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Federal Court clarifies test for Protective Orders with Counsel’s Eyes Only Provisions

In Del Ridge Homes Inc. v Ledgemark Homes Inc., 2022 FC 566 the Federal Court upheld Prothonotary Milczynski’s decision to dismiss Ledgemark Homes’ motion seeking a protective order containing “counsel’s eyes only” (“CEO”) provisions.


Del Ridge Homes commenced a trademark infringement action against Ledgemark. Ledgemark sought a protective order with a CEO designation after being compelled to produce third party financial documents. That motion was dismissed, and Ledgemark appealed on the basis that the Prothonotary applied the wrong standard for the grant of a CEO provision.

The Test for a Protective Order with a CEO Designation

Justice Strickland noted that CEO orders should only be granted in “unusual circumstances”. There is no comprehensive definition of “unusual circumstances” and each case must be decided on its own merits using a contextual and flexible analysis. Bard sets out a “non-exhaustive list of criteria which are often considered when assessing whether unusual circumstances exist which would support the issuance of a counsel’s eyes only protective order”:

  • The terms reflect the terms of a similar order in parallel litigation;
  • The terms of the order provide opportunity to a receiving party to object to the classification of certain documents as confidential; and
  • The party requesting the CEO order believes in good faith that its commercial business or scientific interests may be seriously harmed by disclosure.

There was no disagreement on the first factor: there is no parallel litigation.

Ledgemark alleged that the Prothonotary erred by failing to consider the second factor. Justice Strickland disagreed, noting that Del Ridge’s challenge to the CEO designation had been subsumed by the motion before the Prothonotary. The Prothonotary found there was overreach on Ledgemark’s part because the documents in issue were non-confidential and because similar documents had been produced without a CEO designation.

Ledgemark alleged that the Prothonotary erred in requiring more than a “good faith” belief of harm in assessing the third Bard factor. Justice Strickland explained that the Prothonotary did not err: the test for a CEO order requires “not only a good faith subjective belief that harm will result, but also ‘confidentiality on an objective basis—a harms test.’” Justice Strickland noted this was a question of applying the facts to the law, not a question of law as Ledgemark asserted. The Prothonotary found Ledgemark’s evidence of misuse of confidential information was speculative given that there had been no misuse of confidential documents produced without protective orders during the ligation or in related Ontario litigation. Justice Strickland agreed that Ledgemark did not establish a real and substantial threat of harm or that the documents were of such an extremely sensitive character that disclosure would be highly prejudicial.

Ledgemark also argued that the Prothonotary erred in law by considering other factors. Justice Strickland explained that “no error of law arises by considering other relevant factors.” The Court held that it was not an error of law for the Prothonotary to note that it was unusual for a protective order to be sought 18 months into litigation, to give weight to the lack of evidence of misuse of confidential information in the Ontario litigation, or to note that it would have been helpful to have the disputed documents filed in court.

Justice Strickland held the decision to issue a protective order with a CEO designation is discretionary and based on the applicable law and facts. Ledgemark had not alleged any palpable and overriding error in this decision. Justice Strickland noted that the implied undertaking continued to apply and that the parties are free to negotiate the terms of a protective order absent CEO provisions.

The full decision can be found here.