Canada: Federal Court Of Appeal Confirms Common Interest Privilege Applies In Commercial Transactions

On March 6, the Federal Court of Appeal confirmed that common interest privilege (CIP) protects the sharing, between parties to a commercial transaction, of communications that are subject to solicitor-client privilege (SCP). IGGillis Holdings Inc. v. The Minister of National Revenue is among the clearest statements in support of the existence of such privilege in Canada.1

What You Need To Know

  • The decision restores certainty in this area of the law in Canada. Prior to the lower court's decision,2 Canadian courts had uniformly recognized the application of CIP to protect disclosure of SCP information that is shared between parties to a commercial transaction. The trial decision, which the Federal Court of Appeal overturned, had held that CIP should not apply in this context.
  • IGGillis concludes explicitly that the law of CIP is uniform across Canada.
  • CIP applies broadly. Many cases upholding the application of CIP involve M&A transactions where a target has shared privileged information about things such as asset or liability values or ownership. This case involves a tax dispute with the Minister of National Revenue, who sought to review legal advice shared between counterparties during negotiations over tax structuring issues. IGGillis confirms that CIP applies to legal advice given in the context of commercial transactions generally.
  • Despite the apparent breadth of CIP, its limits are not yet known. The Federal Court of Appeal does not clarify the extent to which CIP can extend beyond commercial transactions to other types of common endeavours—such as, for example, to protect the sharing of SCP information between two parties pursuing a law reform initiative, or seeking to persuade a regulator.


Despite its name, CIP is not a freestanding legal privilege but an exception to the doctrine of waiver of SCP. One party's disclosure of information that is subject to SCP to another party with a common legal interest (such as the consideration or completion of a commercial transaction) does not waive the privilege attached to that information. Reliance upon CIP is common in the context of corporate commercial transactions in Canada. Notably, CIP is not universally available in the context of corporate commercial transactions in other jurisdictions.

In this case, the Minister of National Revenue sought to review legal advice that two commercial parties had shared with one another during negotiations. The Federal Court of Appeal held that the advice was protected by CIP and therefore did not need to be disclosed to the Minister.

Justice Webb, writing for a unanimous bench, overturned a decision of the Federal Court that found CIP does not protect the sharing of SCP information between parties to a commercial transaction. IGGillis is one of the few appellate decisions on CIP in Canada, and among the clearest statements on its reach.


Abacus Capital Corporations Mergers and Acquisitions (Abacus) is a company that often engages in corporate commercial transactions with other arm's length parties. In this case, Abacus structured a series of transactions in which an entity of Abacus acquired shares of the corporation that had been held by IGGillis Holdings Inc. and Ian Gillis (Gillis, collectively).

Abacus and Gillis were represented by separate counsel. Counsel for Abacus produced a memorandum opining on the relevant tax implications for each step of the transaction. The legal advice contained in the memo was primarily the work of counsel for Abacus, but also included the contributions of counsel for Gillis. The completed memo was shared with both Abacus and Gillis.

Once the transactions were complete, the Minister of National Revenue sought production of the memo.

The Decision

The Federal Court agreed with the Minister's argument that there was no common interest between Abacus and Gillis because they were on opposite sides of a transaction. Acknowledging that CIP was a well-entrenched part of Canadian law, the Federal Court nonetheless held that CIP does not apply to protect the sharing of SCP between parties to a commercial transaction, citing the decision of the New York Court of Appeals in Ambac Assurance Corp. v. Countrywide Home Loans Inc.,3 which held that CIP is limited to the litigation context and should not be extended to corporate transactions.

The Federal Court of Appeal disagreed, holding that the New York Court of Appeals' Ambac decision was irrelevant to the question before the Federal Court. The question was whether the memo was privileged under the laws of British Columbia and Alberta, not whether the motion judge agreed with the policy rationale for CIP or preferred the law of CIP that applied in some U.S. jurisdictions. After canvassing judicial consideration and acceptance of CIP, as well as support for the doctrine in a leading text on the law of evidence, the Court of Appeal held that there was a sufficient common interest in the completion of the transaction in issue to find that privilege had not been waived.

According to the Federal Court of Appeal, SCP is not waived when a legal opinion protected by SCP is:

  • disclosed;
  • on a confidential basis; and
  • to other parties with sufficient common interest in the same transaction.4

This principle applies whether the opinion is first disclosed to the client of the particular lawyer and then to the other parties or simultaneously to the client and the other parties. Equally, this principle applies where the opinion is the result of collaboration between counsel to both parties.

The Court found that, in this case, communication of the Abacus memo was strictly limited to the other parties to the transaction and their counsel and therefore remained confidential.

Although the Court did not discuss the reach of CIP beyond commercial transactions, the decision restores much-needed certainty in this area of the law in its affirmation of the application of CIP within the context of commercial transactions.

What remains to be seen is the extent to which CIP can be applied beyond commercial transactions. The Federal Court of Appeal did not explore whether there are limitations to CIP's application. For example, it is not clear whether CIP applies to parties that share a common interest in law reform (like companies within a particular industry), or that share a common interest in persuading a regulator.

It may be that the scope of CIP will be considered, should the Supreme Court of Canada grant leave to appeal the decision. However, it is not yet known whether the Minister of National Revenue will seek leave.


1 See 2018 FCA 51.

2 See Minister of National Revenue v. IGGillis Holdings Inc. and Ian Gillis, 2016 FC 1352.

3 See N.Y.S.3d 838 (Ct. App., 2016).

4 See Para. 42.

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.

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