SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: FS-14-80903-00
DATE: 20140819
RE: ANESHA MOHAMMED-TIMAL – and – SAMUEL TIMAL
BEFORE: F. Dawson J.
COUNSEL: Todd C. Hein, for the Applicant
Andrew J. Kania, for the Respondent
HEARD: June 28, 2014, 2014
E N D O R S E M E N T
[1] The applicant wife seeks an order declaring that Andrew Kania and his firm Kania Lawyers are in a position of conflict of interest and may not act on behalf of the respondent, Samuel Timal, in relation to family law proceedings contemplated between the parties. Proceedings have not yet commenced but the applicant has undertaken to commence such proceedings within 30 days of any order made on this motion. This undertaking is made pursuant to Rule 37.17 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which I find to be applicable in the circumstances pursuant to Rule 1(7) of the Family Law Rules, O.Reg. 114/99, as amended.
Factual Background
[2] The applicant and the respondent separated on September 8, 2012. They have two children who are 13 and 7 years of age. It is anticipated the family law proceedings will include matters in relation to the couple’s children as well as between themselves.
[3] The alleged conflict of interest arose in the course of the applicant and respondent seeking legal advice and retaining counsel. It is common ground that on May 1, 2014 the applicant met with Steven Fehrle, a lawyer with Kania Lawyers. Unfortunately, Mr. Fehrle did not check the law firm’s computer system or other records before he spent approximately one hour interviewing the applicant. During that interview the applicant discussed her marital situation in detail with Mr. Fehrle. She provided him with a $1,000 retainer and the applicant and Mr. Fehrle arrived at a settlement position that the applicant was prepared to implement with the respondent. A “family law intake form” was completed and it was decided that Mr. Fehrle would write to the respondent in an attempt to resolve matters between the applicant and the respondent.
[4] It was only after the interview was complete and the retainer had been paid that Mr. Fehrle checked the law firm’s computer system and learned that the respondent husband had already retained Andrew Kania. I have no evidence as to when that occurred.
[5] Mr. Fehrle has sworn an affidavit in which he indicates that the family law intake form he completed with the applicant was then placed in a sealed envelope and taken to his personal residence. The following day the applicant’s retainer was refunded by means of a credit card reimbursement. Mr. Fehrle has sworn that there are no other documents concerning the applicant at the law firm’s offices, and that there is “nothing on our computer system”. He swears that no information concerning the applicant has been relayed to anyone else in Kania Lawyers and undertakes not to relay any such information. As Mr. Fehrle puts it, a “Chinese wall” was constructed at the law firm on May 2, 2014, the day after the conflict was discovered.
[6] The applicant has sworn in her affidavit that she also had other contacts with the Kania law firm prior to paying a retainer to Mr. Fehrle on May 1, 2014. She deposes that in the fall of 2013 she was part of a conference call with her friend, Vincent Rodo, and Susan Kania. While the applicant acknowledges that the telephone discussion was primarily about Mr. Rodo’s family law matters, she swears there was some discussion of her own marital situation.
[7] Susan Kania is a partner in Kania Lawyers and is married to Andrew Kania. It is the position of Kania Lawyers that the firm, and Andrew Kania in particular, is not in a conflict situation because sufficient steps have been taken to prevent the improper use of the confidential information provided by the applicant to Mr. Fehrle and because the conversation with Susan Kania was in the context of free preliminary legal advice provided to Vincent Rodo. Susan Kania has sworn in her affidavit that at first she did not recall the applicant’s participation in the conference call but that later she did recall it. However, she swears she does not recall any factual details.
[8] The applicant also swears in her affidavit that on January 16, 2014, after her discussion with Susan Kania, and prior to her detailed interview by Mr. Fehrle on May 1, 2014, she attended at Mr. Fehrle’s office with her friend Vincent Rodo. Again, she acknowledges that most of the discussion was about Mr. Rodo’s family law matters. However, she maintains that some aspects of her family law concerns were also discussed with Mr. Fehrle on that occasion. In his affidavit Mr. Fehrle denies that the applicant was present at that meeting. Vincent Rodo swears in an affidavit that the applicant was present and that she participated in the discussion, which included aspects of her marital situation.
[9] After the potential conflict was discovered, Andrew Kania wrote to the applicant on May 5, 2014. The letter was written on behalf of the respondent making certain demands or requests in relation to the family law dispute between the parties. A postscript appears under Andrew Kania’s signature at the third page of the letter as follows:
P.S.: I understand that you attempted to retain Mr. Steven Fehrle of our office last week. Thank you; however of course we can only represent one party and Mr. Timal retained us first. Mr. Fehrle and I have constructed what lawyers term as a “Chinese wall” on this file. This means that we have both promised to never discuss what you advised Mr. Fehrle. I have not spoken to Mr. Fehrle about your meeting, and have no information whatsoever about what you relayed to him. That will not change. As well, Mr. Fehrle will never have anything to do with your husband’s file. We both promise. Thank you.
[10] Andrew Kania appeared on the respondent’s behalf to argue the motion and I have no affidavit from him. However, I have been provided with an affidavit sworn by the respondent husband which attacks the applicant’s character and describes her as “extremely unreasonable” and as an “extremely unfriendly and confrontational person”. Mr. Timal swears to his belief that the applicant is simply trying to deprive him of his counsel of choice.
[11] With respect to the last point, I observe that there is no evidence to support such a finding. I have no evidence before me as to when the respondent first contacted the Kania law firm. Although it seems clear that the respondent retained the firm prior to May 1, 2014, on the evidence before me it is quite possible that the applicant had her initial contact with that firm before the respondent did. There is no evidence to support a conclusion that the applicant has brought her motion to gain tactical advantage and I reject any such suggestion. I find that the circumstances are such that the applicant and her current counsel are concerned that the Kania law firm is acting against the applicant when one of their lawyers conducted a detailed interview of her, which included determining her settlement position, in circumstances where she, or any reasonable person, would conclude they were acting on her behalf and that she was owed both duties of loyalty and confidentiality.
[12] I also observe that as of the date this motion was argued no family law proceedings had been commenced. Furthermore, after the applicant received Andrew Kania’s letter of May 5, 2014, she retained counsel who immediately wrote to Andrew Kania advising of the alleged conflict. Counsel for the applicant has steadfastly advanced that position in correspondence referring to the Rules of Professional Conduct, and making reference to contact counsel for the applicant has had with the Law Society of Upper Canada about this matter.
Applicable Legal Principles
[13] In MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, [1990] S.C.J. 41, the Supreme Court of Canada set out the foundational principles to be applied in deciding whether a law firm should be disqualified from acting for a party on the basis of conflict of interest. At para. 15, the majority held that three competing values are involved in resolving such a question:
The maintenance of the high standards of the legal profession and the integrity of the judicial system;
The right of a litigant not to be deprived of his or her choice of counsel without good cause; and
The desirability of permitting reasonable mobility in the legal profession.
There is no issue of mobility in the present case and the court is concerned only with the first two competing values.
[14] The majority of the court went on to explain that there is a strong presumption that lawyers who work together share each other’s confidences. The court also observed that it is difficult to prove that confidential information has been improperly shared or misused. Having regard to the values I have referred to and to the difficulties just noted, the court established a two part test to be applied in deciding whether to prevent counsel from acting in a particular case. Two questions must be asked as follows (para. 47):
Did the lawyer receive confidential information attributable to a solicitor/client relationship relevant to a matter at hand?
Is there a risk that the confidential information will be used to the prejudice of the client?
[15] With respect to the first question, the court indicated that once a sufficiently related previous relationship is shown to exist between the objecting party and the lawyer or law firm sought to be removed, the court should infer that confidential information was imparted unless the lawyer or law firm demonstrates otherwise (para. 49). I note that the first question is not in issue in the present case. It is conceded that confidential information passed from the applicant to Mr. Fehrle.
[16] With respect to the second question, which is in issue in this case, the court held that a lawyer who has received relevant confidential information cannot act and is automatically disqualified (para. 50). The court recognized that, insofar as other members of the law firm are concerned, “institutional efforts” by the law firm to prevent the transfer or disclosure of the information may prove adequate. However, given the “strong inference that lawyers who work together share confidences” the court should draw such an 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 (para. 51). The court held that “undertakings and conclusory statements in affidavits, without more, are not acceptable” because they can be expected in every case (para. 52). The emphasis is placed upon determining what a reasonable member of the public would think in the circumstances (para. 53).
[17] In MacDonald Estate v. Martin the Supreme Court of Canada also referred to the important role that ethical rules promulgated by provincial law societies and the Canadian Bar Association can play in resolving such issues. For that reason it is useful to set out the relevant provisions of the Rules of Professional Conduct of the Law Society of Upper Canada. I have omitted the published commentary.
2.04 AVOIDANCE OF CONFLICTS OF INTEREST
Definition
2.04 (1) In this rule
A “conflict of interest” or a “conflicting interest” means 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.
Avoidance of Conflicts of Interest
(2) A lawyer shall not advise or represent more than one side of a dispute.
(3) A lawyer shall not act or continue to act in a matter when there is or is likely to be a conflicting interest unless, after disclosure adequate to make an informed decision, the client or perspective client consents.
Acting Against Client
(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.
(5) Where a lawyer has acted for a former client and obtained confidential information relevant to a new matter, the lawyer’s partner or associate may act in the new matter against the former client if
(a) the former client consents to the lawyer’s partner or associate acting, or
(b) the law firm establishes that it is in the interests of justice that it act in the new matter, having regard to all relevant circumstances, including
i. the adequacy and timing of the measures taken to ensure that no disclosure of the former client’s confidential information to the partner or associate having carriage of the new matter 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.
Analysis
[18] I am not concerned with deciding whether a particular lawyer will honour an undertaking they have given not to reveal or rely upon confidential information received from the applicant. The question is whether there is clear and convincing evidence which would satisfy a reasonable member of the public, having regard to all the circumstances, that all reasonable measures have been taken to ensure that no disclosure has or will occur.
[19] What I have before me is essentially evidence of the sort the Supreme Court of Canada has described as inadequate to meet this standard. I have undertakings in affidavits from Steven Fehrle and Susan Kania that they will not share any information they have received from the applicant with Andrew Kania or any other member of the firm. Beyond that, I have an indication that the intake form has been removed from the office and that Mr. Fehrle says there is no information on the law firm’s computer. I have no detailed information about what steps have been taken to determine that or about any steps taken to ensure that employees of the law firm have been made aware of the situation or given any instructions about handling it.
[20] In this case Mr. Fehrle and Ms. Kania swear steps have and will be taken to prevent the improper use of confidential information. They are essentially saying “trust us”. As the Supreme Court of Canada said in MacDonald Estate v. Martin, that is not enough.
[21] I point out that no affidavit has been provided by Andrew Kania as to what he may know, have heard or have access to. In my view, in the context of this case, that is a serious shortcoming in terms of the provision of clear and convincing evidence which would assuage the concerns of reasonable members of the public about the potential for the improper use of confidential information.
[22] Turning to the public interest in the proper administration of justice, the context of what happened in this case is important. Based on the respondent husband’s affidavit there are very bad feelings between the respondent and the applicant. Family law proceedings are frequently prolonged and made more difficult in such circumstances. That potential will be heightened if Kania Lawyers is permitted to represent the respondent due to the additional mistrust that the applicant will understandably have. She revealed all of her confidences, including her settlement position, to one of the lawyers in a small firm of six lawyers which proposes to act for her husband. In addition, the lawyer in the firm who proposes to act for her husband, is married to another lawyer in the firm who has also had some prior contact with the applicant in the context of her matrimonial dispute. Initially Susan Kania did not remember that contact, but she does now, raising the possibility that she may remember more about that contact in the future. The public interest in the proper administration of justice is adversely affected by these circumstances because they may lead to more prolonged and difficult proceedings due to a lack of trust. The circumstances tend to undermine public confidence in both the legal profession and the administration of justice. That will only be avoided if Kania Lawyers is disqualified from acting.
[23] I would not disqualify Kania Lawyers from acting on behalf of the respondent on the basis of the previous telephone contact between the applicant and Susan Kania. See Tauber v. Tauber (2009), 98 O.R. (3d) 663 (S.C.J.). I am satisfied Kania Lawyers were not retained by the applicant at that time and the evidence shows that there was no in-depth discussion of the applicant’s situation. However, against the background of the applicant’s May 1, 2014 interview with Mr. Fehrle, this prior contact and limited exchange of information becomes more significant.
[24] There is also the dispute between the evidence of Mr. Fehrle and of the applicant and Mr. Rodo about the meeting on January 16, 2014 to be taken into account. Having regard to the conflicting evidence, I find that the evidence filed on behalf of the respondent fails to meet the standard of proof by clear and convincing evidence on the issue of whether any information conveyed by the applicant may have been recorded in the records of the law firm in relation to Mr. Rodo’s contact with the firm.
[25] I also note that this is not a situation where the confidential information came into the possession of Kania Lawyers as a result of some prior matter. The information Mr. Fehrle received was in relation to the very matter in question. Indeed, this is a situation where, at least for a short period of time, Kania Lawyers were unwittingly acting for both sides in the same cause or matter.
[26] In Skye Properties Ltd. v. Wu, 2003 75374 (ON SCDC), [2003] O.J. No. 3481, 43 C.P.C (5th) 118, 247 D. L. R (4th) 151, the Divisional Court recognized, at paragraphs 55-56, that acting on both sides of a litigious matter raises additional considerations to those discussed in MacDonald Estate v. Martin. At para. 56 of the Skye Properties case, Blair R.S.J. (as he then was) quoted with approval the words of Drapeau J.A. in Saint John Ship Building Ltd. v. Bow Valley Huskey (Bermuda) Ltd., 2002 NBCA 41, 251 N.B.R. (2d) 102, 18 C.P.C. (5th) 216 (N.B.C.A), at pp. 229-230. Some of what was said by Drapeau J.A. in that quote is as follows:
When the rule against the simultaneous representation of adverse parties is contravened, the implementation of Chinese walls and cones of silence is an exercise in futility. That is so because the conflict that results is not umbilically tied to any imputation of confidential information; the lawyer’s duty of loyalty to the client and the best interests of the administration of justice are more than sufficient to compel immediate disqualification.
There can be no judicial tolerance whatsoever for the simultaneous representation of litigants who are adverse in interest.
I would add that the simultaneous representation of adverse parties in ongoing litigation…would cause grievous damage to the public’s perception of the administration of justice.
[27] I recognize that facts of the present case are somewhat different than those in Skye Properties and Saint John Ship Building Ltd. Nonetheless, I find this aspect of these cases instructive. Quite apart from the concern about the improper use of confidential information Kania Lawyers received from the applicant, there is also the related duty of loyalty to be considered. In particular, the impact the violation of that duty has on the public’s perception of the proper administration of justice must be taken into account. In my view, permitting Kania Lawyers to represent the respondent in the circumstances of this case would undermine public confidence in the legal system and the administration of justice to such a degree that this consideration outweighs the respondent’s interest in having his first counsel of choice. That is particularly so when proceedings have not yet been commenced, when other family law lawyers are readily available to assist the respondent, and having regard to the fact that the respondent does not have a prior history of a solicitor and client relationship with Andrew Kania or Kania Lawyers.
[28] It also seems to me that the spirit of the Rules of Professional Conduct of the Law Society of Upper Canada, quoted above, support the conclusion I have reached. Rule 2.04(4) provides that when a lawyer has acted for a client in a matter the lawyer shall not act against the client in the same matter without the client’s consent. There is no consent here.
[29] Some of the other parts of Rule 2.04 relate to when a lawyer’s partner or associate may act in a “new matter” against a client. See, for examples, Rule 2.04(5). As I have said, in the present case we are not dealing with a new matter. We are dealing with the same matter in which the lawyer received the confidential information from the client they now propose to act against. However, even if I were to apply the requirements of Rule 2.04(5)(b), which set out what a law firm must establish to be permitted to proceed against its former client in a “new matter”, I find Kania Lawyers fails to meet the test when all of the specified factors are taken into account.
[30] I accept that the applicant has grave concerns that she will be prejudiced if Kania Lawyers are permitted to continue to act for the respondent. However, my determination is not based solely on the applicant’s concerns. Rather it is based primarily on my conclusion that, in the circumstances, public confidence in the legal profession and the proper administration of justice will be undermined if Andrew Kania or any member of Kania Lawyers is permitted to continue to act for the respondent. As I have said, that consideration outweighs the respondent’s right to his first counsel of choice having regard to the factors I have previously identified.
[31] An order will go declaring that Andrew Kania and Kania Lawyers are in a position of conflict of interest and may not act for the respondent, Samuel Timal, in this matter.
[32] If the parties are unable to agree on costs they may exchange costs outlines and submissions and provide them to me within 20 days.
F. Dawson J.
DATE: August 19, 2014
COURT FILE NO.: FS-14-80903-00
DATE: 20140819
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ANESHA MOHAMMED-TIMAL – and – SAMUEL TIMAL
BEFORE: DAWSON J.
COUNSEL: Todd C. Hein, for the Applicant
Andrew J. Kania, for the Respondent
ENDORSEMENT
F. Dawson J.
DATE: August 19, 2014