Waiver of Privilege: The Danger of Pleading Lack of Informed Consent
In a case that highlights the importance of carefully drafted pleadings, the Alberta Court of Appeal recently split over the question of whether pleading a lack of informed consent to an agreement resulted in the waiver of privilege over legal advice received during the negotiation of that agreement. In Goodswimmer v Canada (Attorney General), the majority of the Court of Appeal found that the appellant had waived solicitor-client privilege by voluntarily placing its reliance on legal advice into issue in its Statement of Claim and by selectively disclosing certain privileged communications. The dissenting Justice engaged in an interesting analysis of the requirements to imply a waiver of privilege and would have characterized the appellant’s claim in a way that would not put the content of the legal advice that it received into issue.
Background and Decision Below
In 1990, the Sturgeon Lake Indian Band entered into a Treaty Land Entitlement Agreement with the Crown in order to resolve some or all of its land claims. The Band was assisted by two law firms and the Agreement contained a clause acknowledging the Band’s receipt of independent legal advice.
In 1997, a new action for additional treaty claims was filed on behalf of the Band. The claim included allegations that the Crown obtained the Band’s consent to the 1990 Agreement without fully informing the Band of the impact of the Agreement on its members’ rights.
The Band’s document production included 150 records involving communications with its external solicitors. The Crown also produced a draft account from the Band’s law firm, which detailed services provided to the Band in connection with the Agreement.
During discovery Questioning, the Crown requested 13 undertakings relating to the activities of the Band’s lawyers before and after the signing of the Agreement. The Band objected on the basis of solicitor-client privilege.
The Case Management Judge ordered the undertakings to be answered. She found that the Band had voluntarily put its legal knowledge into issue by pleading a lack of informed consent to the Agreement, which had been entered into with the benefit of legal advice, and that “it would be unfair to permit a party who had set up a claim based on privileged communications to preclude his opponent from discovering against that claim by relying upon privilege.”
The Band appealed, including on the grounds that the undertakings were not relevant and material to the claims advanced and that solicitor-client privilege had not been waived.
The Majority Decision
The majority of the Court of Appeal held that a party wishing to establish a waiver of privilege must show that: (i) the presence or absence of the legal advice is material to the lawsuit; and (ii) the party who received the legal advice made the receipt of it an issue in the claim or defence.
Justices Rowbotham and Wakeling rejected the appellant’s argument that it did not specifically plead “legal advice” in its claim. The Court found that the Band voluntarily placed into issue the information that it had when it entered into the Agreement, including legal advice, by asserting that its consent was not informed:
"The appellants say that as they did not specifically plead the 'legal advice', they did not put it into issue. In our view, this submission treats the issue too narrowly. A significant aspect of this case concerns the enforceability of the Agreement. The issue raised by the pleadings is whether the appellants’ consent to the Agreement, including the release, was informed. In other words, what information did the appellants have at the relevant time? The appellants had legal advice before they signed the Agreement. The respondents rely upon the Agreement in defence of the allegations in the amended statement of claim, and upon the clause in the Agreement that specifically states that the appellants had legal advice."
In addition, the majority found that the Band had already disclosed some documents relating to that legal advice and it would be unfair to permit selective waiver of privilege.
The majority therefore upheld the Case Management Judge’s conclusion that solicitor-client privilege had been waived, and dismissed the appeal.
In his dissent, Justice O’Ferrall found that the Case Management Judge misapprehended the pleadings, perhaps due to an “unfortunate” choice of words by the Band’s lawyers. On his analysis, he found that the Band’s real allegation was that its lack of consent was caused by the Crown’s failure to inform it of material facts during the negotiation of the Agreement.
In his view, the Band did not assert its reliance on legal advice. It was the Crown that sought to rely on the Agreement, and the Band’s anticipatory pleadings could not have the effect of waiving privilege. It may be that the Crown could use the acknowledgement of legal advice clause as a complete answer to the Band’s failure to inform allegation, in which case the content of that legal advice would be irrelevant and there would be no need to imply a waiver of privilege.
Justice O’Ferrall would have allowed the appeal in order to protect solicitor-client privilege, including on the basis that: (i) the Band’s pleadings did not clearly put its reliance on legal advice into issue; (ii) selective disclosure should not lead to a general waiver of privilege unless fairness demands it; and (iii) the Crown had not established the relevance of the answers to undertakings or the necessity of deeming a waiver of privilege in order to obtain the information sought in the undertakings.
This case is a reminder of the need for caution in drafting pleadings so as to avoid an inadvertent waiver of privilege. It is not just a warning of the danger inherent in pleading a lack of informed consent to an agreement that contains an acknowledgement of legal advice. Rather, the principles discussed in this case can be applied in any situation in which allegations may be construed in a manner that would put a litigant’s knowledge of the law into issue.
Goodswimmer v Canada (Attorney General), 2015 ABCA 253
Decision Date: July 27, 2015
Alberta Court of Appeal informed consent waiver of privilege