T-992-92
Almecon Industries Limited (Plaintiff)
v.
Anchortek Ltd., Explosives Limited, Ace Explosives ETI Ltd. and Western Explosives Ltd. (Defendants)
Indexed as: Almecon Industries Ltd.v. Anchortek Ltd. (T.D.)
Trial Division, Reed J."Toronto, November 9; Ottawa, November 17, 1998.
Practice — Privilege — Appeal from A.S.P.'s decision opinion letters privileged — Anchortek, defendant in patent infringement action, forwarding opinion letters provided by counsel to distributors — Western Explosives Ltd. producing letter at examination for discovery in another action, now consolidated with this action — Anchortek refusing to answer questions about letters at examination for discovery — Appeal dismissed — (1) Common interest privilege existing — Both parties need not be represented by same counsel for common interest privilege to apply — That parties may become adverse in interest not sufficient to deny existence of common interest privilege — Anchortek, Western not now adversaries — Parties need not be parties to litigation when information shared; anticipation such might occur sufficient — (2) Western's disclosure not waiver of Anchortek's privilege — Anchortek's communications with counsel covered by solicitor-client privilege, originating with Anchortek, remaining privileged despite Western's disclosure.
This was an appeal from the Associate Senior Prothonotary's decision that two opinion letters were privileged. Almecon had commenced a patent infringement action against Anchortek Ltd., and threatened litigation against Anchortek's distributors. Counsel provided Anchortek with opinion letters, which Anchortek forwarded to Western Explosives Ltd. under cover of a letter marked "confidential". That letter referred to Anchortek's understanding that Western would work with Anchortek to resist Almecon's court action. Almecon subsequently commenced a separate action against Western, in the context of which Western produced on discovery the letters in which Anchortek claims privilege. When Anchortek was examined for discovery in the now consolidated action, it refused to answer questions about the letters. On appeal, the A.S.P. confirmed that Anchortek should not be compelled to answer on the ground that the letters were privileged.
The issues were: (1) whether a common interest privilege existed; and, (2) if it did, whether Western's disclosure constituted a waiver for Anchortek.
Held, the appeal should be dismissed.
(1) A common interest privilege existed. Common interest privilege is a privilege in aid of anticipated litigation in which several persons have a common interest. Each can avail himself of the privilege in aid of litigation. Each can collect information for the use of his or the other's legal adviser. Each can hold originals and make copies. All are the subject of the privilege in aid of anticipated litigation. It is not necessary for both parties to be represented by the same counsel to find that common interest privilege exists. Nor is the possibility that the parties might at some point become adverse in interest sufficient to deny the existence of a common interest privilege. Anchortek and Western are not at present adversaries. The two need not both be parties to the litigation, at the time the information is shared; anticipation that this might occur is sufficient.
(2) Western could not waive Anchortek's privilege. The communications of Anchortek with its counsel were covered by solicitor-client privilege, which originated with Anchortek and remained privileged despite Western's disclosure of the letters.
cases judicially considered
applied:
Buttes Gas and Oil Co v. Hammer (No 3), [1980] 3 All ER 475 (C.A.).
distinguished:
Lehman v. Ins. Corp. of Ireland; Independent Fish Co. v. Man. Cold Storage Co., [1984] 1 W.W.R. 615; (1983), 25 Man. R. (2d) 198; 3 C.C.L.I. 257; 40 C.P.C. 285 (Q.B.).
considered:
Maritime Steel and Foundries Ltd. v. Whitman Benn & Associates Ltd. et al. (1994), 130 N.S.R. (2d) 211; 114 D.L.R. (4th) 526; 367 A.P.R. 211; 15 C.L.R. (2d) 53; 24 C.P.C. (3d) 120 (S.C.); Descôteaux et al. v. Mierzwinski, [1982] 1 S.C.R. 860; (1982), 141 D.L.R. (3d) 590; 70 C.C.C. (2d) 385; 28 C.R. (3d) 289; 1 C.R.R. 318; 44 N.R. 462; Supercom of California v. Sovereign General Insurance Co. (1998), 37 O.R. (3d) 597; 18 C.P.C. (4th) 104 (Gen. Div.).
authors cited
Phipson on Evidence, 13th ed. by John Huxley Buzzard et al. London: Sweet & Maxwell, 1982.
Sopinka, John et al. The Law of Evidence in Canada. Toronto: Butterworths, 1992.
APPEAL from A.S.P.'s decision that two opinion letters written for defendant, Anchortek, by its counsel were privileged, even though they had been disclosed to the plaintiff by Western Explosives Ltd. (Almecon Industries Ltd. v. Anchortek Ltd., [1998] F.C.J. No. 1522 (T.D.) (QL)). Appeal dismissed.
appearances:
Henry Lue for plaintiff.
Shonagh McVean for defendant Anchortek Ltd.
solicitors of record:
Dimock Stratton Clarizio, Toronto, for plaintiff.
Smart & Biggar, Ottawa, for defendant Anchortek Ltd.
The following are the reasons for order rendered in English by
Reed J.: This is an appeal from a decision of the Associate Senior Prothonotary [[1998] F.C.J. No. 1522 (T.D.) (QL)] that held that two opinion letters written for the defendant Anchortek by its counsel, retained their privileged status vis-à-vis Anchortek, even though they had been disclosed to the plaintiff Almecon Industries, by the defendant Western Explosives. The issues are whether common interest privilege exists and, if it does, the effect of disclosure of the privileged communication by one of the parties, on the interest of the other party.
The relevant facts are not in dispute. The defendant Anchortek was concerned about the effect that litigation commenced against it by Almecon, and litigation threatened by Almecon against Anchortek's distributors, would have on those distributors. In the litigation, Almecon was alleging patent infringement by Anchortek arising from Anchortek's manufacture and sale of certain seismic hole plugs.
Communication between Anchortek and its counsel ensued. Counsel provided Anchortek with a two-page letter, dated March 18, 1996, that was designed to be sent by Anchortek to its distributors. The two-page letter was accompanied by a covering letter, also dated March 18, 1996, which instructed Anchortek on the type of covering letter that should be sent to the distributors with counsel's two-page letter. Also enclosed was a copy of an earlier, eight-page letter from counsel to Anchortek, dated February 27, 1992. It contained a fuller legal opinion on the issue of patent infringement. Anchortek sent not only the two-page letter of March 18, 1996 to Western but also the other two letters that had come from counsel. This correspondence was sent under cover of a letter marked "confidential". The covering letter referred to Anchortek's understanding that Western would work with Anchortek to resist Almecon's court action. The letter noted that this was much appreciated by Anchortek, and stated that in view of that commitment Anchortek was sending Western a copy of the letter (not letters) that Anchortek had received from its lawyers.
Almecon subsequently commenced a separate action against Western, now consolidated with the present action. In the context of the separate action Western produced on discovery the letters in which Anchortek claims privilege, and Western answered questions about them.
When Anchortek was examined for discovery in the now consolidated action, and was questioned about the letters, it refused to answer. This refusal was appealed to the Associate Senior Prothonotary. He confirmed that Anchortek should not be compelled to answer, stating that [at paragraph 7]:
. . . a party having a privileged document who shares that document with a second party having a joint or common interest in litigation does not authorize that second party to waive privilege.
He held that privilege [at paragraph 7]:
. . . continues to exist in the subject documents and Anchortek does not have to answer questions with respect to them.
The plaintiff challenges this decision on the ground that a common or joint interest does not exist between Anchortek and Western, and thus disclosure by Anchortek to Western was a waiver by Anchortek of its privilege. Secondly, the plaintiff argues that if a common or joint interest does exist, Western's waiver constitutes a waiver for both it and Anchortek.
I am not persuaded that these arguments can prevail. I adopt the description of common interest set out by Lord Denning M.R. in Buttes Gas and Oil Co v. Hammer (No 3), [1980] 3 All ER 475 (C.A.), at pages 483-484 quoted in Sopinka, Lederman and Bryant, The Law of Evidence in Canada (Toronto: Butterworths, 1992), at page 669, and relied upon by the Associate Senior Prothonotary in his reasons:
[It] is a privilege in aid of anticipated litigation in which several persons have a common interest. It often happens in litigation that a plaintiff or defendant has other persons standing alongside him who have the selfsame interest as he and who have consulted lawyers on the selfsame points as he but who have not been made parties to the action. Maybe for economy or for simplicity or what you will. All exchange counsels' opinions. All collect information for the purpose of litigation. All make copies. All await the outcome with the same anxious anticipation because it affects each as much as it does the others. Instances come readily to mind. Owners of adjoining houses complain of a nuisance which affects them both equally. Both take legal advice. Both exchange relevant documents. But only one is a plaintiff. An author writes a book and gets it published. It is said to contain a libel or to be an infringement of copyright. Both author and publisher take legal advice. Both exchange documents. But only one is made a defendant.
In all such cases I think the courts should, for the purposes of discovery, treat all the persons interested as if they were partners in a single firm or departments in a single company. Each can avail himself of the privilege in aid of litigation. Each can collect information for the use of his or the other's legal adviser. Each can hold originals and each make copies. And so forth. All are the subject of the privilege in aid of anticipated litigation, even though it should transpire that, when the litigation is afterwards commenced, only one of them is made a party to it. No matter that one has the originals and the other has the copies. All are privileged.
I note as well the comments of Lord Justice Donaldson, at page 490 of the Buttes decision, which seem particularly appropriate:
But I think that some such proposition must be correct. Take the case of a block of flats. The landlord takes proceedings against a particular tenant and the dispute concerns a term of the lease which is common to all the tenancies. The tenant might well circulate all other tenants in confidence with a copy of counsel's opinion which he had obtained. If the landlord were then to join another tenant as an additional defendant, could he obtain production of the copy of the opinion? I think not.
While Donaldson L.J. did not decide the issue because he did not need to do so, his statements are very persuasive. The Prothonotary correctly identified the legal test and applied that test to a fact situation which legitimately fits within it.
Counsel for the plaintiff made reference to Lehman v. Ins. Corp. of Ireland; Independent Fish Co. v. Man. Cold Storage Co., [1984] 1 W.W.R. 615 (Man. Q.B.), and argued that because it was possible at some time in the future that Anchortek and Western might become adverse in interest, they could not be said to have a common or joint interest in the litigation. I do not read the Lehman decision in that way. That decision is based on the finding that the two defendants did not have a common interest at the relevant time, but rather were adverse in interest. I do not think it is necessary for both parties to be represented by the same counsel to find that common interest privilege exists. The quotation from Lord Denning in the Buttes case, cited with approval in the Sopinka text, indicates that common interest privilege applies on a broader basis than that. Nor is the possibility that the parties might at some point become adverse in interest sufficient to deny the existence of a common interest privilege at present. Anchortek and Western are not at present adversaries. Lastly, the two need not both be parties to the litigation, at the time the information is shared; anticipation that this might occur is sufficient.
There appears to be a paucity of authority concerning the effect of disclosure by one party to a common interest privilege, on the interest of the other. The Associate Senior Prothonotary referred to Phipson on Evidence, 13th ed. London: Sweet & Maxwell, 1982, at page 301:
In cases of joint interest, it is sufficient, as against third persons, if one only of the interested parties claims the privilege, though all must concur in waiving it.
Anchorteck made reference to a statement in Maritime Steel and Foundries Ltd. v. Whitman Benn & Associates Ltd. et al. (1994), 130 N.S.R. (2d) 211 (S.C.), at page 218:
In the ordinary course of events, such a joint privilege could not be unilaterally waived by one [of the parties to that privilege] without the express consent of the other.
That case involved parties who, while originally joint in interest, subsequently became adversaries.
It is important to recall first principles. In Descôteaux et al. v. Mierzwinski, [1982] 1 S.C.R. 860 it was noted that solicitor-client privilege is [at page 870] "a fundamental civil and legal right" and that [at page 875] "conflict should be resolved in favour of protecting . . . confidentiality". In Supercom of California v. Sovereign General Insurance Co. (1998), 37 O.R. (3d) 597 (Gen. Div.), Wilson J. discussed at page 609, the relevance of the principle of fairness when assessing whether a waiver of privilege has occurred. At page 614 he stated:
Litigation privilege and common interest privilege are founded on the principles of promoting a fair and balanced adversarial system.
In the present case, counsel for the plaintiff's argument amounts to the assertion that because a third party (albeit one having a common interest in the litigation with Anchortek) has disclosed privileged communications between Anchortek and its counsel, Anchortek is required to answer questions concerning that communication. I do not understand that to be the law.
The refusal that is identified as giving rise to this appeal is a refusal by Anchortek "to answer questions concerning a letter received by Anchortek from Ogilvie and Company and forwarded to Western Explosives". One such question put to Anchortek was why it had sought an opinion letter from its counsel. I do not think that Western's disclosure of the privileged correspondence can open the door to require Anchortek to answer such questions. These communications are covered by solicitor-client privilege; this privilege originated with Anchortek; the communications of Anchortek with its counsel remain privileged despite Western's disclosure of the letters. I also have a concern that this type of question is not likely to be relevant but I do not decide that point.
In summary, I am of the view that the Associate Senior Prothonotary correctly identified and applied the law. Western cannot waive Anchortek's privilege. For the reasons given, the appeal will be dismissed.