Superior Court of Justice – Ontario

CITATION: Areia Concrete v. 961175 Ontario Ltd. et al, 2012 ONSC 391

COURT FILE NO.: 09-4363-SR

DATE: 2012-01-17

RE: Areia Concrete Inc., Plaintiff

and

961175 Ontario Ltd., Robert Bonadeo, Robert Gillies, Carlos Lourenco, Luigino Rocca and Lou Rocca, Defendants

BEFORE: The Honourable Mr. Justice D.J. Gordon

COUNSEL: M. A. Cohen, for the Moving Party/Defendant

J. K. Postnikoff, for the Responding Party/Plaintiff

HEARD: January 5, 2012

ENDORSEMENT

[1] In their motion, the defendants seek an order removing Steven Gadbois and his law firm as lawyers of record for the plaintiff in this action and in the related actions.

Background

[2] Mr. Gadbois represented Luis Azevedo in an action against some of the present defendants. It involved a claim by a subcontractor in certain construction projects. The action was commenced in 2005. A settlement occurred in May 2011 and an order was subsequently granted dismissing the action.

[3] Mr. Gadbois represents the plaintiff in the present actions. The claims also pertain to construction projects. The actions were commenced in and after May 2009. These actions are to be tried together and are presently on the list for the sittings in June 2012.

The Evidence

[4] Mr. Azevedo became an employee of one of the defendant companies in June 2011, shortly after disclosing to their representatives certain alleged improper conduct by Mr. Areia, the principal of the plaintiff.

[5] Two affidavits were presented in support of the defendants’ motion by:

a) Mr. Azevedo, sworn July 26, 2011; and

b) Robert Bonadeo, sworn August 8, 2011.

[6] Mr. Bonadeo is a named defendant. He is a solicitor employed by one of the defendants.

[7] Mr. Bonadeo asserts that the defence in these actions is based, in part, on “forgery, double billing and billing for work not done” by the plaintiff or its representatives. He reports meeting with Mr. Azevedo in June 2011 and receiving information pertaining to forgery by Mr. Areia and other deceitful practices. Mr. Bonadeo goes on to say the reported forgery involves Mr. Areia forging Mr. Azevedo’s signature on a document assigning the proceeds of litigation and, further, that Mr. Azevedo reported being unable to obtain a copy of such document from Mr. Gadbois. Mr. Bonadeo says Mr. Azevedo is a crucial witness and he will be called by the defendants at trial.

[8] Mr. Azevedo makes reference to several events, including:

a) he was a witness to Mr. Areia unlawfully acquiring assets from him and the corporate defendants; and

b) an attempt by Mr. Areia to forge his name to a document assigning litigation proceeds. Mr. Azevedo says he does not have a copy of this document but believes it is in his file at Mr. Gadbois’ office.

[9] In response, the plaintiff has presented two affidavits from:

a) John Areia, sworn October 7, 2011; and

b) Mr. Gadbois, sworn October 6, 2011.

[10] Mr. Areia refers to a verbal agreement with Mr. Azevedo, in the Spring of 2009, whereby he would assist in paying a portion of Mr. Gadbois’ account. He says Mr. Azevedo promised to repay the loan from the proceeds of his lawsuit. Mr. Areia attempted to have the agreement reduced to writing but it was never signed. He denies committing any forgery or improper conduct.

[11] Mr. Gadbois acknowledges being initially retained by Mr. Azevedo and subsequently by the plaintiffs. He referred to the oral agreement previously mentioned and that, in fact, Mr. Areia did pay part of his then account with Mr. Azevedo.

[12] Mr. Gadbois goes on to say he does not have in his possession a document purporting to assign the litigation proceeds and adds “nor did I even have such a document”. In submissions, plaintiff’s counsel reported the intent was to refer to a “signed” document.

[13] Cross-examinations of the deponents took place on October 31, 2011. Reference is made only to selected matters pertinent to this motion.

[14] Mr. Gadbois acknowledged preparing an agreement that, if signed, would have granted Mr. Areia security as against the litigation proceeds of Mr. Azevedo. A copy of the unsigned agreement was subsequently located in Mr. Azevedo’s file at Mr. Gadbois’ office. Mr. Azevedo acknowledged that he did not see the document at Mr. Gadbois’ office.

Positions of the Parties

[15] On behalf of the defendants, concerns focused on:

a) the loyalty to an existing client having regard to the loyalty to a former client;

b) being in possession of the unsigned document raises the likelihood of Mr. Gadbois being called as a witness at trial; and

c) as Mr. Azevedo is a crucial witness for the defendants, Mr. Gadbois would be cross-examining a former client who owes him money and of whom he is in possession of confidential information, such as matters involving Canada Revenue Agency.

[16] In response, on behalf of the plaintiff and Mr. Gadbois, the position advanced is:

a) as the agreement was never signed, Mr. Gadbois is not a necessary witness;

b) there is no connection between Mr. Azevedo’s lawsuits and the present actions and, further, Mr. Azevedo has nothing to do with Mr. Areia’s case;

c) it is unknown if Mr. Azevedo will be a witness at trial and, hence, the motion is premature; and

d) there is no confidential information that Mr. Gadbois might use in the cross-examination of Mr. Azevedo.

Law

[17] In Macdonald Estate v. Martin, 1990 CanLII 32 (SCC), [1990] 3 S.C.R. 1235 (S.C.C.), Sopinka J., at p. 1243, identified three competing values pertaining to the issue of a disqualifying conflict of interest of counsel, namely:

i) the concern to maintain the high standards of the legal profession and the integrity of the justice system;

ii) the countervailing value that a litigant should not be deprived of his or her choice of counsel without good cause; and

iii) the desirability of permitting reasonable mobility in the legal profession.

[18] As to the appropriate test, at p. 1259, Sopinka J. made reference to two questions:

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 such information will be used to the prejudice of the client?

[19] R. v. Con-Drain Company (1983) Limited, 2008 ONCJ 114 (O.C.J.), involved counsel acting for two defendants. The charges against one were stayed and, in result, Crown counsel indicated the intention of calling him as a witness against the other defendant. Armstrong J., at para. 25, considered the duty of loyalty to more than one client, past and present, noting such continues after the retainer has ended. At para. 38, he applied the test from R. v. W. (W.) (1995), 1995 CanLII 3505 (ON CA), 100 C.C.C. (3d) 225 (Ont. C.A.), namely, whether there is a “realistic” risk of conflict emerging at trial arising out of joint or successive representation of two defendants by one counsel.

[20] In Essa (Township) v. Guergis; Memberry v. Hill (1993), 1993 CanLII 8756 (ON SCDC), 15 O.R. (3d) 573 (Div. Ct.), O. Brien J. referred to a “flexible approach” and, at para. 48, indicated the following to be a non-exhaustive list of factors:

a) the stage of proceedings;

b) the likelihood that the witness will be called;

c) the good faith (or otherwise) of the party making the application;

d) the significance of the evidence to be led;

e) the impact of removing counsel on the party’s right to be represented by counsel of choice;

f) whether trial is by judge or jury;

g) the likelihood of a real conflict arising or that the evidence will be “tainted”;

h) who will call the witness, having regard to the possibility of unfair advantage; and

i) the connection or relationship between counsel, the prospective witness and the parties involved in the litigation.

Discussion

[21] Having regard to the aforementioned principles, I am of the view Mr. Gadbois cannot continue as counsel for the plaintiff. As counsel for the defendants said in his submissions, such a ruling is not intended to suggest any impropriety.

[22] At the outset, the starting point clearly is the right to retain counsel of choice. Further, there is no absolute rule in acting against a former client or, as well, cross-examining him at a trial in which he is not a party. Every case must be considered on its own merits.

[23] It cannot be said with absolute certainty that either Mr. Azevedo or Mr. Gadbois will be a witness at trial. On my review of the evidence tendered on this motion, it appears likely that Mr. Azevedo, at least, will be called.

[24] There is some merit in deferring this motion to the trial judge who will be in a better position to ascertain if an actual conflict has arisen. Such causes concern in terms of delay and expense. Rather than be confronted with a possible mistrial, the parties need to know the answer prior to the commencement of trial.

[25] Mr. Azevedo’s evidence pertains to a number of matters, including forgery of a personal defendant’s signature as well as the agreement as to his litigation proceeds.

[26] It is not my function to assess Mr. Azevedo’s evidence. That is for the trial judge. Credibility appears to be a factor.

[27] Some, or all, of the evidence may be in the nature of significant fact. Admissibility is for the trial judge to decide. My ruling is based on the likelihood of Mr. Azevedo being called as a witness and that he will have some evidence for the court to assess.

[28] Cross-examination of Mr. Azevedo would put Mr. Gadbois in a difficult position. Mr. Azevedo owes him money. Mr. Gadbois must have personal information as to his former conflict. The duty of loyalty creates the conflict.

[29] The assignment of litigation proceeds document is of some concern. It may well have some relevance in the upcoming trial given the anticipated evidence as to forgery. It appears Mr. Gadbois has little memory of the document. He has no notes as to the client’s instructions. However, this is his document and he may well be called as a witness to explain its purpose and other matters pertaining to it.

[30] I am satisfied this motion was brought within a reasonable time period upon receiving the evidence in support. Hence, this cannot be said to involve a deliberate delay or strategic purpose. It is unfortunate this ruling comes at this point in time. However, the trial sittings are some months away. The plaintiff has time to retain other counsel.

Summary

[31] In result, the motion is granted.

[32] If the parties are unable to resolve the issue of costs, brief written submissions are to be delivered to my chambers in Kitchener within 30 days.

D.J. Gordon J.

Released: January 17, 2012