Question of Remedy for Privilege Breach Back to Securities Commission in Knowledge House Affair

On Thursday, the Nova Scotia Court of Appeal issued a judgement about the Knowledge House affair, which has become as notable for the handling of an e-mail server containing solicitor-client communications as for the securities law issues at its heart.

In 2005, Justice Scanlan issued a scathing judgement in which he rejected an argument that certain individuals had waived privilege by sending communications over a company-owned server. In the result, he ordered removal of counsel who had seized the server and reviewed e-mails in prosecuting a civil claim on behalf of National Bank Financial Limited.

The Nova Scotia Securities Commission obtained privileged communications from NBFL and allegedly reviewed them in aide of its investigation. The Court of Appeal dealt with the affected persons’ quest for a remedy against the Commission in 2006. Justice Cromwell (as he then was) held that the affected persons’ application for certiorari was premature, but said the Commission should take “serious and immediate steps” to do right. The Commission did not respond to the Court’s suggestion by initiating proceedings to resolve the privilege issue. Instead, it issued formal allegations. The affected persons then moved before the Commission for a remedy. In June 2010, after numerous intervening proceedings, the Commission held that the privilege breach issue should not be bifucated and dealt with in advance of the merits of the Commission’s allegations.

Thursday’s decision is strictly procedural. Though it recognized that the hanging investigation and privilege question has been “stressful and costly” for the affected persons, the Court held that the delay in hearing the request to remedy the privilege breach was understandable and that the request for a remedy could be dealt with by way of a voire dire at the commencement of the hearing of the Commission’s allegations. It upheld the Commission’s decision.

Wadden v. Nova Scotia (Attorney General), 2011 NSCA 55.

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