Earlier this year, the Federal Court dismissed a claim that a column in a spreadsheet was subject to solicitor-client privilege because disclosure would reveal legal advice obtained prior to its development.
Solicitor-client privilege (literally) protects advisory communications between a solicitor and its client, and it can protect such communications if they find their way into other documents. For example, if two employees of a lawyer’s client discuss the (corporate) lawyer’s advice confidentially via e-mail, their description of the advice may be redacted in response to a production requirement because its disclosure would reveal the solicitor-client communication.
In this case, a corporate taxpayer argued that a column in a spreadsheet was protected by solicitor-client privilege based on the same rationale. It relied on an affidavit that explained that it received legal advice prior to the development of the column and that disclosure of the column would reveal it “by what is being computed, how the computation is done,” and “by associated text in the reacted column.” The Court exercised its discretion to review the prior legal advice and held that the column was simply the “operational outcome or end product of legal advice” and not protected.
This is a fact specific, though illustrative outcome. Even the fact of obtaining legal advice on a particular matter is sensitive and ought normally be kept secret because, once disclosed, inferences can be drawn about advice taken based on the “operational outcome” or “end product” of the advice. Of course, a lawyer’s legal advice can be either be accepted or rejected or followed precisely or loosely, but clients are often drawn to back the legitimacy of their actions by reference to their careful adherence to legal advice. That’s plainly a risk.
In this case, it is unclear whether something precipitated the (more basic) disclosure of an advisory relationship, but one can see how arguing the resulting inference can be very awkward and risky. The only way to do it is to “double down” and disclose more about the advisory relationship and the resulting inference. If not it inviting of waiver in the underlying advice (which the Court did not find here), it seems to be one step down a slippery slope to that outcome.
Canada (National Revenue) v. BMO Nesbitt Burns Inc., 2022 FC 157.
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