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Representation - Lawyers - Conflict of Interest

. Dye & Durham Limited v. Ingarra

In Dye & Durham Limited v. Ingarra (Fed CA, 2024) the Federal Court of Appeal dismissed an appeal from a ruling that found no conflict of interest in counsel for class action plaintiffs, here in a motion to remove "plaintiffs’ counsel as counsel of record":
[1] The appellants are defendants in a proposed class action brought under section 45 of the Competition Act, R.S.C. 1985, c. C-34 (the Act). They sought an order removing plaintiffs’ counsel as counsel of record, alleging that counsel had received relevant confidential information in the course of a prior retainer of a lawyer who was, at one point, also counsel to the defendants.

[2] The Federal Court dismissed the appellants’ motion (Ingarra v. Dye & Durham Limited, 2023 FC 1046, 2023 CarswellNat 5572 per Gascon J.). The Court found that the appellants had not established that relevant information, let alone confidential information, was shared in the course of the former retainer. The Court also found that the former and present retainers were not sufficiently related to justify the presumption that relevant confidential information had been imparted.

[3] The Federal Court erred in finding that retainers under sections 45 and 79 of the Act were not sufficiently related. It is, however, an error of no consequence. While a finding of sufficient relationship shifted the burden to the respondents to prove that no confidential information was received, the Federal Court’s conclusion that no information was in fact shared was amply supported by the evidence and fully responds to the presumption. This finding is dispositive of the appeal.


The principles governing the removal of counsel

[13] Two questions are asked in determining whether a conflict of interest exists: did the lawyer receive confidential information attributable to a solicitor-client relationship relevant to the matter at hand, and, if so, is there a risk that it will be used to the prejudice of the client? A conflict of interest has been defined as a "“substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client, or a third person”". (See R. v. Neil, 2002 SCC 70, [2002] 3 S.C.R. 631, MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, 1990 CanLII 32, [Martin], and Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] 2 S.C.R. 649 [McKercher])

[14] The moving party bears the onus of establishing that relevant confidential information was shared. This can be discharged either by showing evidence that confidential information was in fact imparted to the lawyer during the solicitor-client relationship, or by showing that the new retainer is "“sufficiently related”" to the matters covered in the prior relationship. To find a conflict on the basis that the matters are sufficiently related, the information previously imparted to the lawyer must be "“capable of being used against the client”" in a "“tangible manner"” (McKercher at para. 54, MediaTube Corp. v. Bell Canada, 2014 FC 237, 126 C.P.R. (4th) 245 at para. 109 [MediaTube]).

[15] When a retainer is sufficiently related, a rebuttable presumption is created that the lawyer or firm received confidential information. Ancillary to this, it is also assumed that the information received by the "“tainted”" lawyer would be shared with the lawyer’s affiliates, such as is alleged in the case before us (Martin at 1262). The presumption can be rebutted by demonstrating that no confidential information was actually shared, or by demonstrating that the information is not relevant to the matter at hand (MediaTube at paras. 28 and 116, GCT Canada Limited Partnership v. Vancouver Fraser Port Authority, 2019 FC 1147, 312 A.C.W.S. (3d) 861 at para. 82 [GCT]).

[16] In considering a motion to remove counsel, a court must balance the public interest in maintaining confidence in the integrity of the bar and consequently, the judicial system, against a party’s right of choice of counsel and the desirability for reasonable mobility within the legal profession (Martin at 1243). In considering these factors, courts have generally exercised restraint before interfering with a party’s choice of counsel. However, once it is found that confidential information was disclosed and could be used to the detriment of a client, the lawyer is disqualified. The client’s right to confidentiality trumps the lawyer’s desire for mobility (Strother v. 3464920 Canada Inc., 2007 SCC 24, [2007] 2 S.C.R. 177 at para. 51).


[33] The determination that the retainers were sufficiently related from a legal perspective does not, however, end the matter.

[34] The presumption that confidential information has been shared can be rebutted by proving that no information was actually imparted, or that no information was imparted that could be relevant, such that a reasonably informed member of the public would be satisfied that no misuse of any confidential information would occur (Martin at 1260-1261). In this regard, to warrant removal, the information previously imparted to the lawyer must be "“capable of being used against the client”" in a "“tangible manner”" (McKercher at para. 54; MediaTube at para. 28).

[35] This is a relatively high threshold. The information must likely be part of the factual context directly informing counsel’s advice to the new client (Chapters Inc. v. Davies, Ward & Beck LLP, 2001 CanLII 24189 (ONCA), 52 O.R. (3d) 566 at para. 36 [Chapters]), or there must be points of connection or strategic insight acquired that have been identified by the moving party so as to move the allegation from hypothetical to likely. Contextual, generalized information will not meet the standard. The information must be capable of being used to the detriment of the former client.

[36] A relation sufficient to warrant removal is not established by the mere fact that the legal issues in the two retainers intersect and overlap or that the lawyer acquired relevant legal knowledge and skills during the former retainer. Similarly, the possibility that a lawyer has insight into their former client’s "“general … litigation philosophy”" will generally not suffice (McKercher at para. 54). Specific insight acquired into the former client’s strengths and weaknesses, character and personality traits or litigation strategy will be more significant (Skii km Lax Ha v. Malii, 2021 BCCA 140, [2021] 9 W.W.R. 622 at para. 39 [Malii], citing Le Soleil Hospitality Inc. v. Louie, 2010 BCSC 1954, [2010] B.C.J. No. 2821 at paras. 34-36). As I will explain, nothing in the evidence reaches this level.
. R. v. Marrone

In R. v. Marrone (Ont CA, 2023) the Court of Appeal considers conflict of interest respecting trial counsel:
[39] Where an allegation of conflict of interest is raised on appeal, the appellant is required to demonstrate two things: (i) that trial counsel was in an actual conflict of interest; and (ii) that the conflict impaired trial counsel’s representation, in the sense that counsel’s representation was, in fact, adversely affected. The latter question is judged by what happened, not what might have happened. The Court will find that a miscarriage of justice occurred only if both branches of this test are met: R. v. W.W., (1995) 1995 CanLII 3505 (ON CA), 25 O.R. (3d) 161 (C.A.), at p. 173; R. v. Faudar, 2021 ONCA 226, 403 C.C.C. (3d) 43, at paras. 59-61.
. R. v. Faudar

In R. v. Faudar (Ont CA, 2021) the Court of Appeal considered a lawyer's duty to avoid conflict of interest:
[55] A lawyer owes a duty to their client to avoid conflicts of interest: Baharloo, at para. 31. Section 1.1-1 of the Law Society of Ontario’s Rules of Professional Conduct defines a “conflict of interest” as a substantial risk that a lawyer’s loyalty to, or representation of, a client would be materially and adversely affected by the lawyer’s duties to a former client.

[56] The rule against conflicts guards against two forms of prejudice: first, there is “prejudice as a result of the lawyer's misuse of confidential information obtained from a client”; and second, there is “prejudice arising where the lawyer ‘soft peddles’ his representation of a client in order to serve his own interests, those of another client, or those of a third person”: Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] 2 S.C.R. 649, at para. 23.

[57] With respect to former clients, lawyers must refrain from misusing confidential information. Whereas, for current clients, lawyers must not misuse confidential information, nor place themselves in a situation that jeopardizes effective representation: Canadian National Railway Co., at para. 23.

[58] A lawyer can render effective assistance only when that lawyer champions the accused’s cause with undivided loyalty: W. (W.), at p. 13. Effective representation may be threatened where a lawyer is tempted to prefer other interests over those of their client: Canadian National Railway Co., at para. 26. As this court wrote in R. v. McCallen (1999), 1999 CanLII 3685 (ON CA), 43 O.R. (3d) 56 (C.A.), at p. 67, cited with approval by the Supreme Court in R. v. Neil, 2002 SCC 70, [2002] 3 S.C.R. 631, at para. 12: “There should be no room for doubt about counsel's loyalty and dedication to the client's case.” A lawyer’s duty of loyalty to their client is foundational to the adversarial system and “essential to the integrity of the administration of justice”: Neil, at para. 12.

[59] This court has identified specific criteria to determine where a conflict of interest causes a denial of the accused’s constitutional right to make a full answer and defence, and results in a miscarriage of justice. As Doherty J.A. wrote in W. (W.), at pp. 15-16, the appellant must show:
i. an actual conflict of interest between the respective interests represented by counsel; and

ii. as a result of that conflict, some impairment of counsel’s ability to represent effectively the interests of the appellant.
[60] If both criteria are established, then the appellant has been denied the right to make full answer and defence and a miscarriage of justice has occurred: W. (W.), at p. 16.

[61] It is not enough simply to have an appearance of a conflict. The court must determine whether counsel’s representation was, in fact, adversely affected. The concern on appeal must be with what happened and not what might have happened: W. (W.), at pp. 17-19.

[62] The cases provided by the parties on this issue, namely Baharloo and W. (W.), consider the issue of a potential conflict of interest with another “current client”, as opposed to a former client. However, if the trial counsel’s representation of an accused may be compromised by a duty to a former client, counsel should first advise the new client and obtain their consent. If counsel believes that the duty to the former client actually will compromise the new retainer, then the lawyer should decline to accept the case.
. Lepan v. Lofranco

In Lepan v. Lofranco (Div Ct, 2021) the Divisional Court considered the conflict of interest test for counsel:
[23] The Court has the inherent jurisdiction to remove from the record solicitors who have a conflict of interest: see MacDonald Estate v. Martin, 1990 CanLII 32 (SCC), [1990] 3 S.C.R. 1235, at 1245.

[24] At page 1243 of MacDonald, the Supreme Court set out the general principles to be considered on a motion to disqualify for conflict of interest. A court will seek to balance three competing public policy values:
a) the maintenance of high standards of the legal profession and the integrity of our system of justice;

b) the right of a litigant to its choice of counsel, which he or she should not be deprived of without good cause; and

c) the desirability to permit mobility in the legal profession.


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Last modified: 24-04-24
By: admin