Waiver of Privilege Can Happen When You Least Expect It

Waiver of Privilege Can Happen When You Least Expect It

October 16, 2021

By Brian Babcock

Solicitor-client privilege is an important feature of our legal system. In order for you to have confidence to discuss your situations honestly with your lawyer, you want the assurance that what you say to them, and what they say to you, will remain confidential. Solicitor-client privilege has been called “a principle of fundamental justice and a cornerstone of the Canadian justice system.”

Your own words intended to be private should not be used against you.

Despite this rule, there are exceptions to the principle.

One common category is described as “waiver of privilege” – in other words, the privilege existed, but you did or said something which makes the court decide that it would be unfair for your communications with your lawyer to remain confidential.

What might raise your eyebrows is knowing that some of these situations result in what courts describe as an “implied waiver”. In other words, you do not do or say anything explicitly waiving your privilege, but something in how you conduct the lawsuit allows the other side access to this sensitive information.

Laliberte v. Monteith, an Ontario Divisional Court appeal decision, is an example of this in a family law context.

During negotiations to settle issues of division of property and support, Mr. Monteith represented that his business was worth between 7 and 8 million dollars. He did not disclose that at the time, there were sale discussions ongoing in the range of $30 million dollars. A sale closed six days after the settlement of the family law matter which paid him $23.7 million before taxes, or about $18 million after taxes.

Once Ms. Laliberte heard of the sale, she not surprisingly brought an Application to set aside the agreement, on the basis of misrepresentation. Disclosure is fundamental to the fair resolution of family law disputes, so the courts will set aside an agreement obtained through misrepresentation or a lack of disclosure, if the omission is intentional.

The obligation to disclose is an ongoing obligation, which includes a duty to update information if there are new developments.

Previous cases have held that information about proposed share sales must be disclosed on an updated basis.

The real issue in Laliberte was whether that obligation allows the opposing party to see what information was shared with the lawyer – which might be relevant to proving that the omission was intentional.

Mr. Monteith argues that this obligation did not exist until the sale closed, and since that was after the agreement was signed, he did not fail to disclose.

The arguments on setting aside the agreement put Monteith’s state of mind in issue. If that state of mind was based upon his discussions with his lawyer, and he tries to rely upon that fact in his argument, this is enough to find an implied waiver of privilege.

In the Monteith case, he was very careful to try not to say that he relied upon legal advice in not disclosing the offer, but the motions judge found as a fact that the advice was “central to his defence”.

The Divisional Court agreed with this finding. The privilege was waived. The disclosure was limited to the part of the lawyer’s file related only to discussions of the duty of financial disclosure.

Privilege will not be found to be waived in every case where intent is an issue and the party received legal advice. A bald allegation of failure to disclose will not defeat privilege. In Laliberte, the particular facts of the case strongly supported the argument that the non-disclosure was intentional – Mr. Monteith really was just relying on a technical legal argument to excuse his actions.

Mr. Monteith’s obvious bad behaviour made it easy for the courts to find against him. However, as this is an appeal decision, it stands as a precedent that judges must consider in future cases. The possibility that waiver will be found in cases where your behaviour was not as bad as Monteith’s is a real risk.

In spite of the importance of solicitor-client privilege, particular facts may result in a finding of a waiver of privilege even if that was not your intent. Cases involving “state of mind” and reliance on legal advice are particularly tricky, both in family law and general litigation contexts. You must work closely with your lawyer to avoid an accidental waiver, or at least reduce the risk. Maintaining good behaviour throughout the process may help.