COURT FILE NO.: 559/06

DATE: 20070321

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

FERRIER, HOWDEN & HIMEL JJ.

B E T W E E N:

RICHARD WEISS as Trustee for LOCAL 183, UNIVERSAL WORKERS UNION, LABOURERS’ INTERNATIONAL UNION OF NORTH AMERICA

Applicant

• and -

ONTARIO LABOUR RELATIONS BOARD, ANTONIO DIONISIO AND JOHN DIAS

Respondents

Alan J. Lenczner, Q.C., for the Applicant, Richard Weiss as Trustee for Local 183, Universal Workers Union, Labourers’ International Union of North America

Leonard Marvy, for the Respondent, Ontario Labour Relations Board

Brian Shell & Melissa Atkins, for the Respondents, Antonio Dionisio and John Dias

HEARD: February 12, 2007

HOWDEN J.:

1Local 183 applies by its Trustee for an order quashing the decision of the Ontario Labour Relations Board (“the Board”) made pursuant to s. 149(4) of the Labour Relations Act, 1995 S.O. 1995, c. 1, Schedule A (“the Act”). The Board ruled that Shell Lawyers is not in a conflict of interest and should not be removed as counsel for the respondents, Antonio Dionisio and John Dias, formerly members of the Executive Board of Local 183.

2Shell Lawyers had acted as counsel for Local 183 until it was placed in trusteeship by its parent union, the Labourers’ International Union of North America (“LIUNA”). LIUNA represents construction workers across North America. Local 183 has approximately 27,000 members in Ontario. LIUNA and Local 183 have been locked in a bitter dispute since 2003, after the election of the Local’s leadership group which included Dionisio and Dias. Between October, 2003 and June 12, 2006, a total of sixteen applications were filed with the Board by the parties to this dispute. The Board described the files before it as of June 12, 2006 in the following terms:

(Local 183 alleges) that its parent Labourers’ International Union of North America (hereinafter “LIUNA”) had purported to place Local 183 into trusteeship without just cause, contrary to ss. 147(1) and 149(1) of the Labour Relations Act, 1995 … The other files consist of a series of applications and cross-applications relating to the series of events leading up to and following the ultimate decision by LIUNA to place Local 183 into trusteeship. (Board’s Reasons for Decision, Jan. 26, 2007, Respondents’ Record, p. 184)

3On June 12, 2006, following the hearing of evidence and submissions, the Board dismissed the application under s. 147, holding that trusteeship did not amount to an “alteration of jurisdiction” within the meaning of that section. The Board upheld the imposition of trusteeship on Local 183, finding there was just cause for that action by LIUNA. The Board described Local 183 as:

a large multi-faceted construction local representing over 30,000 workers in virtually every aspect of the construction industry in Ontario. Naturally Local 183 took a very active role in these proceedings and it is a named applicant in most of the applications. It should be noted however that the necessary consequence of this litigation was to determine who would be in control of Local 183 in the immediate future – either the local leadership of Local 183, or its parent international union – LIUNA. Thus, the real protagonists of this litigation were the leadership of Local 183 on the one hand and LIUNA on the other. That is why certain individuals from the local leadership, such as Tony Dionisio and John Dias, have been named as parties in their own right and why they have continued to challenge this trusteeship well after the decision of June 12, 2006. (Ibid, p. 185)

4As part of its disposition of June 12, 2006, the Board ordered that all officers and staff of Local 183 were to take such action as necessary to transfer control and authority of the assets of Local 183 to the appointed trustees. The Board directed LIUNA to file a plan and timetable for lifting the trusteeship and to inform members of Local 183 of the details within one month. It also dealt with the delegates nominated to attend an upcoming LIUNA convention. The Board remained seized of all issues arising from the implementation of the June 12th decision and stated that it would make any further directions and/or remedial orders in the exercise of its powers under s. 149(4) of the Act.

5Subsections 149(1) and (4) of the Act are relevant. They read:

149(1) A parent trade union or a council of trade unions shall not, without just cause, assume supervision or control of or otherwise interfere with a local trade union directly or indirectly in such a way that the autonomy of the local union is affected.

(4) If the Board determines that an action described in subsection (1) was taken with just cause, the Board may make such orders and give such directions as it considers appropriate, including orders respecting the continuation of supervision or control of the local union.

6Following the June 12th order, Local 183, through its Trustee, terminated the retainer of Shell Lawyers as its solicitors and counsel. Mr. Shell wrote to inquire whether Local 183 would object to Shell Lawyers acting for unnamed former employees of Local 183. Local 183 replied on July 19, 2006 that it expected compliance by Shell Lawyers with its professional obligations in light of Local 183’s right to assert conflict of interest and solicitors’ duties of loyalty and maintenance of solicitor-client privilege. It later objected to Shell Lawyers acting specifically for the respondents Dionisio and Dias.

7A number of subsidiary matters arose for the Board’s direction throughout the summer of 2006. Mr. Shell acted as counsel for a group called the “Jurisdictional Committee” of Local 183 and the forty-eight nominated delegates to the LIUNA convention. The Board issued various orders on subjects relating to Local 183, the respondents and the Jurisdictional Committee, including a cease and desist order regarding surveillance by LIUNA complained of by Shell Lawyers; prohibition of further employment terminations by Local 183; a consultation without order regarding LIUNA’s list of delegates from Local 183; rescission of the employee termination prohibition while retaining supervisory jurisdiction over claims about employee discipline or termination; and reconsideration of the Board’s decision not to intervene in the LIUNA delegate issues and confirmation thereof. October 3, 2006 was the date set to consider submissions regarding how to deal with all remaining issues arising from the trusteeship order.

8On October 3, counsel for LIUNA and Local 183 objected that Shell Lawyers was in a conflict of interest by continuing to act for the Jurisdictional Committee and Messrs. Dionisio and Dias against the interests of Local 183. At that time, the Committee had three members; the third member indicated that he no longer wished to be represented by Shell Lawyers. LIUNA and Local 183 objected that the Committee had no standing and that Shell Lawyers was in a conflict of interest, having acted formerly for Local 183.

9On November 2, 2006, the Board (composed of Vice-Chair Jesin) issued the decision which is the subject of this application. The Board dealt first with the standing of the Jurisdictional Committee. It had originated from a resolution passed by Local 183 in 2002. The Board found that the Committee lacked standing to participate on the file. It confirmed that Messrs. Dionisio and Dias are parties to the continuing trusteeship matters. The Board then turned to the complaint of conflict of interest.

10The Board set out the test formulated by Sopinka J., on behalf of a Supreme Court majority, in MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, at 1260 (“MacDonald Estate”):

Typically, these cases require two questions to be answered. (1) Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? (2) Is there a risk that it will be used to the prejudice of the client?

11The Board made the following findings:

• Until June 12, 2006, Shell Lawyers acted for Local 183; LIUNA placed Local 183 into trusteeship on that day

• Shell Lawyers conceded that as counsel to Local 183, it came into possession of privileged information

• Following June 12, 2006, Shell Lawyers acted for the nominated delegates of Local 183 to the LIUNA convention and for Messrs. Dias and Dionisio

• After June 12, 2006, Shell Lawyers continued to advocate on behalf of its remaining clients, as it had on behalf of Local 183, for a result which would take control of the Local away from LIUNA

• The real and substantive respondents to the positions advanced by Shell Lawyers are LIUNA and its appointed Trustee for Local 183; the Local now supports LIUNA’s position

• Any information possessed by Shell Lawyers was received from, or was within the knowledge of, its present clients, Messrs. Dionisio and Dias, and it is the knowledge and information possessed by them that LIUNA and Local 183 were really concerned with.

12In its analysis, the Board first sought to distinguish the position of Shell Lawyers from what it regarded as the normal case of conflict of interest. Vice-Chair Jesin wrote:

The case before me is significantly different from the normal case in which the question of conflict arises. In this case the former executive of local 183 resisted attempts by LIUNA to wrest control of the local from the executive and to place it in the hands of a trustee appointed by LIUNA. Instead, the former executive, who had been elected by the membership, sought to maintain control and authority over the local. By the decision of June 12, 2006 however, it was determined that LIUNA did have just cause to place a trustee in control of the local. However, other ancillary orders were made against LIUNA and the Board expressly retained jurisdiction to consider and vary those orders, when necessary.

13The Board then purported to address the risk of use of confidential information possessed by Shell Lawyers derived from acting for Local 183 to the prejudice of Local 183. Vice-Chair Jesin wrote:

Clearly, the Supreme Court indicated that if, on an objective basis, there is a risk that the law firm will use confidential information to the prejudice of the party opposite, it must be disqualified. However, in assessing this question it is still important to bear in mind the need to have a party retain a solicitor of its choosing.

In addition, it is important to consider the particular circumstances and context in each case, to determine whether there is a potential for real prejudice resulting from the disclosure of such confidential information. This is highlighted in the Superior Court’s decision at an earlier stage of these same proceedings (reported at 2004 O.L.R.B. Rep., March/April 471). That decision dealt with the question of whether another firm, acting for LIUNA at that time was in a conflict. The Court confirmed that the Board not only had the jurisdiction to determine whether the law firm was in conflict, but that it was a more suitable tribunal than the court for making that determination in the case before it. … (Universal Workers Union, LIUNA Local 183 v. Labourers’ International Union of North America (2004), 78 O.R. (3d) 435 (S.C.J.))

This is not a case where there is an alleged conflict because the law firm has hired a solicitor who used to work for the party opposite. Nor is it a case where the law firm acted for one party in another matter and now seeks to act against that party in a subsequent matter. (Examples of such cases include Ford Motor Company of Canada v. Osler, Hoskin and Harcourt (1996), 1996 8070 (ON SC), 27 O.R. (3d) 181 and cases cited therein.) Rather this is a case where it is alleged that the law firm which has properly initiated the litigation and that has properly participated for some three years must be removed in the middle of the litigation because it has been unsuccessful to this point. Surely this is a result which is inconsistent with the protection afforded under s. 149 of the Act.

Subsection 149(1) of the Act provides that a parent union may only assume supervision of a local with just cause. Subsection 149(4) expressly provides that where the Board finds that there is just cause for a parent to assume supervision, the Board may make such orders and directions ‘as it considers appropriate, including orders respecting the continuing supervision or control of the local trade union’. Thus, section 149 provides the Board with the ability to balance particular labour relations considerations in providing relief subsequent to the imposition of trusteeship. In my view, a conflict is not created when the same protagonists who pursue relief prior to the imposition of a trusteeship, continue to engage the same counsel to seek the same relief subsequent to the imposition of the trusteeship. It would furthermore create unwarranted difficulties in the administration of these provisions if those resisting a trusteeship would be required to retain new counsel to pursue ongoing matters in the same case after trusteeship is sanctioned by the Board.

14The Board went on to determine that Shell Lawyers was not in a conflict of interest and it dismissed the motion by LIUNA and Local 183 requesting a disqualification order.

15The issues before this Court are:

i. What is the appropriate standard of review?

ii. Do the Board’s decision and approach meet the required standard?

iii. If not, should the decision of the Board that Shell Lawyers is not in conflict be quashed?

Standard of Review

16The first task on an application for judicial review is to determine the standard to be applied in scrutinizing the Board’s decision. The pragmatic and functional analysis must be used for this purpose: Voice Construction Ltd. v. Construction & General Workers Union, Local 92, 2004 SCC 23, [2004] 1 S.C.R. 609. That approach involves consideration of four contextual factors:

i) presence or absence of a privative clause or statutory right of appeal;

ii) nature of the question – law, fact, or mixed fact and law;

iii) purposes of the legislation and the provision in particular;

iv) expertise of the tribunal relative to that of the reviewing court.

17Most of the appellate authorities, including the seminal case for use of the pragmatic and functional approach, list expertise as the second factor for consideration. I have listed it fourth because I tend to agree with the comment of Laskin J.A. that expertise of the tribunal should not be assessed until the purposes of the provision in issue and the nature of the question are identified. The analysis regarding the first three factors informs to some extent the analysis of the expertise factor: OPSEU v. Seneca College (2006), 2006 14236 (ON CA), 80 O.R. (3d) 1 (C.A.) at 11, footnote 3. The analysis is not to be regarded as a ritual or a mechanical exercise; its object is to find a legislative intent, enabling the reviewing court to address the core issues in order to determine the degree of deference: Dr. Q v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226, at para. 26.

i. Presence or Absence of a Privative Clause or a Statutory Right of Appeal

18The Board’s decisions are protected by two strong privative clauses in ss. 114(1) and 116 of the Act. No statutory right of appeal is provided from the decision now before the court. The Board is granted “exclusive jurisdiction to exercise the powers conferred on it by the Act”; its actions and decisions are “final and conclusive for all purposes” subject to its own power to reconsider and vary or revoke any decision (s. 114(1)). No decision of the Board “shall be questioned or reviewed in any court, and no order shall be made…or proceedings taken in any court…to question, review, prohibit or restrain the Board or any of its proceedings” (s. 116). These are strong legislative clauses indicating deference to decisions of the Board. Their presence is “compelling evidence that the court ought to show deference…, unless other factors strongly indicate the contrary as regards the particular determination”: Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982, at para. 30.

ii. The Nature of the Question

19The question at issue is whether a law firm should be disqualified due to a conflict of interest. The relevant test is set out by the majority in MacDonald Estate. It requires two questions to be answered. The first is whether the lawyer received confidential information attributable to a solicitor and client relationship, which information may be relevant to the matters at hand. The second is whether there is a risk that the confidential information will be used to the prejudice of the former client. The determination of these tests requires an understanding and application not only of the words of the test developed by the Supreme Court of Canada and cited by the Board in its decision; it requires an understanding of the importance which the Supreme Court of Canada majority placed on maintaining high professional standards in the legal profession in order to protect the public and maintain the confidence of the public in the administration of justice: MacDonald Estate, at 1259-60. It is a question of general law to be determined in a labour relations context which in this case is factually clear and not difficult for a person of average intelligence, reasonably informed, to grasp.

20Regarding the first question, whether a lawyer received confidential information is a question of fact. This was not an issue in the case before the Board because Shell Lawyers admitted that it obtained confidential information from Local 183. In a recent decision of this Court involving production of documents held by Shell Lawyers, the Court found that Shell Lawyers remains in possession and control of approximately ninety-two boxes of Local 183’s records which have now been ordered to be produced and held by the solicitors for Local 183, subject to Shell Lawyers having access: Labourers’ International Union of North America, Local 183 v. Shell, [2007] O.J. No. 471 (S.C.J.).

21The remaining issue regarding the first question – whether the confidential information is relevant to the matter at hand – is a question of law: Republic National Bank of New York (Canada) v. Normart Management Ltd. (1996), 1996 8224 (ON SC), 31 O.R. (3d) 14 at 15 (Gen. Div.); Caputo v. Imperial Tobacco Ltd., [2003] O.J. No. 2269 (S.C.J.), at paras. 36, 38, 42.

22Regarding the second question posed by MacDonald Estate, since the use or misuse of confidential information is not susceptible of proof, the test is whether the reasonably informed person would be satisfied that the use of confidential information would not occur: MacDonald Estate, at 1260. Where a lawyer has relevant confidential information obtained from a former client now opposed in interest, the lawyer cannot act against the former client. It is presumed that the public represented by the reasonably informed person would conclude that the information would be used to the prejudice of the former client regardless of assurances or even undertakings not to use it (ibid, at 1261). In the case of a law firm that employs a lawyer who has relevant confidential information, disqualification may not necessarily be automatic; the Supreme Court left open the possibility that the presence of reasonable institutional mechanisms, such as Chinese walls and cones of silence, might satisfy the reasonably informed person that the confidential information would not be used. The Court was clear, however, that undertakings, assurances and affidavits would not be sufficient (ibid, at 1261-3). In this case, we are dealing not with an individual lawyer but with an entire law firm. Shell Lawyers did not take the position that it had established reasonable institutional mechanisms to protect against the use of confidential information obtained from Local 183. Therefore, all of the partners and associates at Shell Lawyers are privy to the confidential information obtained from Local 183.

23As a consequence, the question to be decided by the Board was whether the confidential information obtained by Shell Lawyers was relevant to the issue at hand. As mentioned above, relevancy is a question of law, which suggests less deference is owed.

iii. The Purposes of the Legislation and the Provision in Question

24The purposes of the legislation are expressed in s. 2 of the Act; they are generally to encourage and facilitate collective bargaining and expeditious resolution of workplace disputes. Section 149 protects local trade unions in the construction industry from actions by their parent unions, while recognizing the Board’s power to make orders that it considers appropriate where a parent union has acted with just cause. Take away the context of this case, and I would agree with counsel for the respondent Board and Shell Lawyers that the Board must balance many interests to achieve these objectives. Determining whether there is a disqualifying conflict of interest, which is the focus of this case, does not involve the balancing of competing labour relations’ interests. This issue is a matter that can and does arise before various tribunals and the courts. The issue transcends labour relations. It is rooted in the control of the conduct of officers of the court in “legal proceedings” that may affect the administration of justice: MacDonald Estate, at 1245. “Legal proceedings” include proceedings before the Board: Universal Workers Union v. Labourers’ International Union of North America, 2004 66334 (ON SC), [2004] O.J. No. 2249, at para. 10 (S.C.J.). While the suggestion of counsel for the Board that the interest of expedition in supervising disputes militates towards the Board handling such ancillary matters, the issue of disqualification by reason of conflict of interest does not engage the purposes of the Act or of s. 149.

25In the particular context of this case, I fail to see how the purpose of the Act and s. 149(4) in particular support the contention that the Legislature intended reviewing courts to defer to the Board on the question of whether a disqualifying conflict of interest exists.

iv. Expertise

26Relative expertise is the most important of the contextual factors: Canada (Director of Investigation and Research) v. Southam Inc. (1997), 1 S.C.R. 758 at para. 50; Pushpanathan, supra, at paras. 32-33. The expertise of the Labour Relations Board as a highly-specialized tribunal in the labour relations field is well recognized: Ivanhoe Inc. v. UFCW, Local 500 (2001), 2001 SCC 47, 201 D.L.R. (4th) 577 at para. 25 (S.C.C.). It has dealt with disputes between parent and local unions which are serious and highly acrimonious, sometimes lasting over several years. Such disputes sometimes result in destabilizing attempts to create new unions, severing of an existing union from its parent, and interference with individual participation in union processes: IUBAC, Locals 6, 7 & 25 v. Brick and Allied Craft Union of Canada, [2004] O.L.R.B. Mar./Apr. 193, at paras. 14 - 15. There is also no doubt that courts have recognized that the Board is “master of its own house”, not only as to all questions of fact and law within its jurisdiction, but regarding all questions of procedure when acting within that jurisdiction: Re Cedervale Tree Services Ltd. v. LIUNA (1971), 1971 341 (ON CA), 22 D.L.R. (3d) 40, at 49-50 (Ont. C.A.). That said, there is nothing about the issue of disqualification of a solicitor for conflict of interest that addresses the core labour expertise of the Board. It is an issue that encompasses all legal proceedings. Therefore, it cannot be said that the Board has greater expertise than the courts in this regard. More particularly, the question for the Board in this case is one of law and standards in the legal profession pertaining to protection of the public. The courts are better situated than the Board to answer such a general question of law.

27In support of the assertion that the Board has greater relative expertise, the respondents relied on the decision of Nordheimer J. in Universal Workers Union, supra. That case is clearly distinguishable. In that case, an application was brought for a declaration that a law firm appearing before the Board was in a disqualifying conflict of interest. The Board had expressed doubts about its ability to make such a determination and therefore refused to make a ruling. Nordheimer J. concluded that the Board had jurisdiction to determine whether a disqualifying conflict of interest existed (at paras. 19-22). Since both the Superior Court and the Board had concurrent jurisdiction to deal with the issue, Nordheimer J. had to decide which was “the more appropriate body to make the determination”. Justice Nordheimer concluded that the Board was the most appropriate body, in part because of the specialized expertise of the Board:

The Board is in a much better position, with its specialized knowledge and expertise, to know whether the lawyer or law firm is in possession of confidential information, whether the confidential information is relevant to the issues that the Board has to determine, and whether that confidential information could be used to the detriment of the objecting party. It makes more sense for the tribunal, who must make the ultimate determination of the issues on the hearing before it, to decide whether any conflict alleged against the lawyer is real or only apparent, based on the usual practices of the lawyers and law firms who appear before it. (Universal Workers Union, supra, at para. 24)

28It is this statement that the respondents rely on to support their assertion that the Board has greater expertise than the courts on this issue. However, Nordheimer J.’s words must be understood in their context. He was not engaging in a judicial review. He was not engaging in a pragmatic and functional analysis, as the Court now is required to do. Rather, he was applying the test set out in Equity Waste Management of Canada v. Halton Hills (Town) (1997), 1997 2742 (ON CA), 35 O.R. (3d) 321 (C.A.) to determine which body was most appropriate to deal with this issue at first instance. There is no suggestion in Nordheimer J.’s reasons that he was concluding that the Board’s expertise would always, and in all circumstances, exceed that of the courts on the issue of disqualifying conflicts of interest.

29Considering all four factors, the first factor indicates a strong level of deference to the Board; all of the other factors indicate that this is primarily a legal issue, a question of law of general application with which the Court is better equipped to deal. The Supreme Court of Canada in Toronto (City) v. Canadian Union of Public Employees, Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77 at para. 68, said that the correctness standard of review will rarely be applied in the context of labour adjudications. The case at bar is one of those rare cases. In my opinion, the interplay of the four contextual factors indicates that the Legislature did not intend reviewing courts to give deference to the Board when it decides whether a law firm is in a disqualifying conflict of interest. In the particular circumstances of this case, this analysis leads me to the conclusion that the proper standard of review is one of correctness.

Application of the Standard of Correctness

30Before considering the Board’s decision, it is important to appreciate the values adopted, as well as the concepts discarded, by the Supreme Court of Canada in MacDonald Estate. There is no doubt that the Board attempted to use the words of the test from that case. However, in my view the Board failed to appreciate its meaning and how it is must be applied in order to protect the important public and professional interests involved. Whether this court accepts the Board’s assumption that all of the privileged knowledge obtained by Shell Lawyers during its Local 183 retainer came from Messrs. Dionisio and Dias or not, the possible prejudice to the former client, Local 183, must be approached on an objective basis of perception by a reasonably informed member of the public, as well as within the context of the continuing importance of the duty of client loyalty and confidence of all parties and the public in the administration of justice.

31In MacDonald Estate, Sopinka J. was dealing not only with the strict fact situation before the Court – a junior lawyer moving from the law firm representing one party to that of the party’s opponent in litigation; the Court was setting the standard to be applied to the determination of what is a disqualifying conflict of interest. He listed initially the three competing values: maintenance of professional standards and the integrity of the system of justice; the ability of litigants to be able to choose their own counsel; and the desirability of permitting reasonable mobility in the legal profession. The majority’s decision in MacDonald Estate recognized the context within which their deliberation was occurring, one of increasingly large legal firms, demand for access to all-purpose firms, and reflection of the changing practice of law in changes to some ethical practices such as advertising to the public.

32Despite such changing conditions, Sopinka J., for the majority, wrote of the continued importance of a high standard of conduct in the legal profession, in the following terms at 1243-4:

Merger, partial merger and the movement of lawyers from one firm to another are familiar features of the modern practice of law. They bring with them the thorny problem of conflicts of interest. When one of these events is planned, consideration must be given to the consequences which will flow from loss of clients through conflicts of interest. To facilitate this process some would urge a slackening of the standard with respect to what constitutes a conflict of interest. In my view, to do so at the present time would serve the interest of neither the public nor the profession. The legal profession has historically struggled to maintain the respect of the public. This has been so notwithstanding the high standards that, generally, have been maintained. When the management, size of law firms and many of the practices of the legal profession are indistinguishable from those of business, it is important that the fundamental professional standards be maintained and indeed improved. This is essential if the confidence of the public that the law is a profession is to be preserved and hopefully strengthened. Nothing is more important to the preservation of this relationship than the confidentiality of information passing between a solicitor and his or her client. The legal profession has distinguished itself from other professions by the sanctity with which these communications are treated. The law, too, perhaps unduly, has protected solicitor and client exchanges while denying the same protection to others. This tradition assumes particular importance when a client bares his or her soul in civil or criminal litigation. Clients do this in the justifiable belief that nothing they say will be used against them and to the advantage of the adversary. Loss of this confidence would deliver a serious blow to the integrity of the profession and to the public’s confidence in the administration of justice.

33After referring to several professional codes of conduct, Sopinka J. turned to the two historic approaches to determining whether a disqualifying conflict of interest exists:

i) the probability of real mischief;

ii) the possibility of real mischief.

He considered at some length legal authorities in the United Kingdom, the United States, Australia, New Zealand and Canada. The majority of the Court concluded that the “probability of mischief” standard was not sufficiently high to meet the public requirements that there be an appearance of justice. Sopinka J. wrote at 1259-60:

The probability of mischief test is very much the same as the standard of proof in a civil case. We act on probabilities. This is the basis of Rakusen. I am, however, driven to the conclusion that the public, and indeed lawyers and judges, have found that standard wanting. In dealing with the question of the use of confidential information we are dealing with a matter that is usually not susceptible of proof. As pointed out by Fletcher Moulton L.J. in Rakusen, ‘that is a thing which you cannot prove’. (p. 841). I would add ‘or disprove’. If it were otherwise, then no doubt the public would be satisfied upon proof that no prejudice would be occasioned. Since, however, it is not susceptible of proof, 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. That, in my opinion, is the overriding policy that applies and must inform the court in answering the question: Is there a disqualifying conflict of interest? In this regard, it must be stressed that this conclusion is predicated on the fact that the client does not consent to but is objecting to the retainer which gives rise to the alleged conflict.

34In this case, Local 183 does not consent, and is objecting to, the retainer of Shell Lawyers by parties now opposed in interest to Local 183. This is not a case, as Mr. Shell’s submissions attempted to presume, where his former client has disappeared or its existence as a continuing entity representing some 30,000 labourers has been totally subsumed. Local 183 objects to Mr. Shell and his firm now acting against its interest in the same chain of litigation as they once represented that Local.

35Shell Lawyers concedes part of the first test from MacDonald Estate. It concedes that the firm, its partners and associates are in possession of confidential information obtained from, or through its retainer with, Local 183. However, Shell Lawyers does not concede that it came into possession of confidential information relevant to the matters at hand. Mr. Shell submitted that, because the matters now before the Board involving Local 183 do not pertain to pre-June 12, 2006 events or issues, Shell Lawyers does not come within the first part of the MacDonald Estate test. The applications before the Board are concerned with the Local 183 delegate issues regarding LIUNA conventions, the termination of staff in the wake of the trusteeship, stripping Local members of their membership in Local 183, standing of the Jurisdictional Committee, representation of Local 183 members, and so forth. Shell Lawyers therefore suggests that it has no information from Local 183 relevant to the matters at hand. Mr. Shell also stated that Messrs. Dionisio and Dias are not seeking damages or reinstatement as alleged by Mr. Lenczner for Local 183, and are opposed in interest to Local 183 only to the extent that Local 183 should not be controlled by LIUNA. He submitted that there is no distinction in law for labour relations purposes under s. 149 of the Act between Local 183 and LIUNA, because the Board concluded that the Trustee for Local 183 serves at the pleasure of the President of LIUNA.

36These submissions miss the point. They ignore the fact of Local 183’s continued existence as a legal entity and its continued position representing its members for labour relations purposes. A change in control and public positions of an entity or a change of mind by a person do not alter that entity’s or person’s continued existence as a former client who imparted confidential information in reliance on the counsel’s duties of loyalty to the client and to not use privileged information obtained from that client against the former client’s interest.

37As to assurances from Shell Lawyers that none of the confidential information is relevant, that proposition fails to meet the test in MacDonald Estate, and is fallacious. First, while the Board may be dealing with post-June 12th events, there remains every possibility that pre-June 12th information will be used and is usable to shape, challenge, and cross-examine the case involving Local 183’s present leadership and conduct vis-à-vis its members and its parent union. The mere offering of an assurance by the solicitor/counsel and his firm that none of the confidential information is relevant because the applications presently before the Board arise from post-June 12th events, is self-serving and fails to meet the objective test of perception of the public in MacDonald Estate.

38Second, the Board did not find, in either the conflict decision of November 2 or in its reasons for the order of June 12, 2006, that pre-June 12 events and conduct were no longer relevant to the continuing issues before it. In fact, the Board in its reasons outlines the history before June 12 and lists the sixteen findings of misconduct by officials of Local 183 which led to the decision by LIUNA to establish emergency trusteeship in 2004. It also refers to the four findings of misconduct by the independent hearing officer, all before June 12, which history is inescapably part of the considerations regarding issues of implementation of the trusteeship order, including reinstatement of former officials, terminating others, the plan to overcome the problems predating June 12 and eventual removal of the trusteeship and the conditions thereof. The past is still part of the present and future of these parties, and the Board finds or infers no ‘relevance’ line in the sand at June 12, 2006.

As to the second question within the MacDonald test – risk of misuse – the Supreme Court held as follows:

A fortiori undertakings and conclusory statements in affidavits without more are not acceptable. These can be expected in every case of this kind that comes before the court. It is no more than the lawyer saying ‘trust me’. This puts the court in the invidious position of deciding which lawyers are to be trusted and which are not. Furthermore, even if the courts found this acceptable, the public is not likely to be satisfied without some additional guarantees that confidential information will under no circumstances be used. In this regard I am in agreement with the statement of Posner J. in Analytica, supra, to which I have referred above, that affidavits of lawyers difficult to verify objectively will fail to assure the public.

These standards will, in my opinion, strike the appropriate balance among the three interests to which I have referred. In giving precedence to the preservation of the confidentiality of information imparted to a solicitor, the confidence of the public in the integrity of the profession and in the administration of justice will be maintained and strengthened. On the other hand, reflecting the interest of a member of the public in retaining counsel of her choice and the interest of the profession in permitting lawyers to move from one firm to another, the standards are sufficiently flexible to permit a solicitor to act against a former client provided that a reasonable member of the public who is in possession of the facts would conclude that no unauthorized disclosure of confidential information had occurred or would occur.

The Board’s decision fails to deal with the objectivity and reasonable perception requirements of the MacDonald Estate test.

39The Board found that Shell Lawyers, in now acting for the respondents in opposition to the interests of Local 183 as it now exists, are merely advancing the same interest they have always advanced. This fails to meet either part of the test in MacDonald Estate which focused on the use and misuse of relevant confidential information obtained during its Local 183 retainer. Yes, Local 183’s position in now supporting LIUNA has changed and Shell Lawyers is now acting for two members of the former executive against LIUNA and its former client. But the Board’s conclusion fails to meet the fact of possession of privileged information by Shell Lawyers and the inference that Shell Lawyers now act for clients opposed in interest to Local 183 without effecting any structural safeguard against possible misuse of the information.

40Second, the Board accepts the proposition that the only information Shell Lawyers have is that received from the knowledge of its present clients, Dionisio and Dias. It did so apparently without any evidence to support the proposition, whether by showing that none of the partners or associates sought information from or talked to any member of Local 183 or its executive other than those two, or by establishing that some device similar to cones of silence was put in place. Even if one accepts that proposition at face value, in the absence of any credible evidence of how it reasonably could be true, it fails the public perception/risk of misuse test in MacDonald Estate.

41Finally, the Board appears to have adopted a ‘balance of convenience’ test when dealing with the issue. It states that this is not a case where the law firm acted for one party and now seeks to act against that party in a subsequent proceeding. The Board refuses to contemplate disqualification, not because the conflict is resolved, but because it occurs during the same litigation and because it is deemed to be inconsistent with “the protection afforded under s. 149 of the Act”. Section 149 looks to protection of the local union, not to former executive members or individuals, and the Board itself found that the trusteeship of Local 183 was imposed with just cause due to serious irregularities and other misconduct. Again, the Board’s finding fails to meet the substantial concerns of professional integrity and protection and expectations of the public towards the legal profession. The ability of a person to choose his own lawyer is an important consideration, especially during the litigation; however, as Sopinka J. for the majority in MacDonald Estate made clear, it is not the predominant interest when dealing with the issue of conflict of interest.

42The Supreme Court, in MacDonald Estate, at 1261, held in regard to the risk of misuse branch of conflict of interest:

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. Furthermore, there would be a danger that the lawyer would avoid use of information acquired legitimately because it might be perceived to have come from the client. This would prevent the lawyer from adequately representing the new client. [emphasis added]

43Another aspect of the problem represented by this case is the duty of loyalty to a client. In the case of R. v. Neil, 2002 SCC 70, [2002] 3 S.C.R. 631, at 641, the Supreme Court spoke of this duty in the following terms:

…but the defining principle – the duty of loyalty – is with us still. It endures because it is essential to the integrity of the administration of justice and it is of high public importance that public confidence in that integrity be maintained: MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, at pp. 1243 and 1265, and Tanny v. Gurman, 1993 3995 (QC CA), [1994] R.D.J. 10 (Que. C.A.). Unless a litigant is assured of the undivided loyalty of the lawyer, neither the public nor the litigant will have confidence that the legal system, which may appear to them to be a hostile and hideously complicated environment, is a reliable and trustworthy means of resolving their disputes and controversies: R. v. McClure, 2001 SCC 14, [2001] 1 S.C.R. 445. As O’Connor J.A. (now A.C.J.O.) observed in R. v. McCallen (1999), 1999 3685 (ON CA), 43 O.R. (3d) 56 (C.A.), at p. 67:

…the relationship of counsel and client requires clients, typically untrained in the law and lacking the skills of advocates, to entrust the management and conduct of their cases to the counsel who act on their behalf. There should be no room for doubt about counsel’s loyalty and dedication to the client’s case.

The value of an independent bar is diminished unless the lawyer is free from conflicting interests. Loyalty, in that sense, promotes effective representation, on which the problem-solving capability of an adversarial system rests.

44The Supreme Court of Canada recently re-affirmed the MacDonald Estate principles and the risk to the administration of justice by the appearance of unfairness resulting from solicitor-client information being in the possession of those opposed to the former client: Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, [2006] S.C.J. No. 35 (S.C.C.), at para. 34.

45In failing to apply the law and to appreciate the high professional and reasonable public expectations of lawyers and the legal profession given predominance in MacDonald Estate, the Board decided incorrectly. The application for judicial review is granted. The decision of the Board of November 2, 2006 in respect of Shell Lawyers’ conflict of interest is quashed and it is ordered that Shell Lawyers shall cease to act against its former client, Local 183.

46Counsel may make brief written submissions on costs within thirty days.

HOWDEN J.

FERRIER J.

HIMEL J.

Released: March 21, 2007

COURT FILE NO.: 559/06

DATE: 20070321

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

FERRIER, HOWDEN & HIMEL JJ.

B E T W E E N:

RICHARD WEISS as Trustee for LOCAL 183, UNIVERSAL WORKERS UNION, LABOURERS’ INTERNATIONAL UNION OF NORTH AMERICA

Applicant

• and -

ONTARIO LABOUR RELATIONS BOARD, ANTONION DIONISIO AND JOH DIAS

Respondents