Court says privilege in letters left online waived

On May 5th the Court of Appeal for Newfoundland and Labrador affirmed a finding that a party had waived its solicitor-client privilege in two letters that had been published online.

The letters contained legal opinions to a defendant to an outstanding civil action. They were authored about five and nine years before the action was commenced, but apparently are “highly relevant” to the action. The plaintiffs downloaded the letters from the internet and produced them back to the defendant, which provoked the defendant’s privilege claim.

The defendant had learned the documents were circulating about six months prior to receiving the plaintiffs’ production when contacted by a CBC reporter and one of the plaintiffs (who also posted the letters on her Facebook). It decided not to attempt to take down the letters from the internet because of the expense and, in the Court’s words, because “the genie was out of the bottle and control over the documents would be virtually impossible to maintain.” Strangely, the defendant did not advise its defence counsel of the problem, so defence counsel only asserted privilege after receiving production (again, about six months later).

In these circumstances, the Court of Appeal held that privilege had been waived. Its key findings were as follows:

    • The defendant itself was aware of the publication of the letters well before the plaintiffs produced the letters in the litigation, but did not assert privilege against the plaintiffs. That defence counsel did not know that the letters were circulating until the plaintiffs produced them was irrelevant. Privilege belongs to the client, not its counsel.
    • Plaintiff counsel’s act of downloading of the letters from the internet for use in the litigation ought not be presumed to be improper. Although the Court confirmed that opposing counsel are obliged not to take advantage of an inadvertent disclosure of privileged communications, in this case the letters were somewhat old and it appears that the existence of an inadvertent disclosure was simply not reasonably apparent.
    • It was not wrong for the application judge to consider the lack of evidence about safeguarding efforts in deciding the waiver issue against the defendant: “A privilege-holder ought to be able to provide some evidence of how the privileged documents were safe-guarded to protect the privilege for it is within its power to do so.”

This is a careful judgement that’s directed at the facts. In my reading of it, the Court leaves some (though perhaps limited) room to assert privilege against an opposing party in litigation even though documents make their way inadvertently to the internet and are left there because “the genie is out of the bottle.”

Federation of Newfoundland Indians Inc. v Benoit, 2020 NLCA 16 (CanLII).

Case Report – BCCA applies common interest privilege

On October 16th the British Columbia Court of Appeal applied the common interest privilege doctrine in finding that a draft legal opinion prepared for a vendor of property was immune from production despite being shared with the purchaser, its various officers and the potential financial underwriters of the proposed transaction. The opinion was about the validity of the plaintiff’s claim, which challenged the proposed transaction.

The Court explained:

The disclosures to Mr. Hotel were in the course of discussions between the solicitor for the De Graaf defendants (Mr. McEwan), the solicitor for Western (Mr. MacLean) and the solicitor for National Bank Financial. (Mr. Hotel). The interests of the clients of the three solicitors were not identical but they were common to the extent that financing of the Western exploration of the Mongolian properties was beneficial to all of them. They also shared an interest in assessing the invalidity of Maximum’s claims. Sharing the opinions in the McEwan draft was reasonably in aid of a due diligence investigation of the Maximum litigation. The chambers judge put it in terms of an ongoing interest in completing the transaction which the disclosure was designed to facilitate. In my view, that is a sufficient common interest to support the extension of the privilege. In this regard, I agree with Mr. Justice Lowry (as he then was) in Fraser Milner Casgrain LLP v. Canada (M.N.R.) 2002 BCSC 1344 (CanLII), (2002), 6 B.C.L.R. (4th) 135, 2002 BCSC 1344, relied on by the chambers judge in the quotation I have earlier included, that commercial transactions can benefit from an uninhibited exchange of legal opinions among parties allied in interest.

The Court also rejected claims of waiver based on the purchaser’s internal communications and based on “state of mind” issues pleaded in the defence.

Maximum Ventures Inc. v. De Graaf, 2007 BCCA 510.