Issues of Privilege: Scott & Associates Engineering Ltd. v. Ghost Pine Windfarm, LP

The decision of the Alberta Court of Queen’s Bench in Scott & Associates Engineering Ltd. v. Ghost Pine Windfarm, LP addressed a variety of issues respecting the assertion of privilege by the respondents, Ghost Pine Windfarm, LP and Fortuna GP Inc. (collectively, Ghost Pine), over redacted portions of otherwise producible documents and, in particular, the redacted portions of an Asset Purchase Agreement (APA). An application was brought by the applicant Scott & Associates Engineering Ltd. (SAEL), challenging the validity of such redactions, and it was argued that even if the privilege claimed was proper, such privilege was displaced due to the operation of the fraud exception to privilege, and because Ghost Pine’s state of mind was at issue.

Ghost Pine and Finavera Renewables Inc. (Finavera) entered into the APA for the purchase of a wind farm project (the Ghost Pine Project). Prior to the parties’ entry into the APA, SAEL had commenced litigation against Finavera, the basis of which was SAEL’s alleged interest in the Ghost Pine Project. This litigation was ongoing at the time at which Ghost Pine and Finavera entered into the APA.

After Ghost Pine purchased the Ghost Pine Project, SAEL commenced litigation against, inter alia, Ghost Pine. In the course of this litigation, Ghost Pine disclosed a redacted version of the APA to SAEL, where such redactions were made by Ghost Pine, on the basis of common interest privilege based on either litigation privilege or solicitor-client privilege.

SAEL challenged, inter alia, the validity of the privilege claimed by Ghost Pine over the redacted portions of the APA.

McCarthy Tétrault Notes

Ghost Pine was successful in maintaining its claim of common interest privilege over all of the redactions in the APA.

Mahoney J.’s comments, on the application of common interest privilege to commercial transactions and the exchange of information that is subject to solicitor-client privilege in the context of such transactions, are noteworthy. Mahoney J. noted that, in Alberta, common interest privilege has been extended past the litigation context, and applied to parties that have a common interest in bringing a commercial transaction to a successful completion. In this context, for common interest privilege to apply, there must be an expectation between the parties that their communication was confidential.

Mahoney J. accepted that in commercial transactions, common interest privilege could be based on litigation privilege. He then reviewed the law, regarding the possible extension of common interest privilege to information, which is subject to solicitor-client privilege that is exchanged in the course of a commercial transaction. In this regard, he quoted from a Federal Court Trial Division decision, in which it was held that legal opinions exchanged in the course of a commercial transaction could be covered by common interest privilege, based on solicitor-client privilege where the purpose of such legal opinions was to put the parties to the transaction on an equal footing during negotiations, and were for the benefit of multiple parties.

In his decision, Mahoney J. affirmed Ghost Pine’s claim of common interest privilege based on solicitor-client privilege over certain redactions in the APA. In coming to this decision, Mahoney J. noted the redacted information was subject to solicitor-client privilege, and was directly related to the formulation and provision of legal advice by Finavera’s counsel to the parties regarding the purchase and sale of the Ghost Pine Project, and that the parties intended such communication to remain confidential. Furthermore, because of the operation of common interest privilege, Finavera’s disclosure to Ghost Pine of information that was subject to solicitor-client privilege did not result in a waiver of such privilege.

This decision reaffirms the importance of privilege and the extension, in certain circumstances, of common interest privilege to information subject to solicitor-client privilege that is exchanged between parties in the course of a commercial transaction.