Privilege is a legal doctrine under which certain communications, made within the context of certain relationships, will be sheltered from disclosure to any other persons. In the legal context, written and verbal communications that may be used to prove or disprove a material fact at issue in litigation must be produced for the opposition’s inspection with the exception of privileged communications. 

There are three situations in which privilege may be found to have been waived:

• Voluntary waiver;
• Implied waiver; and
• Inadvertent waiver.

In the recent case of Long v. Red Branch Investments Limited, 2022 BCCA 293, the Court of Appeal underscored that implied waiver of privilege, where found, should be construed narrowly. 

In this action the plaintiff, Red Branch, sought to overturn an earlier decision in which the defendant, Mr. Long, had obtained judgment against them in relation to a royalty to a potash property (the “Royalty Action”). Credibility was a major issue in the Royalty Action, which was resolved in Mr. Long’s favour.  This was based at least in part on the evidence of one John Darch, whom the court found to be a neutral and unbiased witness. 

In September 2017, Mr. Long sought an assessment of special costs in the Royalty Action. In support of that action his counsel produced their entire electronic file. Red Branch reviewed the file and concluded that Mr. Darch was neither neutral nor unbiased. It then sued to overturn the decision in the Royalty Action on the basis of fraud (the “Fraud Action”). 

In response, Mr. Long applied to a chambers judge for a declaration that Red Branch had, by bringing the Fraud Action, waived solicitor-client privilege over any communications or records of communications between Red Branch and its counsel in the Royalty Action up to the date of judgment.

The chambers judge declined to make the order, and Mr. Long appealed. 

The Court of Appeal agreed with the trial judge, finding that “[o]n no rational understanding of the law could the basis upon which Mr. Long relies support a finding that solicitor-client privilege had been waived over the entire litigation file”. It cited the Supreme Court of Canada decision in Goodis v Ontario (Minister of Correctional Services), 2006 SCC 31, where the Supreme Court of Canada held that communications protected by solicitor-client privilege should be disclosed only where “absolutely necessary”, applying “as restrictive a test as may be formulated short of an absolute prohibition in every case”: paras. 20-21.

The Court of Appeal reviewed the case law and reiterated that to give rise to an implied waiver, it is not enough that the party asserting privilege (1) has put its “state of mind” in issue, or that it (2) had obtained legal advice about the transaction in question. There is a necessary third element: the party (3) “must voluntarily inject into the litigation legal advice it received or its understanding of the law before waiver can be implied”, something that could be done through pleadings, evidence or argument asserting reliance on legal advice.

In this case the Court of Appeal found the third element was entirely missing. Red Branch’s pleading indicated that it discovered new evidence in the form of the solicitor’s file from Mr. Long’s counsel only after it was produced. It maintained that it could not have discovered that evidence earlier “through reasonable due diligence or otherwise”. The Court of Appeal found that assuming this raised the second element of legal advice given to Red Branch, Red Branch did not plead or otherwise state that in carrying out its due diligence it relied on legal advice or on its understanding of the law. 

Although Mr. Long argued that the plea of due diligence tied into the advice of counsel, the Court of Appeal rejected the argument that fairness required disclosure. The Court of Appeal reiterated its earlier decision in Soprema Inc v Wolrige Mahon LLP, 2016 BCCA 471, where it said at para. 53:

Where legal advice may have influenced a party’s “state of mind” on a material issue, it is inevitable that upholding the privilege will confer a litigation advantage on the party claiming it because the other would be denied access to relevant information about the opposing party’s state of mind. … But it does not follow from this that that litigation advantage is “unfair”.

The court held that a litigation advantage could not be described as “unfair” when it resulted from the recognition and protection of a fundamentally important principle in the legal system. Furthermore, protecting privilege in those circumstances did not raise an issue of inconsistency because the party asserting the privilege was not relying on the advice it received to justify its conduct at the same time as it shields that advice from disclosure.

The Court of Appeal further considered whether litigation privilege over the documents in the Royalty Action had expired. It noted that although the Royalty Action itself had ended, the litigation that gave rise to it remained pending or might reasonably be apprehended. The claim in the Fraud Action arose from the same juridical source as the Royalty Action, involved the same parties and arose from the same cause of action. Much, if not all, of the same evidence was relevant to both actions. The Court of Appeal held that in such circumstances, the underlying purpose of litigation brief privilege, namely the protection essential to the proper operation of the adversarial process, continued. The Court of Appeal further noted in obiter that proceedings that raised issues common to the initial action and shared its essential purpose would qualify for a continuation of litigation privilege as well. 

Long is a useful summary on waiver issues that might be expected to arise in professional negligence and bad faith actions.

Questions?

If you have any questions with respect to this bulletin, please contact Leilani Karr at lkarr@brownleelaw.com or at 780.497.4810.