ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-10-15666
DATE: 20120112

BETWEEN:

Kim Spirou Plaintiff – and – Warren Chant, Barbara Sebben, Kimberly Winger, Christine Mitchell, Patricia Velleau, Robert Turner and The Religious Hospitallers of Hotel-Dieu of St. Joseph of the Diocese of London o/a Hotel-Dieu Grace Hospital Defendants

Raymond G. Colautti, for the Plaintiff

John McGowan and Anne-Marie Naccarato, for the Defendants

HEARD: December 12, 2011

Decision on motion to remove counsel

Thomas J.:

[ 1 ] This decision relates to a motion brought by counsel for the defendants for an order removing the law firm of Shulgan Martini Marusic LLP (“Shulgan Martini Marusic”) as counsel of record for the plaintiff. The grounds alleged are that Shulgan Martini Marusic is in a conflict of interest in that Gerri Wong, a lawyer at Shulgan Martini Marusic, was acting for the defendant Hotel-Dieu Grace Hospital (“HDGH”) at the relevant time. The litigation in question alleges wrongful dismissal, breach of contract, emotional distress, and punitive damages totalling 6.3 million dollars.

Background

[ 2 ] The plaintiff (Ms. Spirou) was employed by the HDGH in the position of Vice-President, Communications and Development from November 24, 2005, until her employment was terminated on December 6, 2010. During her employment with HDGH, Ms. Spirou was part of the HDGH senior leadership team.

[ 3 ] In January 2010, an independent investigation was undertaken at HDGH regarding a workplace violence and harassment complaint involving two of HDGH’s cardiologists. The resulting fact finding determined that there were serious issues to be addressed regarding the interpersonal workplace relationships and institution functioning of HDGH’s cardiology program (“the Program”). The report also spoke to the overall unhealthy workplace relationships between HDGH’s employees, physicians, senior leadership team and Board of Directors.

[ 4 ] In paragraph 11(ix) of the statement of claim in this action, Ms. Spirou makes specific reference to her contact with the “Cardio/Angioplasty” program. Paragraphs 22 to 29, and 31 of the statement of claim also contains allegations regarding HDGH’s workplace violence prevention program.

[ 5 ] In or about June 2010, HDGH hired Ms. Gerri Wong, a lawyer at the law firm of Shulgan Martini Marusic to assist HDGH with evaluating, mediating, and resolving workplace conflicts between employees including allegations of harassment and workplace violence. In conjunction with Ms. Gemma Smyth, a mediation professor at the University of Windsor Law School, Ms. Wong was also asked to assist HDGH with resolving the interpersonal conflicts within the Program as identified in the report.

[ 6 ] Until this conflict matter was raised in December 2010, as described below, Ms. Wong was actively retained by HDGH in respect of workplace matters. During the course of her retainer with HDGH, Ms. Wong met with, interviewed, and mediated conflicts between HDGH employees. Ms. Wong also met with employees of HDGH at the offices of Shulgan Martini Marusic. Ms. Wong has never advised HDGH that she is not affiliated with Shulgan Martini Marusic.

[ 7 ] In addressing the issues within the Program, Ms. Wong drafted a proposal, signed the Memo of Understanding, drafted an Action Plan, and drafted the letter which was sent to all members of the Program inviting them to participate in the facilitation process in order to improve relationships within the Program.

[ 8 ] In the course of her duties for HDGH, Ms. Wong met with HDGH employees including HDGH staff members, Ms. Dawn Ricker, HDGH’s Safe Workplace Advocate; Mr. Warren Chant, Chief Executive Officer of HDGH and a defendant in Ms. Spirou’s claim; Dr. Gordon Vail, HDGH’s Chief of Staff; Dr. Al Kadri, HDGH’s Chief of Medicine; Dr. Kevin Tracey, HDGH’s previous interim Chief of Staff; Ms. Patricia Somers, Senior Vice President Patient Services and Chief Nursing Executive; Ms. Lora Picinnin, Program Manager, Cardiac Catheterization Lab; and Ms. Mary Yakopich, Director of Cardiac Services. At the time this conflict was raised, as described below, Ms. Wong had just arranged interviews with certain of HDGH’s nurses regarding workplace conflicts.

[ 9 ] When communicating with HDGH in the course of her duties, Ms. Wong used the following email address associated with Shulgan Martini Marusic: gwong@smmbarristers.com. Her emails include an email signature which identifies Ms. Wong as working at Shulgan Martini Marusic.

[ 10 ] Ms. Wong’s invoices to HDGH for her services are printed on Shulgan Martini Marusic letterhead, prefaced with a cover letter from Shulgan Martini Marusic, and signed by Ms. Wong on behalf of Shulgan Martini Marusic. For payment for Ms. Wong’s services, HDGH made out cheques directly to Shulgan Martini Marusic.

[ 11 ] The Law Society of Upper Canada’s (“LSUC”) online directory of lawyers identified Ms. Wong as being “in private practice” at Shulgan Martini Marusic and Ms. Wong was publicly advertised as being a member of Shulgan Martini Marusic.

[ 12 ] On December 9, 2010, Ms. Spirou served her statement of claim on HDGH and several individual defendants, including Mr. Chant, Chief Executive Officer of HDGH, in respect of her termination from employment. The statement of claim identified Mr. Myron Shulgan of Shulgan Martini Marusic as Ms. Spirou’s counsel.

[ 13 ] On December 9, 2010, Ms. Wong sent an email to Ms. Ricker at HDGH and asked to speak with her on December 10, 2010. During the call on December 10, 2010, Ms. Wong informed Ms. Ricker of a conflict of interest between Shulgan Martini Marusic and HDGH, given her firm’s retainer with HDGH and Ms. Spirou’s action against HDGH. Ms. Wong also informed Ms. Ricker that back in June 2010, she had run a check within her firm to ensure that no conflict existed at that time when she first accepted the retainer with HDGH.

[ 14 ] Ms. Wong further advised Ms. Ricker that she had called the LSUC to determine whether Shulgan Martini Marusic would be in a conflict of interest by acting for Ms. Spirou given Ms. Wong’s retainer with HDGH. Ms. Wong advised Ms. Ricker that the LSUC considered this circumstance as constituting a conflict of interest.

[ 15 ] Ms. Ricker communicated this information to Mr. John McGowan of Cassels, Brock & Blackwell LLP, counsel for HDGH in this matter. On December 13, 2010, Mr. McGowan sent a letter to Mr. Shulgan advising him of the conflict of interest and the position taken by Ms. Wong and the LSUC, as reported by Ms. Wong. The letter asked Mr. Shulgan for his position on the conflict and advised that a motion would be brought to remove Shulgan Martini Marusic as counsel for Ms. Spirou.

[ 16 ] On December 23, 2010, Mr. Shulgan sent a letter to Mr. McGowan which stated that, before accepting the retainer with HDGH in June 2010, Ms. Wong had allegedly sought assurances from HDGH that HDGH would not raise a conflict issue in respect of Shulgan Martini Marusic acting adverse to HDGH.

[ 17 ] After further correspondence from defendant’s counsel on January 19, 2011, Mr. Shulgan sent a letter to Mr. McGowan advising that it was his position that there is no conflict of interest between Shulgan Martini Marusic and HDGH because Ms. Wong was allegedly not an employee of the firm and no individual at the firm had any knowledge of Ms. Wong’s retainer with HDGH.

[ 18 ] As part of the motion material filed herein, the plaintiff delivered affidavits from Claudio Martini and Myron Shulgan, partners in Shulgan Martini Marusic. Mr. Shulgan and Mr. Martini were cross-examined on their affidavits and Ms. Wong was examined as an out of court witness under Rule 39 of the Rules of Civil Procedure.

[ 19 ] As a result of that process the following further information came to light and forms background for this motion.

[ 20 ] There exists a serious discrepancy between the evidence of Ms. Wong and Mr. Martini with respect to Ms. Wong’s initial contact with Hotel-Dieu in November 2009.

[ 21 ] Mr. Martini testified that he specifically instructed Ms. Wong that she could only act for the Hospital if it agreed to waive current and future conflicts of interest because the firm often acted against the Hospital in medical malpractice claims. Mr. Martini testified that Ms. Wong gave him an “undertaking” to obtain the Hospital’s consent to waive both current and future conflicts of interest.

[ 22 ] Ms. Wong testified that when she accepted Hotel-Dieu’s retainer in November 2009, none of the partners of the firm, including Mr. Martini, identified any conflicts of interest to her. Moreover, the firm’s computer conflict search process did not reveal any conflicts of interest. In examination, Ms. Wong stated that Mr. Martini never put any conditions on her work for Hotel-Dieu and never asked her to obtain Hotel-Dieu’s consent to waive current and future conflicts of interest. Ms. Wong never sought nor obtained any such consent from Hotel-Dieu.

[ 23 ] At the time of her termination, Ms. Spirou held the executive position of Vice-President, Communications and Development. Her position was part of the Hospital’s senior leadership team. As stated above, the interactions between the senior leadership team and the cardiology department was a matter on which Ms. Wong was retained. Also as stated above, Ms. Spirou advised one of the physicians on filing his complaint against the second physician, also a matter on which Ms. Wong was retained. Ms. Spirou’s statement of claim admits that her job included representing the Hospital to the public regarding the “difficulties arising within the Cardiology/Angioplasty program.”

[ 24 ] In cross-examination, Mr. Shulgan said he could not deny that Ms. Wong’s work for the Hospital involved assisting the Hospital in resolving the problems in the cardiology program. He stated that, in discovery, he would examine Mr. Chant. It is clear Ms. Wong worked closely with Mr. Chant in her work for the Hospital.

[ 25 ] The statement of claim also describes Ms. Spirou’s criticisms of Mr. Chant, particularly that she believed he had a “lack of leadership” in “dealing with serious medical issues affecting Hospital Programs and patient care.” These matters are ones on which Ms. Wong consulted with Mr. Chant in the course of her retainer.

[ 26 ] Ms. Spirou’s statement of claim details the fact that a number of the defendants filed complaints against her that fell within the Hospital’s Workplace Violence Protection Program. The statement of claim also alleges that the Hospital did not follow the program’s procedures. Ms. Wong had been retained to assist with the Hospital’s procedures in other matters where Ms. Spirou was not the subject of complaints.

[ 27 ] In early December 2010, Ms. Wong was advised by the firm partners that they felt there was no conflict and no further discussion was necessary.

[ 28 ] Ms. Wong on the basis of that position sought advice from the LSUC practice management service. She obtained a strong opinion that there was a conflict.

[ 29 ] On December 10, 2010, Ms. Wong ceased all work for HDGH. Ms. Wong resigned from the firm Shulgan Martini Marusic effective April 30, 2011. The only reason for her resignation was the firm’s position on the alleged conflict.

Positions of the Parties

The Moving Party

[ 30 ] Mr. McGowan, counsel for HDGH, argues that the issue is clear and relatively straight forward. It can be summarized by the following points:

1. The defendant, HDGH, was a client of the firm Shulgan Martini Marusic as early as November 2009 by virtue of Gerri Wong’s mediation and advice regarding a dysfunctional workplace;

2. Gerri Wong was a lawyer member of Shulgan Martini Marusic and received confidential information as a result of her work for HDGH;

3. No steps were taken by Shulgan Martini Marusic to ensure the information would not “cross-pollinate” the firm;

4. There is therefore a threat of prejudice to the client HDGH;

5. Shulgan Martini Marusic was breaching its duty of loyalty by representing two clients with adverse interests;

6. HDGH did not consent, expressly or impliedly.

The Plaintiff

[ 31 ] Quite appropriately Mr. Colautti was retained by Shulgan Martini Marusic to prepare materials and argue this motion for the plaintiff and Shulgan Martini Marusic.

[ 32 ] It is his position that I must be careful not to decide this issue on principle without a detailed examination of the facts “on the ground”. He makes a number of points in his material, some of which rightly were given greater emphasis in oral argument.

[ 33 ] Firstly, Gerri Wong was not a lawyer practicing in the firm Shulgan Martini Marusic. She was in a shared space arrangement and acquired and paid her own staff. Therefore there could not be conflict with plaintiff’s counsel as a firm.

[ 34 ] Secondly, even if she was part of the firm she was not providing services as a lawyer, fact finder or imparting legal advice. She was simply providing the services as a mediator/facilitator in a very limited context, unrelated to Ms. Spirou.

[ 35 ] Thirdly, even if Ms. Wong was in possession of confidential information, none was shared with other members of the firm and she has now left the firm taking her files and reports with her. Therefore, there has not been, and can never be a transfer of information.

[ 36 ] Fourthly, even if Ms. Wong did not receive express consent from HDGH, that defendant impliedly consented by not complaining earlier on this and other files.

[ 37 ] Lastly, the only actual damage to the administration of justice will be to “cripple a deserving plaintiff from proceeding with her lawsuit” (factum of plaintiff, at para. 53), presumably by denying her counsel of choice. It is suggested the defendant here has brought this motion only as part of a defence strategy.

Analysis

[ 38 ] For the reasons that follow, I reject the argument of the plaintiff in its entirety and I will grant the order removing the law firm of Shulgan Martini Marusic as solicitors of record for the plaintiff.

Gerri Wong and the Firm

[ 39 ] There can be no doubt in my view that Gerri Wong was an employee or member of Shulgan Martini Marusic. She was listed on the firm filings with the LSUC as an employee/associate and was insured as an associate of the firm. She used the firm general and trust accounts. She required a partner of Shulgan Martini Marusic to sign off on the opening of new files. She invoiced clients on firm letterhead and the clients subsequently paid the firm. She shared bookkeeping services, filing cabinets, computer systems, and a non-secure public email, telephone and fax. She performed conflict checks as against other clients of the firm.

[ 40 ] She was publicly advertised in the phonebook, firm website and other publications as an associate of Shulgan Martini Marusic. No steps were taken by the firm to limit access to information as part of an office sharing relationship nor was client consent for that arrangement sought.

Gerri Wong and HDGH

[ 41 ] I find Ms. Wong was retained by the defendant HDGH in November 2009 and that HDGH was a client of the firm. Helpfully, Rule 1.02 of the Rules of Professional Conduct of the LSUC contains the following:

“client” includes a client of the law firm of which the lawyer is a partner or associate, whether or not the lawyer handles the client’s work;

Commentary

A solicitor and client relationship is often established without formality. For example, an express retainer or remuneration is not required for a solicitor and client relationship to arise. Also, in some circumstances, a lawyer may have legal and ethical responsibilities similar to those arising from a solicitor and client relationship. For example, a lawyer may meet with a prospective client in circumstances that impart confidentiality, and, although no solicitor and client relationship is ever actually established, the lawyer may have a disqualifying conflict of interest if he or she were later to act against the prospective client. It is, therefore, in a lawyer’s own interest to carefully manage the establishment of a solicitor and client relationship.

[ 42 ] By November 2009, Ms. Wong had opened a file and commenced taking instructions for her work on behalf of HDGH. As part of her duties over the next year she met with HDGH employees in interviews and mediations involving workplace conflicts, specifically involving the cardio/angioplasty program. She drafted a proposal, signed a memorandum of understanding, drafted an Action Plan and drafted and sent a letter to all members of the program asking for their participation and cooperation. She billed HDGH from time to time as work progressed and the firm was paid. “[T]he question appears to be whether a reasonable person in the position of a party with knowledge of all the facts would reasonably form the belief that the lawyer was acting for a particular party.” ( Jeffers v. Calico Compression Systems , 2002 ABQB 72 , [2002] A.J. No. 79 (Alta. Q.B.), para. 8 .)

[ 43 ] I have no doubt that any reasonable person would reach the conclusion on these facts.

Ms. Wong’s Role

[ 44 ] While not perhaps the traditional work of a lawyer, that narrow role is not necessary for the firm to be in a conflict. There cannot be different categories or classes of clients.

[ 45 ] In First Property Holdings Inc. v. Beatty , 2003 43494 (ON SC) , 66 O.R. (3d) 97 (“ First Property ”), Wilson J. was concerned about the work done for a client by the law firm of Faskens Martineau DuMoulin. In fact, that work consisted of securities filings by a law clerk. The firm then purported to act in a suit directed against the filing client. The court found the following at paragraph 12 of the decision:

It is not seriously disputed that at the time the lawsuit was initiated that IATRA was a client of Faskens. The legal work was security filings, transcribing information received from the client. Should there be different classes of clients, with differing obligations and duties dependent upon the nature of the tasks performed, and advice given? I think not. A current client of a law firm, even a client for whom mechanical tasks are performed is entitled to a duty of loyalty. It is not within the reasonable expectations of the client in these circumstances or a member of the public that the law firm could be retained by a third party to sue them.

[ 46 ] A strong concern should be raised about embarking down the slippery slope of distinguishing between obligations owed to different categories of existing clients.

[ 47 ] In First Property , Wilson J., as part of the discussion, brought into focus the rationale for the “bright line” test in judging conflicts.

The recent case of the Supreme Court of Canada in R. v. Neil (2002), 2002 SCC 70 , 168 C.C.C. (3d) 321 (S.C.C.) at paragraph 29 reaffirmed the “bright line” test enunciated in MacDonald Estate v. Martin , 1990 32 (SCC) , [1990] 3 S.C.R. 1235 (S.C.C.). The bright line test discourages nuances when a conflict of interest is in issue between an existing client of the firm, and another client. Once there is a finding that there is a current solicitor-client relationship, the “bright line test” applies, to avoid uncertainty and shades of grey:

The bright line is provided by the general rule that a lawyer may not represent one client whose interests are directly adverse to the immediate interest of another current client – even if the two mandates are unrelated – unless both clients consent after receiving full disclosure (an preferably independent legal advise) and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other.

The Interests of the Clients

[ 48 ] At the urgings of plaintiff’s counsel I have considered the practical nature of the relationship of the plaintiff, Shulgan Martini Marusic and HDGH.

[ 49 ] Ms. Wong was hired to assist in the “poisonous” environment that existed in the cardio/angioplasty program at the Hospital. Her duties were outlined previously. Whatever her direct reporting relationship, she was ultimately responsible to Warren Chant, Chief Executive Officer of HDGH. She met with Warren Chant. Her work required her to explore a dysfunctional workplace. The plaintiff’s material on this motion points out that the public was aware that the work environment at HDGH was problematic.

[ 50 ] It is impossible to believe Ms. Wong did not have information about, and an opinion on, Mr. Chant’s management of the Hospital. There is no doubt in her role she received confidential information from employees and management. There is also not a shred of evidence that an effort was made to ensure information from Ms. Wong would not be imparted to the firm.

[ 51 ] In MacDonald Estate v. Martin , 1990 32 (SCC) , [1990] 3 S.C.R. 1235, at paragraph 49 (“ MacDonald Estate” ), of the decision of Dickson C.J., the court speaks of reasonable avenues including institutional mechanisms such as Chinese walls and codes of silence to ensure no leakage of information from the “tainted” lawyer.

[ 52 ] Here we have common staff, common file storage, bookkeeping, telephone, fax and computers. The fact that Ms. Wong walked out the door in April 2011, does not rebut the presumption that disclosure of confidential information took place ( MacDonald Estate , at paras. 46 and 49 ).

[ 53 ] While perhaps unnecessary, let us now look at whether the information that Ms. Wong received might benefit Ms. Spirou in the prosecution of her action for wrongful dismissal. It is important here to remember that Warren Chant is a named defendant. He will be examined. But his importance to the litigation is not simply because he is the Chief Executive Officer. Below are the relevant passages of the statement of claim of Ms. Spirou, being paragraphs 11, and 18 to 21:

(remaining paragraphs reproduced exactly as provided in the source…)

Original signed “Justice Thomas”

Bruce Thomas
Justice

Released: January 12, 2012