Court File and Parties

Citation: Glionna v. Blake, Cassels & Graydon LLP, 2016 ONSC 7932 Court File No.: CV-16-559969 Date: 2016-12-20 Superior Court of Justice - Ontario

Re: James Boyd Glionna, Applicant And: Blake, Cassels & Graydon LLP, Respondent

Before: Lederer J.

Counsel: William A. Chalmers, for the Applicant Paul Schabas and Christopher DiMatteo, for the Respondent

Heard: November 29, 30 and December 5, 2016

Endorsement

[1] The applicant James Boyd Glionna wanted to create an estate freeze. He approached his accountants, Chan & Co. Chan & Co. retained Blake, Cassels & Graydon LLP (“Blakes”), one of Canada’s largest law firms, to assist with the legal issues involved. Blakes, in turn, engaged an American law firm to provide U.S. tax law advice regarding the estate freeze proposal. During March 2008, Blakes provided the requested advice as to the Canadian and U.S. tax issues involved.

[2] On March 12, 2013, James Boyd Glionna contacted one of the lawyers at Blakes. James Boyd Glionna wanted legal advice in respect of his U.S. tax filings. He indicated that he had recently been advised by accountants at Chan & Co. that he was required to report certain holdings to the Internal Revenue Service (IRS). James Boyd Glionna wanted a second opinion. This time, a legal opinion. On March 15, 2013, there was a conference call involving James Boyd Glionna, a lawyer from Blakes, a lawyer from the American Law Firm that had been retained by Blakes and accountants from Chan & Co. The call concerned the Canadian and U.S. tax matters which were of concern to James Boyd Glionna. On that occasion the lawyer from Blakes provided James Boyd Glionna with legal advice.

[3] On May 17, 2013, there was a meeting at Blakes. It was attended by James Boyd Glionna, a lawyer from Blakes and accountants from Chan & Co. It is said that, again on this occasion, legal advice was provided by Blakes to James Boyd Glionna.

[4] On January 29, 2015, James Boyd Glionna commenced an action in the Ontario Superior Court of Justice against Chan & Co. In the action, it is alleged that the accountants were negligent in the discharge of their professional duties and obligations to James Boyd Glionna. It seems that in the time following the commencement of the action, representatives of Blakes met with individuals from Chan & Co. at which time issues raised in the action that had been commenced by James Boyd Glionna were discussed. Blakes is said to have delivered, from its files, documents and information that were confidential to James Boyd Glionna and concerned both his business and personal affairs. These documents were referred to and select portions were copied and included in affidavits sworn and served in connection with a motion brought within the action.

[5] I pause to say that it is not clear to me the circumstances in which information was provided to Blakes that would have been and was expected to remain confidential from Chan & Co. The two firms worked on the same issues and members of both firms took part in the conference call and meeting to which particular reference was made. Whatever advice was provided by Blakes, on those occasions, was provided in the presence of representatives of Chan & Co. I do not say that such confidential information was not provided. Just that I do not understand when or how it came into Blakes’ possession, what it concerned, how it related to what Blakes and Chan & Co. were doing on behalf of James Boyd Glionna and to what extent Chan & Co would, as a result, have already been aware of it. Be that as it may.

[6] Even before the meetings had taken place and he knew the confidential information had been released, James Boyd Glionna asked to meet with the lawyers from Blakes concerning the advice they had provided. James Boyd Glionna saw himself as a client of Blakes; one who wished to meet with his counsel.

[7] Blakes refused or, rather said, that its lawyers would only meet with James Boyd Glionna and his lawyers, in the action, in company with counsel for Chan & Co. Blakes was unprepared to accept that James Boyd Glionna was its client. The firm did not deny that this was so but would not acknowledge that it was. In an email dated July 21, 2016, to counsel for James Boyd Glionna, the General Counsel at Blakes explained the firm’s position. This was summarized in a subsequent email, this one dated August 18, 2016:

I provided the background information about the work we did and our connection to Chan & Co. and to Mr. Glionna in my email of July 21. As I indicated in my email, we are not disputing that Mr. Glionna received our advice, but it was provided through Chan & Co. to the extent Blakes had a relationship with Mr. Glionna, it was not a relationship with him alone and therefore a private interview is not appropriate. We are not trying to take sides in the dispute between your client and Chan & Co and want to be sure we provide the same information to both parties. The way to achieve that is through a joint interview.

[8] The question of how to proceed was exacerbated by the fact that the counsel acting for Chan & Co. did not consent to such a confidential interview taking place. The email ended with the suggestion that counsel for James Boyd Glionna “work it out with [counsel for Chan & Co.] or bring a motion”.

[9] This is not a motion; it is an application. As such it is not brought within the action that has been started by James Boyd Glionna against Chan & Co. It is a separate proceeding seeking an independent remedy. It asks the court to make an order compelling Blakes to meet with James Boyd Glionna and the counsel representing him in the action, for the purpose of having a confidential discussion, the substance of which would not be disclosed to Chan & Co. or those acting on its behalf.

[10] One might wonder about the jurisdiction of the court to do what is asked, particularly as part of an application that is independent of any other proceeding, removed from any direct involvement with the action brought against Chan & Co and, thus, separate from the context within which the request for a meeting was made. In short the application asks the court to order Blakes to follow the Rules of Professional Conduct as the counsel for James Boyd Glionna believes they should be understood and interpreted. The setting of standards of professional conduct and the responsibility of ensuring compliance with those standards falls, first, to the Law Society of Upper Canada. The Law Society Act R.S.O. 1990, c. L. 8, s. 4.1 outlines as “a function of the Society” the responsibility to ensure that:

(a) all persons who practice law in Ontario or provide legal services in Ontario meet standards of learning, professional competence and professional conduct that are appropriate for the legal services they provide; and

(b) the standards of learning, professional competence and professional conduct for the provision of a particular legal service in a particular area of law apply equally to persons who practice law in Ontario and persons who provide legal services in Ontario.

[11] In this case there are two competing values at stake. On the one hand a lawyer owes his or her client a duty to hold, as confidential, information provided by the client:

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:

(a) expressly or impliedly authorized by the client;

(b) required by law or by order of a tribunal of competent jurisdiction to do so;

(c) required to provide the information to the Law Society; or

(d) otherwise permitted by rules 3.3-2 to 3.3-6.

(Rules of Professional Conduct Chapter 3 (Relationship to Clients) rule 3.3-1)

[12] On the other hand a lawyer owes his or her client a duty of candour:

When advising clients, a lawyer shall be honest and candid.

(Rules of Professional Conduct Chapter 3 (Relationship to Clients) rule 3.2-2)

[13] The Commentary that follows the rule explains the duty:

The duty of candour requires a lawyer to inform the client of information known to the lawyer that may affect the interests of the client in the matter.

(Rules of Professional Conduct Chapter 3 (Relationship to Clients) rule 3.2-2 commentary 1.1).

[14] Over the course of the discussions between counsel and the court, counsel from and representing Blakes acknowledged that the firm owed a duty of confidentiality to James Boyd Glionna but at the same time, owed a duty of candour to Chan & Co. The commencement of the action placed Blakes between James Boyd Glionna and Chan & Co. If the meeting that James Boyd Glionna sought took place, he expected its content to be confidential, whereas Chan & Co. could anticipate that the duty of candour would require that it be revealed to that firm. This was a conflict which the law firm could not have foreseen and for which it could not have prepared.

[15] At the outset of the hearing I explained to counsel the concern that, while this had the appearance of a simple procedural issue, there was a risk. It could grow into something more complicated, without a straightforward answer. Were both Chan & Co. and James Boyd Glionna clients of Blakes? If not, which one was? If both were, how was the dual responsibility to be divided? Is it possible that one of the two duties (confidentiality and candour) holds primacy over the other? If a meeting took place would there be questions asked that Blakes was unprepared to answer, causing the parties to return to court to have the propriety of those questions resolved. How many trips to court could it take before this was finally dealt with?

[16] What proceeded was a discussion rather than a set of submissions.

[17] The parties met in an effort to resolve the problem. It appeared that they had succeeded. The hearing was adjourned overnight and then over the weekend to see if it was possible to conclude an agreement.

[18] The parties determined that the best way to proceed was an order allowing for the examination of two lawyers from Blakes as non-parties. Counsel for James Boyd Glionna prepared a draft order. It went beyond the procedure to be adopted. The first paragraph states:

THIS COURT ORDERS that the respondent (“Blakes”), as a law firm, owes the Applicant (“Glionna”) the same fiduciary duties and responsibilities that it owes to Chan & Co. (“Chan & Co”), including, but not limited to: (a) a duty of loyalty; (b) a duty to avoid conflicting interests; (c) a duty of commitment to its client’s cause; and, (d) a duty of candour, and the obligation to comply with the Law Society of Upper Canada’s Rules of Professional Conduct (the “LSUC Rules”).

[19] Blakes objected. It is not hard to see why. This order would answer a number of legal issues. It would determine that duties were owed by Blakes to James Boyd Glionna which, if breached, could raise the prospect of liability and the possibility of an amendment seeking to add the law firm as a defendant in the action.

[20] The remaining paragraphs of the draft order deal only with the logistics of how the examinations would take place: the breadth of the examinations, when they are to be held, the participants, the transcription and the costs.

[21] Counsel for James Boyd Glionna was adamant. Without agreement to the first paragraph, his client would not consent to the rest. He proposed that the Notice of Application be amended to add that the substance of paragraph 1 would be dealt with as part of the application and that full submissions be made.

[22] I am not prepared to do this.

[23] The application sought an order for a confidential meeting involving Blakes and James Boyd Glionna. The agreement the parties have come to, responds to the competing obligations faced by the law firm. It is a useful compromise.

[24] Using the draft order presented to the court as the model, I order:

1. that Paul Tamaki shall attend for an examination (the “Tamaki Examination”) and answer questions about the entirety of his interactions, all of any nature or kind whatsoever, involving, relating to or in connection with James Boyd Glionna, including, but in no way limited to, advice given by Tamaki or any other lawyer at Blakes to Chan & Co. regarding James Boyd Glionna;

2. that the Tamaki Examination shall take place on a date acceptable to the lawyers for Blakes, James Boyd Glionna, and Chan & Co., acting reasonably, failing which, on a date set by the Court;

3. that both counsel for James Boyd Glionna and Chan & Co. shall have the right to ask questions during the Tamaki Examination;

4. that the Tamaki Examination shall be transcribed, and the cost of the attendance and the transcript shall be borne equally by James Boyd Glionna and Chan & Co.;

5. that Kathleen Penny shall attend for an examination (the “Penny Examination”) and answer questions about the entirety of her interactions, all of any nature or kind whatsoever, involving, relating to or in connection with James Boyd Glionna, including but in no way limited to, advice given by Penny or any other lawyer at Blakes to Chan & Co. regarding James Boyd Glionna;

6. that the Penny Examination shall take place on a date acceptable to the lawyers for Blakes, James Boyd Glionna and Chan & Co., acting reasonably, failing which, on a date set by the Court;

7. that both counsel for James Boyd Glionna and counsel for Chan & Co. shall have the right to ask questions during the Penny Examination;

8. that the Penny Examination shall be transcribed, and the cost of the attendance and the transcript shall be borne equally by James Boyd Glionna and Chan & Co.; and

9. that there be no costs of this Application.

[25] It will be apparent that this order affects Chan & Co. I am advised by counsel for James Boyd Glionna that counsel for Chan & Co. has seen the order as initially proposed (that is including the clause to which objection has been taken) and indicated the consent of her client. This being so I do not see how they can have any objection to what I have now ordered.

[26] Finally, I return the issue of jurisdiction. There was no discussion and no reference in either of the facta that were filed which would explain the basis upon which the Court could be asked to order a law firm or lawyers to meet with a client on a confidential basis. Neither the Solicitor’s Act, R.S.O. 1990, c. S. 15 nor the Law Society Act, supra appears to make reference to such an application being made. The substantive, as opposed to the general rules on which the Applicant relies, are rules 14.05(3)(d) of the Rules of Civil Procedure (interpretation of an instrument), 14.05(3)(g) (other consequential relief) and 14.05(3)(h) (no material facts in dispute). So far as I can see there is nothing in these rules which recommends or suggests that it is possible for the Court to step in, take over from the Law Society and impose obligations on lawyers on the basis of requiring compliance with the Rules of Professional Conduct. It is trite to observe that the consent or agreement of the parties cannot provide the court with jurisdiction it would not otherwise have. Having said this, the Rules of Civil Procedure do envisage a motion allowing for the examination of non-parties to an action (see: rule 31.10). That is to say the Rules permit the order that has been made on a motion within an action. To my mind this would be the preferable vehicle for providing this order. In the circumstances, I require that the order be drafted such that it is made within the action commenced by James Boyd Glionna against Chan & Co. and that a copy of this endorsement be placed in that file.

[27] No submissions were made as to costs. The problem confronting the law firm was, if not unique, unusual. With the assistance of the court the parties came close to a resolution. There was not much left for the court to do. In the circumstances, to my mind, this is not a matter for costs. None are awarded.

Lederer J.

Date: December 20, 2016