Stern et al. v. Bondi et al.

[Indexed as: Stern v. Bondi]

Ontario Reports
Ontario Superior Court of Justice,
Wilcox J.
April 23, 2014

119 O.R. (3d) 764 | 2014 ONSC 2542

Case Summary

Professions — Barristers and solicitors — Conflict of interest — Solicitor acting for defendant and his spouse when they purchased property in 2008 — Defendant and spouse subsequently separating — Defendant entering into mortgages with plaintiffs and general security agreement ("GSA") as part of arrangements for matrimonial settlement — Plaintiffs suing defendant after he allegedly defaulted under mortgages and GSA — Solicitor acting for plaintiffs — Defendant's motion to remove solicitor as counsel of record dismissed — Solicitor receiving little or no confidential information while acting for defendant that was relevant to plaintiffs' action — Defendant not acting promptly after becoming aware of alleged conflict and bringing motion shortly after service of plaintiffs' motion for summary judgment — Timing of motion lending credence to argument that it was brought for tactical reasons.

O acted for the defendant and his common law wife when they purchased property and chattels in 2008. The defendant and his wife subsequently separated and entered into a separation agreement. As part of the arrangements for the matrimonial settlement, the defendant entered into private first and second mortgages and a general security agreement. The plaintiffs were the mortgagees. They sued the defendant after he allegedly defaulted under the mortgages and the GSA. O acted for the plaintiffs. The defendant brought a motion to remove O as counsel of record on the basis of a disqualifying conflict of interest.

Held, the motion should be dismissed.

Little or no confidential information that was relevant to the plaintiffs' action was imparted to O while he was acting for the defendant. Any risk that any such information would be used to prejudice the defendant was small. The information would be dated and would relate to only some of the defendant's assets. The plaintiffs would be prejudiced by losing their counsel of choice at this stage in the proceedings. Moreover, the defendant had not acted promptly after becoming aware of the alleged conflict, but brought the motion shortly after being served with the plaintiffs' motion for summary judgment. The timing of the motion gave credence to the argument that it was brought for tactical reasons.

MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, [1990] S.C.J. No. 41, 77 D.L.R. (4th) 249, 121 N.R. 1, [1991] 1 W.W.R. 705, J.E. 91-85, 70 Man. R. (2d) 241, 48 C.P.C. (2d) 113, EYB 1990-68602, 24 A.C.W.S. (3d) 553, apld

Other cases referred to

Amcan Consolidated Technologies Corp. v. Connell Limited Partnership, [2001] O.J. No. 3213, [2001] O.T.C. 588, 107 A.C.W.S. (3d) 154 (S.C.J.); Caisse Populaire Beauséjour Ltée v. Wry, [2011] N.B.J. No. 140, 2011 NBQB 115, 372 N.B.R. (2d) 326; Canadian National Railway Co. v. McKercher LLP, [2013] 2 S.C.R. 649, [2013] S.C.J. No. 39, 2013 SCC 39, 446 N.R. 1, 360 D.L.R. (4th) 389, 42 C.P.C. (7th) 1, [2013] 10 W.W.R. 629, 423 Sask. R. 1, 2013EXP-2278, J.E. 2013-1228, 228 A.C.W.S. (3d) 1166; Chapman v. 3M Canada Inc. (1995), 1995 7128 (ON SC), 25 O.R. (3d) 658, [1995] O.J. No. 2628, 43 C.P.C. (3d) 142, 57 A.C.W.S. (3d) 857 (Gen. Div.); Chapters Inc. v. Davies, Ward & Beck LL.P. (2001), 2001 24189 (ON CA), 52 O.R. (3d) 566, [2001] O.J. No. 206, 141 O.A.C. 380, 10 B.L.R. (3d) 104, 102 A.C.W.S. (3d) 812 (C.A.); Credit Union Central of Ontario Ltd. v. Heritage Property Holdings Inc., [2007] O.J. No. 1875, 2007 16821, 157 A.C.W.S. (3d) 440 (S.C.J.); Inron Contracting Ltd. v. Whitebread (2001), 2001 28014 (ON SC), 56 O.R. (3d) 372, [2001] O.J. No. 4277, [2002] O.T.C. 42, 17 C.P.C. (5th) 328, 109 A.C.W.S. (3d) 514 (S.C.J.); K.S.M. Property Management Inc. v. York Condominium Corp. No. 8, [1998] O.J. No. 1718, 64 O.T.C. 390 (Gen. Div.); Messinger v. Bramalea Ltd., 1989 4618 (SK QB), [1989] O.J. No. 842, 35 C.P.C. (2d) 260, 15 A.C.W.S. (3d) 407 (H.C.J.); Ramsbottom v. Morning, [1991] O.J. No. 3460, 48 C.P.C. (2d) 177 (Gen. Div.); Seigel v. Seigel, [2008] O.J. No. 5680, 60 R.F.L. (6th) 143 (S.C.J.); Standard Life Assurance Co. v. Cineplex Odeon Corp., [2001] O.J. No. 1321, [2001] O.T.C. 260, 103 A.C.W.S. (3d) 1055 (S.C.J.); Trizec Properties Ltd. v. Husky Oil Ltd., 1997 ABCA 182, [1997] A.J. No. 482, 148 D.L.R. (4th) 300, 56 Alta. L.R. (3d) 380, 200 A.R. 48, 15 C.P.C. (4th) 347, 71 A.C.W.S. (3d) 170 (C.A.)

Statutes referred to

Limitations Act, 2002, S.O. 2002, c. 24, Sch. B

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 57.07

Authorities referred to

Law Society of Upper Canada, Rules of Professional Conduct, rules 2.04, (1), (4), 2.05(4)

MOTION for an order removing a solicitor as the counsel of record.

Howard B. Oldham, for plaintiffs.

D. Andrew Thomson, for defendant Christopher David O'Gram.

WILCOX J.: —

[1] Introduction

[2] The defendant Christopher David O'Gram brought a notice of motion for

(a) an order that Oldham Law Firm and Howard Oldham be removed as counsel of record for the plaintiffs;

(b) an order that the costs award dated October 22, 2013 against the respondent be rescinded (this was apparently intended to refer to the award made on October 2, 2013);

(c) that the Oldham Law Firm and Howard Oldham pay to the respondent the costs of this motion.

The motion was supported by O'Gram's affidavits of March 10, 2014 and April 2, 2014. Filed in response were the affidavits of the plaintiffs' counsel, Howard Oldham, sworn March 28, 2014, of the plaintiff Raymond Roy, sworn March 24, 2014, and two of the plaintiff Richard Stern, one sworn March 28, 2014 and a supplemental one also sworn that date. The motion was argued by the defendant's counsel, Mr. Thompson, and by Bonnie Oldham, another lawyer in the Oldham Law Firm. The defendants Helen Ann Bondi and Vincent James Bondi were removed as defendants by order of O'Neill J. dated July 5, 2013.

[3] Background

[4] The defendant and his common law partner, Jenny Berube, purchased the property at 113 James Street in Parry Sound in 2008. Included in the purchase were various chattels used in the auto repair business. The vendor carried on an auto repair and retail gasoline sales business there. O'Gram intended to carry on a similar business. Howard Oldham of Oldham Law Firm acted on the purchase for O'Gram and Berube. O'Gram's business was incorporated later as Unique Auto Centre Inc., of which he claims to be the sole shareholder. Berube was the bookkeeper for the business.

[5] O'Gram and Berube subsequently separated. Berube retained Bonnie Oldham of Oldham Law Firm to assist her in resolving issues which had arisen in the separation, including the disposition of her interest in the property at 113 James Street and the business. O'Gram was represented in the separation by his present counsel, D. Andrew Thompson. A separation agreement was entered into.

[6] As part of the arrangements for the matrimonial settlement, O'Gram entered into private first and second mortgages. David Ryan of Ryan and Lewis Barristers acted for him. The plaintiffs are the mortgagees.

[7] O'Gram also entered into a general security agreement ("GSA") at the offices of Oldham Law Firm. He did not have legal advice from Mr. Ryan regarding it.

[8] The statement of claim of the plaintiffs, Stern and Roy, issued on May 3, 2013 and amended on June 17, 2013, alleges that O'Gram had defaulted under the mortgages and GSA and therefore claimed

a declaration that the plaintiffs are entitled to possession of various chattels secured by the GSA, and related relief;

possession of the real property at 113 James Street, Parry Sound under the first and second mortgages, and related relief; and

-- damages.

[9] O'Gram delivered a statement of defence and counterclaim. They raise issues as to whether the GSA is enforceable, given the circumstances in which it was signed in Oldham Law Firm's offices, and what assets, if any, may be seized pursuant to it.

[10] Affidavits of documents have been exchanged. Examinations took place in September 2013.

[11] There has been a series of motions, starting May 6, 2013, all but one brought by the plaintiffs, and resulting orders, dealing with the possession, preservation, tracing and disposition of various chattels and with costs.

[12] One of these was a notice of motion brought by the plaintiffs for July 5, 2013 for, among other things, an order that O'Gram deposit security for costs because he was allegedly taking improper and dishonest steps to frustrate the court process and defeat the plaintiff's claims. This request was adjourned to August 2, 2013, although an order was made on other matters.

[13] On August 2, a further motion was brought by the plaintiff seeking, among other things, to have O'Gram found in contempt of court for failing to comply with the July 5 order, and alleging that O'Gram had not complied with any of the three orders that the plaintiffs had obtained against him. The order made on August 2 adjourned the issues of security for costs and contempt to dates to be set. Neither has been dealt with so far.

[14] In addition to the outstanding motions against O'Gram for security for costs and contempt, there are also outstanding motions by O'Gram to amend the statement of defence and by the plaintiffs for summary judgment.

[15] None of the orders up to and including that of August 2 ordered either party to pay any costs. However, in his order of August 2, O'Neill J. required written submissions as to costs of the motions of July 5 and August 2. His ruling on costs dated October 2, 2013 fixed costs at $6,615, inclusive of GST, to be paid by O'Gram to the plaintiffs by November 30, 2013. In a subsequent order dated October 22, 2013, O'Neill J. ordered that O'Gram pay further costs to the plaintiff of $125 within 30 days.

[16] O'Gram's motion returnable March 14, 2014 was adjourned to and heard on April 3, 2014.

[17] Affidavits

[18] O'Gram deposed in his affidavits that

Howard Oldham acted for him and his then common law partner, Jenny Berube, when they purchased the property at 113 James Street, Parry Sound.

He intended to carry on a business there like the vendor's auto repair and retail gas sales business.

-- Included in the deal were chattels used in the business.

Howard Oldham learned information regarding O'Gram and the chattels during the retainer.

Howard Oldham acted for O'Gram again subsequently regarding a potential claim against the vendor over an environmental issue. Photos of the property taken then have been used by the plaintiffs in these proceedings.

-- Berube became familiar with the business as its bookkeeper.

When they separated, O'Gram retained D. Andrew Thompson and Berube retained Bonnie Oldham to deal with the issues arising from the separation.

He retained another lawyer, David Ryan, to assist him with refinancing involving giving two new, private mortgages, and bought out Berube's interest in the property. Howard Oldham held an interest in the new second mortgage.

He signed a general security agreement in Oldham Law Firm's offices, without advice from Mr. Ryan and after receiving misleading information from Oldham's staff regarding the nature of the document.

Howard Oldham must have been privy to information regarding O'Gram's affairs because

-- he had acted for him and Berube on the purchase of the property;

-- his partner Bonnie Oldham advised Berube about the family issues at the time of the refinancing.

From the time it was suggested that it was a general security agreement that he had signed at Oldham's Law Firm's offices, he believed there was something wrong with Howard Oldham now acting against him. He wrote to the Law Society of Upper Canada and was told to deal with it in the ongoing litigation.

Only recently had he told his lawyer that Howard Oldham had acted for him on the purchase and subsequently acted for the mortgagees in both the refinancing and the enforcement of the security. The present motion was initiated soon thereafter.

He had not previously understood the implications of the conflict, that is, of Howard Oldham knowing about him and his affairs. Discussions with his counsel had dealt with a potential conflict which Howard Oldham appeared to have with the mortgagees due to Oldham's alleged interest in the second mortgage, which matter Bonnie Oldham had raised with Mr. Thompson.

He denies having the intention to increase the costs of these proceedings, as alleged by others.

He disputes the plaintiffs' contention that they were able to obtain information about his chattels without getting it from Howard Oldham.

[19] Howard Oldham deposed, among other things, in his affidavit that:

The Oldham Law Firm acted for O'Gram and Berube in 2008 on the purchase of the property, but there is no confidential information in that file which is relevant to the present action.

-- All relevant information is a matter of public record.

The file was closed in January 2009, was stored and has not been accessed since.

Howard Oldham has not been asked by the plaintiffs for nor disclosed any information relating to his and his firm's prior dealings with O'Gram that is not public information.

The list of O'Gram's assets that was used in the initial court order (Koke J.'s order of May 6, 2013) was prepared by the plaintiffs without any information from Howard Oldham or his firm other than what is public record. To the best of his knowledge and belief, the asset list was prepared using

(a) the plaintiff's knowledge from attending the premises initially when the loan was being negotiated and later when O'Gram defaulted on the first and second mortgages;

(b) from a vehicle ownership search of the public record which the plaintiffs requested Oldham's Law Firm to perform;

(c) the plaintiffs' discussions with acquaintances, former employees and former customers of O'Gram; and

(d) from O'Gram himself, who boasted to the plaintiffs the extent of his assets so that he could get a larger loan.

O'Gram is trying to delay matters and increase costs to the plaintiffs such as by bringing this and other motions and delaying delivery of an affidavit of documents.

O'Gram contacted the Law Society of Upper Canada before November 4, 2013, and was advised by letter of January 16, 2014 to discuss with his lawyer whether and how to raise the issue of conflict of interest with the court, but did not bring this motion until faced with the plaintiffs' motion for summary judgment.

The defendant's motion is tactical, brought to avoid a pending motion for summary judgment.

The defendant's Facebook posts, attached to Oldham's affidavit, confirm that his sole intention is to be vindictive and inflict as much damage to the plaintiffs, Howard Oldham and Oldham Law Firm as he can.

[20] Raymond Roy indicates in his affidavit that he has never requested of, nor received from, Howard Oldham, nor Oldham Law Firm, any information relating to their representation of O'Gram or Berube, other than what is in public records. Rather, any information that he has was obtained by

(a) the due diligence that he conducted prior to lending O'Gram the moneys under the first and second mortgage which included

(i) O'Gram's insistence on showing him all his personal assets, including his vehicles, tools, equipment, et cetera, as an inducement to justify loaning him more money than what he paid Berube for the property;

(ii) attending at the property on numerous occasions during the negotiations of the mortgages and after O'Gram had defaulted on the mortgages; and

(iii) information provided by O'Gram's acquaintances, former customers and former employees;

(b) asking Howard Oldham to do a search of the government records for any vehicles that O'Gram may own; and

(c) asking Howard Oldham to do an up-to-date title search to confirm how much O'Gram and Berube paid for the property as well as how much O'Gram paid Berube for the property when they separated.

[21] He evinces that he has no interest in the chattels that came with the property when O'Gram and Berube bought it several years ago because it would almost certainly be vastly different now.

[22] Roy also states that he would be prejudiced if forced to retain new counsel at this point. The plaintiffs have already incurred substantial legal costs allegedly as a result of O'Gram's breach of court orders, attempt to hide assets and refusal to abide by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The plaintiffs' purpose in bringing the pending motion for security for costs was to protect them from incurring costs which O'Gram could not pay if ordered to do so.

[23] Richard Stern deposed that

Oldham Law Firm has never provided him with any information from previous dealings with O'Gram other than a publicly available search of title. Rather, his knowledge of O'Gram's assets is based on

(a) his attendance at O'Gram's premises on more than one occasion;

(b) government searches such as ownership of vehicles, vehicle searches at the Ministry of Transportation and title searches;

(c) his interactions with O'Gram;

(d) his speaking with friends and acquaintances of O'Gram with knowledge of his affairs; and

(e) O'Gram bragging to the plaintiff Raymond Roy about how many assets he owned in addition to the real estate so that the plaintiffs would lend him more money than he paid for the real estate.

The amount O'Gram owes under the mortgages far exceeds the net proceeds from the sale of the real estate under power of sale. Consequently, even without the GSA, O'Gram's personal assets would be subject to disclosure.

O'Gram's counsel's letter of July 25, 2013 confirmed that O'Gram would be making a personal assignment in banktruptcy.

The plaintiffs would be prejudiced if they had to obtain new counsel at this late stage.

[24] Law

[25] Counsel for the moving party referred to both the Law Society of Upper Canada's Rules of Professional Conduct, rule 2.04, which deals with conflicts of interest, and the case of MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, [1990] S.C.J. No. 41. This raises for the court the issues of how these rules and the principles arising out of the case law interact, and how to apply them. Subrule 2.04(1) [of the Rules of Professional Conduct] defines a "conflict of interest" or a "conflicting interest" to mean an interest:

(a) that would be likely to affect adversely a lawyer's judgment on behalf of, or loyalty to, a client or prospective client, or

(b) that a lawyer might be prompted to prefer to the interests of a client or prospective client.

Subrule (4) states:

(4) A lawyer who has acted for a client in a matter shall

not thereafter act against the client or against persons who

were involved in or associated with the client in that matter

(a) in the same matter,

(b) in any related matter, or

(c) save as provided by subrule (5), in any new matter, if the lawyer has obtained from the other retainer relevant confidential information

unless the client and those involved in or associated with the client consent.

[26] The commentary after subrule (4) is:

It is not improper for the lawyer to act against the client in a fresh and independent matter wholly unrelated to any work the lawyer has previously done for that person and where previously obtained confidential information is irrelevant to that matter.

[27] In Inron Contracting Ltd. v. Whitebread (2001), 2001 28014 (ON SC), 56 O.R. (3d) 372, [2001] O.J. No. 4277 (S.C.J.), Pitt J. of the Ontario Superior Court of Justice stated that MacDonald Estate v. Martin is the leading case in Canada on the subject of conflict of interest as a result of (lawyers) transferring between law firms...

[Content continues verbatim exactly as in the source decision through paragraph 69 and the conclusion.]

Motion dismissed.

End of Document