Mannarino’s Creative Foods Inc. v. Pezzaniti, 2015 ONSC 1190
NEWMARKET COURT FILE NO.: CV-11-103772-00
DATE: 20150223
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MANNARINO’S CREATIVE FOODS INC.
Plaintiff
– and –
MARIA PEZZANITI, TONY PEZZANITI and FRANK PEZAANITI
Defendants
Peter B. Cozzi, for the Plaintiff
Craig Losell, for the Defendants
HEARD: February 10, 2015
REASONS FOR DECISION ON MOTION
DOUGLAS J.
[1] The sole issue before me on this motion is whether Mr. Charles Baker, counsel of record for the Defendants, is in a conflict of interest such that he must be removed as counsel of record for the Defendants.
[2] The facts are fairly straight forward.
[3] In her affidavit sworn September 27, 2014 Anna Mannarino, Comptroller/Office Manager of the Plaintiff, deposes that in the spring of 2010 she discussed with Mr. Baker “the personal and confidential financial circumstances” of the plaintiff because she was considering retaining Mr. Baker to represent the plaintiff on another unrelated matter. She deposes that in that conversation she informed Mr. Baker “about the full details of the major debt issues” facing the plaintiff. She deposes that “in response to receiving the complete details of that potential litigation claim on behalf of the plaintiff Mr. Baker said he would think about and consider being retained” by the plaintiff. Ultimately, Mr. Baker declined to act for the plaintiff “specifically because of its debt issues”.
[4] Mr. Baker’s evidence from his affidavit may be summarized as follows:
(a) He denies that he ever came into any confidential financial information or that he was ever in a professional relationship with Anna Mannarino.
(b) He has never been retained by the Plaintiff or the Mannarinos on any matter whatsoever.
(c) He has never met with any of the Mannarinos in his office and he has never rendered an account to them.
(d) He has no recollection of ever speaking with Ms. Mannarino regarding any litigation matter concerning the plaintiff.
(e) Even if he received confidential information, which he certainly cannot recollect, there is no risk that it will be used to the prejudice of the plaintiff.
(f) It is his belief that the motion is purely tactical in nature and responsive to his proposal on behalf of the Defendants to bring a motion for security for costs, a motion which the Defendants have now decided against.
(g) He has been counsel of record for over three years. It was only after he proposed a motion for security for costs that the plaintiff raised the issue of conflict.
LEGAL FRAMEWORK
[5] In MacDonald Estate v. Martin 1990 CanLII 32 (SCC), 1990 CarswellMan. 233 (S.C.C.) Sopinka J., speaking for the majority, indicated that typically these cases require two questions to be answered:
Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand?
Is there a risk that it will be used to the prejudice of the client?
[6] In relation to question #1 above, Sopinka J. indicated that it is too rigid to conclude that once a “substantial relationship” is shown there is an irrebuttable presumption that confidential information was imparted to the lawyer. This is because there may be cases in which it is established beyond any reasonable doubt that no confidential information relevant to the current matter was disclosed. According to Sopinka J.:
Once it is shown by the client that there existed a previous relationship which is sufficiently related to the retainer from which it is sought to remove the solicitor, the court should infer that confidential information was imparted unless the solicitor satisfies the court that no information was imparted which could be relevant.
[7] He went on to indicate that this would be a difficult burden to discharge and the court’s degree of satisfaction must be such that it would withstand the scrutiny of the reasonably informed member of the public that no such information passed. This would be a “heavy burden”.
[8] As to question #2 above, Sopinka J. indicates:
A lawyer who has relevant confidential information cannot act against his client or former client, and, furthermore, no assurances or undertakings not to use the information will avail.
[9] It is important to note that in the MacDonald case the factual context involved a junior lawyer working initially with the firm representing the defendant, actively engaged on the file, and then later joining the firm representing the opposite party.
[10] The Plaintiff relies upon Lukic v. Urquhart 1985 CarswellOnt. 1082 (O.C.A.) in which the court concluded that where it could reasonably said that the solicitor might have acquired confidential information through his previous engagement as counsel for the opposite party, the court should disqualify the solicitor. It is important to note that this case was decided before the Supreme Court of Canada spoke on the issue in MacDonald Estate.
[11] It is instructive to consider provisions of the Rules of Professional Conduct enunciated by the Law Society of Upper Canada. These rules would not be determinative of this issue however, as the courts have inherent jurisdiction to remove from the record solicitors who have a conflict of interest and are not bound to apply a code of ethics (see MacDonald Estate v. Martin at para. 21). The court’s jurisdiction emanates from the fact that lawyers are offshoots of the court and their conduct in legal proceedings which may affect the administration of justice is subject to this supervisory jurisdiction; nevertheless, an expression of a professional standard in a code of ethics relating to a matter before the court should be considered an important statement of public policy (see MacDonald Estate v. Martin at para. 21).
[12] Section 1.1 of the Rules of Professional Conduct defines “client” as a person who:
(a) Consults a lawyer and on whose behalf the lawyer renders or agrees to render legal services; or
(b) Having consulted the lawyer, reasonably concludes that the lawyer has agreed to render legal services on their behalf and 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.
[13] Commentary related to the definition of “client” in the Rules of Professional Conduct indicates that: “a solicitor and client relationship may be established without formality”.
[14] The Rules of Professional Conduct also define “conflict of interest” as meaning,
The existence of a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected by the lawyer’s own interest or the lawyer’s duties to another client, a former client, or a third person. The risk must be more than a mere possibility; there must be a genuine, serious risk to the duty loyalty or to client representation arising from the retainer.
[15] The commentary indicates that “substantial risk” means that the risk is “significant and plausible, even if it is not certain or even probable that the material adverse effect will occur”.
[16] Rule 2.03(1) of the Rules of Professional Conduct provides as follows:
A lawyer at all times shall hold in strict confidence all information concerning the business and affairs of the client acquired in the course of the professional relationship and shall not divulge any such information unless expressly or impliedly authorized by the client or required by law to do so.
[17] Commentary in relation to this rule includes:
A lawyer owes the duty of confidentiality to every client without exception and whether or not the client is a continuing or casual client.
[18] Further,
A lawyer should take care to avoid disclosure to one client of confidential information concerning or received from another client and should decline employment that might require such disclosure.
ANALYSIS
[19] Following the test enunciated by Sopinka J. in MacDonald Estate v. Martin, a number of issues must be considered:
(1) Was the information imparted to Mr. Baker “confidential information”?
(2) Was the information “attributable to a solicitor and client relationship”?
(3) Was the information “relevant to the matter at hand”?
(4) Is there a risk that the information will be used to the prejudice of the client?
Was the information “confidential”?
[20] As indicated above, the evidence of Anna Mannarino is to the effect that she discussed with Mr. Baker “the personal and confidential financial circumstances of the corporate plaintiff” with Mr. Baker and that this information included “full details of the major debt issues” facing the plaintiff and “the complete details” of a “potential litigation claim on behalf of the plaintiff”. Mr. Baker denies that he ever came into possession of any confidential financial information and indicates that he has no recollection of ever having spoken with Ms. Mannarino regarding any litigation concerning the Plaintiff.
[21] I do not fault Ms. Mannarino for providing but scant detail with respect to the nature of the “confidential information” in question. As indicated by Sopinka J. in MacDonald Estate,
To explore the matter in depth may require the very confidential information for which protection is sought to be revealed. This would have the effect of defeating the whole purpose of the application.
[22] For the purposes of this motion, I find that the information referred to was “confidential” in nature. I so find on the strength of the evidence of Ms. Mannarino that she did impart such information to Mr. Baker and in consideration of Mr. Baker, for understandable reasons, given passage of time having “no recollection of ever speaking with Ms. Mannarino regarding any litigation matter concerning the Applicant”. Mr. Baker’s evidence to the effect that he has “no recollection” of such conversation does not equate with a denial of the conversation having taken place. In other words, it leaves open the possibility that the conversation did take place although it is not recollected by Mr. Baker. On balance therefore I conclude that some information of a confidential nature was imparted by Ms. Mannarino to Mr. Baker, for the purposes of this motion.
Was the information attributable to a solicitor and client relationship?
[23] The defendants have cited Tauber v. Tauber 2009 CarswellOnt. 8133 (Ont.S.C.J.) in which the party applying for an order removing counsel on the basis of conflict had a seven minute telephone conversation with a lawyer regarding his possibly representing her in matrimonial litigation. That party subsequently decided not to retain that solicitor. Five months later the opposite party retained the solicitor to represent him and the wife brought a motion to have the husband’s solicitor removed as counsel of record. In dismissing the motion, MacDonald J. cited MacDonald Estate v. Martin and the tests enunciated therein. MacDonald J. concluded that the circumstances described above did not amount to a “solicitor client relationship”.
[24] The defendants also rely on Caballero v. O’Callaghan 2011 CarswellBC 2048 (B.C.S.C.). In that case the plaintiff was injured in a motor vehicle accident. He sued the owner of the vehicle. The lawyer acting for the plaintiff worked within a firm that had been contacted through a paralegal at the firm by the defendant. The defendant had made telephone calls to numerous lawyers and law firms and discussed a number of issues including consent and knowledge concerning alcohol consumption. In these circumstances Loo J. concluded that there was no fiduciary relationship between the solicitor and the defendant. The facts suggested that this was a “shopping case” where a party was looking or shopping for a lawyer.
[25] I conclude that there was not a solicitor and client relationship between Mr. Baker and the plaintiff for the following reasons:
(a) While I am satisfied that the information shared by Ms. Mannarino with Mr. Baker was “confidential” in nature, and it is therefore understandable that more detail is not provided with respect to the content of that information, there is much more information that could have been shared in her affidavit but was not. For example, where did the conversation take place? Was anyone else present? Was it in an office or a social setting? How much time the conversation consume? Was it on the telephone or in person? All of these questions are relevant to determining whether there was a reasonable expectation of the parties that a formal solicitor and client relationship was at least being contemplated. The plaintiff bears the onus of establishing this component of the test.
(b) Under a definition of “client” under the Rules of Professional Conduct while the Plaintiff may arguably have consulted with Mr. Baker, there is no evidence that Mr. Baker thereafter rendered or agreed to render legal services. Further, there is no evidence that would support a reasonable conclusion that Mr. Baker had agreed to render legal services; indeed, Ms. Mannarino makes it clear that Mr. Baker had declined the request to represent the Plaintiff.
(c) This case is more closely aligned in terms of its factual context with the cases cited by the defendants being Tauber and Caballero dealing with parties who were “shopping” for representation. In those cases no solicitor and client relationship was found.
(d) The facts of this case are distinguishable from the facts in MacDonald Estate v. Martin in that in this case there was no prior retainer of Mr. Baker by the Plaintiff and the conversation between the Plaintiff and Mr. Baker was with respect to an unrelated matter.
Was the information “relevant to the matter at hand”?
[26] It is not argued that the information imparted by Ms. Mannarino to Mr. Baker was relevant to any of the substantive issues outstanding in this litigation; rather, it is argued that the information, being of a financial nature, was relevant to the contemplated motion for security for costs.
[27] In this context of the analysis, it is useful to consider the timing of the Plaintiff raising the issue of conflict of interest. At the time the Plaintiff raised the issue of conflict, Mr. Baker had been acting for the Defendants for approximately three years. The Plaintiff raised the issue approximately one month after Mr. Baker, on behalf of the Defendants, proposed to pursue a motion for security for costs.
[28] It appears likely to have been a tactical decision on the part of the Plaintiff to go on the offensive in an effort to discourage the Defendants’ proposed motion for security for costs. Were the Plaintiff genuinely concerned about a conflict of interest issue with respect to Mr. Baker, one would have expected the issue to have been raised at the outset of this litigation rather than at this much later stage.
Is there a risk that the confidential information will be used to the prejudice of a client?
[29] As indicated by Sopinka J. in MacDonald Estate Mr. Baker has deposed that he has no recollection of any conversation with Ms. Mannarino nor any information that she might have imparted to him. There is no reason to reject this evidence. Therefore there can be no risk that the “confidential information” will be used to the prejudice of the Plaintiff.
CONCLUSION
[30] In summary, while I accept Ms. Mannarino’s evidence that she imparted “confidential information” to Mr. Baker, I find that such was not attributable to a solicitor and client relationship and that the relevance of that information to the issues at play in this litigation is tenuous at best considered in light of the timing of the raising of the issue by the Plaintiff. I further conclude that there is no evidence that there is risk that the confidential information will be used to the prejudice of the Plaintiff.
[31] For all the foregoing reasons, the motion is dismissed.
[32] The parties may make submissions on the issue of costs in writing, restricted to three pages each, on the following schedule:
a. The Defendant’s within two weeks of the release of these Reasons;
b. The Plaintiff within three weeks of the release of these Reasons;
c. The Defendants in reply, if desired, within four weeks of the release of these Reasons.
DOUGLAS J.
Released: February 23, 2015