Court of Appeal for Ontario

Date: January 24, 2017 Docket: C62200 Judges: Sharpe, Pepall and Hourigan JJ.A.

Between

Her Majesty the Queen in Right of the Province of Ontario Plaintiff (Respondent)

and

Chartis Insurance Company of Canada, American Home Assurance Company, Royal & Sun Alliance Insurance Company of Canada, The Royal Insurance Company of Canada, Royal Insurance Company Limited, Aviva Canada Inc., Aviva Insurance Company of Canada, General Accident Assurance Company of Canada, Travelers Insurance Company of Canada, and St. Paul Fire and Marine Insurance Company Defendants (Appellants)

Counsel:

• Gavin MacKenzie and Brooke MacKenzie, for the appellants
• William Manuel and Jonathan Sydor, for the respondent

Heard: December 2, 2016

On appeal from the order of the Divisional Court (Justices Edward F. Then, Anne M. Molloy and Thomas R. Lederer), dated February 11, 2016, with reasons reported at 2016 ONSC 43, 347 O.A.C. 43, allowing an appeal from Justice Alfred J. O'Marra of the Superior Court of Justice, dated July 16, 2014, with reasons reported at 2014 ONSC 4221, 38 C.C.L.I. (5th) 34.

Pepall J.A.:

A. Introduction

[1] This appeal concerns the disqualification of counsel due to an alleged conflict of interest. At issue is the possibility of inadvertent disclosure of confidential information arising from the close working relationship between two lawyers after one transferred law firms to work with the other. The integrity of counsel involved is unchallenged and there is no suggestion of any actual impropriety.

[2] The respondent, Her Majesty the Queen in Right of the Province of Ontario ("Ontario"), sued the appellants, Chartis Insurance Company and American Home Assurance Company (collectively, "AIG"), as a result of an insurance coverage dispute.

[3] Ontario retained the law firm of Theall Group LLP ("TG") as its counsel in the coverage dispute. Michael Foulds is a lawyer who worked for TG and was intimately involved in working with senior counsel to Ontario on the dispute. Foulds then left that firm and joined the law firm of Lloyd Burns McInnis LLP ("LBM") as a partner. LBM represents AIG in the coverage dispute. At his new firm, Foulds does not work on the coverage action but he spends 50 to 60 percent of his time working with Douglas McInnis, who is counsel to AIG on the dispute. Foulds also works on other files for AIG.

[4] AIG moved for a declaration that the ethical screen put in place by Foulds' new firm, LBM, was sufficient to prevent disclosure of Ontario's confidential information and that it was in the interests of justice that the firm continue to act in the action.

[5] In turn, Ontario brought a cross-motion seeking an order that Foulds' new firm, LBM, be disqualified from continuing to act for AIG due to an inherent conflict of interest caused by Foulds, who was formerly Ontario's counsel, joining his new firm to work with senior counsel to AIG.

[6] The application judge agreed with AIG's position, granted its motion, and dismissed Ontario's cross-motion.

[7] The Divisional Court overturned that decision.

[8] For the reasons that follow, I would dismiss the appeal from the Divisional Court's order.

B. Background Facts

[9] Ontario was a defendant in four class actions. Ontario carried insurance, however a dispute arose over its insurance coverage with AIG and three other insurers. Ontario retained Laurence Theall of TG to act on its behalf. In 2012, Theall commenced an action against the insurers to compel coverage.

[10] Foulds was an associate at TG and began working with Theall on the insurance dispute in November 2010. Foulds' involvement included work on the actions and settlement negotiations with the insurers. These negotiations were successful with respect to all of the insurers except AIG. The settlements were finalized in August 2013. The action against AIG continues.

[11] As a result of his involvement, Foulds is in possession of privileged and confidential information relating to the class actions, the coverage action, the negotiations, and the settlements. During the time he was with TG, Foulds docketed more than 160 hours on the coverage proceedings.

[12] McInnis of LBM is opposing counsel and acts for AIG in the coverage dispute. He was retained in June 2009 and has been actively and directly involved in both defending AIG in the action brought by Ontario and in the unsuccessful settlement negotiations. McInnis has docketed more than 400 hours on matters relating to the coverage action.

[13] McInnis has worked for AIG as coverage advisor and counsel since 1986. Since the early 1990s, he has represented AIG on more than 50 separate coverage files relating to the Ontario Insurance Program.

[14] In the summer of 2013, McInnis approached Foulds to join LBM, a 14 member Toronto litigation boutique, as a partner. Foulds and McInnis had previously worked together on AIG matters between 2004 and 2010, when they both worked at another law firm. Once he joined LBM, Foulds was to work with McInnis on AIG and other client matters, excluding the coverage action and any other Ontario-AIG matters.

[15] In November 2013, Foulds told Theall that he intended to move his practice to LBM.

[16] In early December 2013, McInnis contacted Theall by telephone to discuss the establishment of an ethical screen. On January 2, 2013, McInnis sent an e-mail outlining the safeguards to be put in place upon Foulds' arrival at LBM. These would include:

(a) Foulds would have no involvement in LBM's representation of AIG in the coverage action;

(b) Foulds would not discuss any Ontario-AIG matters with anyone at LBM or AIG;

(c) no one from LBM would discuss any Ontario-AIG matters with Foulds;

(d) immediately upon arriving at LBM, Foulds would sign an undertaking confirming that he understood, and would adhere to, all elements of the ethical screen;

(e) all LBM lawyers and staff involved in Ontario-AIG matters would sign a similar undertaking;

(f) LBM would inform all personnel in writing of the ethical screen, of the requirement to adhere to it, and of the possible sanctions for failing to abide by the terms of the ethical screen, which sanctions could include dismissal;

(g) Foulds' office would be located several offices away from those LBM personnel working on Ontario-AIG matters; and

(h) the ethical screen would be monitored and enforced by a senior partner with no personal involvement in Ontario-AIG matters.

[17] Theall responded by requesting an opportunity to review the undertaking proposed in draft form. McInnis sent this to Theall in early January 2014. McInnis asked that Ontario consent to LBM continuing to act for AIG on the coverage action.

[18] Subsequently, as an extra precaution, LBM decided that Foulds would not work with McInnis' assistant.

[19] Foulds commenced work at LBM on January 6, 2014. Foulds estimates that one-half of his time is spent doing work for AIG and that 50 to 60 percent of his time is spent working with McInnis.

[20] On February 7, 2014, Theall advised McInnis of Ontario's objection to LBM continuing to act on the coverage dispute because of the serious conflict of interest that arose from Foulds' move to LBM. Theall wrote that Foulds had docketed over 160 hours on the case between Ontario and AIG and was "privy to not only privileged information, but the entire litigation strategy". He went on to write:

Mr. Foulds assisted me in the very matter that is at issue between Ontario and Chartis, including both the allocation of defence costs and indemnity payments for the Huronia litigation. He was substantially involved in preparing an opinion for Ontario regarding allocation of defence costs, drafting the statement of claim, discussing settlement possibilities, attendance at client meetings, and meetings with the opposing insurers. Mr. Foulds is therefore in possession of very relevant confidential information.

[21] Since he joined LBM, Foulds has not been involved in the class actions, the coverage action, the Ontario Insurance Program, or any Ontario-AIG matters. He does work on AIG files not involving Ontario.

C. The Decisions Below

(1) The Application Judge's Decision

[22] The application judge identified the test articulated by Sopinka J. in MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, considered the Law Society of Upper Canada's ("LSUC") guidelines for protecting a client's confidential information, and reviewed cases that had considered comparable ethical screens. He then turned to the application of these principles to the case before him.

[23] He noted that there was no requirement that the tainted lawyer (an unfortunate but apt descriptor)[1] have zero contact or involvement with lawyers working on the client's file. To hold otherwise would be particularly challenging for small firms.

[24] He concluded that LBM had implemented all of the suggested measures under the LSUC guidelines in a timely manner and had appointed an independent senior partner to supervise and monitor the firm's adherence to the requirements of the ethical screen.

[25] He characterized the issue as being "whether reasonable precautions have been taken to minimize risk" (para. 41) and asked rhetorically what more could be done to protect the confidentiality of Ontario's information. At paras. 42 to 44, he wrote:

Even if a doubt remains that there is the possibility of inadvertent disclosure, I consider in the balance, the impact of a disqualification order on the opposing parties' right to counsel of choice. Mr. McInnis has not just been retained. He has been involved significantly as coverage counsel in AIG matters for many years. He has been their outside counsel on such matters since 1986. Since the early 1990s, AIG has retained Mr. McInnis exclusively for Ontario-AIG matters. He has been dealing with matters giving rise to the present coverage action for more than five years. He has docketed over 400 hours in the matter, which has been described as a complex action involving the interpretation of his client's insurance policy and class actions involving a class period from the 1940s to 2009.

The parties are large sophisticated institutional interests. Although there are a number of experienced lawyers competent to undertake litigation of such complexity as in this case, as acknowledged by Mr. McInnis on examination, none have the depth of knowledge, experience and understanding of AIG and the Ontario Insurance Program as Mr. McInnis. AIG should not be denied its counsel of choice.

LBM has been pro-active in minimizing the risk of disclosure of confidential information. In considering the timely and comprehensive compliance by LBM with the institutional measures set out in the guidelines, in addition to appointment of a supervising senior partner, and isolating Mr. Foulds from any Ontario-AIG matters, I find that a reasonably informed person would be satisfied that the use of confidential information had not occurred or would likely occur, and it is in the interests of justice to allow Mr. McInnis to remain as AIG's counsel of choice.

[26] The application judge therefore granted LBM's motion and dismissed Ontario's cross-motion.

[27] On November 24, 2014, Nordheimer J. granted leave to appeal to the Divisional Court. In applying the test for granting leave to appeal, he was satisfied that there was "good reason to doubt the correctness" of the application judge's decision. He noted that the application judge had appeared to have reversed the onus and engaged in a "balancing act", rather than considering whether the presumption of disqualification had been rebutted.

(2) Divisional Court Decision

[28] The Divisional Court allowed the appeal and disqualified LBM from continuing to act for AIG in the coverage action. Lederer J., writing for a unanimous court, noted that an order seeking the removal of counsel is discretionary and therefore attracts deference. Nonetheless, he concluded that the application judge had erred in his application of the principles articulated in MacDonald Estate. At paras. 25 and 41, he wrote:

The implementation of the guidelines and the presence of the senior partner could be relied on to further a consideration of whether the inference of the delivery of confidential information prejudicial to Ontario had been rebutted. This is not how the motion judge employed these factors in the analysis he undertook or the determination that he made. Rather, he took the approach that if the firm had done everything possible to avoid the delivery of confidential information, the test had been met. He failed to go on and consider whether, notwithstanding all of the safeguards introduced, the presumption of tainting had been effectively rebutted.

In his reasons the motion judge approached this matter on the basis that the presumption that confidential information will be inevitably imparted to opposing counsel would be rebutted, i.e. that a reasonably informed person [would find] that the use of confidential information had not occurred or was likely to occur, if opposing counsel has implemented all reasonable precautions to minimize the risk. Moreover, the motions judge posits the proposition that any residual risk of inadvertent disclosure can be tolerated or balanced by consideration of the impact of disqualification on the opposing parties' right to counsel of choice.

[29] Lederer J. noted that there was nothing to suggest that the LSUC guidelines or some other ethical screen would successfully address every conflict in every case. There will be circumstances, such as in this case, where the public, represented by the reasonably informed person, could not be satisfied that no use of confidential information would occur.

[30] He determined that the relationship was "too close for comfort". The Divisional Court accordingly allowed the appeal.

[31] This court granted leave to appeal on May 16, 2016.

D. The Applicable Law

[32] The applicable test to determine whether a disqualifying conflict exists was set out in MacDonald Estate. Sopinka J. stated, at pp. 1259-60:

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.

[33] According to Sopinka J., that is the overriding policy and has to inform the court in answering whether there is a disqualifying conflict of interest. The questions to be answered are: (i) did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand, and (ii) is there a risk that it would be used to the prejudice of the client?: MacDonald Estate, at p. 1260.

[34] There is no issue in this appeal with respect to the answer to the first question. It is conceded that Foulds is in possession of such confidential information. The appeal therefore turns on the answer to the second question.

[35] In assessing risk of prejudice to the client, the court is to infer that Foulds will impart confidential information to his new colleagues at LBM. However, as Sopinka J. explained in MacDonald Estate, that inference is rebuttable:

There is, however, a strong inference that lawyers who work together share confidences. In answering this question, the court should therefore draw the inference, unless satisfied on the basis of clear and convincing evidence, that all reasonable measures have been taken to ensure that no disclosure will occur by the "tainted" lawyer to the member or members of the firm who are engaged against the former client: p. 1262.

[36] In this appeal, the inference is rebuttable if the measures instituted by LBM would satisfy a reasonably informed person that use of confidential information had not occurred or would not occur: MacDonald Estate, pp. 1259-60.

[37] In MacDonald Estate, Sopinka J. invited lawyers' professional regulatory bodies to address appropriate measures to prevent the disclosure of confidential information in circumstances where a lawyer transfers firms. He also noted that, since the legal profession is self-governing, the codes of conduct of lawyers' governing bodies are "an important statement of public policy with respect to the conduct of a barrister and solicitor": p. 1244.

[38] The Canadian Bar Association and the Federation of Law Societies of Canada established rules and guidelines in response to Sopinka J.'s invitation. The provincial governing bodies, including the LSUC, then promulgated their own rules and guidelines, which generally borrowed heavily from the model rules proposed by the Federation of Law Societies.

[39] At the relevant time, the LSUC's approach to what constitutes adequate measures to prevent the disclosure of confidential information was set out in r. 2.05 of the LSUC's Rules of Professional Conduct under the heading 'Conflicts from Transfer between Law Firms', and more specifically in subsection (4) on Law Firm Disqualification:

Where the transferring lawyer actually possesses relevant information respecting the former client that is confidential and that, if disclosed to a member of the new law firm, may prejudice the former client, the new law firm shall cease its representation of its client in that matter unless

(a) the former client consents to the new law firm's continued representation of its client, or

(b) the new law firm establishes that it is in the interests of justice that it act in the matter, having regard to all relevant circumstances, including,

(i) the adequacy and timing of the measures taken to ensure that no disclosure to any member of the new law firm of the former client's confidential information will occur,

(ii) the extent of prejudice to any party,

(iii) the good faith of the parties,

(iv) the availability of suitable alternative counsel, and

(v) issues affecting the public interest.

[40] Guidelines to protect confidential information are set out in the commentary to r. 2.05. In particular, guidelines 1, 10, 11 and 12 state:

1. The screened lawyer should have no involvement in the new law firm's representation of its client.

2. The screened lawyer's office or work station and that of the lawyer's support staff should be located away from the offices or work stations of lawyers and support staff working on the matter.

3. The screened lawyer should use associates and support staff different from those working on the current matter.

4. In the case of law firms with multiple law offices, consideration should be given to referring conduct of the matter to counsel in another office.

[41] In Robertson v. Slater Vecchio, 2008 BCCA 306, 81 B.C.L.R. (4th) 472, the British Columbia Court of Appeal held that not every guideline must be followed to the letter.

[42] Robertson involved a conflicted lawyer who had acted for defendants in various lawsuits while at his old firm and who migrated to a nine-person law firm that acted for the plaintiffs. There was some delay in the implementation of the ethical screen, and two of the guidelines, which were identical to the LSUC's guidelines 11 and 12, were not followed. Despite these shortcomings, the application judge held that the test in MacDonald Estate was met, and he dismissed the application for disqualification.

[43] There was no doubt that the tainted lawyer had received confidential information. On the issue of the tainted lawyer's interaction with other lawyers, Newbury J.A. of the B.C. Court of Appeal stated, at para. 14:

The chambers judge noted, it was "unclear on the evidence" whether [the tainted lawyer's] work at [his new law firm] was "kept far enough away from other lawyers and staff, and whether he avoided working with associates and staff involved in the [appellants'] lawsuits." Given this comment, we should assume for purposes of this appeal that [the tainted lawyer's] work area was not a segregated one and that he is likely to have worked with lawyers and staff members who were working on those matters. [Citations omitted.]

[44] Newbury J.A. also observed that guideline 11 was "virtually irrelevant" where the concern is "disclosure of information by a lawyer as opposed to disclosure to him or her". She noted that guideline 12 was a particular challenge for small firms and stated, at para. 25:

The Guideline is limited to professional interactions and does not purport to prohibit purely social or even administrative contact, contrary to the suggestion of counsel for the appellants in this court…The law does not purport to prohibit all interaction, such as participation in management activities or even socializing, between the lawyer and his new colleagues.

[45] Newbury J.A. went on to note that if all interactions were prohibited, then "disqualification 'would be a virtual given' and the minority opinion of Cory J. in MacDonald Estate would become the 'de facto law'."

[46] Ultimately, the B.C. Court of Appeal in Robertson was unable to conclude that the application judge had misdirected himself, or that his decision was so clearly wrong as to amount to an injustice, and therefore dismissed the appeal.

[47] Although Robertson involved noncompliance with the guidelines and a tainted lawyer who likely had worked with lawyers and staff who were working on conflicted matters, the degree of contact between the tainted lawyer and those working on the conflicted matters was dissimilar to that in the case under appeal. That said, the decision in Robertson does reiterate the discretionary nature of a determination of disqualification, and it also stands for the proposition that compliance with all of the guidelines is not mandatory.

[48] However, implementation of the guidelines is a significant factor to consider when an application judge is exercising his or her discretion. Canadian courts have typically held that compliance with the guidelines provides sufficient protection for the migrating lawyer's former client: see Robertson; Dwyer v. Mann, 2011 ONSC 2163, [2011] O.J. No. 1551; and Bank of Montreal v. Dresler, 2002 NBCA 69, 253 N.B.R. (2d) 37. That said, while highly persuasive, compliance is not determinative.

[49] Counsel were unable to identify any case that was on all fours with the case under appeal.

E. Positions of The Parties

[50] The appellant, AIG, submits that it was not the application judge who applied the wrong test. Rather, the Divisional Court applied the dissenting test articulated by Cory J. in MacDonald Estate. The application judge properly gave precedence to the integrity of the justice system and only considered other values, such as choice of counsel, after he had determined the sufficiency of the ethical screen.

[51] AIG also submits that the Divisional Court ignored post-MacDonald Estate jurisprudence and that Canadian courts have found that where a law firm implements an ethical screen in compliance with the LSUC's requirements in a timely manner, the presumption that lawyers share confidences is rebutted.

[52] Lastly, AIG submits that the Divisional Court applied the wrong standard of review. The application judge came to the correct decision and, at the very least, it was a reasonable conclusion.

[53] The respondent, Ontario, submits that the application judge failed to distinguish between inevitable incidental contact and a case such as this, where the tainted lawyer works closely with the lawyer working on the conflicted matter. Instead, he favoured a mechanical application of the LSUC guidelines. The concern should be whether a screen is effective, not whether it is comprehensive. Not every conflict of interest can be successfully met by following the LSUC guidelines.

[54] Ontario also argues that no weight should be given to the value of AIG being represented by its counsel of choice, because the conflict of interest in this case was neither inadvertent nor unforeseen. Rather, it was created by LBM's own conduct.

[55] Lastly, Ontario submits that the appellant has failed to refer to any case where the work of the two lawyers was so intertwined as in this case.

F. Analysis

(1) Standard of Review

[56] The first issue to consider is whether the Divisional Court applied the correct standard of review. In my view, it did.

[57] The Divisional Court properly identified a disqualification motion as being discretionary in nature. Such a decision is reversible where the court has misdirected itself, has come to a decision that is so clearly wrong that it amounts to an injustice, or where the court gives no or insufficient weight to relevant considerations: Penner v. Niagara Regional Police Services Board, 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 27.

(2) Assessment of the Application Judge's Decision

[58] The Divisional Court spent some time focusing on the dissenting opinion in MacDonald Estate. The appellant relies on this fact to argue that it was simply substituting its discretion for that of the application judge.

[59] Although its emphasis on the dissent in MacDonald Estate was unnecessary, I agree with the Divisional Court that the application judge misdirected himself. He did so in two respects.

(i) LSUC Guidelines not Dispositive in Circumstances of this Case

[60] First, having identified the proper test as described in MacDonald Estate, the application judge proceeded to treat the guidelines as an exhaustive answer and effectively reversed the onus of proof. The application judge acknowledged the applicable presumption that lawyers who work together share confidences. But, in considering whether that presumption had been rebutted, at para. 41, he asked the wrong question: "What more could be done to protect the confidentiality of [Ontario's] information?"

[61] To ask this question precludes the possibility that no measure could be sufficient to address the degree of professional contact between the two lawyers. The application judge assumed that every conflict could be successfully met by the imposition of the guidelines. This was in error.

[62] As an example, as Mr. MacKenzie for AIG candidly acknowledged, no screen would effectively screen a firm of two lawyers having a familial relationship. Post-MacDonald Estate jurisprudence does not uniformly provide that compliance with regulatory guidelines precludes disqualification. For example, in Winford Insulations Ltd. v. Andarr Industries Inc., 1998 ABQB 1124, 243 A.R. 1, where the court held that reasonable measures taken to prevent the disclosure of confidential information were insufficient to avoid disqualification in a case involving two lawyers who worked in close physical proximity in a firm of 10 to 11 lawyers.

[63] Further, in the province of Ontario, the legal profession has expressly recognized that compliance with the rules and guidelines may not be adequate in every case. In the commentary to its Rules of Professional Conduct, the LSUC writes:

It is not possible to offer a set of "reasonable measures" that will be appropriate or adequate in every case. Instead, the new law firm that seeks to implement reasonable measures must exercise professional judgment in determining what steps must be taken "to ensure that no disclosure will occur to any member of the new law firm of the former client's confidential information."

Adoption of only some of the guidelines may be adequate in some cases, while adoption of them all may not be sufficient in others.

[64] Sopinka J. observed, at p. 1262 of MacDonald Estate, that it is not for the court to develop standards; that is the role of the governing bodies of the self-governing legal profession. The court's role is merely supervisory. But neither MacDonald Estate, nor the guidelines themselves, suggest that the court should abdicate its supervisory responsibility. In fact, the Supreme Court recently reiterated the supervisory role of the courts in resolving conflicts of interest. In Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] 2 S.C.R. 649, McLachlin C.J. stated, at para. 16:

Both the courts and law societies are involved in resolving issues relating to conflicts of interest – the courts from the perspective of the proper administration of justice, the law societies from the perspective of good governance of the profession. [Citations omitted.]

[65] I would also add that this decision is not about small firms versus large firms. Admittedly, by Toronto standards, LBM is a small firm. It is a litigation boutique and consists of 14 lawyers. But, in this case, the size of the firm is irrelevant. What is relevant is the integrated nature of Foulds' and McInnis' practices. Foulds works with McInnis 50 to 60 percent of the time. While technology, such as e-mail, might serve to diminish face-to-face interaction, the potential for inadvertent disclosure is significant. Indeed, LBM recognized the potential for such disclosure by imposing a safeguard that Foulds' office would be located several offices away from those LBM personnel working on Ontario-AIG matters. However, this precaution does little to address Foulds' actual working relationship with McInnis. In addition, Foulds also continues to spend 50 percent of his time working for AIG, and AIG is a client he shares in common with McInnis.

[66] Moreover, any disclosure of the subject matter of the confidential information held by Foulds has the potential to be very prejudicial to Ontario. The dispute between AIG and Ontario relates to coverage. Significantly, Foulds was privy to the failed negotiations with AIG and is in possession of the terms of the confidential settlements entered into between Ontario and the other insurers who were originally disputing coverage along with AIG.

[67] While the appellants may have achieved technical compliance with the r. 2.05 guidelines, in my view, compliance with the spirit of those guidelines is absent.

[68] The objective of the guidelines is to limit or screen interaction. This is particularly evident from guidelines 10, 11 and 12. The most striking feature of this case is that Foulds spends 50 to 60 percent of his time working with McInnis. In the face of that fact, it cannot be said that there is clear and convincing evidence that all reasonable measures are being taken to ensure that no disclosure would occur by Foulds to AIG's counsel. The public, represented by the reasonably informed person, could not be satisfied that no use of confidential information would occur between two people with such an intense working relationship.

(ii) Paramountcy of the Integrity of Legal Profession

[69] Secondly, the application judge treated the examination of the conflict issue as a balancing exercise between the three competing interests: protecting Ontario's confidential information, the integrity of the legal system, and the right to choose one's own counsel. In my view, he erred in so doing.

[70] Although the right to one's choice of counsel is one of the three values identified in MacDonald Estate as bearing on the issue of conflict, it is not paramount. As noted in that case, and as rephrased by the Saskatchewan Court of Appeal in Wallace v. Canadian National Railroad, 2011 SKCA 108, 340 D.L.R. (4th) 402, rev'd on other grounds (sub nom. Canadian National Railway Co. v. McKercher LLP) 2013 SCC 39, [2013] 2 S.C.R. 649) at para. 55, "primacy [is] given to the integrity of both the legal profession and the administration of justice over…a client's choice of lawyer and lawyer mobility."

[71] While in MacDonald Estate, at p. 1263, Sopinka J. mentions the word "balance", it is in a different context. There, he was addressing standards to be developed by the Canadian Bar Association which would give precedence to the preservation of the confidentiality of information imparted to a solicitor, but would also reflect the interests relating to choice of counsel and mobility. He was not referring to the court's role in addressing a disqualification motion. A court is to give primacy to the integrity of the legal profession and the administration of justice.

G. Conclusion

[72] In its submissions, AIG raised the concern that concurrence with the Divisional Court's decision would result in uncertainty in the law. This concern lacks foundation. Most cases that are guideline compliant will be unobjectionable. However, this case is most unusual given the intense working relationship between Foulds and McInnis. The presumption is that lawyers who work together share confidences, absent clear and convincing evidence that all reasonable measures have been taken to ensure no disclosure will occur. The evidence in this case is neither clear nor convincing.

[73] As mentioned, the concern of inadvertent disclosure should not be taken as a reflection of the integrity of either lawyer. Rather, it is the integrity of the justice system that is in issue.

H. Disposition

[74] For these reasons, the appeal is dismissed. AIG is to pay Ontario's costs of the appeal, including the leave to appeal motion, fixed in the amount agreed to by the parties, namely, $25,000 inclusive of disbursements and applicable tax.

Released: January 24, 2017

"RJS" "S.E. Pepall J.A."

"I agree Robert J. Sharpe J.A."

"I agree C.W. Hourigan J.A."

[1] LSUC uses the less charged term 'screened' in its guidelines.