January 22, 2015

It is a well-recognized principle of law that communications between a client and his lawyer are privileged and remain private and confidential even after death. Only the client can choose to waive privilege and allow the communications to become public. Waiver can be either explicit or implicit. One well known example of implicit waiver of privilege is in cases of a client’s will – the drafting solicitor may disclose his client’s will after the testator’s death, when circumstances suggest that the deceased would like his final testamentary wishes made known to his beneficiaries and executor.

The recent case of Leggat v Jennings addressed another situation where implied waiver may be found – where a party disputes the validity of a settlement, is he required to disclose his lawyer’s advice to him regarding the settlement?

Because of the number of parties, the court referred to the “Leggat parties” and “Jennings parties” for convenience. The original litigation involved a dispute over a number of car dealerships. The parties reached a settlement to end the litigation and entered into an agreement. However, the Jennings parties subsequently sought to set aside the settlement on the grounds that they had relied on, to their detriment, a number of alleged misrepresentations made to them by the Leggat parties.

As part of the examinations for discovery, the Jennings parties were asked to disclose all communications between them and their solicitors relating to the settlement negotiations. The Jennings parties refused on the grounds of privilege. The motion before the court was to decide whether the production was required.

The Leggat parties, who sought disclosure of the documents, argued that the Jennings parties had implicitly waived solicitor-client privilege. They argued that they had a right to full disclosure of what motivated the Jennings parties to enter into the settlement agreement, which included advice received from their lawyers. It was their position that they had a right to know whether the Jennings parties relied on legal advice rather than the misrepresentations, as the Jennings parties claimed. By putting in issue their state of mind when they entered the settlement, the Leggat parties argued that the Jennings parties had impliedly waived privilege over any legal advice received from their lawyers relating to the settlement.

The Jennings parties rigorously opposed the production of their communications with their lawyers. They argued that there are good public policy reasons to protect solicitor-client privilege, which can only be waived voluntarily or in the narrowest of circumstances by the courts. They argued that there had been no implied waiver in these circumstances.

Justice Gray held that solicitor-client privilege is of fundamental importance in the law such that it will prevail over other interests, such as the right to full disclosure. As a result, the court held that production would only be ordered if the Jennings parties had waived privilege by implication.

The court held that a party would implicitly waive privilege by putting into issue his reliance on legal advice. However, the mere fact that a party’s state of mind is in issue is not sufficient to waive privilege. In this case, the question is whether the Jennings parties, having put their state of mind in issue, opened themselves up to questions about whether legal advice affected their state of mind. The court held that the answer is no: only where a party has placed its state of mind in issue and has given evidence that it received legal advice which formed, in part, the basis of its state of mind could there be an implied waiver of privilege.

In reaching its decision, the court adopted Justice Perell’s two-part test for determining whether privilege has been waived (as set out in the 2012 case Creative Career Systems Inc. v Ontario):

  1. The presence or absence of legal advice is relevant to the existence or non-existence of a claim or defence; which is to say that the presence or absence of legal advice is material to the lawsuit; and

  2. The party who received the legal advice must make the receipt of it an issue in the claim or defence.

Solicitor-client privilege is a carefully guarded right. However, it is not absolute, and will be waived if the receipt of or reliance on legal advice is put into issue.