both the United States and Canada based upon a misapprehension that it was supported by similar rationales and purposes said to support joint client privilege and litigation privilege, when they bear no relation to advisory CIP.
  2. JCP is a valid form of SCP, while CIP is not.
  3. Litigation CIP is compatible with litigation privilege based on a shared adversarial purpose. However, litigation privilege is distinct from SCP. The primary function of SCP is to maintain the solicitor-client relationship without which the administration of justice cannot function. It is not rationalized as serving any adversarial purpose. For that reason neither ligation privilege nor litigation CIP shares any functional compatibility with advisory CIP.
  4. Not only does advisory CIP not conform to the fundamental tenets of SCP, it is incompatible with them. Indeed, its application guts SCP of its purpose and function. The ad hoc rationales said to justify advisory CIP, such as it being an exception or defence to waiver, a form of selective waiver, or supported by an expectation of confidentiality, must be rejected because they eviscerate SCP of its purpose and function.
  5. Advisory CIP provides no benefit to the administration of justice in either enhancing compliance or maintaining the solicitor-client relationship, while significantly adding to its costs. Advisory CIP significantly expands the quantity of relevant evidence that is denied to the courts. It is not available to most users of advisory legal services and unfairly disadvantages them at trial. Furthermore, it provides an increased potential for abuse, while undermining the administration of justice by predominantly enabling transactions that anticipate creating litigation.
  6. External policy factors relating to the use of SCP, such as advisory CIP providing economic and social benefits to society by fostering commercial transactions are incompatible with SCP, which is limited to factors affecting the administration of justice.
  7. Resort to external policies represents an attempted case-by-case justification of a SCP which is incompatible with the class of SCP. Advisory CIP as a case-by-case justification of privilege requires the demonstration on a balance of probabilities to be of such unequivocal importance to society that it demands protection.
  8. The claimed policy benefit of advisory CIP of enabling commercial transactions is entirely speculative, and more likely represents a cost to society by the fact that advisory CIP mostly enables transactions that anticipate litigation which undermine the administration of justice, or are otherwise of no, or harmful value to society.

The prior jurisprudence of the Federal Court of Canada, namely the Pitney Bowes decision, is not binding on this Court. Pitney Bowes is distinguishable as it was a matter involving joint client representation, not allied lawyer CIP. The Court in Pitney Bowes also applied unsound jurisprudence from other Canadian and American courts that relied on the false external policy factor of advisory CIP fostering commercial transactions and unsupportable expectations of confidentiality."

Impact for practitioners

In the short term, practitioners should beware of the risk that disclosure of privileged communications to other advisors in a deal context may result in a privilege waiver.  Until the appeal is decided by the FCA, the outcome of any similar FC compliance order applications may be uncertain.  Both Pitney Bowes and Iggillis are decisions emanating from the same level of Court and neither is binding in future cases.  Thus, the likelihood that another FC judge would follow Iggillis is an open question.  This uncertainty militates towards a cautious approach to disclosure for the time being.

Other aspects of Iggillis

Litigation privilege

Mercifully, the FC did not wholly adopt Professor Giesel's rejection of CIP:  litigation CIP survived.  In the FC's view, and relying on Blank v. Canada (2006 SCC 39), litigation privilege and SCP are fundamentally different and the sharing of information between lawyers representing different clients is consistent with the doctrinal basis for litigation privilege:  while litigation privilege protects litigation strategies in adversarial process, SCP protects the solicitor-client relationship.  Confidentiality is "intrinsic and essential" to litigation strategy. 

Tax advising

Other than the endorsement of CIP in a litigation context, another somewhat bright spot in Iggillis was the FC's rejection of the Minister's argument that tax planning communications (including a lawyer's advice) are never privileged, based on Canada v. Revcon Oilfield Constructors Inc (2015 FC 524) ("Revcon").  Few practitioners interpreted Revcon as standing for the proposition that tax advice from a lawyer was not privileged and that weak argument was doomed to fail in Iggillis.  Similarly, the FC appropriately rejected the Minister's argument that the Abacus Memo was not legal advice, but rather business advice, since it obviously included legal advice. 

On the other hand, the FC suggested that deal/advisory CIP facilitates high-risk transactions and protects information that could show non-compliance with the law. In this regard, the FC's views regrettably seem infected by popular misunderstandings of tax planning.  The judgment states that "CIP will also enable commercial transactions that are of questionable legality given the purposes they are put to. ... They may involve placing wealth off shore, or estate planning of wealthy persons ... The transactions require the employment of lawyers ... who excel at navigating the complexity and opacity of their legal world or of international treaties and arcane points of law that abound there.  The schemes may resort to shell corporations, offshore trusts, and other legal constructs such as bankruptcies or cross-border protections that require secrecy of their advisory communications in order to be concluded. Like this matter, there is little or no economic reality to these transactions, nor any benefit to society."  With respect,  "placing wealth offshore" is quite alright if the owner complies with the law, estate planning is not obviously of "questionable legality", and the FC's reference to tax planning synonymously with opacity, arcane laws, shell corporations and a lack of economic reality suggests that the Court may have been prejudiced by misunderstandings typically within the domain of media outlets. 


Iggillis may warm the heart of professors for its reliance on an academic paper over well-established case law and for its lengthy theoretical analysis, but may also make the blood of tax practitioners run cold and chill the appropriate sharing of information between lawyers in the short term.


1. SCP is well understood as protecting communications between a lawyer and client that occur for the purpose of seeking or giving legal advice, which communications are intended to be confidential.  Disclosing privileged information to third parties typically constitutes a waiver of privilege (unless, for example, the limited waiver doctrine is supportable).

2. JCP protects communications when two or more clients are represented by the same lawyer (for example, two clients on the same side of a piece of litigation or defendants in a prosecution).

3. Litigation privilege is a rule of evidence that protects from disclosure in Court any documents or communications generated for the dominant purpose of litigation.

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.

Events from this Firm
14 Sep 2017, Seminar, Birmingham, UK

Has Cloud replaced traditional outsourcing models? We will compare cloud to outsourcing, consider whether they have effectively become the same thing for many solutions and assess some of the advantages and disadvantages of each model.

18 Sep 2017, Seminar, London, UK

Our annual event as part of the London Design Festival is now in its fifth year. We would be delighted if you are able to join us again.

21 Sep 2017, Seminar, London, UK

Has Cloud replaced traditional outsourcing models? We will compare cloud to outsourcing, consider whether they have effectively become the same thing for many solutions and assess some of the advantages and disadvantages of each model.

In association with
Related Video
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.