COURT FILE AND PARTIES

COURT FILE NO.: 09-00390976
MOTION HEARD: 20111130
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Canplas Industries, Plaintiff/ Defendant to the Counterclaim

AND:

McKee et al ., Defendants/ Plaintiffs by Counterclaim

BEFORE: Master Abrams

COUNSEL:
J. Russo/M. Whiteley , for the Plaintiff/Defendant to the Counterclaim (905-273-6920, f.)
P. Lomic, for the Defendants/Plaintiffs by Counterclaim (416-362-0823, f.)

HEARD: November 30, 2011

REASONS FOR DECISION

[ 1 ] The defendants/plaintiffs by counterclaim are seeking an Order to protect the confidentiality and secrecy of certain information and documentation disclosed or to be disclosed herein—on a “for counsel eyes only” basis. They say that the information is not known to the public and is the subject of a more restrictive confidentiality and secrecy Order in parallel litigation in the Federal Court—to which Order Canplas has consented.

[ 2 ] The evidence before me is that Airturn Products Inc. is a new Canadian company in the early stages of development. Mr. Lomic says (and the defendants have adduced evidence to this effect) that details of Airturn’s technical information as to the manufacture and structure of its products, as well as its marketing, customer and financial information, are and always have been confidential. If this information were to be placed in the public domain, I am told, Airturn would suffer irreparable harm (i.e. others in like businesses would garner a competitive advantage).

[ 3 ] Likewise, Mr. Lomic submits, unfettered disclosure of customer and/or financial information to Canplas would cause Airturn irreparable harm in that Airturn alleges (by way of counterclaim) that Canplas has engaged in a campaign of making false and/or misleading statements about Airturn and its products and services. Fulsome disclosure would permit Canplas (if it has been doing that which Airturn alleges) to further identify and target Airturn’s customers. The draft Order proposed, it is argued, seeks to balance the protection of the parties’ confidential information with the parties’ right to challenge confidentiality on a motion.

[ 4 ] For its part, Canplas opposes the motion on a number of grounds. First, it says, the parties executed a discovery plan in which there were no restrictions placed on the disclosure of information and production of documents. Second, it says, the request for confidentiality arose only after undertakings were given to produce documents, further to Airturn’s examination for discovery. Mr. Russo argues that the imposition of a confidentiality provision would permit Airturn to resile from what were unqualified undertakings. Canplas says, further, that the evidence adduced by Airturn as to serious prejudice or harm is speculative and general in nature and that the relief sought would severely hamper Canplas’ prosecution of its claims and defence of the defendants’ counterclaim.

[ 5 ] It is noteworthy for me that the discovery plan was executed approximately one month before the notion of a confidentiality Order was raised by the defendants. The time lag was short and is not fatal to this motion. Litigation is a dynamic process. Counsel consider and reconsider the manner in which they approach issues all of the time. I also do not think that the fact that the defendants raised the issue of confidentiality immediately after undertakings were given is here of great moment. Because the timing was coincident with when the issue of confidentiality was raised in the Federal Court, I cannot agree that, by this motion, the defendants are seeking to resile from undertakings given. That said, if there were no parallel litigation, I might be persuaded otherwise.

[ 6 ] As for the Order made in the Federal Court proceeding, Mr. Russo points out that it does not have a “counsel eyes only” provision. He says it is thus a different Order (and ought not to be considered as dispositive or persuasive in the case at bar). It may be a different Order; but I accept, as Mr. Lomic submits, that the Federal Court Order is more restrictive than the Order now being proposed.

[ 7 ] Canplas says that the deemed undertaking rule would here provide sufficient comfort. I don’t agree. To deny the defendants the relief they seek would be to permit the parties to do an end-run on the Federal Court proceedings. I accept, as the defendants have submitted, that “...[i]f a confidentiality Order...does not issue in this court, then the plaintiff will be able to obtain Airturn’s [confidential] information in the Ontario [Superior Court] proceedings that it is not able to obtain in the Federal Court proceedings”.

[ 8 ] While Canplas has provided the court with a list of considerations that militate against the relief sought by the defendants (which list is summarized at paragraph 51 of Canplas’ factum), and while I have had regard to those considerations, I think that they are all trumped by the fact and nature of the confidentiality provisions already agreed to in parallel proceedings. And with the parties having already agreed to confidentiality in the Federal Court, it is difficult for me to be persuaded by the argument now advanced that confidentiality in the Superior Court will necessarily be prejudicial as leading to unnecessary delay and unwarranted additional cost. [1] Then too, and notably, Airturn has adduced credible evidence as to the harm that it says will befall it if it is to disclose the information that it seeks to keep confidential. The risk of harm, on which Airturn makes comment, is heightened by virtue of the allegations made in the defendants’ counterclaim. [2]

[ 9 ] While I acknowledge that the terms of the proposed Order are broad in their application, they are nonetheless narrower than those to which Canplas consented in the bifurcated Federal Court litigation (with there being no bifurcation of liability and damages herein) and they provide the parties with the opportunity to have the court declassify information originally classified as confidential. This accords the parties added comfort that they will not be hamstrung in the prosecution/defence of the claims herein.

[ 10 ] As for the court file being sealed, Canplas is not opposed to such relief being granted. In all, I am not persuaded (in the particular circumstances of this action, including as it relates to developing technology not yet patented) that the public interest in open and accessible court proceedings is outweighed by the risks to the parties’ commercial interests.

[ 11 ] For all of these reasons, Order to go in accordance with the relief sought by the defendants in paragraph 1 of their notice of motion. Failing agreement as to the costs of this motion, I may be spoken to.

Master Abrams

February 28, 2012

[1] “There is merit in a case where parallel litigation is underway...to have reasonably comparable protective orders, provided the terms are not contrary to principle or practice in this Court” ( Apotex v. Wellcome Foundation , 1993 CarswellNat 382, at para. 14 (Fed. Ct.) ).

[2] See: Apotex v. Wellcome Foundation , supra , at paras. 13 and 16