T-1160-92
Merck & Co. Inc., Merck Frosst Canada Inc. and
Yamanouchi Pharmaceutical Co. Ltd. (Plaintiffs)
v.
Interpharm Inc., Allen Barry Shechtman,
Bernard Sherman, Northam Medication Service
Inc., Inter-American Office Service Inc., Medicine
Club of America Inc., Leonard Clayman, Bluma
Clayman, 643402 Ontario Limited and Medichem
Inc. (Defendants)
INDEXED AS: MERCK & CO. V. INTERPHARM INC. (T.D.)
Trial Division, Giles A.S.P.—Toronto, September 14
and 18, 1992.
Barristers and Solicitors — Implied undertaking of confi
dentiality — Motion to remove Gowling, Strathy & Henderson
as solicitors for plaintiffs — While enforcing Anton Pillar type
order when acting for another plaintiff in another patent
infringement action, Gowling may have obtained information
about defendants' operations useful to plaintiffs herein —
Information so obtained subject to implied undertaking of con
fidentiality — Whether solicitor should be removed if might or
could wrongfully deploy information subject to undertaking —
Motion dismissed — Cases dealing with solicitor and client
privilege not applicable as no solicitor and client relationship
between defendants and Gowling, merely implied obligation on
Gowling — Implied undertaking of confidentiality of insuffi
cient public interest, when balanced against right of party to
choose own solicitors and public interest in efficient adminis
tration of justice, to require Court to disqualify any solicitor
who might wrongly deploy information subject to undertaking
— Solicitor who fails to observe undertaking subject to citation
for contempt — Implied undertaking restrains what solicitor
does with information, but cannot prevent solicitor from retain
ing it in his mind — So long as existence and content of any
disclosure not disclosed outside firm, retaining counsel having
experience of similar cases in interest of efficient administra
tion of justice.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Federal Court Rules, C.R.C., c. 663.
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235;
(1990), 77 D.L.R. (4th) 249; [1991] 1 W.W.R. 705; 70
Man. R. (2d) 241; 121 N.R. 1.
CONSIDERED:
Eli Lilly and Co. v. Interpharm Inc. (1992), 42 C.P.R.
(3d) 4 (F.C.T.D.); Crest Homes Plc. v. Marks, [1987]
A.C. 829 (H.L.); Spiliada Maritime Corpn. v. Cansule
Ltd., [1987] A.C. 460 (H.L.); Home Office v. Harman,
[1983] 1 A.C. 280 (H.L.).
REFERRED TO:
Bibby Bulk Carriers Ltd. v. Cansulex Ltd., [1989] Q.B.
155.
MOTION by defendants to remove Gowling,
Strathy & Henderson as solicitors for plaintiffs.
Motion dismissed.
COUNSEL:
Gordon F. Henderson, Q. C. for plaintiffs.
Harry B. Radomski for defendants.
SOLICITORS:
Gowling, Strathy & Henderson, Ottawa, for
plaintiffs.
Goodman & Goodman, Toronto, for defendants.
The following are the reasons for order and order
rendered in English by
GILES A.S.P.: The motion before me was for an
order removing Gowling, Strathy & Henderson
(hereinafter "Gowling's") as solicitors for the plain
tiffs. The principal ground was based on the fact that
Gowling's had acted for the plaintiffs ("Eli Lilly") in
Eli Lilly and Co. v. Interpharm Inc. (1992), 42 C.P.R.
(3d) 4 (F.C.T.D.), an action by Eli Lilly against some
of the defendants in this case and others for infringe
ment of patents of certain drugs, not at issue in this
case, allegedly infringed in the same manner as a pat
ent at issue in this case has allegedly been infringed.
In the course of prosecuting the Eli Lilly action an
Anton Pillar type of order was obtained and in the
course of enforcing that order the solicitors for Eli
Lilly would have obtained information about the
operations of these defendants which would possibly
be of use to the plaintiffs in this action. The informa
tion so obtained would be subject to an implied
undertaking of confidentiality. The moving defend
ants argue that to allow solicitors who are subject to
such an implied undertaking to act for another party
in whose favour they might deploy (to use a neutral
term) the information was to risk bringing justice
into disrepute and for that reason counsel sought to
persuade me that Gowling's should be ordered
removed as solicitors for the plaintiffs. I dismissed
the motion for reasons given from the bench but indi
cated that if counsel requested, I would give brief
written reasons, which on request I now do.
Counsel pressed me to analogize to those cases
where solicitors were removed for being in a position
of possibly being able to infringe solicitor and client
privilege. In those cases cited the solicitor of a client
had become or was associated with the solicitor for a
party with opposing interests to the client. In this case
there is no suggestion that any member of the plain
tiffs' legal firm ever entered into a solicitor and client
relationship with the defendants or any of them.
While there is no allegation of any use of the infor
mation subject to the implied undertaking by the par
ticular member of the firm acting for the plaintiffs,
nor even of any transmission of that information by
other members of the firm who acted for Eli Lilly to
the member who is acting for these plaintiffs, neither
is there any evidence of any chalkline, cone of
silence or any other steps being taken to attempt to
ensure that the particular members of the firm who
acted for Lilly do not communicate with the members
of the firm acting for the plaintiffs. Should I have
found that the principles in the solicitor and client
cases applied, and that therefore there was an onus on
the plaintiffs' solicitors to prove an absence of possi
ble conflict, I would have been required by MacDon-
ald Estate v. Martin, [1990] 3 S.C.R. 1235 to order
the solicitors removed because there is no evidence
whatsoever to prove that a breach of the undertaking
could not have taken place.
Solicitor and client privilege is one of the basic
principles which permit the operation of our justice
system and public confidence in it. In order to sup
port the public interest in the inviolability of the
solicitor and client relationship the courts have
imposed great inconvenience and have overridden
without question personal rights such as the right of a
person to choose his own counsel. In this case there is
no suggestion that a lawyer who once acted for the
defendant is now with the plaintiffs' firm. There is no
suggestion of a solicitor and client relationship hav
ing been established between the defendants and any
one at Gowling's. The public interest in solicitor and
client relationship is not engaged.
In my view the implied undertaking would be most
impractical if it resulted in an ability to remove from
a case any solicitor who was bound by an implied
undertaking. The implied undertaking is not of suffi
cient public interest when balanced against the right
of a party to choose his own solicitors and the public
interest in the efficient administration of justice to
require the Court to disqualify any solicitor who
might wrongly deploy information subject to the
undertaking. If a solicitor fails to observe the under
taking the remedy is to cite him for contempt, not to
remove him.
A lawyer who takes cases regularly must have
acquired a great deal of information subject to
implied undertakings. In these days of specialized
education and long work hours for junior lawyers, it
is possible that a significant percentage of a lawyer's
general knowledge will have been acquired in his
practice of law, there having been little other oppor
tunity for him to acquire the same. It is equally possi
ble that a large portion of that general knowledge will
be subject to implied undertakings. If the defendants'
submissions are correct, few lawyers who have been
called for any length of time will be able to take part
in litigation. It is to be remembered that the undertak
ing is to the Court and is not limited to deploying
information in cases involving one or more of the
same parties.
Counsel were unable to cite any case where the
question of whether a solicitor should be removed
who might or could wrongfully deploy information
subject to the undertaking was considered. There are
however a number of cases where it is hard to con
ceive that if there were any such general principle
that it would not have been considered. In Crest
Homes Plc. v. Marks, [1987] A.C. 829 (H.L.) (case in
which it is noted that the implied undertaking applies
to information acquired as the result of an Anton Pil
lar type of order) the plaintiff alleged that the defend
ants had taken plans from the plaintiff. The defend
ants were ordered to surrender all such plans. A
certain number of plans were surrendered. The plain
tiff then commenced another action. The defendants
in the second action included the defendants in the
first action. An Anton Pillar type of order was
obtained in the second action and a considerable
number of plans were obtained which it was alleged
ought to have been produced in response to the order
in the first case. The report I have cited is of a motion
to be released from the implied undertaking so that
the information obtained as a result of the second
order could be used in connection with contempt pro
ceedings with regard to the first order. It is apparent
that the use that is restricted by the implied undertak
ing does not include retaining the information in the
brain or files of the lawyers so that it may be
deployed for purposes such as considering the same
when deciding whether contempt proceedings might
be appropriate and indicating that a motion should be
made to release the information from the implied
undertaking so that it may be used in contempt pro
ceedings.
Another set of circumstances in which I find it dif
ficult to believe that disqualification of solicitors,
because of the existence of an implied undertaking,
would not have been considered if there were such a
principle is "the Spiliada" (Spiliada Maritime Corpn.
v. Cansulex Ltd., [1987] A.C. 460 (H.L.)). The
Spiliada was one of a fleet of ships allegedly dam
aged by being loaded in Vancouver, British Columbia
with allegedly damp sulphur. The ships had different
owners, flew different flags, were bound to different
foreign ports and apparently employed different types
of bills of lading. However, their owners employed
the same firm of English solicitors. Prior to the com
mencement of the Spiliada action a plaintiff had
commenced an action with respect to damage alleg
edly done by damp sulphur to the ship Cambridge-
shire by the same defendant as appears in the
Spiliada action. After the Cambridgeshire, cases with
respect to the Artemis, the Semiramis and possibly
several other ships were commenced. Before the
Spiliada case reached the House of Lords, it appears
from the report of that case that 15 lawyers from the
same firm with 75 files were deployed on similar
cases. It is not clear how many ships were actually
involved or how many cases. The House of Lords
decision in the Spiliada was reported in 1987. In
1989 a dispute involving "the Cleanthes" was pro
ceeding to arbitration. Again, damp sulphur loaded in
Vancouver was involved. A motion was brought to
release from the undertaking implied in the Cam-
bridgeshire, a scientific report on the effect of damp
sulphur on mild steel ("the mild steel report") (see
Bibby Bulk Carriers Ltd. v. Cansulex Ltd., [1989]
Q.B. 155). It is quite apparent that the implied under
taking with regard to the mild steel report came into
existence before the commencement of the Spiliada
and continued in existence until after the House of
Lords decision in the Spiliada. The motion for
release of the mild steel report was not successful but
it is quite apparent that the fact of the existence of the
report must have been in the minds of the solicitors
and have been there since they acted for the owners
of the Cambridgeshire. The Spiliada deals with an
order for service ex juris. There is no mention in the
report of the case that the matter of the existence of
an implied undertaking was even considered. How
ever, in that the mild steel report would appear neces
sarily most relevant to any action involving the
alleged damage by damp sulphur to the hull of a ship,
I do not consider it possible that if there were any
principle that solicitors restrained by an implied
undertaking should be removed, that Lord Goff
would have indicated that it was in the best interests
of justice that the same firm of solicitors be used in
the Spiliada as had been used in the earlier cases.
One of the principal reasons for Lord Goff finding
that England was the forum conveniens for the
Spiliada, was that the same firm of solicitors could be
used if the case were tried in England. I think it is
worth quoting from the speech of Lord Goff where
he points out the advantages of using the similar case
educated solicitors [at pages 485-486].
I believe that anyone who has been involved, as counsel, in
very heavy litigation of this kind, with a number of experts on
both sides and difficult scientific questions involved, knows
only too well what the learning curve is like; how much infor
mation and knowledge has to be, and is, absorbed, not only by
the lawyers but really by the whole team, including both law
yers and experts, as they learn about the interrelation of law,
fact and scientific knowledge, having regard to the contentions
advanced by both sides in the case, and identify in their minds
the crucial matters on which attention has to be focused, why
these are the crucial matters, and how they are to be assessed.
The judge in the present case has considerable experience of
litigation of this kind, and is well aware of what is involved.
He was, in my judgment, entitled to take the view (as he did)
that this matter was not merely of advantage to the shipowners,
but also constituted an advantage which was not balanced by a
countervailing equal disadvantage to Cansulex; and (more per-
tinently) further to take the view that having experienced teams
of lawyers and experts available on both sides of the litigation,
who had prepared for and fought a substantial part of the Cam-
bridgeshire action for Cansulex (among others) on one side
and the relevant owners on the other, would contribute to effi
ciency, expedition and economy—and he could have added, in
my opinion, both to assisting the court to reach a just resolu
tion, and to promoting a possibility of settlement, in the pre
sent case. This is not simply a matter, as Oliver L.J. suggested,
of financial advantage to the shipowners; it is a matter which
can, and should, properly be taken into account, in a case of
this kind, in the objective interests of justice.
Before leaving the sulphur fleet I should perhaps
note that the solicitor seeking release from the
implied undertaking in Bibby were the solicitors act-
ing for the owners of the Cleanthes, surely circum
stances in which a motion to remove might have been
expected if any such thing were usual.
In my view cases dealing with solicitor and client
privilege do not apply to situations where solicitor
and client privilege is not involved but implied obli
gations bind a solicitor. Next it is my view that the
implied undertaking restrains what a solicitor does
with the information but cannot prevent the solicitor
from retaining it in his mind.
I believe the undertaking has been given its widest
scope in Home Office v. Harman, [1983] 1 A.C. 280
(H.L.).
There the undertaking was held infringed by the
lawyer supplying the information to a newspaper
reporter in the apparent hope that the material would
be used to aid an activist group for which she was
also a lawyer. When criticizing the lawyer the House
of Lords made no suggestion that there was anything
improper in her acting for both clients. What was
improper was the use she made of the information. In
my view so long as the content of any disclosure and
perhaps even its very existence are not disclosed
outside the firm it is in the best interests of the effi
cient administration of justice that counsel be
retained who have had the educational experience of
participating in similar cases. I would therefore on
general principles dismiss the motion.
In MacDonald Estate v. Martin, as I understand
the reasons of the majority, it was held that when
seeking to determine the applicability of solicitor and
client privilege each case must be decided on its own
facts. While I have concluded that solicitor and client
privilege principles are not applicable to this case, if I
should have considered this case on a subjective basis
I note the following: this motion arises because this
defendant fears that this counsel might use informa
tion supplied by the defendant under compulsion.
That information must be of one or both of two basic
kinds: either information relevant to the issues in this
case or information irrelevant to the issues in this
case. If the information is irrelevant the contempla-
tion of it within the law firm will do the defendant no
harm. If, as is unfortunately not unknown in cases in
this Court, the law firm attempts to plead or intro
duce in evidence irrelevant information, the defen
dant has remedies available in the Rules [Federal
Court Rules, C.R.C., c. 663] to strike irrelevant
pleadings or to request a judge to ignore irrelevant
evidence or prohibit its introduction and in addition
can presumably move for contempt. If the informa
tion is relevant the defendant will have to disclose it
either in its affidavit of documents or in its oral dis
covery. The potential mischief in the case of relevant
material is then that the solicitors might disclose it in
that short period of time between the institution of
the action and discovery. Against this mischief, of
what I will call possible mistiming, I have to weigh
such factors as the plaintiffs' right to choose their
own counsel and the interests of justice in efficiency,
savings in costs and savings in time. When so
phrased the subjective decision is quite obviously in
favour of the solicitors continuing to act. In my view,
therefore, both the objective and subjective consider
ations require that this motion be dismissed.
ORDER:
Motion dismissed.
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