Date: 20070831
Docket: T-2088-05
Citation: 2007
FC 879
Toronto, Ontario, August 31, 2007
PRESENT: Kevin R. Aalto, Esquire, Prothonotary
BETWEEN:
TAZCO HOLDINGS I NC.,
EXCALIBRE OIL TOOLS LTD.,
and TEBO INDUSTRIES LTD.
PLAINTIFFS
(Respondents)
and
ADVANTAGE PRODUCTS INC., GENESIS
MACHINING SERVICES INC.,
and WEATHERFORD CANADA LTD.
DEFENDANTS
(Applicants)
REASONS FOR ORDER AND ORDER
[1]
This
motion raises once again the vexing issue of whether a law firm is in a
position of conflict in acting against a former client. The Defendants seek an
order to remove the firm of Brownlee LLP (“Brownlee”) as solicitors for the
Plaintiff. The Defendants allege that Brownlee is in a position of conflict
because the lawyer from Brownlee who is acting on this patent infringement
action had previously been engaged by the Defendant, Advantage Products Inc.
(“Advantage”), to pursue patent infringement litigation on its behalf. The
parties have agreed that this motion be dealt with as a Rule 369 motion under
the Federal Courts Rules. As these cases are often fact
driven, it is necessary to set out in some detail the evidence contained in the
various affidavits filed. There were no cross-examinations on any of the
affidavits.
Background
[2]
This
action was commenced by statement of claim issued November 22,
2005
by Brownlee on behalf of the Plaintiffs. A statement of defence and
counterclaim was served and filed on January 25, 2006. The action is a patent
infringement action in which it is alleged that the defendants have infringed a
patent of the plaintiffs for the production of a device called a Torque
Anchor. The device which the defendants manufacture and sell which is alleged
to infringe the plaintiffs patent is called a TorqStopper. It is a device primarily
used in the oil industry.
[3]
In
support of its position Advantage filed the affidavit of Lynn Tessier
(“Tessier”) sworn March 29, 2006 and the affidavit of Daniel R. Horner (“Horner”)
sworn March 29, 2007. Tessier is the inventor of the anti-rotation tool
known as the TorqStopper, the patented device which is in issue in these
proceedings. He is also a principal of Advantage. Horner is a director of and
corporate counsel for Advantage.
[4]
The
plaintiffs filed affidavits from Edward C. Moore (“Moore”) sworn March 20, 2007 and one from
Neil F. Kathol (“Kathol”) sworn March 21, 2007. A reply affidavit from Kathol
sworn May
7, 2007
is also filed. Moore is the President of the plaintiffs, Tazco
Holdings Inc. (“Tazco”) and Excalibre Oil Tools Inc. (“Excalibre”). Kathol is
a partner of Brownlee and acts for the plaintiffs. Kathol is also the lawyer
at Brownlee who acted for Advantage in a prior patent infringement lawsuit
involving the TorqStopper.
Evidence of Advantage
[5]
Prior
to this proceeding, Advantage had retained the services of Kathol to pursue a
patent infringement action on their behalf (the “Corlac Action”). This
retainer lasted from approximately October 2001 through August 2002 (the
“Brownlee Retainer”). Tessier deposes that during the Brownlee Retainer,
Kathol worked closely with various individuals from Advantage including
Tessier, Horner, John Doyle, an employee of Advantage, and others associated
with the TorqStopper patent. During the course of the Brownlee Retainer,
Tessier deposes that confidential information was shared by Advantage with
Kathol and more specifically:
6. In the course of the advantage
Communications, the Plaintiffs’ solicitors, and specifically Mr. Kathol:
(a)
drafted
licence agreements and sub-license agreement including those involving MSI and
Advantage;
(b)
discussed,
in detail, aspects of the TorqStopper and the nature of its operation;
(c)
discussed,
in detail, patent infringement issues respecting the Corlac Action with myself,
Mr. Weber, Mr. Goodwin, Mr. Doyle and Mr. Malyszko;
(d)
discussed,
in detail, litigation strategy concerning patent infringement issues respecting
the Corlac Action with Mr. Weber, Mr. Goodwin, Mr. Doyle and Mr. Malyszko;
(e)
assisted
in drafting the Statement of Claim issued by Advantage and MSI in the Corlac Action;
(f)
prepared
Affidavits on behalf of Mr. Weber and Mr. Doyle respecting patent infringement
issues in the Corlac Action; and
(g)
generally,
obtained knowledge of Advantage’s finances, share structure, off shore
interests and intentions, corporate make-up, customers, suppliers of machined
goods, distributors and litigation strategy.
7. As a result of the Advantage
Communications, I am of the belief that the Plaintiffs’ solicitors, Brownlee Fryett, and specifically, Mr.
Kathol, have confidential information concerning Advantage’s business,
interests and affairs as well as the personal characteristics and litigation
tolerances of myself and Mr. Weber, which the Plaintiff might
use to the disadvantage of Advantage.
[6]
Tessier
further states that he did not consent to either Kathol or Brownlee releasing
confidential information obtained during the Brownlee Retainer relating to the
Corlac Action. Attached as exhibits to the Tessier affidavit are copies of
accounts rendered by Brownlee to Advantage commencing in October 2001 to August
2002. The total of the accounts is in excess of $23,000. The accounts are all
signed by Kathol on behalf of Brownlee. The work done by Brownlee for
Advantage is extensive as appears from the accounts and it would be impossible
to believe that during the course of the Brownlee Retainer that confidential
information relating to the TorqStopper and Advantage generally was not shared
with Kathol and Brownlee.
[7]
The
itemization in the accounts refers to, inter alia, telephone calls with
the client; meetings with the client; reviewing the patent application;
correspondence to and from the client; correspondence to Corlac regarding
passing off and patent infringement; drafting outline of patent technology
licenses; drafting the statement of claim; drafting license agreements;
detailed review of Canadian Patent; drafting of affidavits; telephone call with
Tessier; advice regarding the claim etc. All of these entries indicate the
kind of communication one would expect between counsel and client. The
inference to be made is that Advantage shared with its counsel confidential
information relating to its business. It is to be noted that Kathol was
engaged in drafting affidavits. Although it is not clear from the accounts,
presumably this was in support of the interlocutory injunction claimed in the
Corlac Action. In an affidavit in support of an injunction there must be full
and frank disclosure to the Court. Thus, in order to draft such affidavits,
Kathol must have had a detailed understanding of the business of Advantage. He
may have forgotten what he learned, as he says in his affidavit, but that is
not the issue.
[8]
Prior to
the commencement of this action, there was an exchange of correspondence and
telephone conversations between Brownlee and Advantage’s intellectual property
counsel. Brownlee sent Advantage and others a letter dated February 3, 2005
demanding that Advantage not infringe the patent of the plaintiffs and that
Advantage cease and desist from doing so. Advantage’s counsel responded by
letter dated February 11, 2005 advising that Brownlee was in a conflict and
could not act against Advantage. The letter went on to recite the Alberta Code of Professional
Conduct, Chapter 6, Rule 3(b):
Except with the consent of the client or approval
of a court pursuant to (c) a lawyer, must not act against a former client if
the lawyer has confidential information that could be used to the former
client’s disadvantage in the new representation.
[9]
The letter invited Brownlee to
withdraw as counsel based on conflict in that it possessed, through Kathol,
confidential information of Advantage. The exchange of correspondence
continued and in a letter dated March 31, 2005, Horner formally requested
that Brownlee withdraw as counsel in relation to this matter. The letter
listed four areas of confidential information that were acquired by Kathol in
his representation of Advantage in the Corlac Action. The confidential
information identified in the letter included:
1.
confidential
information relating to the structure of Advantage;
2.
confidential
information relating to the development of the patents and intellectual
technology;
3.
Advantage’s
client base, marketing strategies, client lists, income and expense documents;
and
4.
information
regarding the manner in which Advantage conducted its litigation and
strategies.
The letter also went on to comment “[s]uffice it so say that
if this is not a conflict, then nothing is”. The letter then advised that if
Brownlee did not withdraw that a motion would be brought to obtain an order
prohibiting Brownlee from acting.
[10]
Horner,
in his affidavit, states that Advantage always took the issue of conflict
seriously and that in an effort to persuade Brownlee to withdraw they sent the
Tessier affidavit to Brownlee in April, 2006. In response, Kathol advised
Advantage’s counsel that Brownlee had sealed the Tessier affidavit and that it was
not reviewed because “there would be the possibility that the affidavit
contains allegations of your clients having imparted information . . . that
goes beyond what was actually imparted. We do not want to be informed of any
such additional information”. Horner also attaches as an exhibit to his
affidavit an e-mail from Kathol dated April 25, 2006. In that e-mail, Kathol
indicates that Tazco is rethinking whether Brownlee should continue to act. Brownlee
did not withdraw.
[11]
The action
languished for a number of months. Horner states that because the matter did
not move forward thereafter that Advantage was of the view that Brownlee might
in fact withdraw as counsel. Horner deposes that only in December 2006, when
Brownlee responded to the Notice of Status Review, did Advantage realize that
Brownlee intended to continue to act. Horner says in light of these
circumstances the motion to remove Brownlee was brought as soon as reasonably
possible.
The Plaintiff’s Evidence
[12]
In
response to the motion, Moore deposes that Kathol has acted
for Excalibre since 1997 and that Kathol “has an intimate knowledge of the
facts and circumstances of this case”. Moore also states that he “has been advised”
that if Advantage wanted to remove Brownlee as solicitors “it would have to so
without delay”. Moore then relates the history of
this action to support the delay argument.
[13]
The
statement of claim was issued and a statement of defence and counterclaim was
served and filed. Thereafter, there was skirmishing between the parties over
the pleadings, however, no motion was brought to disqualify Brownlee.
Pleadings were finally completed in February 2007 and the defendants again
indicated they would bring a motion to have Brownlee disqualified. The
plaintiffs delivered their affidavit of documents in February 2007. This motion
was finally launched in March 2007.
[14]
Moore states in his affidavit that
he would be “disappointed” if the conflict issue can now be raised. He also
deposes that James Weber (“Weber”), the President of Advantage, is the “front
and centre” person at Advantage and expresses surprise that Tessier swore the
affidavit on behalf of Advantage and not Weber. He also describes an
altercation that arose between Weber and himself at a trade show over their
respective patents. Nothing turns on this event, however.
[15]
Moore also
states that he has not been told anything by Kathol whatsoever relating to
Advantage dealing with personal characteristics and litigation tolerances of
Tessier, Weber or others and has not been told anything dealing with
Advantage’s finances, structure, litigation tolerances, customer base or
litigation strategy. Indeed, Moore deposes that much of this
information, such as names of suppliers is available on Advantage’s website and
Moore states that he knows most of
Advantage’s customers because they are in the same market.
[16]
Kathol, in
his affidavit sworn March
21, 2007,
confirms the Brownlee Retainer and admits he drafted the statement of claim in
the Corlac Action and drafted Royalty Agreements which he says were standard
royalty agreements based on precedents. Kathol deposes that he has no
recollection of receiving any information about Advantage or its principals
that was unique and denies discussing “in detail, litigation strategy”.
Essentially, Kathol denies he was privy to any confidential information from
Advantage and categorizes information received as “common knowledge” in the
“oil patch” or available through public sources. Much of his affidavit tosses
off the “confidentiality” allegations of Advantage as so much standard run of
the mill work that there was no relevant confidential information received by
Kathol or Brownlee.
[17]
In
a supplemental affidavit sworn May 7, 2007, Kathol describes an exchange of
correspondence with counsel for Advantage in which Advantage’s counsel sent a
cease and desist letter to Brownlee dated September 18, 2006 regarding
infringement of Advantage’s patents relating to the TorqStopper. Brownlee
responded by letter dated September 26, 2006 and reiterated that they were
counsel to Tazco. Nowhere in this exchange of correspondence is there any
allegation of conflict.
Issues
[18]
The issues
for the Court are:
1.
Is
Brownlee in a position of disqualifying conflict such that it should no longer
be able to act for the plaintiffs?
2.
If
Brownlee is in a position of disqualifying conflict, does the failure of
Advantage to move expeditiously to disqualify Brownlee permit Brownlee to
continue to act for the plaintiffs?
Disqualifying Conflict - The Test to be
Applied
[19]
The
Supreme Court of Canada has set out the approach to be taken when dealing with
a potential conflict of interest. In Macdonald Estate v. Martin,
[1990] 3 S.C.R. 1235, Justice Sopinka observed that the Court is concerned with
at least three competing values, as follows:
1.
Maintaining
the high standards of the legal profession and the integrity of our system of
justice;
2.
Not depriving
litigants of their counsel of choice without good cause; and,
3.
Allowing
reasonable mobility in the legal profession.
[20]
Thus, when
analyzing whether a disqualifying conflict of interest is present, the test
“must be such that the public, represented by the reasonably-informed person,
would be satisfied that no use of confidential information would occur” (par.
47). It is a two-part test. Part one requires that the solicitor actually
receive confidential information relative to the matter at hand. Part two
entails a consideration of whether there is a risk to the client that the
confidential information will be used to the prejudice of the client.
Analysis
[21]
In this
case, the first question is whether Brownlee, during the Brownlee Retainer,
received confidential information relevant to this action. Notwithstanding his
protestations to the contrary, it is inconceivable that Kathol did not receive
some confidential information regarding Advantage during the retainer relating
to the Corlac Action. A brief review of the accounts rendered by Brownlee to
Advantage indicates that information was shared by Advantage with Kathol.
Further, the amount of the accounts indicates that Kathol did more than just a
standard statement of claim. A significant amount of work was done and it is
unquestionable that it related to patents held by Advantage or its associated
companies which are directly in issue in this proceeding.
[22]
Justice
Sopinka noted with respect to the receipt of confidential information:
“In my opinion, once it is shown by the
client that there existed a previous relationship which is sufficiently related
to the retainer from which it is sought to remove the solicitor, the court
should infer that confidential information was imparted unless the solicitor
satisfies the court that no information was imparted which could be relevant.
This will be a difficult burden to discharge. Not only must the court’s degree
of satisfaction be such that it would withstand the scrutiny of the
reasonably-informed member of the public that no such information passed, but
the burden must be discharged without revealing the specifics of the privileged
communication. Nonetheless, I am of the opinion that the door should not be
shut completely on a solicitor who wishes to discharge this heavy burden.”
[23]
Having determined that
confidential information was imparted by Advantage to Brownlee via Kathol, the
next question for consideration is whether there is a risk that it will be used
to the detriment of the client. This is a much more difficult question to
answer. The Brownlee Retainer occurred almost four years before the current
action was commenced. Kathol says he does not recall any confidential
information being imparted to him. He has not reviewed the former file and
says any documentation received from Advantage was returned. However, this is
not in and of itself enough to answer this question. As Justice Sopinka
observed:
“The second question is whether the
confidential information will be misused. A lawyer who has relevant
confidential information cannot act against his client or former client. In
such a case the disqualification is automatic. No assurances or undertakings
not to use the information will avail. The lawyer cannot compartmentalize his
or her mind so as to screen out what has been gleaned from the client and what
was acquired elsewhere.” (par. 50)
[24]
The
overriding policy concern is “a risk” that confidential information will be
used to the detriment of the client. The level of “risk” is not qualified but
only “a” risk. Given the extent to which Kathol was engaged on behalf of
Advantage and the scope of work undertaken by him and Brownlee a risk exists
that confidential information will be used to the prejudice of Advantage.
While Kathol says he does not currently remember any confidential information
being imparted to him, there is a risk that his memory will be refreshed during
the current litigation such that confidential information will be used against
Advantage. Thus, to maintain the integrity of our system of justice in the
mind of public the Brownlee firm must be disqualified from acting on behalf of
the plaintiffs in this case. Having determined that Kathol has confidential
information he and Brownlee cannot act against their former client.
[25]
I
am supported in this conclusion by a consideration of Rule 6 of the Code
of Professional Conduct (the “Code”) of the Law
Society of Alberta. That Rule provides:
“A lawyer who possesses confidential
information of a client or former client:
(b) must not act or continue to act for
another client if the lawyer would have a duty to disclose such information to
that client.”
[26]
There are
other provisions of the Code which support this overriding obligation of
lawyers to their clients.
[27]
Similarly,
many other cases have reiterated the proposition that that there must be an
unqualified perception of fairness in the eyes of the public (see, for example,
O’Dea v. O’Dea (1987), 68 N.F.L.D. & P.E.I.R. 67 aff’d
N.F.L.D. C.A).
[28]
These
principles were reaffirmed by the Supreme Court of Canada in R. v. Neil,
[2002] 3 S.C.R. 631. Mr. Justice Binnie, speaking for the Court, stated that
the “duty of loyalty” is “essential to the integrity of the administration of
justice and its high public importance that public confidence in that integrity
be maintained” (par. 12). Further, the Court approved the reasoning of Justice
Ground in Drabinsky v. KPMG (1988), 41. O.R. (3d) 565 (Ont. Gen.
Div.) wherein Justice Ground observed that:
“I am of the view the fiduciary relationship
between the client and the professional advisor, either a lawyer or an
accountant, imposes duties on the fiduciary beyond the duty not to disclose
confidential information. It includes a duty of loyalty and good faith and a
duty not to act against the interests of the client.”
[29]
All of
these principles were discussed and approved again by the Supreme Court of
Canada in the recent decision of Strother et al. v. 3464920 Canada
Inc. et al., [2007] S.C.J. No. 24. While this case deals with concurrent
clients, Justice
Binnie noted at
par. 51:
“In MacDonald
Estate v. Martin, similarly, the legal rule was arrived at after balancing
various interests, including trading off a client’s ability to choose counsel
against other considerations such as lawyer mobility. Once arrived at,
however, the MacDonald Estate v. Martin rule protecting against
disclosure of confidential information is applied as a “bright line”
rule. The client’s right to confidentiality trumps the lawyer’s desire
for mobility. So it is with Neil. The “bright
line” rule is the product of the balancing of interests not the gateway to
further internal balancing. In Neil, the Court stated (at para.
29):
The bright
line is provided by the general rule that a lawyer may not represent one client
whose interests are directly adverse to the immediate interests of another
current client — even if the two mandates are unrelated — unless
both clients consent after receiving full disclosure (and preferably
independent legal advice), and the lawyers reasonably believes that he or she
is able to represent each client without adversely affecting the other.
[Emphasis in original.]
Further,
Justice
Binnie went on to discuss the “duty of loyalty” as follows:
[56] While the duty of loyalty is focussed on the lawyer’s ability to
provide proper client representation, it is not fully exhausted by the
obligation to avoid conflicts of interest with other concurrent
clients. A “conflict of interest” was defined in Neil as an
interest that gives rise to 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. (emphasis added)
(Neil,
at para. 31, adopting § 121 of the Restatement (Third) of the Law
Governing Lawyers, vol. 2, at pp. 244-45)
[30]
Thus, to adapt Justice Binnie’s phraseology to this case –
the former client’s right to confidentiality trumps the current clients’ right
to counsel of their choice.
[31]
The
Plaintiffs argue that they should not be removed as counsel for three main
reasons. First, they argue there is nothing more than general allegations that
confidential information was imparted to Kathol. They argue there are no
details in Tessier’s affidavit of the specifics of the confidential information
and that Kathol’s work was based upon “conventional documents and records which
were of a public nature” and thus Brownlee is not possessed of any confidential
information. Second, they argue an adverse inference ought to be drawn from
the failure of Advantage to file an affidavit of its CEO, Jim Weber. Finally,
they argue that because of the significant delay in bringing this motion that
the plaintiffs were “lulled into believing that the defendants no longer had a
real concern about conflict of interest” and ought no to be deprived of their
counsel of choice. They cite a number of cases which they say support the
proposition that on the facts of this case they ought not to be disqualified as
counsel.
[32]
I would
not give effect to any of these arguments. First, where there is a previous
retainer by a client, there is an inference that confidential information has
been imparted to counsel. In this case there is more than an inference. There
is the evidence of Tessier as to the type of confidential information given to
Kathol. Even more telling are the recorded entries in the accounts rendered by
Kathol to Advantage. Those entries support the fact that that there were
meetings, telephone calls and discussions with representatives of Advantage
including Tessier. It is a stretch of the imagination to believe that all that
was imparted during these meetings, telephone calls and discussions was nothing
more “conventional documents and records which were of a public nature”. As
the confidential information related to the patents of Advantage it is clearly
relevant to the issues in this proceeding.
[33]
The cases
cited by the plaintiffs do not assist their cause. The case of Denharco
Inc. v. Forespro Inc. [1999] F.C.J. No. 97, a judgment of
this Court, concerned the threshold question whether there was evidence of a
previous solicitor-client relationship sufficiently related to the retainer in
dispute. The Court found there was not and thus did not disqualify counsel. The
Court was also critical of the fact that it was an associate in the law firm
who had no personal knowledge of whether there was any relevant confidential
information passed on to counsel and not the client who swore the affidavit. In
this case there is clear and convincing evidence that Brownlee was in
possession of confidential information that is relevant to the current
retainer.
[34]
They also
cite Groupe Tremca Inc. v. Techno Bloc Inc.,
[1999] F.C.J. No. 1813, a decision of the Federal Court of Appeal. In this
case a defendant had consulted plaintiff’s counsel regarding the marketing of a
product that might infringe a patent held by the plaintiffs. The party
received advice that the patent would not prevent marketing of its product.
Seven years later, the plaintiff retained the same counsel who had given that
advice to act against that party. These plaintiffs argue that this case supports
their position because in that case there was a clear relationship between the
former client and the lawyer which led to the disqualification. They argue
that the same relationship does not exist in this case and that Advantage has
failed to prove a sufficient relationship between the Brownlee Retainer and
this action. The evidence, however, is to the contrary. There is more than
sufficient evidence before the Court to conclude that there is a relationship
between the Brownlee Retainer and the current action.
[35]
Second,
with respect to the argument that an adverse inference should be drawn because
Tessier and not Weber swore the affidavit in support of this motion, the
evidence is that Tessier is the co-inventor of the TorqStopper and is involved
in the business of the defendants. There is also an entry on one of the
accounts of a telephone call with Tessier. The nexus between Tessier and
Advantage is sufficient for Tessier to be able to depose to the confidential
information imparted to Kathol. No adverse inference will be made.
The Delay in Bringing this Motion
[36]
Finally, the
plaintiffs argue that because the defendants have delayed in bringing this
motion they should be allowed to have counsel of their choice continue to act.
As Moore puts it in par. 16 of his
affidavit:
“Owing to the delay by the Defendants of
at least twelve (12) months and due to their not raising the conflict until
after the Plaintiffs invested their time and resources towards the steps taken
with Brownlee LLP as their counsel, I would be very disappointed if the
Defendants could now raise the conflict before this Honourable Court. I am
disappointed that the conflict motion has apparently brought delay to the
issuance of a Scheduling Order.”
[37]
This
argument rings hollow. Advantage did not create this problem. It was a
problem created by Brownlee. The question of Brownlee’s conflict was raised
prior to the issuance of the statement of claim. It continued to be an issue
notwithstanding that Advantage filed a statement of defence and counterclaim.
The affidavit of Tessier was sent to Kathol on April 10, 2006 after the
pleadings were filed. Brownlee took no steps to deal with the issue other than
to deny they had a conflict. They could have sought an opinion from the Law
Society of Alberta as counsel did of the Barreau du Quebec in the Denharco case. They could
have brought their own motion for directions. They did not and having created
the conflict they must deal with the consequences.
[38]
On the
issue of delay, one further matter that must be considered. That is, what is the
motive for now bringing the motion for disqualification. Justice Ground of the
Superior Court of Justice of Ontario noted in Credit Union Central of
Ontario Limited v. Heritage Property Holdings Inc. et al. (2007),
CanLII 16821 that courts should be vigilant in examining the motive for
bringing a motion to disqualify counsel to ensure that it is not for pure
tactical advantage. At par. 29 of the decision he stated:
In
addition, the court may examine the motives of the party bringing a motion for
the removal of a solicitor of record and that the courts should be on guard
against parties bringing such motions for tactical advantages. In Skye
Properties Ltd. v. Wu (2003) O.J. No.
384, Blair, J. stated at paragraph 70:
I
agree that Courts should be vigilant in weeding out disqualification motions
that are simply brought for purposes of gaining a tactical advantage by one
side over the other. The authorities are clear that such a ploy will not
be tolerated. For example, in Canadian Pacific Railway Company v.
Aikins, MacAulay and Thorvaldson 1998 CanLII 5073 (MB C.A.), (1997), 123 Man. R. (2d) 281 (C.A.)
Monnin J.A. stated, at para. 19:
The
second issue is one that was not addressed by any of the parties, but it is one
which must sound alarm bells for any court hearing a matter of this nature: the
concept or practice of removal litigation. It is incumbent to ask if
there is genuinely an issue of conflict, or is the issue simply being raised as
a strategic tool where it might well advantage the party raising it simply to
delay matters or for other positioning purposes.
Justice Binnie also highlighted this
concern in Strother as follows:
Sometimes the claim of conflict is asserted for purely
tactical reasons, an objectionable practice criticized in Neil at paras. 14-15, and a factor to be
taken into account by a court in determining what relief if any is to be
accorded: De Beers Canada Inc. v. Shore Gold Inc., 2006 SKQB 101 (CanLII), [2006] S.J. No. 210
(QL), 2006 SKQB 101; Dobbin v. Acrohelipro Global Services Inc. 2005 NLCA 22 (CanLII),
(2005), 246 Nfld. & P.E.I.R. 177, 2005 NLCA 22. Sometimes, however,
the dilemma is of the lawyer’s own making. (par. 36)
[39]
In
this case, the question of the conflict was raised prior to the commencement of
proceedings and remained a festering sore in this proceeding. Advantage
threatened a motion early on but did nothing. However, they argue that the
e-mail from Kathol in which he said that Tazco was reconsidering whether
Brownlee should continue to act was an indication that they did not need to
bring the motion until they heard further from Brownlee. That e-mail was sent
in April after the affidavit of Tessier was sent to Brownlee. Certainly,
Brownlee did not move the matter forward diligently as a Notice of Status
Review was sent out in December 2006. Brownlee’s response was filed on January 15, 2007. Advantage’s
counsel filed responding submissions arguing for a dismissal of the
proceeding. It was only after the order was made permitting the matter to
continue that Advantage’s counsel say that a motion was required.
[40]
On
balance, the facts in this case do not support an improper motive on behalf of
Advantage for bringing this motion. The issue was clearly raised at the outset
and was never finalized in any way. Each side was busy making assumptions
about the position of the other side. Advantage assumed that Tazco was
reconsidering using Brownlee and Tazco assumed that as Advantage did not bring
their motion that they were not proceeding to push the conflict button. In the
best interests of the clients, the lawyers should have acted sooner to deal
with the issue.
[41]
However,
the conflict exists and Brownlee is disqualified from acting for the
Plaintiffs. The delay by Advantage in bringing this motion and the fact they
continued to deal with Brownlee notwithstanding the conflict are matters that
should be considered on the issue of costs. While in the ordinary course costs
will follow the event, this is a case where it is appropriate that no costs be
awarded.
ORDER
THIS COURT ORDERS that
1.
Brownlee
LLP is disqualified from acting as counsel for the plaintiffs in this
proceeding and they are hereby removed as counsel of record;
2.
There
shall be no costs of this motion;
3.
The
plaintiffs shall appoint new counsel to represent them in this proceeding on or
before September 14, 2007; and,
4.
New
counsel acting for the plaintiffs shall, no later than October 1, 2007, submit a joint schedule for
completion of the next steps in the proceeding or, in the event of
disagreement, requisition a case management conference for the purpose of
fixing a schedule.
“Kevin
R. Aalto”
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