NEWMARKET COURT FILE NO.: FC-15-047701-00

DATE: 20150729

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DMITRI MALKOV, Applicant

AND:

NATALIA STOVICHEK-MALKOV, Respondent

BEFORE: THE HON. MADAM JUSTICE S.E. HEALEY

COUNSEL: Alexandra Abramian, for the Applicant

John M. Freeman, for the Respondent

HEARD: July 9, 2015

ENDORSEMENT

The Nature of the Motion

[1] The respondent, Natalia Stovichek-Malkov (“Natalia”) seeks the following relief:

1. An order combining this case together with the action commenced by Mikhail Malkov in court proceeding number CV-12-0156-00[^1], and for an order that the Family Law Rules apply to the proceedings commenced under Court File No. CV-12-0156-00;

2. And order removing Alexandra Abramian as solicitor of record for the applicant herein, and as solicitor of record for Mikhail Malkov in Court File No. CV-12-0156-00;

3. Costs of this motion.

Facts

[2] An issue exists in this case as to the ownership of the matrimonial home, which is registered in the joint names of Natalia and her husband, the applicant Dmitri Malkov (“Dmitri”).

[3] The respondent to this motion, Mikhail Malkov (“Mikhail”), is the applicant’s father. Mikhail alleges that he provided the entirety of the funds used to purchase the property, and further alleges that he is the only person to pay for the maintenance, upkeep and preservation of the property, which is disputed by Natalia. Natalia and Dmitri have occupied the property since its purchase on September 12, 2012. Natalia alleges a one-half ownership in the property.

[4] On September 30, 2014, Mikhail commenced an action against Natalia (Court File No. CV-12-0156-00), in which he claims he is the sole legal owner of the matrimonial home (“the civil action”). Natalia has denied this. Natalia asserts that the issues in this proceeding regarding ownership of the matrimonial home, and the issues in the civil action, have the same factual basis. Moreover, she has asked for a lump sum payment for spousal support to be paid to her from Dmitri’s share of the matrimonial home, if she is successful in her claim. She argues that if the two cases are heard separately there is a possibility of inconsistent findings of facts, which will affect both the issues raised in this case and the issues raised in the civil action.

[5] Pleadings closed in the civil action on November 10, 2014, and there is no evidence that further steps have been taken in that litigation.

[6] Mikhail resists the consolidation on the basis that he does not want to be required to participate in the matrimonial case, as it will address a myriad of issues which do not involve him. Furthermore, he argues that there is no reason why he should be required to attend the various conferences or the trial in the matrimonial proceeding, especially since he resides in Israel for one-half of each year.

[7] The progress of this case is that the parties have attended at a case conference on April 24, 2015, and are in the process of exchanging financial disclosure. Mikhail submits that the civil action involves a single issue and requires only a two-day trial, which would be ready to proceed during the November, 2015 trial sittings.

[8] Natalia asserts that Ms. Abramian should be removed as counsel of record for Dmitri in this case and for Mikhail in the civil action because of events occurring on September 19, 2014. At that time she was represented by a lawyer in the matrimonial dispute, a fact that was well known to Ms. Abramian. Her affidavit outlines that on that day Mikhail asked to meet her at the matrimonial home. When there, he urged her to forget about separating, and promised financial inducements if the parties stayed together. He asked that she attend his lawyer’s office and sign a document indicating that he was the true owner of the matrimonial home, and threatened to take her court if she did not agree. She further deposed that during the course of this meeting Mikhail said that he would be meeting with his lawyer, Ms. Abramian, that evening. He again threatened to begin litigation if she did not sign documents in Ms. Abramian’s office that would confirm that Mikhail was the owner of the matrimonial home. Throughout of the balance of the day Natalia received calls from Dmitri inquiring as the outcome of the meeting with his father.

[9] Later that evening, and at the request of Dmitri, Natalia attended at the office of Ms. Abramian who is both Dmitri’s lawyer and Mikhail’s lawyer. Mikhail was present, as was Ms. Abramian and an associate lawyer. Natalia’s matrimonial lawyer was not invited to the meeting, nor had he been advised of it. It is Natalia’s evidence that at the meeting Ms. Abramian acknowledged that she did not represent her interests, and presented Natalia with an agreement. She offered to send the agreement to Natalia’s lawyer before it was signed by Natalia. The agreement that was presented to Natalia identified Mikhail as the true owner of the property. Natalia’s evidence is that she refused to sign the document and left the meeting after about 15 minutes. Mikhail’s evidence is that Natalia thanked Ms. Abramian and left with the document, indicating that she would review it with her lawyer.

[10] Natalia argues that by convening a meeting in her office, at which her own lawyer was not invited or present, Ms. Abramian became a potential witness. Yet, at the time, she represented Dmitri and shortly thereafter she became the lawyer of record for Mikhail in the civil action. Natalia argues that by virtue of her position as both Dmitri and Mikhail’s lawyer, Ms. Abramian is sheltered from being called as a witness by Natalia if the need arises. Further, she argues that the possibility exists that information communicated during the course of the meeting in Ms. Abramian’s office could be used in these proceedings or in the civil action. Even if no confidential information was exchanged at the meeting, she argues that an appearance of impropriety exists, since Ms. Abramian was already acting for Dmitri and clearly had an association with Mikhail, for whom she subsequently commenced a proceeding.

[11] From Mikhail’s perspective, his evidence is that at the initial meeting between he and Natalia on September 19, he told Natalia that he was not interested in becoming involved in the matrimonial dispute between the parties. However, he indicated that if she continued to assert an entitlement to a one-half interest in the property, then he would have no alternative but to commence proceedings of his own, seeking an order that he be found to be the true legal owner of the property and transferring legal title of the property to him. Following their discussions, Mikhail understood that he and Natalia reached a resolution. Accordingly, Mikhail telephoned Ms. Abramian and requested that she prepare a consent in accordance with his understanding of the oral agreement. He and Natalia met at Ms. Abramian’s office at approximately 7:30 p.m., at which time Ms. Abramian introduced herself and her associate to Natalia, and advised Natalia that she represents Mikhail’s interests and in no way represented her interests, and was not in a position to provide her with legal advice. Ms. Abramian relayed to Natalia that it was her understanding that she and Mikhail reached an agreement regarding the property that would avoid the necessity of legal proceedings between them, and that based on that understanding she had prepared a draft agreement. Ms. Abramian provided Natalia with the draft agreement and advised her that she would be pleased to forward a copy of it to Natalia’s counsel of choice so that the respondent could obtain independent legal advice. Again, Natalia advised that she would take the draft and review it with counsel, and left Ms. Abramian’s office. It is Mikhail’s evidence that the entire meeting lasted five minutes, and there were no discussions or negotiations during the meeting regarding the terms of the consent. Further, his evidence is that at no time did Natalia impart any information, confidential or otherwise, to Ms. Abramian or her associate. The extent of Natalia’s discussions were introductory in nature, and to advise that she would review the draft document with counsel.

Consolidation of Proceedings

[12] Rule 12(5) of the Family Law Rules, O. Reg. 114/99, as amended, permits the court to combine two or more cases if it will be convenient to hear them together. It is not clear whether a “case” includes a non-family proceeding. The definition of “case” in the Family Law Rules suggests that it would, “case” being defined in Rule 2(1) as meaning an application or “any other method allowed in law for bringing a matter to the court for a final order…”.

[13] I nonetheless adopt the approach taken in Cruickshank v. Bastin, 2012 ONSC 7169 (Ont. S.C.J.), in which the court averted to Rule 1(7) of the Family Law Rules to consider Rule 6 of the Rules of Civil Procedure, R.R.O 1990, Reg. 194 by analogy, because the latter rule was more detailed, and ordered the combination of a family proceeding involving property issues with a civil partition and sale case.

[14] Before making a consolidation order, the court is to consider whether the criteria in rule 6.01(1) of the Rules of Civil Procedure have been satisfied, and then consider whether the balance of convenience favours such an order. In assessing whether there is a question of fact or law common to both proceedings, the focus is on whether the proposed common issue has sufficient importance in relation to the other facts or issues that it would be desirable that the matters be consolidated, heard at the same time, or after each other: Canadian National Railway Co. v. Holmes, [2011] O.J. No. 3672, at para. 43. At para. 44 of Canadian National Railway Co., supra, the court set out a variety of factors that should be taken into account when considering a request to consolidate proceedings, including:

a. The extent to which the issues in each action are interwoven;

b. Whether there is a risk of inconsistent findings or judgments if the actions are not joined;

c. Whether the issues in one action are relatively straightforward compared to the complexity of the other action;

d. Whether a decision in one action, if kept separate and tried first, would likely put an end to the other actions or significantly narrow the issues for the actions or significantly increase the likelihood of settlement;

e. The litigation status of each action;

f. Whether any of the parties will save costs, or alternatively have their costs increased, if the actions are tried together.

[15] Evaluating these factors within the context of this case leads to the following conclusions:

a. While support and custody issues are at play in the family law proceeding, the dispute over ownership of the matrimonial home raises the same issue in each proceeding, with the same evidence having to be led;

b. There is a risk of inconsistent findings or judgments if the cases proceed separately;

c. The family law case is more complex by virtue of the greater number of issues, but again, the question of ownership of the matrimonial home is an isolated issue in each proceeding;

d. A decision in the civil action may assist in ending or significantly narrowing the property issues in the family law action. However, for one proceeding to be held in abeyance while the other one reaches trial is impractical, and in this case, may frustrate the goal of having the family law dispute resolve in a timely manner. This is an extremely important factor given that custody, access and support are involved;

e. Both proceedings are in their beginning stages. I do not accept the proposition that the civil action can be heard in November, as there has been no exchange of affidavit of documents, no discoveries, no trial record passed and accordingly, the parties have yet to attend trial scheduling court to schedule a pretrial or trial date. It will not be ready to be tried in November, 2015;

f. The fact that Mikhail spends part of the year in Israel and that returning for the family proceedings will be costly is also not a compelling factor. He would have to return for the discovery process and pretrial in the civil action also. The family case has, as its next step, a settlement conference. This could afford the parties the earliest possible date for a resolution of all of the issues, and eliminate costs for all. An order can also be made that exempts Mikhail from filing material or attending court for any step in the case which does not involve the property issues. On the other hand, Natalia, faced with being the respondent and defendant in two separate proceedings, would pay duplicative legal fees to address the common issue in each proceeding.

[16] In the final result, weighing all of these factors together, I find that it is in the interest of justice to combine the two cases, and the balance of convenience favours such an order.

Removal of Counsel

[17] The standard for removal of counsel is objective, and is that of a reasonably informed member of the public: MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235 (“MacDonald Estate”).

[18] The motion requires this court to balance the competing values of maintaining the integrity of and public’s trust in our system of justice, and the right of a litigant not to be deprived of counsel of his choice without very good reason.

[19] Mikhail’s counsel submits that the second consideration requires even more careful weighing in this case, as she is one of few Russian-speaking lawyers who practices family law. Both of her clients speak Russian as their first language.

[20] The test set down in MacDonald Estate to be applied to determine whether a lawyer has a disqualifying conflict of interest is whether the public, represented by the reasonably informed person, would be satisfied that no use of confidential information would occur: paras. 44 to 47. The questions to be asked are:

1. Has the client/moving party shown that there existed a previous relationship of such a nature that the court can infer that confidential information was imparted;

2. Has the lawyer discharged the heavy burden of satisfying the court that no information was imparted that could be relevant;

3. Will the confidential information be misused.

[21] The interplay between the nature of the relationship and confidential information was discussed by Sopinka J. at para. 46 of MacDonald Estate. The individual who can show a “substantial relationship” is entitled to a presumption that confidential information was disclosed, although rebuttable by a lawyer who chooses to attempt to discharge the heavy burden of proving that confidential information was not imparted. See also 1623242 Ontario Inc. v. Great Lakes Copper Inc., 2014 ONSC 782, at para. 30.

[22] The first question requires examining whether Natalia and Ms. Abramian’s interactions gave rise to the type of relationship in which confidential communications are likely to have occurred. The law on the formation of a solicitor and client relationship was set out in 1623242 Ontario Inc. v. Great Lakes, supra, at paras. 46 to 49, as follows:

46. In Descôteauz v. Mierzwinski, with regard to when a solicitor-client relationship arises in the context of legal advice, Lamer J. stated at p. 876:

When dealing with the right to confidentiality it is necessary, in my view, to distinguish between the moment when the retainer is established and the moment when the solicitor-client relationship arises. The latter arises as soon as the potential client has his first dealings with the lawyer’s office in order to obtain legal advice. [Emphasis theirs.]

47. Lamer, J. explained that even where the lawyer does not agree to advise the person seeking his or her services, communications made by the person to the lawyer or his staff for the purpose of obtaining legal advice are privileged. [Emphasis theirs.]

48. In order for a solicitor-client relationship to arise, the “client” must intend to seek legal advice from the lawyer. There is no evidence that Mr. Govedaris sought “legal advice” on behalf of his client form Mr. Davis, as that expression is commonly understood in the context of privilege.

49. When no legal advice is provided, and the only information imparted by the lawyer is of an administrative or procedural nature, a solicitor-client relationship does not arise.

[23] Communications that give rise to solicitor-client privilege were discussed in Solosky v. The Queen, 1979 9 (SCC), [1980] 1 S.C.R. 821 and Pritchard v. Ontario (Human Rights Commission), 2004 SCC 31, 2004 S.C.C. 31, [2004] 1 S.C.R. 809, at paras. 15 and 16, in which the Supreme Court of Canada described the criteria for solicitor-client privilege:

Dickson J. outlined the required criteria to establish solicitor-client privilege in Solosky v. The Queen, 1979 9 (S.C.C.), [1980] 1 S.C.R. 821, at p. 837, as: “(i) a communication between solicitor and client; (ii) which entails the seeking or giving of legal advice; and (iii) which is intended to be confidential by parties”. Though at one time restricted to communications exchanged in the course of litigation, the privilege has been extended to cover any consultation for legal advice, whether litigious or not: see Solosky, at para. 834.

Generally, solicitor-client privilege will apply as long as the communication falls within the usual and ordinary scope of the professional relationship. The privilege, once established, is considerably broad and all-encompassing. In Descôteaux v. Mierzwinski, 1982 22 (SCC), [1982] 1 S.C.R. 860, the scope of the privilege was described, at p. 893, as attaching “to all communications made within the framework of the solicitor-client relationship, which arises as soon as the potential client takes the first steps, and consequently even before the formal retainer is established”. The scope of the privilege does not extend to communications: (1) where legal advice is not sought or offered; (2) where it is not intended to be confidential; or (3) that have the purpose of furthering unlawful conduct: see Solosky, supra, at p. 835.

[24] In this case, the facts do not support the type of relationship in which confidential communications can be presumed to have been imparted. Natalia knew that she was attending at the office of her husband’s lawyer, at the request of her father-in-law, and she had her own lawyer at the time. She does not depose that she was going to the office to seek legal advice. She gave no evidence that that was her intention. She further provided no evidence to dispute Mikhail’s evidence that she left Ms. Abramian’s office without having received any legal advice or having imparted any confidential information. At its highest, her evidence is that Ms. Abramian “might have acquired confidential information that could be used to prejudice” Natalia in one or both of the cases.

[25] Nothing turns on the fact that Ms. Abramian drafted an agreement based on her client’s information that the parties had reached an oral agreement regarding ownership of the property. This is no different than her being advised by Natalia’s own lawyer, in the course of correspondence, a conference or settlement meeting, that she may be in a position to consent to such an order. Such a communication is not binding and is protected by settlement privilege: L’Abbé v. Allen-Vanguard Corp., 2011 ONSC 7575, [2011] O.J. No. 5982; William Allan Real Estate Co. v. Robichaud, [1987] O.J. No. 2167; and Welch v. Welch, [1994] O.J. No. 956. Accordingly, the argument that Ms. Abramian could be a potential witness lacks an air of reality.

[26] But that does not end the matter. This case is akin to the situation faced by the court in Everingham v. Ontario, 1992 7681 (ON SC), [1992] O.J. No. 304 (Gen. Div.) [“Everingham”], in which a solicitor was disqualified from acting against a patient confined in a mental hospital because he met privately with the patient in the institution, without the presence or knowledge of the patient’s own counsel.

[27] Rule 7.2-6 of the Rules of Professional Conduct of the Law Society of Upper Canada provides:

…If a person is represented by a legal practitioner in respect of a matter, a lawyer shall not, except through or with the consent of the legal practitioner

(a) Approach or communicate or deal with the person on the matter; or

(b) Attempt to negotiate or compromise the matter directly with the person.

[28] In Everingham, at paras. 11 and 15, the court determined that to “approach or deal with” means to approach or deal with a person in relation to the subject matter or process of the litigation. The commentary in Rule 2.1(1) of the Rules of Professional Conduct makes it clear that the lawyer should act in a way which will inspire confidence in the community at large and avoid even an appearance of impropriety. Wherever possible, the court is to respect the Rules of Professional Conduct of the Law Society of Upper Canada, and wherever possible make orders consistent with their provisions: Fitzgerald v. Sharp, [2004] O.J. No. 4110 (Ont. S.C.J.), at para. 32.

[29] In addition to Everingham, Natalia’s counsel relies upon the cases of Fitzgerald v. Sharp, supra, and Boston-Cloutier v. Boston, [2015] O.J. No. 1913 (Ont. S.C.J.) as examples of cases in which an appearance of impropriety was created by attendances by one party’s counsel on a party adverse in interest. Mikhail’s counsel seeks to distinguish these cases on the basis that all involved individuals with diminished mental capacity.

[30] However, the principle underlying the decision in each of these cases is the same: whether a fair-minded, reasonably informed member of public would conclude that the proper administration of justice required the removal of the solicitor: Everingham, at para. 29; Fitzgerald, supra, at para. 24; Boston-Cloutier, supra, at para. 16. Even if there is nothing improper about the contact, a solicitor may be removed where his or her conduct creates an appearance of impropriety. Vulnerability created by diminished mental capacity or circumstances such as incarceration may add to the appearance of impropriety, but the test does not suggest that such vulnerability or oppressive circumstances must be present before the test is met. In my view, it is a test requiring that the objective, reasonable standard be applied to the entire context of the case.

[31] Family law litigants are often going through the most troubling moments of their lives, and are often in positions of vulnerability or weakness due their circumstances. Given the high incidence of separation and divorce among the public, the “fair-minded and reasonably informed member of the public” is going to be informed about the dynamics of family law disputes and the role of lawyers in representing parties to those disputes. I find that such a hypothetical person would be alarmed by the notion of a family litigant, who has retained her own lawyer, being invited and allowed to come into contact with the lawyer for her estranged spouse, without her own lawyer being informed in advance and providing permission. This is particularly so where the meeting had something to do with a major issue in dispute in the litigation. In convening such a meeting I find that Ms. Abramian did breach Rule 7.2-6 of the Rules of Professional Conduct, and this factors into the decision for her removal. While the facts support that she was not acting with a motive other than to facilitate what she understood to be a settlement reached, nonetheless her direct contact with Natalia was a breach of the rule, however well-intended. In all of the circumstances, the public’s confidence in the administration of justice would be eroded, I find, if Ms. Abramian were permitted to continue to act. This consideration I find to be paramount to the difficulties posed to Mikhail and Dmitri by having to locate suitable counsel to replace Ms. Abramian.

[32] Accordingly the motion is granted, and the following order shall issue:

1. This case shall be combined together with the action commenced by Mikhail Malkov in court proceeding CV-12-0156-00;

2. The Family Law Rules shall apply to the combined proceeding;

3. Natalia shall have ten days from the release of this decision to serve and file an amended answer to make a claim against Mikhail in order to add him as a respondent in this case, and Mikhail shall have 30 days thereafter to serve and file an answer, and thereafter the provisions of rule 10 of the Family Law Rules apply;

4. The title of proceeding of the combined proceeding will be as set out in the Notice of Motion filed at Tab 10 of the Continuing Record, and will bear the court file number FC-15-047701-00;

5. Mikhail Malkov shall be exempt from filing material or attending court for any step in the case which does not involve property issues;

6. Alexandra Abramian shall be removed as solicitor of record for the applicant herein, and as solicitor of record for Mikhail Malkov in the now combined proceeding.

Costs

[33] If the parties are unable to reach an agreement on costs, they may each make brief submissions in writing, no longer than three pages, plus any offers to settle, case law authorities and costs outlines on which they seek to rely. Natalia’s submissions are due by August 14, 2015, Dmitri’s and Mikhail’s by August 28, 2015 and any reply by September 3, 2015 All submissions are to be directed to the office of the judicial assistants in Barrie, to my attention.

HEALEY J.

Date: July 29, 2015

[^1]: Incorrectly identified as “CB-12-0156-00” in the motion and affidavit of the respondent, Natalia Stovickek-Malkov.