Docket: T-1345-13
Citation: 2016 FC 110
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BETWEEN:
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C. STEVEN
SIKES, AQUERO, LLC
AND AQUIAL, LLC
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Plaintiffs/
Defendants
by Counterclaim
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and
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ENCANA
CORPORATION,
CENOVUS FCCL
LTD.,
FCCL
PARTNERSHIP AND
CENOVUS ENERGY
INC.
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Defendants/
Plaintiffs by Counterclaim
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ORDER
AND REASONS
LAFRENIÈRE P.
[1]
This is a motion on behalf of the Plaintiffs, C.
Steven Sikes (“Dr. Sikes”), Aquero, LLC and Aquial, LLC (“Aquial”), for an order
removing Smart & Biggar/Fetherstonhaugh LLP (“Smart & Biggar”) as
solicitors of record of the Defendants, EnCana Corporation, Cenovus FCCL Ltd.,
FCCL Partnership and Cenovus Energy Inc. (hereinafter referred to as either “the
Defendants” or “the EnCana Defendants”).
[2]
It is common ground between the parties that Mr.
Garland, a partner with the law firm of Smart & Biggar, had some dealings
with Dr. Sikes, a principal of the corporate Plaintiffs, in June 2008. At
the time, the Plaintiffs were seeking to retain counsel to enforce the patent
rights asserted in the underlying action. This was well before Smart &
Biggar was retained to act on behalf of the EnCana Defendants.
[3]
The Plaintiffs submit that a review of the
circumstances behind the substantive communications between Dr. Sikes and Mr. Garland
establishes that relevant confidential information was provided by Dr. Sikes
and legal advice was given by Mr. Garland. The Plaintiffs maintain that the
confidential nature of the information exchanged between the two leads to the inevitable
conclusion that Smart & Biggar is in a disqualifying conflict of interest
under the applicable legal test.
[4]
The motion is opposed by the Defendants. They
submit that Dr. Sikes only provided general,
non-confidential information of the kind typically required for a law firm to
conduct a conflict of interest review. They also deny
that any legal advice was dispensed by Mr. Garland.
I.
Issues to be determined
[5]
The parties agree on the test to be applied in
determining whether counsel should be disqualified due to a conflict of
interest. The Court must inquire: (1) whether a lawyer received confidential
information attributable to a solicitor-client relationship; and (2) if so, is
there a risk that the relevant confidential information will be used to the prejudice
of the former client: MacDonald Estate v Martin [1990] S.C.R. 1235 at para
45.
[6]
The evidence on this motion establishes that there
was no existing solicitor and client relationship between Dr. Sikes and Smart
& Biggar when Dr. Sikes initially contacted Mr. Garland. According to
the Defendants, none was established in the initial telephone call between Dr.
Sikes and Mr. Garland.
[7]
The fact that a client file is not opened and no
retainer is paid is not determinative that no solicitor-client relationship
exists. However, the mere disclosure of information necessary for a lawyer to
complete a conflict of interest review does not create a solicitor-client
relationship.
[8]
The real issue to be determined on this motion
is whether a reasonable person with knowledge of all the facts would reasonably
form the belief that Mr. Garland received relevant confidential information
from Dr. Sikes that could be used to the prejudice of the Plaintiffs, thereby
disqualifying Smart & Biggar from acting on behalf of the Defendants in
this case.
[9]
Before delving into the merits of the motion, I
propose to set out some background facts that are not in dispute and the
procedural history of the action and then briefly summarize the parties’
evidence.
II.
Background Facts
[10]
The following facts are not in dispute and are
supported by the evidence adduced by the parties on this motion.
[11]
On November 6, 2007, Mr. Mark Hochwit, then
President and CEO of Aquial, sent a letter to EnCana FCCL Oil Sands Ltd.
(“EnCana”) raising concerns regarding the handling of certain information of Aquial
by EnCana as well as the potential infringement by EnCana of Aquial’s pending
worldwide patent application. Shortly after receiving a letter from EnCana
dated May 14, 2008 rejecting Aquial’s allegations, Dr. Sikes contacted counsel at
Gowlings LLP (“Gowlings”), a law firm prosecuting the ‘723 Patent in Canada, to
obtain advice and representation on how to best enforce the Plaintiffs’ rights.
[12]
Dr. Sikes was advised of a conflict on the part
of Gowlings and was referred to Joan Van Zant at Ogilvy Renault LLP as potential
counsel for the matter. On June 9, 2008, Dr. Sikes contacted Ms. Van Zant by
leaving a voicemail message. He then followed up with an email explaining that
the Plaintiffs were interested in a general discussion of their rights in
Canada and provided her with a list of potentially conflicted parties. Dr.
Sikes called Ms. Van Zant one week later, at which point she identified a
potential conflict. Ms. Van Zant referred Dr. Sikes to several other lawyers, including
Mr. Garland.
[13]
Dr. Sikes searched Mr. Garland’s profile on
Smart & Biggar’s website, printed a copy of the webpage, and proceeded to
call Mr. Garland on June 16, 2008. During their telephone call, which lasted
approximately 15 minutes, Dr. Sikes indicated that he was looking for
representation in Canada related to a Canadian patent pending and a possible
infringement situation related to water clarification chemicals and processes
in the oil-sands region. Mr. Garland obtained information from Dr. Sikes (more
about that later) and opened a general file named “Aquero Company” for the
purpose of a conflict of interest review.
[14]
Immediately following their conversation, Dr.
Sikes sent an email to Mr. Garland stating that he had enjoyed their
discussion. Dr. Sikes confirmed in his email that the Plaintiffs were
interested in a general discussion about their rights in Canada and how to
proceed in asserting their rights assuming that the patent would be issued soon
in Canada. He also added that the technology would impact the water-treatment
companies that provide services and chemicals to the operating companies, such
as Baker Petrolite, Nalco Chemical, Champion Technologies, GE/Betz and
Innovative Chemical Technologies Canada, as well as the operating companies
themselves, namely Syncrude, Suncor, ASAGD and CSS, including EnCana.
[15]
Mr. Garland responded by email later that same
day, indicating that he would complete a standard conflict of interest check
and get back to Dr. Sikes as soon as possible. Mr. Garland indicated that he
would limit the conflict check to the water-treatment companies as it was not
immediately clear to him, without reviewing the patent or discussing the
technology and marketplace further, that his law firm would necessarily be
acting against the interests of the operating companies.
[16]
Dr. Sikes made two follow up phone calls to Mr.
Garland prior to being informed by Mr. Garland on June 23, 2008 that he could
not act for the Plaintiffs. Dr. Sikes subsequently contacted other law firms
recommended by Mr. Garland and then prepared a “combination litigation/business
plan” based on his discussions with counsel.
III.
Procedural History
[17]
The underlying proceeding is a patent
infringement action instituted by the Plaintiffs on August 7, 2013. The
Statement of Claim named the EnCana Defendants, as well as Conocophillips
Canada and Baker Hughes Canada Company, as Defendants (collectively “the
Initial Defendants”). The Plaintiffs’ pleading was amended on August 14, 2013 (“Amended
Statement of Claim”) and further amended on December 1, 2014 (‘Second Amended
Statement of Claim”).
[18]
The Plaintiffs alleged in the Amended Statement
of Claim that the Initial Defendants had and were breaching the Plaintiffs’
rights under Canadian Patent No. 2,595,723 (the ‘723 Patent). The ‘723 Patent
relates generally to chemical composition and their methods of use for
de-oiling water produced during oil recovery operations by steam-assisted
gravity drainage.
[19]
On March 3, 2014, a Notice of Status Review
(Notice) was issued pursuant to Rule 380(1)(a) of the Federal Courts
Rules as 180 days had elapsed since the issuance of the Statement of Claim
and no statement of defence had been filed and no motion for default judgment
was pending. Counsel for the Plaintiffs submitted a letter on March 13, 2014
explaining that the parties had agreed to delay any further steps in the action
in order to allow time to discuss a possible resolution of certain issues. It
was anticipated that one or more motions would be brought by the Initial Defendants
prior to filing their respective defences.
[20]
On March 21, 2014, Mr. Cameron Weir with Smart
& Biggar sent a letter to the Registry to advise that his law firm was
representing the EnCana Defendants. Mr. Weir confirmed that, subject to the
outcome of discussions with the Plaintiffs, his clients intended to file a
motion for particulars and/or to strike portions of the Statement of Claim, as
well as a motion for security for costs, prior to filing any defence.
[21]
By Order dated March 25, 2014, the action was
allowed to continue as a specially managed proceeding. I was designated
case management judge by the Chief Justice on April 3, 2014.
[22]
The Initial Defendants filed separate motions on
April 15, 2015 seeking an order striking the Amended Statement of Claim in its
entirety, or portions thereof, and an order requiring the Plaintiffs to post
security for their costs. The Plaintiffs wholly discontinued the action against
Conocophillips Canada and Baker Hughes Canada Company on June 17, 2014.
[23]
The Defendants’ motions were heard in Calgary on
August 13, 2014. During the hearing, the Plaintiffs were ordered to post an
amount of $50,000.00 as security for the Defendants’ costs up to the completion
of examinations for discovery. The Plaintiffs further agreed to amend their
Amended Statement of Claim to correct deficiencies in respect to allegations of
infringement.
[24]
By Order dated September 10, 2014, the
Plaintiffs were directed to serve a draft Second Amended Statement of Claim on the
Defendants within thirty (30) days of posting security for costs. In the event consent
to file was not forthcoming from the Defendants, the Plaintiffs were directed
to bring a motion for leave to file the Second Amended Statement of Claim.
[25]
On November 6, 2014, the Plaintiffs brought a
motion for leave to file a Second Amended Statement of Claim, having failed to
obtain the Defendants’ consent. The motion was ultimately resolved between the
parties. Immediately following a case management conference held on December 1,
2014, the Plaintiffs filed their Second Amended Statement of Claim.
[26]
The Defendants filed their Statement of Defence
and Counterclaim on January 15, 2015. They essentially deny the allegations of
infringement and assert that the ‘723 Patent is invalid, void and of no effect.
The Defendants plead, in particular, at paragraph 16(b) that the Plaintiffs are
estopped from seeking the remedies requested “on the basis of acquiescence,
estoppel and/or [latches].”
[27]
On February 24, 2015, counsel for the Plaintiffs
sent a letter to counsel for the Defendants expressing concerns about a conflict
of interest on the part of Smart & Biggar. The entirety of the letter is
reproduced below.
During the
scoping of our document discovery, something has come to our attention which we
feel we must bring to your attention immediately. Specifically, please find
attached a copy of an email which was unearthed in our document review which
indicates rather detailed discussions between Dr. Sikes and yourself, and
before Smart & Biggar had run what looks like a limited conflict's check.
The only reason
Dr. Sikes was looking back at these dated emails in the discovery process was
because your clients' pleading of equitable laches. That led Dr. Sikes to go
through [is] records to show he was not just sitting back while seeing his
rights abused, and was in fact making a number of strides seeking to protect
those interests.
Please note that
Dr. Sikes, upon hearing your name and seeing you in the courtroom in Calgary on
September 10, 2014, approached you and identified himself, suggesting (or more
properly asking) if you had conversed before. It appeared to him that you did
not recall speaking with him.
Which brings us
to the present. Dr. Sikes, upon reviewing the attached email and his phone
records has now recollected more details of what appear material interactive
conversations with you. Dr. Sikes has become very concerned about that shared
subject matter, how it may be reflected in the pleadings of the defendants, and
how it may affect the future conduct of this matter.
In particular,
Dr. Sikes recalls, after looking at his phone records, that he had a 15 minute
call with you on June 16, 2008. In that call, he believes you discussed the
concept of suing Encana and recalls you giving counsel suggesting the problems
in suing a large, well-financed entity. In any event, he believes that
conversation also was more directed at going after the known service provider
of Baker-Hughes as an alternative to Encana.
It seems to me
that such counsel is material at the very least to the laches defence as it is
no coincidence that the voice mail referenced in your pleadings was connected
to Dr. Sikes considering he should perhaps not sue the Encana Defendants, and
indicate to Encana that Baker Hughes was perhaps the appropriate party to
pursue.
Regardless, and
as you also know, the threshold of someone becoming a ''client" can be
low, and it looks like that may have occurred here through your counsel to Dr.
Sikes. Of course, and alternatively, you are perhaps a potential witness in
this matter to show that Dr. Sikes was indeed seeking to assert his rights,
which was by all accounts quite difficult where every large patent firm sees
ultimate business conflicts in suing players in this industry.
As you know, a
seminal authority on conflict dictates that a lawyer’s duty of loyalty has 3
salient dimensions: a duty to avoid conflicting interests; a duty of commitment
to the client’s cause; and a duty of candour. We suggest that your continued
representation of the Encana Defendants creates substantial risk of greater
conflict affecting the administration of justice from this situation.
We are not sure
what exactly to do about this presently, but we certainly expect that the usual
procedure of dealing with such conflicts by affidavits and undertakings to
establish that no confidential information could appear to be used to the
Plaintiffs’ detriment was not done here. Doing a "Chinese Wall" after
the fact looks problematic as you cannot put toothpaste back in the tube. We
are only telling you of this conflict as a courtesy so that you may consider
your and your clients' future options. I otherwise have no current instructions
on further actions but will be advising my clients further.
[28]
Mr. Elliott Simone, a partner at Smart &
Biggar responsible for handling questions relating to conflicts of interest, replied
to the letter from Plaintiffs’ counsel on March 2, 2015. Mr. Elliott wrote that
he had discussed the matter with Mr. Garland and reviewed Dr. Sikes’ email
dated June 15, 2008, as well as the firm’s records. Based on his review, Mr.
Elliott was satisfied that the contact made by Dr. Sikes back in 2008 did not
represent a conflict of interest for his firm. He concluded his letter with the
following comments:
Finally, I understand from Kevin Graham that during
cross-examinations held at your offices back in June 2014, Dr. Sikes indicated
to Mr. Graham that he had contacted our firm with respect to this matter and
our firm was unable to represent him due to a conflict. As such, the suggestion
in your letter that this issue has only recently come to your clients’
attention as a result of the "document review" is clearly not the
case. If there was a legitimate conflict concern, one would have expected that
it would have been raised by your clients well before this time given that our
firm has been representing the defendants in this action for over a year and a
half. As such, we can only conclude that the issue is only now being raised
purely for tactical reasons.
IV.
Plaintiff’s Motion for Removal of Smart &
Biggar
[29]
On April 16, 2015, counsel for the Plaintiffs
submitted a letter to the Registry to advise that he had received instructions
to bring a motion on the conflict of interest issues. The Plaintiffs proceeded
to file their motion record on May 15, 2015, seeking the following relief:
(a)
an Order removing Smart & Biggar/Fetherstonhaugh
LLP ("Smart & Biggar'') as solicitors of record for the Defendants;
(b)
an Order declaring that Smart & Biggar has
obtained confidential information from the Plaintiffs which is sufficiently
related to this action;
(c)
an Order declaring that Smart & Biggar is in
a position of conflict of interest, and has breached its duty of
confidentiality to the Plaintiffs in representing the Defendants in this
action;
(d)
an Order immediately removing Smart & Biggar
as solicitors of records for the Defendants in this action
(e)
an Order prohibiting Smart & Biggar from
revealing confidential information obtained from the Plaintiffs to anyone,
including: (1) the Defendants (and any employees, directors or affiliates
thereof), or (2) subsequent new counsel of record for the Defendants;
(f)
an Order requiring Smart & Biggar to provide
an undertaking to the Court that no confidential information obtained from the
Plaintiffs has been communicated to the Defendants or their subsequent new
counsel of record;
(g)
an Order requiring subsequent new counsel of
record for the Defendants to provide an undertaking to the Court that no
information related to any allegations of infringement of the Patent, except
that which could be obtained from public sources, was communicated to them by Smart
& Biggar;
(h)
costs of the motion to the Applicants on an
indemnity basis; and;
(i)
such further and other relief this Honourable
Court deems just.
[30]
In support of their motion, the Plaintiffs rely
on the affidavit of Dr. Sikes sworn on April 2, 2015 (Sikes Affidavit). The
Defendants filed two affidavits in response - one by Mr. Garland and the
other by Mr. Kevin Graham (Mr.
Graham), another lawyer with Smart & Biggar.
[31]
Dr. Sikes was cross-examined on his affidavit on
June 9, 2015. There was no cross-examination of the Defendants’ affiants.
V.
Affidavit Evidence of Dr. Sikes
[32]
As noted earlier in these reasons, Dr. Sikes had
a 15 minute telephone conversation with Mr. Garland on June 16, 2008. Dr. Sikes
summarizes the conversation as follows at paragraph 11 of his affidavit:
11. In contrast to my interaction with Ms. Van Zant, my
recollection of that telephone conversation was that it was focused and
detailed. I recall establishing with Mr. Garland that the conversation was
confidential. Mr. Garland was interested as to why I thought my technology had
been infringed, what evidence there was about that, the nature of the
intellectual property itself, and whether there were prior communications with
any potential litigants. We also discussed some procedural issues such as the
venue for any litigation, typical duration of IP litigation, and also typical
defences against allegations of infringement, and my specific circumstances,
rather than at general level. I do not recall Mr. Garland trying to establish
any other potential plaintiffs in the matter.
[33]
Dr. Sikes states that he sent a “somewhat
standardized email” that he had earlier prepared to Mr. Garland after speaking
to him on the phone.
[34]
At paragraph 14 of his affidavit, Dr. Sikes
characterizes the conversation with Mr. Garland as “interactive”:
…I had questions
and ideas of my own that Mr. Garland vetted, corroborated and discouraged. I
relied on Mr. Garland’s feedback (and pertinent questions) and used that as a
frame of reference in going forward with some kind of plan to address the
breach of the Plaintiffs’ rights, and trying to commercialize the 723 Patent.
This was incorporated into notes regarding those initial telephone
solicitations that I can establish as contemporaneous at that time. These notes
included matters such as how we would let other parties know about our
technology, how we wanted to address seeking business opportunities, avoiding
contact with adverse parties, and who were the most likely defendants. A true
copy of my contemporaneous notes (redacted for non-relevant and potentially
prejudicial/privileged items) is attached to my Affidavit as Exhibit “F”. The
provision of the redacted portion is in no way a waiver over the privilege
attached to this document.
[35]
The unredacted portions of the typewritten notes
prepared by Dr. Sikes read as follows:
2. We
should avoid at the outset with any further interactions with potential
adversary companies (primary infringers). Our interactions to date seem to have
been appropriate, probably unavoidable, maybe even necessary, and could prove
useful later. However, having made the effort with such companies, now we can
focus on the operating companies and attempt to attract their business.
6. The
litigation can be entered in the province or in the federal court. The federal
court has jurisdiction over all of the provinces. An individual province has
jurisdiction only over itself, so a finding in Alberta may not carry over to
other provinces. The recommendation is to proceed at the federal level if
possible.
12. An
adversary can submit prior art and other information to the patent office
during the examination. An adversary also is allowed to submit filings to
provoke an interference. However, an adversary would have to weigh the
potential for negative outcomes from CIPO. CIPO typically does not like to
receive adversarial communications during an examination. If some type of
adversarial papers had been filed, we would have been notified.
Peter thinks that
we should stay with Gowlings regarding the patent applications and associated
filings with the CIPO.
[36]
Dr. Sikes states at paragraph 20 of his
affidavit that he came across material relating to his discussions with Mr.
Garland when he was instructed by counsel to start preparing for upcoming
document discoveries, including documents potentially relevant to the laches
allegations raised by the Defendants. Dr. Sikes claims that he became much more
concerned about his communications after reviewing the Defendants’ laches
defence as he believed the Plaintiffs’ later conduct was at least in part
related to his discussion with Mr. Garland.
VI.
Affidavit Evidence of Mr. Garland
[37]
Mr. Garland acknowledges in his affidavit that he
was contacted by Dr. Sikes with respect to his company potentially retaining
Smart & Biggar; however, he does not have a specific recollection of his
discussions with Dr. Sikes given that they occurred seven years previously.
[38]
Mr. Garland indicates that he is well versed in
his law firm’s conflict of interest review procedure and the manner in which a
“cold” telephone call from a non-client relating to a potential new mandate
should be handled. In accordance with the procedure, Mr. Garland states that he
obtained the required information from Dr. Sikes and opened a general file for
Aquero for the purpose of the conflict of interest review. Attached as exhibits
to his affidavit are copies of all of the documents in Smart & Biggar’s
possession recording or relating to his discussions with Dr. Sikes, including his
personal notes taken during the initial telephone call on June 16, 2008.
[39]
Mr. Garland’s handwritten notes on his initial
conversation with Dr. Sikes are contained in one page. Beyond setting out the contact
information for Dr. Sikes and Aquero Company, they reflect the following:
•
a note “from Joan VZ” (establishing that Dr. Sikes was referred
to Mr. Garland by Joan Van Zant);
•
a note “Alberta/Sask – oil sands” (which is the marketplace that
the patent at issue relates to);
•
a note “small R&D company”;
•
the identity of Dr. Sikes’ U.S. and Canadian patent prosecution
counsel and general information about the patent application in issue,
including the PCT application number;
•
a listing of the adverse parties, namely:
“water treatment companies → e.g. ○ Baker
Petrolite
○ Nalco Chemical Co.
○ G.E. – Betz
○ Champion Technologies
○ ICTC → Innovative
Chemical
Technologies
Canada”
•
the words “how to proceed?” and “he will send me an email with
the info for conflict checks”.
[40]
Mr. Garland states that the information received
from Dr. Sikes was general and of a non-confidential nature. He claims that, beyond
requesting general background information required for a conflict of interest
review, he would not have solicited any information of the type referenced in
the third sentence of paragraph 11 of Dr. Sikes’ affidavit. He also maintains
that while he may have answered some general questions relating to patent
litigation in Canada, he would not have discussed with Dr. Sikes his “specific
circumstances” or provided any legal advice before the conflict of interest
review was completed.
VII.
Affidavit Evidence of Mr. Graham
[41]
Mr. Graham states that he reviewed the evidence
contained in the Sikes Affidavit, and in particular the evidence in paragraph
17 relating a conversation between him and Dr. Sikes. Mr. Graham recalls
speaking to Dr. Sikes during an off-the-record discussion at a
cross-examination of Dr. Sikes conducted in Calgary on June 20, 2014, and not
June 13, 2014 as asserted by Dr. Sikes. According to Mr. Graham, Dr. Sikes
stated that he had previously contacted Smart & Biggar regarding
enforcement of the patent at issue and that he was advised that Smart &
Biggar was unable to act due to a conflict. Mr. Graham specifically recalls that
Dr. Sikes told him that he could not remember who at Smart & Biggar he
had spoken to.
VIII.
Cross-examination of Dr. Sikes
[42]
As stated earlier, Dr. Sikes was cross-examined
on his affidavit. The cross-examination exposed a number of misstatements, mischaracterizations,
embellishments and errors in Dr. Sikes’ evidence. Representative
examples of faulty memory and hyperbole in Dr. Sikes’s evidence, as well as
instances where Dr. Sikes was vague or evasive on cross-examination, are conveniently
reproduced in Schedule A to the Defendants’ written representations. I will
review a few examples that are particularly troubling.
[43]
Dr. Sikes stated at paragraph 14 of his affidavit that his
conversation with Mr. Garland was incorporated into notes that he could “establish
as contemporaneous at that time”. The document attached as Exhibit “F” is later
identified as a true copy of his contemporaneous notes, redacted for what Dr.
Sikes claimed were “non-relevant and potentially prejudicial/privileged items.”
Dr. Sikes admitted when pressed in cross-examination that the document in
question was not actually a contemporaneous record, but rather a “litigation
business plan” setting out Dr. Sikes’ summary of information obtained as a
result of his interviews with Canadian IP firms he contacted in 2008. He
further conceded that the plan was only written out after his third call with
Mr. Garland on June 23, 2008, a full week after his initial conversation with
Mr. Garland.
[44]
In my view, Dr. Sikes was attempting to bolster his evidence by twice
portraying his business plan as “contemporaneous” at paragraph 14 of this affidavit. The emphasis on this
adverb was clearly intended to mislead the Defendants and the Court into
believing that his notes were made at the time of initial call with Mr. Garland,
that they were an accurate and complete record and that they were untainted by
subsequent events. This was clearly not the case.
[45]
Cross-examination also revealed that the
discussions referenced in paragraph 11 of the Sikes Affidavit were not directed
to Dr. Sikes’ “specific circumstances” as alleged. First of all, Dr. Sikes
could not provide any details of the said circumstances. Secondly, he
acknowledged in cross-examination that Mr. Garland had not reviewed the patent
application at the time of the initial telephone call. It is apparent that Mr. Garland would not have been able to provide any useful advice
with respect to Dr. Sikes' circumstances without further information, including
conducting a review of the patent in issue.
[46]
Another troubling aspect of Dr. Sikes’ evidence
which cast into question his credibility is his repeated insistence that all of
the information imparted to Mr. Garland (and to each of the other Canadian IP
firms) was confidential simply because the communication was made in
confidence. The fact that a communication was made in confidence does not
establish that the information imparted in that communication was in fact confidential.
Beyond vague assertions, Dr. Sikes does not explain what
the information was and why such information was confidential.
[47]
Dr. Sikes also refused
to provide clearly relevant documents through selectively asserting privilege.
This impeded Mr. Garland’s ability to fully respond to the allegations made
against him and this Court’s ability to determine whether any confidential
information or legal advice was in fact provided.
[48]
At the hearing of the motion, I asked counsel
for the Plaintiffs whether the Plaintiffs would be prepared to provide to the
Court, on a confidential basis, a copy of the handwritten notes that Dr. Sikes had
made on Mr. Garland’s profile page that he had printed out and over which
privilege had been claimed. The Plaintiffs ultimately agreed to produce the
document. Upon reviewing the document, it is clear that the content of the sparse
scribbled notes is in no way privileged or confidential. Once again, the
Defendants and the Court were misled into believing that the notes contained
some sensitive, important and highly confidential information and that there
were valid reasons for not disclosing them.
[49]
In light of the above, I agree with the
Defendants that an adverse inference should be drawn from the fact that an
unexpurgated version of the document attached as Exhibit “F” was not
produced. I can only assume that portions that have not been
produced undermine the evidence of Dr. Sikes and the position of the Plaintiffs
on this motion.
[50]
During the cross-examination, Dr. Sikes attempted to add to his
evidence by asserting that Mr. Garland had provided “advice” to not pursue the
operating companies and only to pursue the water-treatment companies, which was
“in part” the basis for the Plaintiffs’ delay in commencing this action. These
assertions by Dr. Sikes are simply not credible. Dr. Sikes’ characterization of
the alleged advice varied throughout the cross-examination, ultimately
resulting in Dr. Sikes acknowledging that all that was discussed with Mr.
Garland (and vetted by Dr. Sikes) was the “standard business practice” that it
was inadvisable to sue your customers if it can be avoided.
IX.
Analysis and Conclusion
[51]
The evidence in the affidavits produced by the
parties was conflicting in many respects. At first blush, the allegations made
by Dr. Sikes in his affidavit appeared quite serious. However, in light of the
significant concessions and admissions made by Dr. Sikes during the withering cross-examination
by Defendants’ counsel, I am not satisfied that any relevant confidential
information related to the present action was ever provided by Dr. Sikes to Mr.
Garland, or that Mr. Garland provided any legal advice to Dr. Sikes.
[52]
Dr. Sikes’ evidence was self-serving, vague,
uncorroborated and, in parts, misleading. He attempted to paint himself as
vulnerable and an inexperienced person seeking to obtain legal litigation
services. He further demonstrated an abysmal
ignorance of the concepts of privilege and confidentiality. It is apparent to me that either Dr. Sikes did
not have the faintest idea as to what these concepts were or, if he did, he
blandly asserted privilege without justification.
[53]
Although Mr. Garland has no specific
recollection of his initial conversation with Dr. Sikes, I have no reason to
doubt his evidence that the information he received from Dr. Sikes was general
and of a non-confidential nature and that no legal advice was provided. Mr. Garland’s
evidence was not challenged in cross-examination and is largely corroborated by
his notes taken while the discussion was actually taking place. Moreover, it is
consistent with his law firm’s conflict of interest
review procedure.
[54]
In determining the disputed facts in this
motion, I am left with Dr. Sikes’ tattered evidence and the clear and unchallenged
evidence of Mr. Garland. In the circumstances, I prefer Mr. Garland’s evidence
over that of Dr. Sikes.
[55]
Being substantially in agreement with the
Defendants’ submissions, I find that the Plaintiffs have failed to discharge
their burden of establishing that a reasonably informed member of the public in
possession of all the relevant facts would conclude that there was a solicitor
and client relationship between Dr. Sikes and Smart & Biggar or that confidential
information relevant to the matter at hand was provided to Mr. Garland.
[56]
The motion shall accordingly be dismissed.
[57]
During the hearing, the parties made submissions
in relation to costs. The Defendants subsequently provided a Bill of Costs
showing that counsel’s fees relating to the motion exceeded $125,000.00
(including GST) and disbursements totalled $8,991.36 (including GST). The
Defendants reiterated their request that, in the event that the motion was
dismissed, costs be awarded in their favour in the amount of $20,000.00 (plus
GST), for a total of $29,991.36 (including GST). They further requested that
costs be made payable forthwith and in any event of the cause.
[58]
I see no reason to deviate from the general rule
that costs should follow the event. Upon reviewing the Defendants’ Bill of
Costs, I conclude that the costs and disbursements claimed by the Defendants
(except for those relating to Mr. Garland, who was an affiant and not counsel
on this motion) are reasonable taking into account the complexity of the issues
raised, and the amount of work involved. I am also satisfied that costs should
be made payable forthwith in light of the nature of the motion, which is
separate and distinct from the issues raised in the pleadings.
THIS COURT ORDERS that:
1.
The motion is dismissed.
2.
Costs in the amount of $29,991.36 shall
be awarded to the Defendants, to be paid forthwith in any event of the
cause.
“Roger R. Lafrenière”
Vancouver,
British Columbia
January 29, 2016
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