Benchmark Litigation's Managing Editor Michael Rafalowich speaks with McMillan's Toronto partner Adam Chisholm about his unique practice, a recent victory, and the importance of taking advantage of key legal opportunities.
You’ve got a bit of a unique practice, branding yourself as commercial litigator with specialties in intellectual property, administrative law, and securities. Is it a generally even split, or does the balance vary from year to year?
I focused on administrative law early in my career and argued a number of proceedings related to different administrative tribunals. Over time, I gained specific experience that led me to focus on securities and intellectual property and I could not bring myself to give up one or the other. Securities and IP are generally a 40%/40% split, depending on the year, with the rest of my work being general commercial or administrative law litigation. Sometimes I will have a significant administrative tribunal hearing (e.g. Competition Tribunal) matter that requires significant time and leads to a different distribution. Ultimately, I am doing marketable things that I enjoy, which is important.
Your recent victory for Catalyst Capital seems squarely position in the commercial/securities camp. Is this case typical of your work in this area? Or were there any points of novelty regarding this case specifically?
The Hudson’s Bay Company (HBC) case was one of the most significant cases heard by a Canadian securities administrator in 2019. It was unique because of its national importance, the forum involved and the outcome. HBC is Canada’s oldest company. The then-Executive Chairman of HBC sought to take the company private. The transaction at issue was valued at $1.9 billion. Our minority shareholder client brought a proceeding to the Ontario Securities Commission taking issue with the nature of, and disclosure about, the transaction. The shareholder group making the take-private bid and HBC were both represented by sophisticated counsel and advisors. They opposed the Commission granting standing to our client and argued that there were no issues with the proposed transaction. Parties concerned about commercial transactions in Ontario have traditionally relied on the courts to resolve their concerns. This case, however, was held to relate to “fundamental securities regulatory issues” and the Commission granted standing to our client. The Commission acknowledged that the relief sought was central to the ability of minority shareholders to make an informed voting decision. The Commission stopped short of cease-trading the transaction but took the extraordinary step of ordering that the public disclosure about the transaction be amended in at least thirteen enumerated ways if the transaction were to proceed. Regulators are obviously careful about interfering in transactions at all, which is why the Commission’s requirement that further disclosure was required before the transaction could proceed is so notable. The decision itself contains strong language about proper disclosure and process in a number of areas, including conflicted material transactions, the use of special committees, limitations contained in appraisals and benefits to shareholders. It is rare to get such detailed guidance from a regulatory tribunal in a contested matter, and the decision is surely a precedent that Canadian companies considering management-led transactions will look to in the future.
With respect to this matter being typical of my work, the Commission has not heard many of these cases. However, I do appear at the Commission with respect to various matters. Another example of my work in the space is our firm’s representation of the former directors and officers of Sino-Forest, which is the most significant securities fraud case in Canada in the last ten years; perhaps ever. I participated in every stage of those proceedings and was lead counsel on our clients’ sanctions and appeal efforts.
You brought an application to the Ontario Securities Commission to prevent the HBC transaction. As this case was framed as “a major victory” which the firm is only starting to discuss publicly as of April, can I assume this application was granted? What was the full course of action that this case took and how and when exactly did it resolve?
The Commission proceeding was commenced in late 2019, after the issuance of the management information circular related to the transaction, but prior to the shareholder vote on the deal. The Commission rendered its order requiring further disclosure on December 18, 2019. It released twenty-eight pages of reasons explaining the order two months later, in February 2020. The Commission assuredly took time to be careful in writing its reasons because of the potential impact on future transactions. After the Commission made its order, the shareholder group who wanted to take HBC private improved its disclosure and price and the deal proceeded to a vote in late February. The transaction was concluded thereafter. For obvious reasons, our firm did not want to comment on the legal implications of the Commission decision prior to the conclusion of the underlying transaction, one way or another.
McMillan’s role was sole counsel to Catalyst, with you leading the case. Did you want to discuss your relationship with this client? How did you come to be retained by them as the lead?
We have acted for Catalyst in the past on novel and interesting restructuring and securities law matters and the National Chair of our securities group, Paul Davis, has maintained the relationship with Catalyst. I have previously argued matters for Paul’s clients and he involved me when the matter became litigious.
Is your IP work strictly relegated to the trademark arena or do you take on any patent work as well?
I handle all sorts of contentious IP disputes, including patent cases. Our firm does copyright, trademark and patent work. That said, our firm does not specialize in Big Pharma-style patent work as some other firms do.
How much of your work involves trials?
While I have had success at trial, one of the things that I really value about my areas of expertise are that they involve opportunities for merits adjudication without the costly civil trial framework. I have done a number of hearings that are not “civil trials” but still involve oral advocacy and skills such as impeachment. They can still be high-stakes matters with significant consequences. The HBC case is merely one recent example.
An increasing number of court matters are being argued on a paper record using the “application” procedure available in most Canadian jurisdictions. Even contentious IP matters that I argue before the Federal Court often do not involve live witnesses. Cross-examinations are done out of court. These proceedings require less time to get to a hearing and are often less costly for clients but are a good source of opportunity for merits adjudication.
You’ve been nominated as one of Canada’s “Top Litigators 40 and Under.” Did you want to take the opportunity to address any others of your vintage that you would recommend for such an accolade?
I think several people that Benchmark have selected in recent years are great choices. From our firm, I would recommend Jeffrey Levine and Samantha Gordon. Jeff is already a Benchmark Future Star. Toronto counsel should keep an eye on Sam, who should be reaching that level very soon. Outward looking, I would recommend Jason Beitchman who is a named partner at his own shop.
Do you find that others in your generational bracket are being provided with opportunities to provide lead counsel on matters and/or try cases?
Civil trials are increasingly uncommon in the Canadian litigation landscape. This is one of the reasons why I have enjoyed my areas of expertise: they have afforded me more litigation experience early in my career. Beyond that, I think that opportunity to lead litigation is largely a product of practice area and the culture of each firm. Our firm tends to staff matters relatively lean, which provides our associates with opportunities that they may not get at other shops. Our senior lawyers tend to be trusting of younger colleagues, something that I have been the beneficiary of myself. I can say that our firm tries to empower our junior colleagues at the earliest opportunity. For example, in the past year, junior associates have made oral submissions at our appeal courts and worked on Supreme Court filings on matters that I have led. Once those same lawyers are leading files, I try to continue to be available as a resource to them, so that I can pay forward some of the trust that has been given to me so far.