Be careful what you waive: Partial disclosure of privileged documents can create unintended consequences

Litigation routinely involves thousands or even tens of thousands of documents. Expensive and time-consuming disputes over what must be disclosed and what is protected by privilege are commonplace. Faced with these disputes, selectively disclosing otherwise harmless privileged documents may appear inexpensive and expedient. But caution is needed – you may be giving up more than you bargained for. 

What is “privilege”? 

Privilege protects documents from disclosure during litigation, creating a “zone of privacy” for certain activities, relationships or individuals. It takes many forms, but the most potent is the privilege between solicitor and client. Solicitor-client privilege protects all interactions between clients and their lawyers from disclosure when the lawyer is providing legal advice or otherwise acting as a lawyer, rather than as a business advisor or in another non-legal capacity. 

This privilege is essential. It ensures that clients can communicate openly with their lawyers without fear that their private information and litigation strategies may be used against them. Without this assurance, clients could not be expected to speak honestly and candidly with their counsel, public confidence in the justice system would be eroded and the administration of justice severely hindered. 

For these reasons, the Supreme Court of Canada has held that solicitor-client privilege is to be “jealously guarded and should only be set aside in the most unusual circumstances“.  

What is waiver, and how does it happen? 

Despite the importance of solicitor-client privilege, it is not absolute. It can be lost and documents subsequently disclosed through express or implied waiver by the privilege holder – usually the client. 

Express waiver occurs when the possessor of the privilege knows of the existence of the privilege and clearly and voluntarily intends to give it up. For example, at the request of a client, a lawyer may provide privileged documents to opposing counsel stating that the applicable privilege is no longer claimed over them, expressly allowing those documents to be disclosed and used.  

Implied waiver can happen when the holder of the privilege acts in a manner or takes a position that would be inconsistent with maintaining the privilege and it would be unfair to allow the privilege to apply in the circumstances. For example, solicitor-client privilege might be impliedly waived when a party argues that their former lawyer acted in bad faith. The lawyer could only realistically defend against these claims by exposing privileged information and as such it would be unfair to bar the lawyer from using privileged information in his or her defence. 

Given that waiving privilege may reveal private client information, expose litigation strategy and leak potentially embarrassing details, it should only be done with great care – steps should be taken to avoid implied waiver if it is not intended. 

The danger of selective waiver: Pacific Sands Beach Resort Ltd. v. Co-Operators General Insurance 

But waiver is not all-or-nothing. Privilege may be waived over only part of a document, or it may be waived over only some documents that address a particular subject. However, selective waiver of privilege is risky and can lead to privilege being lost over the undisclosed portions of a document, or whole undisclosed documents in a broader file. These issues were recently discussed at length in Pacific Sands Beach Resort Ltd. v. Co-Operators General Insurance, 2025 BCSC 858 (“Pacific Sands”). 

In Pacific Sands, the plaintiff claimed that the defendant insurance company breached the terms of its insurance policy by refusing the plaintiff’s insurance claim and breached its duty of good faith in investigating and determining the plaintiff’s claim.  

As litigation proceeded, the plaintiff repeatedly challenged the privilege claimed by the insurance company over a large number of documents. After repeated exchanges on the issue and many changes to which documents were claimed to be privileged, the insurance company provided a letter explicitly waiving privilege over 454 documents relating to the insurance company’s handling of the plaintiff’s claim under the applicable policy of insurance. The letter was clear that disclosure was done to avoid a lengthy and expensive production application and to demonstrate that the insurance company acted in good faith in the investigation and adjustment of the plaintiff’s claim. It also emphasized that the insurance company retained privilege to all other documents over which it did not explicitly waive privilege. 

The plaintiff challenged this selective waiver and disclosure, arguing that by providing some of the documents relating to the plaintiff’s insurance claim, the insurance company had implicitly waived privilege over all documents relating to the plaintiff’s claim for coverage under its insurance policy. The insurance company asserted that all the documents not disclosed were privileged; and that waiver only occurred in relation to the 454 documents. Notably, the documents at issue largely consisted of records contained in the file of the insurance company’s former legal counsel, including communications between the defendant and its consultants, experts, agents and said former legal counsel. 

In considering these arguments, the court emphasized the importance of protecting solicitor-client privilege. But it also pointed out the importance of ensuring that selective waiver does not harm the values of fairness and consistency in litigation. It expressed concern that a party selectively waiving privilege may be able to cherry-pick favourable disclosures while retaining potentially harmful documents – depriving both the opposing party and the court access to the full narrative and thereby gaining an unfair advantage.  

Balancing the forgoing, the court ordered the insurance company to disclose all documents regarding the insurance company’s handling of the plaintiff’s insurance claim, including the communications between the insurance company and its former legal counsel. It held that the insurance company’s action of waiving privilege over some documents relating to the plaintiff’s insurance claim was inconsistent with maintaining privilege over other documents on the same subject. The court held that it would be unfair to allow the insurance company to use the disclosed documents in its defense, while only allowing the plaintiff and the court to see the information chosen by the insurance company. Moreover, because the insurance company selectively disclosed documents to show that it did not act in bad faith, the court held that it also implicitly put both legal advice and state of mind before the court, making it unfair to deny the plaintiff access to all the documents on the same subject. 

The importance of this decision is clear: extreme care is needed before selectively disclosing privileged documents, as an initial disclosure may ultimately spread much farther than intended. Insurers (and indeed, all litigants) should consult with their legal counsel about the potential pitfalls associated with selectively disclosing privileged documents. While, in theory, it may sound sensible to selectively disclose privileged documents that otherwise seem harmless or supportive of one’s case, doing so could create unintended consequences pertaining to the overall scope of documentary disclosure in the legal action.  

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.  

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