2018 FCA 51, 2018 FCA 51

A-465-16 2018 FCA 51 Iggillis Holdings Inc. and Ian Gillis ( Appellants ) v . The Minister of National Revenue ( Respondent ) and Abacus Capital Corporations Mergers and Acquisitions, the Federation of Law Societies of Canada and The Canadian Bar Association ( Interveners ) Indexed as: Iggillis Holdings Inc. v. Canada (National Revenue) Federal Court of Appeal, Webb, Boivin and Rennie JJ.A.—Edmonton, October 2, 2017; Ottawa, March 6, 2018.

Barristers and Solicitors — Solicitor-client privilege — Common interest privilege — Appeal from Federal Court decision determining that advisory common interest privilege (CIP) is not a legitimate or acceptable application of solicitor-client privilege (SCP); therefore, legal opinion at issue to be disclosed to respondent — Abacus Capital Corporations Mergers and Acquisitions (Abacus) comprised of number of corporations, partnerships, trusts; providing tax advice in relation to corporate transactions — Abacus, appellants represented by counsel — Legal memorandum indicating tax implications for transactions produced — Memo prepared by one lawyer with input from other lawyer — Each lawyer sending memo to respective clients — Following completion of transactions, respondent serving on each appellant requirement under Income Tax Act , s. 231.2(1) to produce memorandum — Federal Court noting in reasons that CIP well entrenched in Canadian law but that advisory CIP not valid constituent form of SCP; therefore having no application to facts of present case — Whether Federal Court Judge correct in finding that CIP not valid principle of law that could be applied to legal memo in this case — Legal memo comprised almost exclusively of opinions on legal effects of transactions — Legal implications of transactions matters for Court to determine — Therefore, no loss of evidence if legal memo not disclosed but only loss of inadmissible opinion on legal implications of transactions — Federal Court relying heavily on American legal article, decision of New York Court of Appeals in Ambac Assurance Corp. v.

Countrywide Home Loans Inc, which rejected application of CIP in commercial transactions — However, under Act, s. 231.7(1)(b), requirements to provide documents not applying to document protected from disclosure by solicitor- client privilege as defined in Act, s. 232(1) — In present case, Alberta, British Columbia only provinces identified as being potential provinces for purposes of solicitor-client privilege definition — Federal Court’s reasons for finding CIP not valid constituent form of solicitor-client privilege constituting general statements of policy — Cases, commentary examined here reinforcing Federal Court’s conclusion that common interest privilege strongly implanted in Canadian law, in particular in Alberta, British Columbia — Not appropriate for Federal Court to rely on New York Court of Appeals decision to overturn decisions of Alberta, British Columbia courts — Based on court decisions in Alberta, British Columbia, solicitor-client privilege not waived when opinion provided by lawyer to one party is disclosed on confidential basis to other parties with sufficient common interest in same transactions — In present circumstances, Abacus, appellants having sufficient common interest in transactions to warrant finding that, in Alberta or British Columbia, legal memo protected from disclosure by solicitor-client privilege — Appeal allowed.

Income Tax — Practice — Disclosure of documents — Solicitor-client privilege — Appeal from Federal Court decision involving requirement under Income Tax Act , s. 231.2(1) to produce legal memorandum — Under Act, s. 231.7(1)(b), requirements to provide documents to respondent not applying to document protected from disclosure by solicitor-client privilege as defined in Act, s. 232(1) — In present case, Alberta, British Columbia only provinces identified as being potential provinces for purposes of solicitor-client privilege definition — Based on Alberta, British Columbia court decisions reviewed, solicitor-client privilege not waived when opinion provided by lawyer to one party is disclosed on confidential basis to other parties with sufficient common interest in same transactions — In present case, legal memo at issue did not need to be disclosed to respondent since protected by solicitor-client privilege.

This was an appeal from a Federal Court decision determining that advisory common interest privilege (CIP) is not a legitimate or acceptable application of solicitor-client privilege (SCP) and therefore, the legal opinion at issue was to be disclosed to the respondent. This appeal raised the issue of whether SCP continues to apply to a legal opinion that is disclosed to a person who is not the client of the lawyer who wrote the opinion but is involved in common transactions with the client of that lawyer.

Abacus Capital Corporations Mergers and Acquisitions (Abacus) is comprised of a number of corporations, partnerships and trusts. It provides tax advice in relation to corporate transactions. Abacus and the appellants were represented by counsel. As a result of various discussions between counsel for each side of the transactions, the proposed transactions were finalized and summarized in a series of charts.

As well, a legal memorandum which indicated for each step in the series of transactions the implications that, in the opinion of the authors of the memo, would arise under the applicable taxing statutes, was produced. The memo was prepared by one of the lawyers with input from the other. Each lawyer sent the memo to their respective clients. Following the completion of the transactions, the respondent served two requirements (the requirements) under subsection 231.2(1) of the Income Tax Act to produce this memorandum— one on each appellant. The memorandum was marked “ PRIVILEGED & CONFIDENTIAL ”.

The legal memo was sent to Abacus and the appellants. In its reasons, the Federal Court noted that CIP is well entrenched in Canadian law but then stated that advisory CIP is not a valid constituent form of SCP and therefore had no application to the facts of this case. The reasons were essentially centered around two concerns—the concern that the Court have all of the relevant evidence and the decision of the New York Court of Appeals in Ambac Assurance Corp. v. Countrywide Home Loans Inc , which quoted an American legal

article on the subject of SCP in an allied lawyer setting. The issue was whether the Federal Court Judge was correct in finding that CIP is not a valid principle of law that could be applied to the

legal memo in this case. Held, the appeal should be allowed. The legal memo is comprised almost exclusively of opinions on the legal effects of the transactions. The legal implications of thetransactions are matters for the Court to determine. Whether a particular

section of a taxing statute will apply or how it will apply is not amatter that is to be determined based on opinion evidence presented during a hearing. Therefore, there would be no loss of evidence ifthe legal memo were not disclosed but only a loss of an inadmissible opinion on the legal implications of the transactions. The Federal Court Judge relied heavily on the legal

article and the majority decision in Ambac, which rejected the application of CIP incommercial transactions. However, as provided in paragraph 231.7(1)(

b) of the Act, the requirements to provide documents do not applyto a document that is protected from disclosure by solicitor-client privilege as defined in subsection 232(1) of that Act. In this case, theonly provinces that were identified as being potential provinces for the purposes of this definition of solicitor-client privilege wereAlberta and British Columbia. Therefore, the question was whether a superior court in Alberta or British Columbia would find that thelegal memo was protected from disclosure by solicitor-client privilege.

The Federal Court Judge’s stated reasons for finding thatcommon interest privilege is not a valid constituent form of solicitor-client privilege were, to a large extent, general statements of policy.Cases and commentary examined here reinforced the Federal Court’s conclusion that common interest privilege is strongly implanted inCanadian law and around the common-law world and, in particular, in Alberta and British Columbia, which were the relevant provincesfor the definition of solicitor-client privilege in subsection 232(1) of the Act in this case.

It was therefore not appropriate for the FederalCourt Judge to rely on the decision of the New York Court of Appeals to effectively overturn the decisions of the Alberta and BritishColumbia courts. Based on the decisions of the courts in Alberta and British Columbia, solicitor-client privilege is not waived when an opinion providedby a lawyer to one party is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions.

Inthe circumstances of this case, Abacus and the appellants had sufficient common interest in the transactions to warrant a finding that, inAlberta or British Columbia, the legal memo was protected from disclosure by solicitor-client privilege. STATUTES AND REGULATIONS CITED Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 231.2(1), 231.7(1)(b), 232(1) “solicitor-client privilege”. CASES CITED APPLIED: Solosky v. The Queen, (SCC), [1980] 1 S.C.R. 821, (1979),105 D.L.R. (3d) 745; Maximum Ventures Inc. v. De Graaf,2007 BCCA 510, 409 W.A.C. 215; Milner et al. v.

Minister of National Revenue, 2002 BCSC 1344, 57 D.T.C. 5048; Pitney Bowes ofCanada Ltd. v. Canada, 2003 FCT 214, 225 D.L.R. (4th) 747. CONSIDERED: Ambac Assurance Corp. v. Countrywide Home Loans Inc., 36 N.Y.S. 3d 838, 27 N.Y. 3d 616 (Ct. App. 2016); Derco Industries Ltd. v.A.R. Grimwood Ltd., [1984] B.C.J. No. 1894 (QL) (C.A.), 1984 CarswellBC 1498 (WLNext Can.); Syrek v. Canada, 2009 FCA 53, 2009D.T.C. 5063. REFERRED TO: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.

AUTHORS CITED Giesel, Grace M. “End the Experiment: The Attorney-Client Privilege Should Not Protect Communications in the Allied LawyerSetting” (2011–2012), 95 Marq. L. Rev. 475. Lederman, Sydney N., John Sopinka and Alan W. Bryant. The Law of Evidence in Canada, 4th ed. Markham, Ont.: LexisNexis, 2014. APPEAL from a Federal Court decision (2016 FC 1352, [2017] 4 F.C.R. 80) determining that advisory common interest privilege wasnot a legitimate or acceptable application of solicitor-client privilege and therefore, the legal opinion at issue was to be disclosed to therespondent. Appeal allowed.

APPEARANCES Joel A. Nitikman for appellants and intervener Abacus Capital Corporation Mergers and Acquisitions. Margaret McCabe and Henry Gluch for respondent. Michael Feder, Q.C. and Patrick Williams for intervener Federation of Law Societies of Canada. Mark Tonkovich and Jacques Bernier for intervener The Canadian Bar Association. SOLICITORS OF RECORD Dentons Canada LLP, Vancouver, for appellants and intervener Abacus Capital Corporation Mergers and Acquisitions. Deputy Attorney General of Canada for respondent.

McCarthy Tétrault LLP , Vancouver, for intervener Federation of Law Societies of Canada. Baker & McKenzie LLP , Toronto, for intervener The Canadian Bar Association. The following are the reasons for judgment rendered in English by [ 1 ] Webb J.A. : This appeal raises the issue of whether solicitor-client privilege continues to apply to a legal opinion that is disclosed to a person who is not the client of the lawyer who wrote the opinion but who is involved in common transactions with the client of that lawyer. The Federal Court Judge ( 2016 FC 1352 , [2017] 4 F.C.R. 80 ) found: (

a) at paragraph 72 of his reasons, that “the memo is legal advice provided by the lawyers to their clients in the strictest confidence and protected from disclosure under SCP [solicitor-client privilege] subject to whether the privilege has been waived or is protected by CIP [common interest privilege]”; and (

b) at paragraph 300 of his reasons, that “advisory CIP is not a legitimate or acceptable application of solicitor-client privilege” and, therefore the legal opinion was to be disclosed to the Minister of National Revenue (Minister). [ 2 ] For the reasons that follow I would allow the appeal. I. Background [ 3 ] Abacus Capital Corporations Mergers and Acquisitions (Abacus) is comprised of a number of corporations, partnerships and trusts. It provides tax advice in relation to corporate transactions. Any tax saving arising from its advice is shared by the persons who use its services.

In this case, Abacus structured a series of transactions which resulted in an Abacus entity acquiring the shares of the corporations that had been held by IGGillis Holdings Inc. and Ian Gillis (collectively, Gillis). [ 4 ] Abacus was represented by Joel Nitikman of Fraser Milner Casgrain LLP (now Dentons Canada LLP) and Gillis was represented by Richard Kirby of Felesky Flynn LLP. As a result of various discussions between counsel for each side of the transaction, the proposed transactions were finalized and summarized in a series of charts.

Joel Nitikman (with input from Richard Kirby) produced a memorandum which indicated for each step in the series of transactions the implications that, in the opinion of the authors of the memo, would arise under the applicable taxing statutes. Following the completion of the transactions the Minister served two requirements (the requirements) under subsection 231.2(1) of the Income Tax Act , R.S.C., 1985 (5th Supp.), c. 1, to produce this memorandum—one on IGGillis Holdings Inc. and the other on Ian Gillis.

The only counsel who appeared at the hearing of this appeal for Abacus and Gillis was Joel Nitikman. [ 5 ] Following the hearing of this appeal, two documents were delivered to this Court in a sealed envelope—a copy of 18 pages of diagrams showing, what would then have been, the proposed transactions and a memorandum which identified each step illustrated in the charts and provided the opinion with respect to the implications of that step. The 18-page series of diagrams illustrating the transactions only contain minimal legal advice.

Although both documents were in the envelope it is far from clear whether privilege is claimed for both. The Federal Court Judge noted, in paragraph 66 of his reasons, that “[w]hile the diagrams depicting the transactions might not be said to be privileged, I understand that this information is known to the Minister”. Certainly the Minister has the right to know what transactions were completed by taxpayers.

The transactions that have been completed would have been disclosed in filings and documents available to the Minister and therefore, the transactions themselves would no longer be considered confidential vis-a-vis the Minister. [ 6 ] In paragraph 3 of their memorandum of fact and law, Abacus and Gillis indicate that the “Memo” which is the subject of this appeal, is the memorandum in which the lawyers opine “on how to buy the shares in the most tax-efficient manner”.

While there are a few notations of the application of provisions of the Income Tax Act on some of the diagrams, the memorandum is the more detailed explanation of the opinions of the lawyers. As well, the memorandum is marked “ PRIVILEGED & CONFIDENTIAL ” but there is no similar notation on the diagrams. [ 7 ] The focus of the Federal Court was on the memorandum marked “ PRIVILEGED & CONFIDENTIAL ” in which the opinions on the legal implications of the transactions are expressed. In this appeal the focus continued to be on this memorandum.

In these reasons this memorandum will be referred to as the Abacus memo. [ 8 ] In paragraph 69 of his reasons, the Federal Court Judge stated that: “[t]he content of the memo is almost exclusively advice describing the legal effects in terms of each step in the transaction”. I agree with this description of the Abacus memo.

The Federal Court Judge also found in paragraph 45 that “[t]he legal advice culminates in the Abacus memo, which is primarily the work product of Abacus, based on its significant experience in similar transactions, but with the contribution of the respondents’ lawyer, at least as depicted in the disclosed emails” and in paragraph 68 that “the Abacus memo was the fruit of cooperative efforts of both lawyers who were highly experienced in the legal considerations of income tax and related commercial law subjects”. [ 9 ] The Abacus memo was sent to Abacus and Gillis.

Gillis was not the client of Joel Nitikman and Abacus was not the client of Richard Kirby. II. Decision of the Federal Court [ 10 ] The Minister argued that there was no common interest as between Abacus and Gillis as they were on the opposite sides of the proposed transactions. However, the Federal Court Judge [at paragraph 83] rejected this argument: I do not agree with this submission.

While it is true that the parties to a purchase and sale agreement are generally adverse in interest, when they are working cooperatively to reduce taxes payable on the sale of shares, the two parties share a common interest with regard to that legal issue. The Abacus memo related only to that issue because legal opinions drove the transaction. This is similar to the facts in Pitney Bowes [ Pitney Bowes of Canada Ltd. v. Canada , 2003 FCT 214 , 225 D.L.R. (4th) 747], where at paragraph 4 it was noted that

“multiple parties needed legal advice in areas where their interests were not adverse” and for the goal of “[h]aving the transactionconcluded” [at paragraph 16]. [11] The Federal Court Judge also noted [at paragraph 91] that common interest privilege is well entrenched in Canadian law: Besides, more recent American jurisprudence (see e.g.

Shipyard Associates; Teleglobe) has recognized CIP in circumstances almostidentical to those in this matter, which I do not need to describe, inasmuch as I accept the respondents’ argument that CIP in transactionalcircumstances is strongly implanted in Canadian law and indeed around the common-law world. [12] However, immediately after acknowledging that common interest privilege “is strongly implanted in Canadian law and indeedaround the common-law world” he stated [at paragraph 92] that, essentially in his view, this was not correct: Despite the Court’s acknowledgment of the challenge it faces in terms of the recognized stature of CIP, it nevertheless is very strongly ofthe view that CIP is not a valid component of SCP doctrine for the reasons that follow in the next section. [13] In paragraph 298 of his reasons the Federal Court Judge set out a number of

summary points that, in his view, supported hisfinding that “[a]dvisory CIP is not a valid constituent form of SCP and therefore has no application to the facts of this case”. [14] Although lengthy, the Federal Court Judge’s reasons are essentially centered around two concerns—the concern that the Courthave all of the relevant evidence and the decision of the New York Court of Appeals in Ambac Assurance Corp. v. Countrywide HomeLoans Inc., 36 N.Y.S. 3d 838 (Ct. App. 2016) (Ambac). The Federal Court Judge also referred extensively to the

article by ProfessorGrace M. Giesel of the University of Louisville’s Brandeis School of Law (“End the Experiment: The Attorney-Client Privilege ShouldNot Protect Communications in the Allied Lawyer Setting” (2011–2012), 95 Marq. L. Rev. 475 (the Giesel article.)). The Giesel articlewas quoted in Ambac. III. Issue [15] The issue in this appeal is whether the Federal Court Judge was correct in finding that common interest privilege is not a validprinciple of law that could be applied to the Abacus memo in this case. Since this is a question of law, the standard of review iscorrectness (Housen v.

Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235). IV. Analysis [16] In Solosky v. The Queen, (SCC), [1980] 1 S.C.R. 821, at page 837, (1979),105 D.L.R. (3d) 745, at page 758, theSupreme Court set out the general criteria that must be met for a document to be privileged: As Mr. Justice Addy notes, privilege can only be claimed document by document, with each document being required to meet the criteriafor the privilege—(

i) a communication between solicitor and client; (ii) which entails the seeking or giving of legal advice; and (iii)which is intended to be confidential by the parties…. [17] The Abacus memo entails the giving of legal advice. The Abacus memo was largely prepared by Joel Nitikman with input fromRichard Kirby. Each lawyer sent the memo to their respective clients.

Therefore, the opinions expressed by Joel Nitikman werecommunicated by him to his client (Abacus) and the opinions of Richard Kirby were communicated by him to his client (Gillis).Therefore, the first two criteria, as set out above, are satisfied in this case.

The issue, in this appeal, relates to the third criterion—confidentiality. [18] The Federal Court Judge found, at paragraph 72 of his reasons, that the Abacus memo was subject to solicitor-client privilege,subject only to whether privilege had been waived or common interest privilege would result in the memo remaining privileged: I conclude, therefore, that the memo is legal advice provided by the lawyers to their clients in the strictest confidence and protected fromdisclosure under SCP [solicitor-client privilege] subject to whether the privilege has been waived or is protected by CIP. [19] I agree with this conclusion.

If Joel Nitikman would have written one opinion for Abacus and this opinion was shared with Gillis,this opinion would have been privileged when communicated to Abacus and the issue would be whether the communication to Gilliswould result in a loss of that privilege. If Richard Kirby would also have written a separate opinion for Gillis and this opinion was sharedwith Abacus, that opinion would also be privileged when communicated to Gillis and the issue would be whether the communication toAbacus would result in a loss of that privilege.

In my view, the result should not be different because a single opinion was preparedbased on input from the two lawyers. When dealing with a statute as complex as the Income Tax Act, it may well be more efficient andthe interests of the respective clients may well be better served if the lawyers collaborate on the opinion that is to be provided in relationto the application of that statute to the series of transactions to be completed by the parties. [20] At one time if a privileged document was disclosed to a third party, privilege in that document was lost regardless of how it wasdisclosed to that third party.

In Derco Industries Ltd. v. A.R. Grimwood Ltd., [1984] B.C.J. No. 1894 (QL) (C.A.), 1984 CarswellBC1498 (WLNext Can.), Justice Esson of the British Columbia Court of Appeal in Chambers noted [at paragraph 3] that there were “anumber of authorities in support of the principle that once a privileged document is disclosed in any way to a third party, that is a thirdparty to the privilege, the privilege is lost”. However, this case was cited by the British Columbia Court of Appeal in the subsequent caseof Maximum Ventures Inc. v.

De Graaf, 2007 BCCA 510, 409 W.A.C. 215 (Maximum Ventures), where that Court held, at paragraph 14(which is cited below), that privilege was not lost when an opinion was disclosed to another party with a common interest in completingthe transactions. [21] The views of the British Columbia Court of Appeal that disclosure to third parties did not automatically result in a loss ofprivilege are consistent with the conclusion of the Federal Court Judge that common interest privilege has been applied in many commonlaw jurisdictions to maintain privilege over opinions of counsel that are disclosed to other parties with a common interest in completingtransactions to which the privilege relates.

[22] Although the Federal Court Judge found, in paragraph 91 of his reasons, that common interest privilege “in transactionalcircumstances is strongly implanted in Canadian law and indeed around the common-law world”, he found that it is not a valid principleof law. As noted above in paragraph 14, two recurring themes appear to dominate in his reasons—the potential loss of evidence if theAbacus memo is not disclosed and the decision of the New York Court of Appeals in Ambac which referred to the Giesel article. A.

Evidence [23] The concern about the ability of the Court to have all of the relevant evidence if the Abacus memo is not disclosed is raised inparagraphs 14, 17, 120, 153, 156, 162, 194, 195, 198, 223, 224, 233, 239–242, 245, 261, 262, 289, 290, 296, and 298 of the FederalCourt Judge’s reasons. [24] As noted above, in paragraph 69 of his reasons, the Federal Court Judge stated that: “[t]he content of the memo is almostexclusively advice describing the legal effects in terms of each step in the transaction”. [25] The question which would then arise is whether the advice describing the legal effects of the transactions would be evidence thatwould be admissible in Court. [26] In Syrek v.

Canada, 2009 FCA 53, 2009 D.T.C. 5063, Justice Nadon, writing for this Court, addressed the admissibility of a legalopinion on an issue of domestic law that was to be determined by the Court [at paragraphs 28–30]: The questions asked of Ms. Ashenbrenner and the answers she provided in regard thereto were clearly directed, in my respectful view, toan issue of law which the Judge had to decide. It is trite law that questions of law are not questions in respect of which courts will admitopinion evidence. In The Law of Evidence in Canada, John Sopinka & Sidney N. Lederman & Alan M.

Bryant, 2d ed. (Toronto andVancouver: Butterworths) at page 640, paragraph 12.83, the learned authors say: Questions of domestic law as opposed to foreign law are not matters upon which a court will receive opinion evidence. In support of the above proposition, the learned authors refer to the decision of the Ontario Court of Appeal in R. v. Century 21 RamosRealty Inc. (1987), (ON CA), 58 O.R. (2d) 737 at 752, where the Court stated the principle as follows: It was a question of law for the judge as to what constitutes an appropriation.

It was for the judge to determine, in compliance with thelegal definition, if and when an appropriation took place. This was not something on which an expert witness could give evidence. Consequently, it was wrong for the Judge to rely, even if only in part, on the opinion of Ms. Ashenbrenner with respect to whether theAgreement was enforceable or whether the appellant was bound by its terms. [27] As noted by the Federal Court Judge the Abacus memo is comprised almost exclusively of opinions on the legal effects of thetransactions. There are no opinions on foreign law in the Abacus memo.

The legal implications of the transactions are matters for theCourt to determine. Whether a particular

section of a taxing statute will apply or how it will apply is not a matter that is to be determinedbased on opinion evidence presented during a hearing. Therefore, in my view, there is no loss of evidence if the Abacus memo is notdisclosed. There is only a loss of an inadmissible opinion on the legal implications of the transactions. The parties would each have theopportunity to argue at a particular hearing how the various provisions of the applicable taxing statutes will apply. B. The Giesel

Article and the Ambac Decision [28] The Federal Court Judge relied heavily on the Giesel

article and the Ambac decision. The Federal Court Judge referred to eitherthe Giesel

article or the Ambac decision in paragraphs 10, 21–26, 28, 77, 93, 95, 98, 100, 103, 106, 107, 109, 110, 117, 119, 126, 128,130, 131, 136, 145, 149, 155, 162, 174, 175, 177–180, 196, 197, 200–205, 211, 212, 216, 219, 221, 225, 226, 231, 234, 235, 246–248,250, 254, 257, 277, and 286 of his reasons. The large number of references to the Giesel

article or the Ambac decision illustrate theimportance of this

article and this case to his decision. Both the Giesel

article and the majority of the judges of the New York Court ofAppeals in Ambac reject the application of common interest privilege in commercial transactions. [29] However, as provided in paragraph 231.7(1)(

b) of the Income Tax Act, the requirements do not apply to a document that isprotected from disclosure by solicitor-client privilege as defined in subsection 232(1) of that Act. This definition is as follows:

Definitions 232 (1) … … solicitor-client privilege means the right, if any, that a person has in a superior court in the province where the matter arises to refuse todisclose an oral or documentary communication on the ground that the communication is one passing between the person and theperson’s lawyer in professional confidence, except that for the purposes of this

section an accounting record of a lawyer, including anysupporting voucher or cheque, shall be deemed not to be such a communication. (privilège des communications entre client et avocat)[Emphasis added.] [30] In this case, the only provinces that were identified as being potential provinces for the purposes of this definition of solicitor-client privilege were Alberta and British Columbia. Therefore, the question is whether a superior court in Alberta or British Columbiawould find that the Abacus memo is protected from disclosure by solicitor-client privilege.

The question is not whether the New YorkCourt of Appeals or the Court of any other state in the United States would find that the Abacus memo was protected from disclosure bysolicitor-client privilege. [31] The Federal Court Judge’s stated reasons for finding that common interest privilege is not a valid constituent form of solicitor-

client privilege in paragraph 298 of his reasons are, to a large extent, general statements of policy. However, the issue in this case iswhether under the law applicable in British Columbia and Alberta, the Abacus memo would be subject to solicitor-client privilege.

Theissue is not what, in the opinion of the Federal Court Judge, the law should be based on certain policy concerns as identified by him. [32] In Maximum Ventures, the British Columbia Court of Appeal stated [at paragraph 14] that: Recent jurisprudence has generally placed an increased emphasis on the protection from disclosure of solicitor-client communications,including those shared in furtherance of a common commercial interest. In the instant case the McEwan draft was produced within therecognized solicitor-client privileged relationship.

The common interest privilege issues arise in response to a plea of waiver of thatprivilege. The common interest privilege is an extension of the privilege attached to that relationship. The issue turns on whether thedisclosures were intended to be in confidence and the third parties involved had a sufficient common interest with the client to supportextension of the privilege to disclosure to them. In my view, the ambit of the common interest privilege is aptly summarized in theSopinka on evidence 2d ed., Supp. of 2004 @ p. 133 which cites the case of Pitney Bowes of Canada Ltd. V.

Canada (2003), 225 D.L.R. (4th) 747, 2003 FCT 214 quoted by the chambers judge at para. 31 of his reasons. Where legal opinions are shared by parties withmutual interests in commercial transactions, there is a sufficient interest in common to extend the common interest privilege to disclosureof opinions obtained by one of them to the others within the group, even in circumstances where no litigation is in existence orcontemplated. [Bold in original.] [33] In Maximum Ventures, the opinion was first prepared by one lawyer and then shared with persons who were not his client.

TheBritish Columbia Court of Appeal adopted the Chambers judge’s description of the interest of the parties with whom the opinion wasshared as “an ongoing interest in completing the transaction which the disclosure was designed to facilitate” and then found that thisinterest “is a sufficient common interest to support the extension of the privilege” (Maximum Ventures, at paragraph 16). In the presentcase, different versions of the Abacus memo were shared between the lawyers and their clients and the Abacus memo was finalizedbased on input from both lawyers.

The preparation of one opinion based on input from lawyers representing the different parties to thetransactions is not sufficient to distinguish this case from Maximum Ventures. In each case (Maximum Ventures and this case) theopinions provided by a lawyer to his or her client are shared with other persons who have a common interest in the transactions. [34] In my view, based on Maximum Ventures, the disclosure of the Abacus memo to the other parties to the proposed transactionwould not result in a finding that privilege had been waived.

Communication of the Abacus memo was strictly limited to the other partiesto the transaction and their counsel and therefore remained confidential. [35] In Milner et al. v. Minister of National Revenue, 2002 BCSC 1344, 57 D.T.C. 5048 (Fraser Milner Casgrain LLP), the BritishColumbia Supreme Court held that the documents disclosed by Fraser Milner Casgrain to persons who were not their clients but whowere interested in completing certain transactions with their clients retained their status as privileged.

The Court [at paragraphs 7–8]referred to the cases that were relied upon by Fraser Milner Casgrain (the petitioners): The petitioners maintain the privilege attached to the documentation was not waived when it was disclosed to Group B because thedisclosure was made to facilitate the common interest the two groups of companies shared in having the transaction successfullycompleted. They rely on Archean Energy Ltd. v. Canada (MNR) (1997), (AB KB), 202 A.R. 198 (Alta. Q.B.),Anderson Exploration Ltd. v. Pan-Alberta Gas Ltd. (1998), 1998 ABQB 455 , 10 W.W.R. 633 (Alta. Q.B.) and St. JosephCorp. v.

Canada (Public Works and Government Services), 2002 FCT 274 , [2002] F.C.J. No. 361 (T.D.). In Archean Energy, legal opinions concerning the tax consequences of a number of share purchases were developed for one companywhich subsequently provided them to a second company, the purchaser in the transactions. The opinions were held, on application by thepurchaser under the Income Tax Act, to be privileged because they had been provided to further the common interest of having thetransaction concluded and not with the intent of waiving the privilege attached.

In Anderson Exploration, two corporations exchangedconfidential documents of a proprietary nature in negotiating a merger. A legal opinion obtained by one was also given to the other.Later, in unrelated litigation involving a subsidiary of one of the corporations, the plaintiff sought access to the documents arising fromthe merger negotiations. The court held that the disclosure of the documents to third parties did not waive the privilege that attached toall of the documentation because of the common interest associated with their disclosure. And in St.

Joseph, legal opinions exchanged inthe course of a commercial transaction were held to be privileged given that the parties had a joint interest in ensuring its completion.[Emphasis in original.] [36] Two of the cases referred to above were from Alberta. Therefore, there is no distinction between the law of Alberta and BritishColumbia in relation to the issue of common interest privilege. [37] The Federal Court in Pitney Bowes of Canada Ltd. v.

Canada, 2003 FCT 214, 225 D.L.R. (4th) 747 relied on Fraser MilnerCasgrain LLP in finding that certain opinions that were shared with other parties who had an interest in certain transactions remainedprivileged. [38] The existence of common interest privilege is also recognized in Sopinka, Lederman and Bryant: The Law of Evidence inCanada, 4th ed. by Lederman, Bryant and Fuerst, (Markham, Ont.: LexisNexis, 2014), at pages 975–976: §14.156 There may well be “common interest privilege” available in circumstances where no litigation is in existence or evencontemplated.

In commercial transactions, legal opinions are often disclosed and shared among various parties to the transaction who allhave a common interest in the successful completion of the transaction. In certain commercial transactions, this sharing of opinions is forthe purpose of putting the parties on an equal footing during negotiations and in that sense the opinions are for the benefit of multipleparties even though the opinions may have been prepared for a single client.

The parties in those circumstances would expect that theopinions would remain confidential as against outsiders and that mere disclosure in that context would not necessarily result in theprivileged status of the legal opinions being lost. [Footnote omitted.] [39] The cases cited for this proposition are Maximum Ventures and Pitney Bowes.

[ 40 ] These cases and the commentary in The Law of Evidence in Canada reinforce the conclusion of the Federal Court Judge [at paragraph 91] that common interest privilege “is strongly implanted in Canadian law and indeed around the common-law world” and in particular in Alberta and British Columbia which are the relevant provinces for the definition of solicitor-client privilege in subsection 232(1) of the Income Tax Act , in this case.

It was therefore not appropriate for the Federal Court Judge to rely on the decision of the New York Court of Appeals to effectively overturn the decisions of the Alberta and British Columbia courts. [ 41 ] Based on the decisions of the courts in Alberta and British Columbia, solicitor-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. [ 42 ] As noted above, when dealing with complex statutes such as the Income Tax Act , sharing of opinions may well lead to efficiencies in completing the transactions and the clients may well be better served as the application of the Income Tax Act will be of interest to all of the parties to the series of transactions.

In my view, in the circumstances of this case, Abacus and Gillis had sufficient common interest in the transactions to warrant a finding that, in Alberta or British Columbia, the Abacus memo is protected from disclosure by solicitor-client privilege. V. Conclusion [ 43 ] As a result, I would allow the appeal and set aside the judgment of the Federal Court, with costs here and in the Federal Court. Issuing the judgment that the Federal Court should have rendered, I would dismiss the application of the Minister to enforce the requirements as they relate to the Abacus memo. Boivin J.A. : I agree.

Rennie J.A. : I agree.