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Supreme Court of Canada Removes Counsel for Botched Anton Piller Search
The Supreme Court of Canada allowed an appeal from Canadian Bearings Ltd., and removed a large Bay Street firm acting as the solicitors of record for Celanese Inc., for improperly seizing and subsequently reviewing privileged electronic documents from Canadian Bearing Ltd.
During the execution of an Anton Piller order against Canadian Bearings in June 2003, privileged electronic documents were downloaded onto a portable hard drive and “burned” on CD-ROMS. These were then given to an independent accounting firm, BDO, in a sealed envelope. No complete list of the seized records was made at the time. Two days after the search, both Canadian and U.S. counsel for Celanese directed BDO to open the sealed envelope and make copies of the contents of the hard drive and CD-ROMs available to them. Lawyers from both firms then partially reviewed the privileged electronic documents obtained from the hard -drive and CD-ROMs.
Canadian Bearings brought a motion to disqualify both firms from continuing to act for Celanese, which was dismissed by the motions judge. Canadian Bearings appealed to the Divisional Court, which allowed the appeal. Celanese appealed to the Ontario Court of Appeal, which allowed the appeal on the grounds that neither of the lower courts had applied the correct test for removal. The appeal came before the Supreme Court for a determination of the proper test for removal of counsel, and in particular, which party bears the onus to show (or rebut) the prejudice arising from disclosure of privileged documents.
Justice Binnie held that Canadian Bearings discharged its onus as per the MacDonald Estate test by establishing that the solicitors for Celanese had in fact obtained privileged information. The onus then shifted to Celanese to rebut a presumption of prejudice. Justice Binnie writing for a unanimous court stated:
Experience has shown that despite their draconian nature, there is a proper role for Anton Piller orders to ensure that unscrupulous defendants are not able to circumvent the court’s processes by, on being forewarned, making relevant evidence disappear. Their usefulness is especially important in the modern era of heavy dependence on computer technology, where documents are easily deleted, moved or destroyed. The utility of this equitable tool in the correct circumstances should not be diminished. However, such orders should only be granted in the clear recognition of their exceptional and highly intrusive character and, where granted, the terms should be carefully spelled out and limited to what the circumstances show to be necessary. Those responsible for their implementation should conform to a very high standard of professional diligence. Otherwise, the moving party, not its target, may have to shoulder the consequences of a botched search…
In summary, I agree with the Divisional Court that lawyers who undertake a search under the authority of an Anton Piller order and thereby take possession of relevant confidential information attributable to a solicitor-client relationship, bear the onus of showing there is no real risk such confidences will be used to the prejudice of the defendant. Difficulties of proof compounded by errors in the conduct of the search and its aftermath should fall on the heads of those responsible for the search, not of the party being searched (my italics). The onus was not met by the respondents in this case.
The Court further stated that due to the complex nature of modern commercial litigation, there is no such thing as an automatic disqualification for violation of privilege. Instead, courts should look to a number of factors including, but not limited to (i) how the documents came into the possession of the plaintiff or its counsel; (ii) what the plaintiff and its counsel did upon recognition that the documents were potentially privileged; (iii) the extent of review made of the privilege material; (iv) the contents of the solicitor-client communications and the degree to which they are prejudicial; (v) the stage of the litigation; (vi) the potential effectiveness of a firewall or other precautionary steps to avoid mischief. In view of all the circumstances, Justice Binnie found that the solicitors on record did not satisfy the test for removal as per MacDonald Estate, namely “that the public represented by the reasonably informed person would be satisfied that no use of confidential information would occur”.
The large Bay Street firm was removed as solicitors of record for Celanese. The U.S. firm is prohibited from any communication with Celanese with respect to this proceeding or any related proceedings in Canada.
For a copy of the decision (Supreme Court of Canada), visit: