Candice Chan-Glasgow

Director, Document Review Services

March 27, 2018


In Iggillis Holdings Inc. v. Canada (National Revenue), 2018 FCA 51 (CanLII), a highly anticipated decision released earlier this month, the Federal Court of Appeal overturned a Federal Court decision which found that common interest privilege “is not a legitimate or acceptable application of solicitor-client privilege”.


In this case, Abacus Capital (“Abacus”) structured a series of transactions to acquire the shares of the corporations that were previously held by IGGillis Holdings Inc. and Ian Gillis (collectively, “Gillis”).  Abacus’ lawyer, with input from Gillis’ lawyer, prepared a memorandum outlining the steps to purchase the shares in the most tax-efficient manner (the “Abacus Memo”).  The lawyers sent the Abacus Memo to their respective clients.  Following the transactions, the Minister of National Revenue served IGGillis Holdings and Ian Gillis with requirements under subsection 231.2(1) of the Income Tax Act to produce the Abacus Memo (the “Requirements”).


The Federal Court judge found that the Abacus memo was subject to solicitor-client privilege, subject, however, to a further determination as to whether the privilege had been waived and, if so, whether it would remain protected by common interest privilege.  The Federal Court judge then held that waiver had occurred and that common interest privilege, while “strongly implanted in Canadian law”, was not a valid principle of law (largely based on the New York Court of Appeals decision Ambac Assurance Corp. v. Countrywide Home Loans Inc., 36 N.Y.S.3d 838 (Ct. App., 2016) and did not cure the waiver of privilege.


The Federal Court of Appeal determined that the Federal Court judge’s stated reasons for finding that common interest privilege was not a valid principle of law were largely based on “general statements of policy”.  Writing for the court, Justice Webb held that it was “not appropriate for the Federal Court judge to rely on the decision of the New York Court of Appeals to effectively overturn decisions of the Alberta and British Columbia courts”.


Justice Webb cited Maximum Ventures Inc. v. De Graaf, 2007 BCCA 510 (CanLII) to find that disclosure of the Abacus Memo to other parties to the proposed transaction would not result in a waiver of privilege.  He went on to conclude that:


“[S]olicitor-client privilege is not waived when an opinion provided by a lawyer to one party is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions.  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.  In each case, the solicitor-client privilege that applies to the communication by the lawyer to his or her client of a legal opinion is not waived when that opinion is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions.”


In the result, the appeal was allowed, and the Minister’s application to enforce the Requirements was dismissed.