A recent Ontario decision by Justice Perell has analyzed when class members will have waived privilege over solicitor-client communications. The decision emphasizes the breadth of consequences of certification for class members beyond the determination of common issues.
The Certified Class Action
The class was made up of investors in a timeshare program that was expected to provide tax benefits. The class had received tax opinions from a law firm, Cassels Brock & Blackwell LLP. The Canada Revenue Agency, however, disallowed the expected tax benefit.
The class then sought opinions from a second law firm, Thorsteinssons LLP, with respect to litigating the CRA’s decision in the Tax Court of Canada.
The class later sought a third set of opinions from a third law firm, Davies Ward Phillips & Vineberg LLP, this time with respect to the investors bringing litigation against Cassels Brock.
An action for professional negligence and negligent misrepresentation was started by the investors against Cassels Brock, which was certified as a class proceeding.
The Motion For Production of Privileged Documents
Post-certification, the parties engaged in document production. Initially, the representative plaintiff produced only 10 documents in total, none of which were the communications either with Thorsteinssons or Davies.
The defendant law firm, Cassels Brock, brought a motion for production of the communications between class members and both Thorsteinssons and Davies. For the purposes of the motion, the documents were provided to the motion judge in a sealed envelope.
The Decision: Privilege Was Waived
The motion judge, Justice Perell, began his analysis by finding that the communications with Davies were not relevant to the common issues. The advice related to bringing the class action itself, not to the events that were at issue.
On the other hand, the correspondence with Thorsteinssons was found to be relevant to the common issues, in particular to the issues of damages and mitigation. Class members had sought Thorsteinssons’ advice to salvage the situation and eventually negotiate a settlement with the CRA.
While all the parties agreed that the communications were privileged, Justice Perell went on to determine that the class members had waived privilege over them.
The representative plaintiff had alleged professional negligence against his former lawyer, Cassels Brock. By not opting out, the class members were taken to have adopted the pleadings. Where there are allegations of professional negligence, the class members waived any solicitor-client privilege to the extent necessary for the law firm to defend itself. Fairness dictated that this include communications with other lawyers, as was the case here.
The decision shows the potentially wide implications for class members of remaining in a class action, that they are taken to have adopted the representative plaintiff’s pleadings and all that this entails as far as waiver of privilege is concerned. The decision also takes a broad approach regarding the scope of waiver when allegations of professional negligence are made against a lawyer, an area of case law Justice Perell noted was still nascent.