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An Implied Waiver Is Not Enough – Trials & Appeals & Compensation



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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.

* * *

Brownlee LLP is a member of
the Canadian Litigation Counsel, a nationwide affiliation of
independent law firms .

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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