Anton Piller Orders and Privileged Documents: Celanese Canada v Murray Demolition

When issuing Anton Piller orders (an Anton Piller order is obtained ex parte, and allows the moving party to access the premises of the other party to gather documents or other evidence that the court fears may be destroyed if the search is not carried out), courts have always been sensitive to their extraordinary nature. In obtaining an order, parties have always had to meet a relatively strict test to ensure that no other order could protect their interests while awaiting a determination of the dispute between the parties. However, since their first use, they have gradually been more routinely issued.

With the increase in the use of these orders, courts have become more concerned not only with how they are obtained, but also with how orders are executed. This issue came before the Supreme Court of Canada in Celanese Canada Inc v Murray Demolition Corp, 2006 SCC 36.

In the judgment, the SCC recognizes that Anton Piller orders resemble private search warrants, and that the contempt power which can be used to enforce them means that ordinary citizens are not likely to distinguish them from search warrants. This requires courts to ensure that these orders are carried out in a way which respects the rights of those subject to them.

The main litigation involved allegations that, during demolition of a factory run by Celanese, certain defendants were stealing technology from Celanese and making unauthorized use of it. An Anton Piller order was issued against one of the defendants, Canadian Bearings.

The order was executed by an independent accounting firm in the presence of the police and overseen by an independent solicitor. An effort was made at the time to segregate documents subject to solicitor and client privilege. However, the number of files and amount of electronic information removed made comprehensive review impossible. The accounting firm retained the electronic files and reviewed them with the defendant’s solicitors. They complained, however, that they did not have adequate time to review all the documents.

The end result was that Celanese’s solicitors had a number of CDs containing copies of privileged communications between Canadian Bearings and its solicitors. Although the documents were eventually deleted, it was found that 35 people at two law firms had access to the documents during the two or three week period before they were deleted.

The SCC took the opportunity to review the law governing the way in which Anton Piller orders are executed. Lower courts have been struggling with this issue over the last several years. Since 2005, a number of judgments have harshly condemned the improper execution of these orders. One such case, Ridgewood Electric (1990) v Robbie (2005), 74 OR (3d) 51, is cited by the SCC, but there are also examples from other provinces. These cases have stiffly sanctioned misconduct in the exercise of the orders (for instance, in Harris Scientific Products v Araujo, 2005 ABQB 603, the Alberta Court of Queen’s Bench ordered damages of $35,000 for trespass and punitive damages of $10,000).

In Celanese, however, there appeared not to be misconduct at the level seen in the other cases. The SCC notes that,

the search in the present case was conducted by reputable and responsible people, under the supervision of a senior member of the Ontario bar. The disclosure of solicitor-client confidences came about not by egregious misconduct, but through a combination of carelessness, overzealousness, a lack of appreciation of the potential dangers of an Anton Piller order and a failure to focus on its limited purpose, namely the preservation of relevant evidence.

After the discussion of Anton Piller orders, the SCC moves on to rule that Celanese had the onus of demonstrating that no prejudice would result from their solicitors carrying on in the file. They argued that to require Canadian Bearings to produce “the very confidential information for which protection is sought” in order to prove prejudice “would have the effect of defeating the whole purpose of the application” (citing Macdonald Estate v Martin, [1990] 3 SCR 1235, the governing authority on removal when a solicitor changes firms). Since this onus could not be discharged, the solicitors were removed.

It is clear that the fact the documents were obtained through the use of an Anton Piller order had great weight on the SCC’s reasoning on the onus for removal. They wrote 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.”

Already, however, the Ontario Superior Court has applied this holding in a case which did not involve the use of an Anton Piller order (see 2000768 Ontario Inc v 514052 Ontario Ltd, [2006] OJ No 4383). If Celanese is broadly applied in this way, it affects any situation where privileged documents come into the possession of the other side’s solicitors and makes their removal from the case relatively easy to obtain. The SCC may have to revisit the issue in the future to clarify whether its holding applies to all privileged documents or only those gained through the improper execution of Anton Piller orders.