Date: 20160902
Dockets: T-1947-13
T-1997-14
T-942-15
Citation:
2016 FC 994
Vancouver, British Columbia, September 2, 2016
PRESENT: Prothonotary Roger R. Lafrenière
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Docket:
T-1947-13
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BETWEEN:
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THE ENOCH CREE
NATION
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AS REPRESENTED
BY
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CHIEF RON
VINCENT MORIN AND
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LYLE MORIN,
NOLA WANUCH,
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JOHN THOMAS
JR., BILLY MORIN,
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LORNA MORIN,
LORNE MORIN,
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KELLY MORIN,
WAYNE MORIN AND SHANE MORIN, BAND COUNCILLORS ACTING ON THEIR OWN BEHALF AND
ON BEHALF OF ALL OTHER MEMBERS OF THE ENOCH CREE NATION
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Plaintiffs
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and
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HER MAJESTY THE
QUEEN IN RIGHT
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OF CANADA AS
REPRESENTED BY
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THE ATTORNEY
GENERAL OF CANADA,
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THE MINISTER OF
ABORIGINAL AFFAIRS
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AND NORTHERN
DEVELOPMENT,
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THE MINISTER OF
TRANSPORT,
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THE MINISTER OF
ENVIRONMENT,
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PARKLAND
AIRPORT DEVELOPMENT
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CORPORATION,
CPL6 HOLDINGS LTD.,
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ROBERT GILGEN,
SILKE GILGEN, AARON SOOS, AND THE ROYAL BANK OF CANADA
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Defendants
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Docket: T-1997-14
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AND BETWEEN:
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THE ENOCH CREE
NATION
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AS REPRESENTED
BY
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CHIEF RON
VINCENT MORIN AND
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LYLE MORIN,
NOLA WANUCH,
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JOHN THOMAS
JR., BILLY MORIN,
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LORNA MORIN,
LORNE MORIN,
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KELLY MORIN,
WAYNE MORIN AND SHANE MORIN, BAND COUNCILLORS ACTING ON THEIR OWN BEHALF AND
ON BEHALF OF ALL OTHER MEMBERS OF THE ENOCH CREE NATION
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Applicants
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And
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HER MAJESTY THE QUEEN
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IN RIGHT OF CANADA
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AS REPRESENTED BY
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THE MINISTER OF
TRANSPORT,
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PARKLAND AIRPORT DEVELOPMENT
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CORPORATION AND CPL6 HOLDINGS LTD.
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Respondents
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Docket: T-942-15
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AND
BETWEEN:
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ENOCH CREE
NATION
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Applicant
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and
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HER
MAJESTY THE QUEEN
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IN
RIGHT OF CANADA,
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AS
REPRESENTED BY
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THE
MINISTER OF TRANSPORT
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AND
PARKLAND AIRPORT
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DEVELOPMENT
CORPORATION
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Respondents
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REASONS
FOR ORDER
[1]
This motion is brought by Parkland Airport
Development Corporation (Parkland), CPL6 Holdings Ltd. (CPL6), Robert Gilgen,
Silke Gilgen and Aaron Soos, the Defendants in Court File No. T-1947-13; by
Parkland and CPL6, the Respondents in T-1997-14; and by Parkland, the
Respondent in T-942-15, who are together jointly referred to in these reasons
as the
“Moving Parties”. They seek an order that Parlee
McLaws LLP (Parlee), including Mr. Edward H. Molstad Q.C., be disqualified by
reason of a conflict of interest from acting for Enoch Cree Nation (Enoch), the
principal Plaintiff or Applicant in the three proceedings before this Court.
[2]
The conflicting interest is said to arise from
Parlee’s representation of Parkland and CPL6 in litigation before the Court of
Queen’s Bench of Alberta (ACQB) from 2013 to 2015. The primary ground advanced
by the Moving Parties is that Parlee’s representation of Enoch is a breach of
the duty of loyalty to Parkland and CPL6, who are Parlee’s former clients, and
is harmful to the reputation of the administration of justice. The secondary
ground advanced is that Parlee should be removed to avoid the risk of improper
use of confidential information provided by Parkland and CPL6 to Parlee during
the solicitor-client relationship and after Parlee assured the Moving Parties
that Enoch could not retain Parlee in its dispute with Parkland and CPL6 due to
obvious conflict.
[3]
The motion is opposed by Enoch, Chief Ronald
Morin and the Band Council, who are named as the Plaintiffs in T-1947-13 and
the Applicants in T-1997-14, and by Enoch, the Applicant in T-942-15.
I.
Introduction
[4]
The Moving Parties brought the present motion on
December 15, 2015. In support of their motion, they filed the affidavits of Mr.
Ferguson and Robert Gilgen. Enoch filed nine affidavits in response. The
parties have also produced documents related to the proceedings brought by
Enoch in this Court and the proceeding brought by Parkland and CPL6 in the
ACQB, including pleadings, affidavits and transcripts.
[5]
The facts in the present case are fairly well
documented and, for the most part, not controversial. Each side urges, however,
a different approach upon me in the interpretation of the facts to determine whether
Parlee complied with the principles relating to conflict of interest. Without
attempting to summarize all of the voluminous evidence filed by the parties, I
will set out below only the pertinent facts as I see them, in chronological order.
II.
Background Facts
[6]
In November of 2012, Robert Gilgen and Mr. Soos,
the president and vice-president of Parkland, began exploring the potential to
create an aerodrome in Parkland County (County). In December of 2012, they met
and together learned the process involved for creating an aerodrome. Both of
them reviewed documents, such as the Transport Canada Aeronautical Information
Manual and the requirements in the Aeronautics Act. They also learned that Canada had no
general restrictions on aerodrome development.
[7]
Parkland was incorporated in February of 2013.
Parkland became aware in August of 2013 that the Edmonton City Centre Airport
would be closing November 30, 2013. CPL6 was incorporated in August of 2013 and
acquired the land for the aerodrome.
[8]
On September 17, 2013, Mr. Rodney Shaigec, Mayor
of the County, sent a letter to the then Minister of Transport, to express
concerns with the proposed aerodrome. The letter was copied to various parties,
including Parkland, Chief Morin, and the Honourable Rona Ambrose, who was the
member of Parliament representing the riding where the Enoch reserve was
located.
Mayor Shaigec concluded his letter as follows:
Further, the applicant has not consulted with Enoch Cree First
Nation which is located approximately two (2) kilometers to the east of the
proposed aerodrome. As the approval of the application rests with the Crown, I
trust Transport Canada will consult Enoch Cree First Nation prior to rendering
a decision that may impact their existing Aboriginal rights or titles.
[9]
Chief Morin in turn sent a letter to Ms. Ambrose
on September 19, 2013, with copies to the Minister of Transport, the County and
Parkland, to advise that Enoch had yet to be consulted by Transport Canada or
any federal entity about the proposed aerodrome. Chief Morin noted that
construction had already begun and questioned whether there had been any
environmental assessments of the project. He concluded his letter by stating
that Enoch objected to any further construction until the First Nation was
consulted.
[10]
Mayor Shaigec sent a second letter to the
Minister of Transport on September 26, 2013 requesting that the federal
government amend the Aeronautics Act and Regulations to allow
municipalities to provide meaningful input in the application and review
process. The letter reiterates the County’s request that Transport Canada not
approve Parkland’s application “as it is not in the
public interest.” The letter was copied to Parkland and Chief Morin.
III.
Retainer of the Law Firm Parlee
[11]
On September 18, 2013, the County issued a “Stop Order” pursuant to section 645(1) of the Municipal
Government Act, ordering that CPL6 cease and desist all stripping and
grading activity by October 10, 2013.
[12]
In early October 2013, Parkland and CPL6 retained
Mr. Fred Laux, Q.C. to act for them to quash the Stop Order, thereby allowing
the development and construction of the aerodrome to continue. Mr. Laux is a
lawyer at Shores Jardine LLP with expertise in municipal planning law. However,
due to the urgency of the matter, Ian Wachowicz was retained to assist Mr. Laux
with the litigation. At the time, Ian Wachowicz was a partner at Parlee. Both
counsel worked together to prepare material in support of an application for a
permanent or interim injunction against the County prohibiting the County from
attempting to enforce the Stop Order. This gave rise to litigation commenced on
October 7, 2014 in the ACQB, Docket No. 1303-14319 (the “ACQB application”).
[13]
Robert Gilgen states that Mr. Wachowicz provided
legal advice in relation to the law regarding aerodrome development, including
registration and certification of the aerodrome in accordance with the Aeronautics
Act. Mr. Wachowicz maintains, however, that the dispute centered
exclusively on whether the County had jurisdiction to regulate aerodromes.
While acknowledging that the Aeronautics Act may have been mentioned in
the brief, Mr. Wachowicz denies having provided any advice to Parkland and CPL6
regarding the legislation. According to Mr. Wachowicz, the advice was focused
instead on the extent to which the County could regulate the aerodrome.
[14]
On October 24, 2013, the merits of the
application were argued by Mr. Laux and
Mr. Wachowicz before ACQB Justice R. Paul Belzil based upon the affidavit
evidence of
Robert Gilgen and a written brief filed on behalf of Parkland and CPL6. The
brief describes the work done by Parkland and CPL6 to develop and construct the
aerodrome and refers to the legal requirements for registration and
certification of the aerodrome. At paragraph 5, Mr. Laux submits that the
facilities to be constructed meet the definition of “Aerodrome”
under the Aeronautics Act. He further adds at paragraph 10 that: “[t]here is no requirement under the Aeronautics Act
or regulations thereunder requiring any form of approval prior to a party
undertaking construction of the facilities described above”. Oral
submissions to the same effect were made at the hearing.
[15]
On October 29, 2013, Justice Belzil issued a
decision enjoining the County from attempting to enforce the purported Stop
Order: Parkland Airport Development Corporation v Parkland (County), 2013
ABQB 641 (CanLII). No appeal was taken from the decision; however, Parlee
continued to represent Parkland and CPL6 until about August of 2015, when the
matter of the costs of the application was finally concluded by Parlee’s
managing partner,
Mr. James McGinnis, following the departure of Mr. Wachowicz from Parlee.
IV.
Legal Proceedings by Enoch against the Moving
Parties
[16]
On November 28, 2013, the law firm of Willier
and Company (which was representing Enoch at the time) served the Moving
Parties’ corporate solicitors, Lynass Ferguson & Schoctor, with the
Statement of Claim in T-1947-13, as well as a motion record seeking an
injunction on short notice. The Statement of Claim alleges, in short, that the
development and construction of the aerodrome by the Defendants is illegal and
constitutes an ongoing danger or threat to Enoch’s treaty rights, aboriginal
rights, traditional way of life and aboriginal cultural values. At paragraph
23, it is alleged that the Defendants have intentionally violated Canadian law,
including the Aeronautics Act.
[17]
The previous day, Mr. Will Willier of Willier
and Company had sent a letter Mr. Molstad cautioning him about Parlee’s
representation of Parkland. The letter reads as follows:
Attached is a
Statement of Claim filed in Federal Court on November 26, 2013.
We understand
that Parlee McLaws acts for the defendants; Parkland Airport Development
Corporation, CPL6 Holdings Ltd., and possibly Robert Gilge, Silke Gilgen, and
Aaron Soos.
Because Parlee
McLaws is acting for Enoch Cree Nation with respect to land claims, including
the matter of the traditional territory of Enoch Cree Nation in which the
proposed aerodrome/airport is located in Parkland County, we submit that Parlee
McLaws is in a conflict of interest position and can no longer act for Parkland
Airport Development Corporation.
We look forward
to your immediate response.
[18]
Mr. Molstad wrote to Mr. Willier on November 27,
2013 and advised him that Parlee would not act for any of the Defendants in
that dispute.
[19]
Unaware of the correspondence exchanged between
Mr. Willier and Mr. Molstad,
Mr. Richard Ferguson, a partner with Lynass Ferguson & Schoctor, sent the
pleading and motion materials with a covering letter to Mr. Wachowicz on
November 28, 2013 asking if Parlee could represent the Moving Parties in the
defence of the action and in response to the motion. Later that same day, Mr.
Ferguson received an email from Mr. Wachowicz that reads as follows:
“I just saw this.
Sadly, I cannot act. Enoch is a client of Parlee McLaws, and while they are not
using our firm for this matter (obviously due to the conflict) Enoch just sent
us a letter demanding that Parlee McLaws not act for either side in this
dispute. I will contact you tomorrow re this, and regarding referrals to
aboriginal law counsel.”
[20]
Mr. Wachowicz states that to the extent that he
advised Mr. Ferguson that Enoch had requested that Parlee not act for “either side” of the dispute, he was mistaken. He sent
a further
e-mail to Mr. Ferguson, including Robert Gilgen, to advise that Parlee was
conflicted from acting as the firm acted for Enoch in unrelated matters.
[21]
The Moving Parties subsequently retained Shores
Jardine LLP to defend the action and the injunction application.
[22]
In his affidavit filed in support of Enoch’s
motion for injunctive relief, Chief Morin states that the Enoch Band Council
met on November 8, 2015 and that the Band Council passed a motion to proceed
immediately to bring an application to stop the aerodrome/airport development
being constructed by Parkland and CPL6. He expresses numerous concerns about
the construction of the aerodrome next door to the reserve, including the
overall environmental damage and the irreparable harm it would inflict on the
First Nation’s archeological, cultural and historical sites in the immediate
vicinity. Chief Morin also states that he heard that Parkland and CPL6 had been
boasting that there was no requirement under the Aeronautics Act or
regulations for any form of approval prior to a party undertaking construction
of the facilities. Chief Morin sets out in his affidavit a number of
preliminary steps or requirements that should be incorporated into an
aerodrome/airport development process before any approval is granted by the
appropriate federal government departments and actual construction of an
aerodrome or air strip or runway begins.
[23]
The injunction application was ultimately
dismissed by Order of Mr. Justice
Michael Phelan dated January 20, 2014.
[24]
Enoch subsequently commenced the application for
judicial review in T-1997-14 on October 24, 2014. Enoch was represented Willier
and Company at the time. In support of the application, Chief Morin filed an
affidavit reiterating Enoch’s position that the aerodrome development process
was illegal. In early 2015, the law firm of Olthuis Kleer Townshend LLP
(Olthuis Kleer) was retained to represent Enoch in T-1947-13 and T-1997-14.
[25]
On June 4, 2015, Enoch filed a second
application for judicial review against the Crown and Parkland (T-942-15). Once
again, Enoch was represented by Willier and Company at the time. The grounds
for relief and the evidence in this second application substantially overlap
with that in T-1947-13 and T-1997-14.
[26]
Olthuis Kleer later applied to be removed as
solicitors of record T-1947-13 and
T-1997-14 and the application was granted by Order dated October 28, 2015.
V.
Conflict of Interest Raised
[27]
On November 6, 2015, Mr. Kirk Lambrecht, counsel
for the Moving Parties, received a call from Mr. Molstad, senior counsel with
Parlee. According to Mr. Lambrecht, Mr. Molstad indicated that Enoch was
considering retaining Parlee to assume conduct of the action in
T-942-15 in place of Willier and Company and inquired whether Parkland would
object to Parlee’s appointment as solicitor of record on the basis of conflict.
[28]
Although there is disagreement as to whether Mr.
Molstad requested that Parkland waive any conflict, it is of no moment, as it
is clear that Mr. Lambrecht immediately raised the possibility of a conflict.
Mr. Lambrecht responded to Mr. Molstad’s inquiry by e-mail on November 9, 2015 as
follows:
My
clients have confirmed that Parlee LLP did act for Parkland Airport Development
Corporation in relation to airport development, and have decided to not waive
the conflict of Parlee LLP in this matter. My client therefore does not consent
to have Parlee LLP (Mr. Molstad or associates) take over the litigation for the
Enoch Cree First Nation.
[29]
On November 11, 2015, Mr. Molstad replied by
e-mail. In the interest of fidelity, the full text of the relevant portions of
the e-mail is reproduced below.
In order to
clarify, Parlee McLaws has not requested that Parkland Airport Development
Corporation (“Parkland”) waive any conflict as we are not aware of a conflict
of interest.
In our conversation with you on
Friday afternoon, November 6th, 2015, we advised you that we were aware that
Parlee McLaws had acted on behalf of Parkland in the past, however, the writer
was not familiar with this matter and had no knowledge in relation to it. We
asked if you would inquire of Parkland to determine whether they would have any
objection to the writer acting on behalf of the Enoch Cree Nation (“Enoch”) in
relation to the dispute between Enoch and Parkland.
We contacted Mr. Ian Wachowicz who
was a partner at Parlee McLaws until early this year (he is presently at the
law firm of Dentons) on Tuesday, November 10th, 2015 and he advised that his
representation of Parkland was with respect to a dispute with the County of
Parkland. This representation of Parkland was completed and the file was
closed. Parlee McLaws does not presently act for Parkland.
Mr. Wachowicz further advised that
he received no confidential information which was in any way related to the
dispute between Parkland and Enoch.
We were advised today by Mr.
Littlechild that Chief and Council of Enoch passed a Band Council Resolution on
November 10th, 2015 confirming that the writer has been appointed to represent
them in relation to their dispute with Parkland and the Crown.
Based upon the information that we
have received from
Mr. Wachowicz, it is our position that there is no conflict and that the writer
is able to represent Enoch in relation to their dispute with Parkland and the
Crown.
We will be filing a Notice of Change of Solicitor and
requesting a telephone conference with Prothonotary Lafreniere in order to
address the schedule in relation to this matter.
[30]
Mr. Lambrecht responded to Mr. Molstad on
November 12, 2015 as follows:
It seems from
your email that your position that Parlee is not in conflict is based upon
information that you have “received from Mr. Wachowicz”. It appears to me that
you are not aware of all of the material circumstances which bear upon the
issue of conflict of interest, and I will be assembling additional information
in this regard in the coming days and weeks. Right now, that issue is
outstanding.
[31]
Despite further submissions from Mr. Lambrecht,
Parlee maintained its position that it had no conflict of interest when acting
for Enoch in litigation against Parkland because the law firm had no
confidential prejudicial information. Parlee indicated that it was prepared,
however, to continue to take steps to ensure that no information would be
communicated from the lawyers at the firm who worked on the file involving
Parkland and the County with other lawyers at the firm.
[32]
By letter dated December 3, 2015, Mr. Molstad
concluded the debate as follows:
As you are aware,
it is the position of Parlee McLaws LLP that there is no conflict and that they
are in a position to continue to represent Enoch. Ultimately the Court will
make a decision in this regard. Once the issue of conflict has been resolved
and provided the Court allows us to continue to represent Enoch Cree Nation, we
will at that time become Solicitor of Record in relation to Actions T-1947-13
and T-1997-14.
VI.
Motion for Disqualification of Parlee
[33]
In response to the Moving Parties’ motion, Enoch
filed the affidavits of six lawyers and one articling student at Parlee, and of
Mr. Wachowicz, the lawyer who (while at Parlee) had a solicitor-client
relationship with Parkland associated with litigation before the Court of
Queen’s Bench of Alberta. Most of these affiants had only passing involvement
in the said litigation.
[34]
Mr. James McGinnis, a managing partner at
Parlee, states in his affidavit that he reviewed the law firm’s file relating
to its former clients, Parkland and CPL6, and confirms that there was no
confidential information on the file that relates to Parkland’s dispute with
Enoch. Mr. Wachowicz, Mr. Steven Rohatyn, and Mr. Bruce Hirsche also denied the
existence of confidential information relevant to the dispute between Enoch and
Parkdale. However, it was clearly established during cross examination that
none of these deponents had actually read the pleadings in T-1947-13,
T-1997-14, or T-942-15 at the time they commissioned their affidavits.
[35]
Mr. McGinnis states that in order to secure the
file relating to Parkland, Parlee put a number of ethical screens in place on
or around November 13, 2015. He obtained the physical file and placed it in a
locked filing cabinet in his office, whereby only he has the key. The cabinet
is on a separate floor from the office of Mr. Molstad. Mr. McGinnis also had IT
staff secure the electronic file materials, so that they could not be accessed
by any other lawyer at the firm, other than him. Mr. McGinnis spoke to all the
lawyers that entered time on the Parkland dispute with the County and directed
them that they are not permitted to speak about the matter to anyone at the
firm. All the lawyers that entered time on the matter executed solicitor’s
undertakings, wherein they undertake not to discuss the file materials. Mr.
McGinnis and
Mr. Molstad have also executed solicitor’s undertakings. Mr. McGinnis reviewed
the support staff arrangements to ensure that no support staff that worked on
the Parkland dispute would work with Mr. Molstad.
VII.
Issue to be Determined
[36]
It is common ground that Parlee had a previous
solicitor-client relationship with Parkland and, by extension, with CPL6 and
the two corporation’s directors. There is also no dispute about the terms of
the retainer. The only issue to be determined on this
motion is whether Parlee, including Mr. Molstad, should be disqualified from
acting for Enoch in the three proceedings brought by Enoch against the Moving
Parties in this Court by reason of a conflict of interest.
VIII.
Analysis
[37]
From its seminal decision in MacDonald Estate
v Martin, [1990] 3 S.C.R. 1235, 77 DLR (4th) 249 [Macdonald Estate]
through to its recent pronouncement in Canadian National Railway Co v
McKercher LLP, 2013 SCC 39 (CanLII),
[2013] SCJ No. 39 [McKercher], the Supreme Court of Canada has provided
guidance as to when it is appropriate to deny a party the counsel of its choice
because of some past dealings by the counsel, or individuals in his law firm,
with the opposing party to the litigation. While the governing principles are
now well established, their application is fact intensive.
[38]
Enoch submits that the motion should be
dismissed because there is no risk that confidential information will be
misused or that there would be a breach of the duty of loyalty. According to
Enoch, the previous retainer with Parkland and CPL6 involved a lawyer that left
the firm some time ago and is unrelated to Parkland’s dispute with Enoch.
[39]
This case is fairly unique in that both parties
to this motion have, at some point in time, asserted that Parlee is in a
conflict of interest vis-à-vis the interests of the other party. Moreover,
counsel with Parlee was acutely aware that there was a potential conflict of
interest in representing their long-time client in light of their previous
involvement with Parkland.
[40]
Being substantially in agreement with the
written representations filed on behalf of the Moving Parties, I conclude that
Parlee’s should be disqualified from representing Enoch because there is an
actual conflict of interest on the facts of this case. At the very least, there
is an overwhelming appearance of a conflict of interest.
[41]
The interests of the County and Enoch were clearly
allied back in September 2013 when they adopted similar public positions and
pressure tactics in opposing the development and construction of Parkland’s aerodrome.
Further, correspondence from Mayor Shaigec and
Chief Morin to Crown Ministers setting out their objections was not only copied
to Parkland, but also to each other. It strains credulity that Mr. Wachowicz
was not aware of Enoch’s opposition to the project when he was acting on behalf
of Parkland. At the very least, he should have been attuned to Enoch’s interest
in the project by perusing the letter from Mayor Shaigec to the Minister of
Transport dated September 26, 2013, which was attached as an exhibit to
Robert Gilgen’s affidavit in the ACQB application.
[42]
This is not a case, as in Macdonald Estate, of lawyers changing firms. Nor is this a case of a law firm accepting
a retainer to act against a current client on a matter unrelated to the
client’s existing files, as in McKercher. This a case of a law firm acting at one time for a client to
defend its right to develop and construct an aerodrome
and then turning around and opposing that same right on behalf of another
client. These are clearly irreconcilable legal interests.
[43]
The general rule is that a lawyer, and by
extension, a law firm, owes a duty of loyalty to their clients. A lawyer who
has formerly represented a client in a matter shall not thereafter represent
another party in the same or a substantially related matter in which that party’s
interests are materially adverse to the interests of the former client, unless
the former client gives informed consent. The duty of loyalty includes, among
other duties, a duty of candour (full disclosure) and a duty to avoid
conflicting interests.
[44]
In R v Neil, [2002] 3 S.C.R. 631, the
Supreme Court of Canada concluded that the fiduciary relationship between a
lawyer and client imposes on the lawyer more than a duty not to disclose
confidential information. It includes a duty of loyalty and, in particular, a
duty to avoid conflicting interests if there is a substantial risk that a
lawyer’s representation of a client would be materially and adversely affected
by the lawyer’s duties to a former client.
[45]
As I stated in Robbins & Myers Canada Ltd
v Torque Control Systems Ltd, 2007 FC 957 (CanLII), the fiduciary duty of
loyalty owed by a lawyer to a former client continues after termination of the
solicitor-client relationship, such that a lawyer may not act in a manner that
will injure the former client in matters involving the prior representation.
[46]
An aggravating circumstance is that Parlee
proceeded to act for other clients interested or involved in the lawful
development and construction of the aerodrome in accordance with the Aeronautics
Act after being warned by Enoch to cease representing Parkland. This lack
of duty of loyalty is a paramount concern in this case.
[47]
I should add that it matters not whether
relevant confidential information has been provided by the Moving Parties to
Parlee. The Federal Court of Appeal in Groupe-Tremca Inc v Techno-Bloc Inc,
1999 CanLII 9113 (FCA) explained why the duty of loyalty to a former client
arises regardless of the existence of confidential information, at par. 13:
[13] It seems to the Court that once a law firm issues a legal
opinion leading the client to adopt a particular line of conduct, that firm
places itself in a conflict of interest situation which is no longer potential
but actual if it subsequently takes it upon itself to act against that client
for activities relating to the line of conduct. The firm must bear the
consequences of its choices of client, and the first client chosen should as a
general rule be the only one represented in any problem arising out of the
particular retainer. A firm which in such circumstances undertakes to represent
a second client will have difficulty persuading the Court that the second
client’s right to retain its services takes priority over the first client’s
right to assume the loyalty of its counsel.
[48]
For the sake of completeness, I conclude that
the general denials by Mr. Wachowicz,
Mr. McGinnis and others at Parlee are not enough to satisfy me that no relevant
confidential information could have been imparted by the Moving Parties. First
of all, I agree with the Moving Parties that the denials were made without any
apparent knowledge of the specific allegations made by Enoch in its pleadings.
Secondly, a reasonably informed person would assume, as I have, that a variety
of incidental information and opinions would have been transmitted between Mr.
Wachowicz and the principals of the two companies: Almecon Industries Ltd v
Nutron Manufacturing Ltd, (1994), 55 CPR (3d) 327 at p. 328.
[49]
I should also add that the steps taken by Mr. McGinnis
to secure the Moving Parties’ confidential information may have been
sufficient, if implemented earlier, but were implemented too late. There is a strong
inference that lawyers who work together share confidences. Reasonable measures
should have been taken to ensure that no disclosure would occur immediately after
Mr. Willier wrote to Mr. Molstad on November 27, 2013, and not two years later.
[50]
It is unclear to me why Enoch has persisted in
defending the indefensible. In the circumstances, I conclude that the motion
should be granted, with costs fixed at an elevated scale, as requested by the
Moving Parties.
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