The Ontario Superior Court docket of Justice just lately launched a call that will likely be welcomed by firms in search of to take care of privilege over the outcomes of inside investigations.
The choice in Vecchio Longo Consulting Companies Inc. v. Aphria Inc., 2023 ONSC 6336 distills and clarifies the legislation in Ontario on privilege over inside company investigations usually, and offers a lot referred to as for certainty, given the prior lack of legislation in respect of Particular Committee experiences particularly.
Background
Aphria was focused in late 2018 by a New York short-seller report which made allegations towards the corporate, triggering a big decline within the firm’s share value and rapid threats of litigation.
Aphria rapidly arrange a Particular Committee to analyze these allegations. The Particular Committee retained exterior litigation counsel to guide the investigation. The attorneys, in flip, retained forensic accounting and enterprise advisory consultants.
A number of months later, Aphria issued a press launch as to the conclusions of the Particular Committee.
Within the meantime, a securities class motion was issued in Ontario, based on the allegations within the short-seller report. That motion has been licensed. Throughout the examinations for discovery, Class Counsel requested for a replica of the Particular Committee report or for disclosure of the factual findings of the Particular Committee.
These questions had been refused on the premise of solicitor-client and litigation privilege. Class Counsel moved for manufacturing, arguing that no privilege exists or, if it did, it had been waived by the corporate’s press launch.
McCarthy Tétrault represented the Defendants on this movement.
The choice
Justice Perell dismissed the plaintiff’s movement. The Court docket rejected Class Counsel’s core arguments: (1) that the Particular Committee report was actually simply the results of a factual investigation; (2) that the report had not been ready for the dominant function of litigation, and so didn’t entice any privilege; and (3) that even when it was privileged, that privilege had been waived.
First, the Court docket discovered that the Particular Committee Report was litigation privileged, noting that when counsel was retained, and the report was ready, litigation was already underway. The Court docket additionally cited the truth that the corporate had retained a legislation agency that had appreciable expertise investigating and litigating securities disputes.
Second, the Court docket discovered that the Particular Committee Report was additionally solicitor-client privileged. The Court docket rejected Class Counsel’s submission that exterior counsel engaged by the Particular Committee had been employed merely to find out the info concerning the allegations, and located as a substitute that counsel was offering authorized recommendation, which required a factual investigation – as it’s not possible to offer significant authorized recommendation with out ascertaining the info and making use of the legislation to these info.
Third, the Court docket rejected the plaintiff’s idea that Aphria had waived privilege over the Particular Committee report as a result of it had issued a press launch as to the conclusions reached.
Conclusion
This Resolution closes an extended overdue hole within the legislation on privilege. There was a shocking prior lack of jurisprudence on how the legislation of privilege utilized to Particular Committee experiences. The Resolution helps the flexibility of firms, confronted with critical allegations, to nominate a Particular Committee to conduct a correct investigation whereas sustaining privilege over its work.
By Dana Peebles, Bryn Grey, Richard Lizius, and Amanda Iarusso
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