Solicitor-client privilege is a fundamental principle of Canadian law, and that privilege is all but absolute. In general, solicitor-client privilege extends to employees of the client who have privileged conversations with the client’s solicitor. However, this extension of the privilege does not necessarily apply to third-party independent contractors of the client, who are not employees under Canadian law, which presents a potential problem for solicitors and clients alike.
If a company hires an independent contractor, and that contractor receives legal advice from the company’s solicitor or provides instructions to the solicitor, is the conversation between the independent contractor and the solicitor covered by solicitor-client privilege? This article answers this question through an analysis of the caselaw surrounding solicitor-client privilege, and discusses whether and when the privilege extends to non-employees of the client, like independent contractors.
General Accident Assurance Co. v Chrusz[1]
In General Accident Assurance Co. v Chrusz (“Chrusz”), the Ontario Court of Appeal (“ONCA”) answered the above question by looking to the relationship between a given third party, such as a contractor, and the client, in terms of the client’s relationship with the client’s lawyer. The Court stated that solicitor-client privilege’s application to third-party communications depends on “the true nature of the function that the third party was retained to perform for the client”. That is, if the third party’s retainer includes functions that are “essential to the existence or operation of the client-solicitor relationship”, then the privilege should extend to cover communications that fit within the context of that function and fit the requirements of the privilege.[2]
When a client gives a third party permission to give instructions to its solicitor on behalf of the client, or authorizes the third party to get legal advice from the solicitor on the client’s behalf, then, according to the court in Chrusz, “the third party is performing a function which is central to the client-solicitor relationship”, and the third party “should be seen as standing in the shoes of the client for the purpose of communications” that fit within the context of their retainer.[3] Therefore, the application of the privilege to third parties, such as independent contractors, is tied to the third party’s “authority to obtain legal services or to act on legal advice on behalf of the client”, and to where the third party is “empowered by the client to perform a function on the client’s behalf which is integral to the client-solicitor function”.[4]
There is an important caveat to this description of the third party’s function, though. Where the third party is merely authorized to pass information on to the solicitor in order for the solicitor to advise the client, or if the third party is simply acting on legal instructions from the solicitor, then the third party is not acting in a manner that is essential to the solicitor-client relationship, and this sort of communication should not be covered by the privilege.[5]
Recent Caselaw
More recent cases have adopted the “functional” test developed by ONCA in Chrusz.
In XCG Consultants Inc. v ABB Inc., the Court asked whether the third party in question was “essential or integral to the operation or maintenance of the solicitor-client relationship between ABB and its solicitors”.[6] In this case, the third party provided information to ABB’s lawyers, which the lawyers did make use of in providing legal advice to ABB. However, according to the court, the communications between the third party and ABB’s lawyers “were not essential for the maintenance and operation of the solicitor-client relationship”, because the primary use of the information was for business-related activities of the client, rather than legal advice that the solicitor would be providing to the client.[7]
In The Catalyst Capital Group Inc. v West Face Capital Inc., the Court followed the functional test from Chrusz and determined that, because the third parties in this case “did not act as a communications conduit between counsel and Catalyst”, and did not “play any role that one could characterize as essential to the solicitor-client relationship”, the third parties’ communications with the solicitor were not covered by the privilege.
The Test
Based on the caselaw outlined above, the test for whether solicitor-client privilege covers communications between third parties, such as independent contractors, and counsel depends on the relationship between the third party and the client in question, and the scope of that third party’s retainer.
Where a client retains a third party, and the retainer includes functions which are central to the functioning of the solicitor-client relationship, including being authorized to seek legal advice from the solicitor and to direct the solicitor to act on behalf of the client, then the third party should be understood as “standing in the shoes” of the client.
However, where the third party’s retainer does not grant it such authority, or where it is merely passing information from other sources to the lawyer for the lawyer to give to the client, or if it is only retained to act on instructions from the solicitor, after the client has instructed the solicitor, the third party’s function is not integral to the solicitor-client relationship, and the privilege should not extend to cover its communications with the solicitor.
Takeaway
If you hire a third-party independent contractor and expect that contractor to be able to communicate with your solicitor while being covered by solicitor-client privilege, it is important to ensure that the scope of your retainer with the third-party contractor includes seeking advice from and providing instructions to your solicitor. Further, it is important to make sure that the substance of the communications that that third-party has with your solicitor is “essential” or “integral” to the solicitor-client relationship, rather than simply passing information along, as outlined above.
For solicitors, it is important to keep in mind that the communications you have with a third party with whom your client expects you to communicate may not be covered by solicitor-client privilege. In order to be covered by the privilege, the communications must be “essential” or “integral” to the solicitor-client relationship that you have with your client.
Footnotes
[1] General Accident Assurance Co. v Chrusz, 1999 CarswellOnt 2898 (ONCA).
[2] Ibid at para. 120.
[3] Ibid at para. 121.
[4] Ibid at para. 125.
[5] Ibid at para. 122.
[6] XCG Consultants Inc. v ABB Inc., 2014 ONSC 1111 at para 43.
[7] Ibid at para. 44.