Court File and Parties

COURT FILE NO.: 11-CV-437780 Motion heard: January 18, 2017

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: P & J CONTRACTING INC. and 1422604 ONTARIO INC., Plaintiffs AND JAMES D. SINGER, Defendant

BEFORE: Master Lou Ann M. Pope

COUNSEL: Counsel for plaintiffs: Robert G. Tanner, Tanner & Guiney Fax: 416-862-7874 Counsel for defendant: Brian Radnoff, Lerners LLP Fax: 416-867-2412

Reasons for Endorsement

[1] The defendant seeks an order removing Robert Tanner and Tanner & Guiney law firm as lawyers of record for the plaintiffs on the ground of a disqualifying conflict of interest as Mr. Tanner will likely be an important witness at trial and he has a direct interest in the litigation beyond that of an advocate.

Background

Underlying Action

[2] This action arises out of the defendant’s representation of the plaintiffs in an action based, among other things, on fraud committed on 1422604 Ontario Inc. (“142”) by Emilio Taurasi (“Taurasi”) and related companies in the context of a real estate joint venture. (“Underlying Action”) The plaintiff, P & J Contracting Inc. (“P & J”) was a participant in the joint venture and minority shareholder in 142 which allegedly suffered harm. John Cipollone (“Cipollone”) is the principal and directing mind of P & J.

[3] Cipollone, through P & J, and Taurasi, through Taurasi Holdings Inc., entered into a joint venture agreement with two other investors to develop real estate in Vaughan, Ontario (“Joint Venture Agreement”). 142 was the operating company established for the joint venture. Each of the four investors held 25 per cent of the shares in 142.

[4] The Royal Bank of Canada (“RBC”) was appointed banker for 142. The Joint Venture Agreement, the Financial Services Agreement between 142 and RBC, and 142’s resolution regarding banking and security (collectively, the “Banking Documents”) provided that two signatures were required to withdraw or order transfers of funds from 142’s accounts. This included issuing cheques.

[5] In or around November, 2002, the defendant met with Cipollone for the first time. At that time, Cipollone had copies of substantially all of the relevant documents of 142, including copies of contracts, invoices and banking records relating to the joint venture.

[6] The defendant undertook a preliminary investigation of the alleged misconduct. Shortly thereafter, RBC and Taurasi were put on notice of the potential for litigation and attempts were made to resolve the dispute prior to the commencement of litigation.

[7] By May, 2003, attempts to settle the matter had been unsuccessful; therefore, Cipollone instructed the defendant to commence proceedings against RBC and the Taurasi defendants.

[8] The Underlying Action was commenced on December 30, 2003. In that action, the claims were as follows:

(a) P & J, on behalf of 142, sued RBC claiming damages for negligence or breach of contract in the amount of $2,700,631.22 on the basis that RBC had been honouring cheques with only Taurasi’s signature;

(b) P & J, in its own right, sued Taurasi, and his related companies, Taurasi Holdings Inc., Royal Town Management Ltd., Royal Town Home Enterprise Ltd. and Royal Town Homes Ltd. (collectively “Taurasi Defendants”) for damages for conspiracy and/or fraud in the amount of $970,000 and punitive damages in the amount of $100,000; and

(c) P & J, in its own right, sued Taurasi Holdings Inc. for damages in the amount of $650,000 for breach of contract and various expenses, an accounting and damages in the amount of $3,500 per month in relation to a leased trailer.

[9] The plaintiffs alleged that Taurasi was misappropriating funds held by 142 for the benefit of the joint venture by issuing cheques bearing only his signature, contrary to the Banking Documents, for the benefit of himself and his related companies and for purposes unrelated to the business of 142.

[10] Prior to issuing the claim in the Underlying Action, the defendant obtained leave for P & J to commence an action on behalf of 142 as against RBC.

[11] By approximately February, 2004, pleadings in the Underlying Action were completed. By September, 2005, the Underlying Action had progressed through early mediation, the discovery stage and had been set down for trial. During this time, the defendant and Cipollone attended at the office of counsel for the Taurasi defendants to inspect documents. As they were satisfied that they had all of 142’s documents, they proceeded to examinations for discovery without 142’s affidavit of documents.

[12] When the Taurasi defendants served an expert report for trial, it became apparent that the Taurasi defendants had additional productions that had not been disclosed. After the Taurasi defendants made production of the additional documents, it is the defendant’s evidence that he advised Cipollone that the plaintiffs required an expert report, he required Cipollone to analyze the newly produced cheques and advised him that it might be necessary to conduct further examinations of Taurasi.

[13] In the end, the defendant obtained multiple trial adjournments in accordance with Cipollone’s instructions.

[14] It is the defendant’s evidence that Cipollone failed to respond to his correspondence on these issues and he failed to provide the funds necessary to retain an expert, conduct further examinations and proceed to trial.

[15] On September 18, 2009, the defendant obtained an order removing himself as lawyer of record for the plaintiffs.

[16] Thereafter, Mr. Tanner and the firm of Tanner & Guiney (“Tanner”) became lawyer of record for the plaintiffs in the Underlying Action on March 11, 2010.

[17] Subsequently, Tanner took the following steps in the Underlying Action:

(a) in October 2010, obtained an order granting leave to commence a derivative action on behalf of 142 as against the Taurasi defendants;

(b) issued a fresh as amended statement of claim which added claims by P & J, on behalf of 142, against RBC and the Taurasi defendants, and claims by P & J in its own right against Taurasi personally and the Taurasi defendants.

[18] The defendants delivered further pleadings in response to the fresh as amended statement of claim.

[19] In early March 2016, the plaintiffs obtained summary judgment against the Taurasi defendants in the amount of $1,292,862 and shortly before the summary judgment hearing, the plaintiffs reached a settlement with RBC for $187,500.

This Action

[20] This action was commenced on October 21, 2011. After the statement of defence was served, by agreement, this action did not proceed while the Underlying Action was ongoing.

[21] In June 2016, P & J brought a motion for, among other things, leave to commence a derivative action on behalf of 142. However, in August 2016, Tanner advised defence counsel that P & J was no longer seeking that relief.

[22] Other than motions by P & J for an immediate mediation and to amend the statement of claim, no other steps have been taken in this action. The plaintiffs’ motion to compel an immediate mediation was withdrawn and their motion to amend was resolved on an unopposed basis.

[23] In this action, the plaintiffs allege that the defendant negligently represented them in the Underlying Action. Among other things, the plaintiffs claim that:

(a) the defendant failed to seek leave to commence derivative proceedings on behalf of 142 against the Taurasi defendants and he failed to claim on behalf of 142 against any of the Taurasi defendants. This issue was resolved successfully after Tanner became counsel;

(b) the defendant failed to claim against Taurasi for unjust enrichment, conversion, negligence, inducing breach of contract, breach of trust or breach of fiduciary duty. Again, this issue was dealt with in the amendments made to the statement of claim after Tanner took carriage of the underlying action and the plaintiffs were ultimately awarded damages against Taurasi for breach of trust or breach of fiduciary duty;

(c) the defendant failed to identify certain members of Taurasi’s family in the statement of claim or name them as defendants prior to expiry of the limitation period.

(d) the defendants failed to claim damages for the expenses of paying Tanner to duplicate work that the defendant completed prior to having himself removed as counsel in the Underlying Action and to take steps that the defendant should have taken in the Underlying Action.

[24] In his affidavit filed on this motion, the defendant denies the plaintiffs’ claims that Tanner was required to duplicate work, such as the failure to obtain expert evidence. He states that although he wanted to retain experts, Cipollone instructed him not to do so.

Summary of Positions of the Parties

[25] The defendant submits that at trial Tanner will be in the best position, and likely the only person, who can give evidence regarding the allegations made against him. For example, he will be required to give evidence on the following:

(a) the events following his retainer in the Underlying Action, such as explaining why the work he did amounts to duplication and justify his decision to duplicate work that had already been completed, and explain how the plaintiffs were harmed or prejudiced as a result of anything that the defendant did or did not do;

(b) the result of the Underlying Action and collection efforts for the judgment, such as, to explain why the plaintiffs settled with RBC for substantially less than the amount sought, and why Tanner chose to claim so much less than the defendant did against RBC in the original statement of claim. As background, in the statement of claim drafted by the defendant, the claim against RBC was for $2,700,631.22; whereas, that claim was reduced to $1,000,000 in the amended statement of claim prepared by Tanner. Ultimately, the plaintiffs settled with RBC for $187,500. The defendant contends further that Tanner will be required to explain why the plaintiffs obtained judgment of $1,292,862 against the Taurasi defendants, which is less than the amount sought on the summary judgment motion and in the claim. Further, he will need to testify about steps taken to try to enforce the judgment and why the plaintiffs cannot collect.

(c) when the claims against Dino and Tony Taurasi were discovered and why the plaintiffs did not seek to claim against Dino and Tony in 2011 when the defendant filed the fresh as amended statement of claim. As background, one of the claims in the amended statement of claim in this action is that the defendant failed to identify certain members of Taurasi’s family in the statement of claim or name them as defendants prior to the expiry of the limitation period. One of the family members is identified in the amended statement of claim herein as Dino Taurasi who is the brother of Emilio Taurasi, a defendant in the Underlying Action, and one of the members of Taurasi’s family to whom some money was alleged to have been paid as pled in the statement of claim prepared by the defendant but not specifically named. The other family member is identified as Tony Taurasi, also a brother of Emilio Taurasi and the sole director of Royal Town Enterprises Ltd., a defendant in the Underlying Action, and he is also one of the Taurasi family members to whom money was alleged to have been paid in the statement of claim prepared by the defendant, but whose name was not identified.

[26] Therefore, the defendant submits that only Tanner can testify about what the defendant did that Tanner believes was negligent. He states that Tanner is the best, if not the only, person who can give this evidence as Cipollone cannot testify about Tanner’s state of mind and the reasoning behind his decisions, advice and recommendations.

[27] The defendant delivered an amended statement of defence in response to the amended statement of claim. In the amended defence, it is alleged that any damages suffered by the plaintiffs were caused or contributed to by Tanner’s conduct. For example, it is pled that with respect to any claim by the plaintiffs in the Underlying Action against Dino and Tony Taurasi, the limitation period for that claim did not expire until after Singer had himself removed as lawyer of record for the plaintiffs. As such, it is pled that the plaintiffs, represented by different counsel, could have commenced an action against Dino and Tony Taurasi, but failed to do so within the application limitation period. Therefore, the defendant submits that Tanner will be required to testify at trial to explain why claims were not made against Dino and Tony Taurasi within the applicable limitation period and after his retainer commenced.

[28] Lastly, the defendant states that there are issues currently regarding the production of documents in this action. In particular, just prior to this motion being heard, counsel were in discussions regarding production of the defendant’s file in the Underlying Action and production of Tanner’s file. As Tanner took the position that only portions of his file are relevant to the issues in this action, the defendant states that a motion will likely be required to resolve this issue. For that same reason, the defendant argues that it is not appropriate for Tanner to continue as counsel for the plaintiffs herein as it demonstrates the obvious conflict.

[29] The plaintiffs submit that this motion is premature as pleadings have not been completed. They submit further that the likelihood of plaintiffs’ counsel being a witness at trial is not clear, nor is it clear that a trial will be necessary. It is submitted further that the defendant is not prejudiced by plaintiffs’ counsel continuing to act, whereas, removal of plaintiffs’ counsel will be highly prejudicial to the plaintiffs for numerous reasons, including unnecessary costs to retain new counsel and depriving the plaintiffs from their counsel of choice.

[30] The plaintiffs do not agree with the defendant’s position on what evidence will be required for trial and how it might be adduced. Firstly, the plaintiffs argue that opinions expressed by Mr. Singer in his affidavit are inadmissible; however, as the plaintiffs have not sought to strike those statements, nor have they cited the precise statements, I have not addressed this argument. Secondly, the plaintiffs state that carriage of the collection proceedings in respect of the judgment obtained in the Underlying Action is in the hands of other counsel such that Tanner will not be required to give such evidence. Further, it is submitted that the issues of whether the defendant was negligent, any resulting necessity for repair and whether the settlement with RBC was reasonable will not depend on the opinion of Tanner but on that of an expert witness. In addition, the plaintiffs argue that Tanner will not be required to give evidence at trial regarding discoverability of any claims against Dino and Tony Taurasi because those claims were known to the defendant in December 2003 when he drafted the statement of claim, such that any applicable limitation period had long-since expired when Tanner was retained in March 2010.

Law and Analysis

[31] The law in the area of disqualifying conflict of interest of counsel is well settled. The principle issue is the balancing of three competing values; namely, (1) the maintenance of high standards of the legal profession and the integrity of our system of justice; (2) the right of a litigant to its choice of counsel, which he or she should not be deprived of without good cause; and (3) the desirability to permit mobility in the legal profession. (MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235 (S.C.C.) at para. 13) Only the first two competing values are in issue on this motion.

[32] The Supreme Court of Canada in MacDonald Estate held at paragraph 19 that the most important and compelling value is the integrity of our system of justice.

[33] More recently, the Supreme Court of Canada opined that a lawyer’s duty of loyalty to current clients includes the principle of avoidance of conflicts of interest which includes ensuring that divided loyalty does not impair a lawyer’s relationship with a client (R. v. Neil, 2002 SCC 70, 2002 S.C.C. 70, at paras. 17, 19). At paragraph 31, the court accepted the definition of conflict as a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client, or a third person.

[34] The court must be concerned with not only actual conflicts of interest but with perceived conflicts of interest that reflect adversely on the administration of justice.

[35] The Ontario Divisional Court in Essa (Township) v. Geurgis, [1993] O.J. No. 2581, distinguished between cases where there is a risk of disclosure of confidential information from “potential witness” cases. The court cautioned against making premature orders preventing solicitors from continuing to act stating that courts should do so only in clear cases in view of the expense of litigation and the “enormous waste of time and money and the substantial delay which can result from an order removing solicitors”. The court also opined that an application to remove counsel can be made to the trial judge when it is certain that there is a conflict. A trial judge will be in a much better position to determine if a party’s counsel should be disqualified. It stated further that in the alternative, it is possible that concessions may be made at trial to obviate the need to call counsel as a witness, or the evidence may be readily obtainable from other witnesses. Further, the court raised the point that some motions to remove solicitors are not brought with the purest of motives and, in doing so, may be to the substantial benefit of an opposing party.

[36] As stated succinctly by Master McAfee in Karas v. Ontario, 2011 ONSC 5181, 2011 CarswellOnt 8946, at para. 26:

The overarching test to be applied on a motion to remove a lawyer from the record is whether a fair-minded reasonably informed member of the public would conclude that the proper administration of justice requires the removal of the lawyer. This determination is very fact specific and based on an examination of all of the factors in the case and the specific reason why the motion is being brought. The task of the court is to uphold and preserve the integrity of the justice system while ensuring that litigants are not deprived of their counsel of choice without good cause. (see Gaetan Chip Stand Inc. v. North Glengarry (Township), [2005] CarswellOnt 5313 (Ont. S.C.J.), at para 8, citing Everingham v. Ontario (1992), 8 O.R. (3d) 121 (Ont.Div.Ct.) at p. 127 and see MacDonald Estate v. Martin, [1990] 3 S.C.R. 1236 (S.C.C.) at paras 16, 47-51 and 65-66)

[37] As in this action, the issue is whether Tanner ought to be permitted to continue as lawyer for the plaintiffs if he will be required to appear as a witness in the same action. That issue was addressed squarely by the court in Urquhart v. Allen Estate, [1999] O.J. No. 4816 (Ont. S.C.J.), when Justice Gillese aptly explained at paras. 27-28:

When counsel appears as a witness on a contentious matter, it causes two problems. First, it may result in a conflict of interest between counsel and his client. That conflict may be waived by the client as indeed, was done in this case. The second problem relates to the administration of justice. The dual roles serve to create a conflict between counsel's obligations of objectivity and detachment, which are owned to the court, and his obligations to his client to present evidence in as favourable a light as possible. This is a conflict that cannot be waived by the client as the conflict is between counsel and the court/justice system.

Counsel are independent officers of the court. The trial judge must be able to rely upon plaintiff’s counsel for a high degree of objectivity. The overriding value, in these circumstances, is concern for the proper administration of justice. A distinction must be drawn between the role of counsel as an independent officer of the court and the role of a witness whose objectivity and credibility are subject to challenge. The dual roles that [counsel] intends to fulfill compromises the integrity of the system. As I can see no way to alter the process that respects the rights of both parties, fulfills the needs for due process and maintains regard for the dictates of the proper administration of justice, in these circumstances plaintiffs’ counsel cannot be permitted to continue. I note that even if I were to exercise my discretion and permit him to continue procedural problems may very well arise. If they did so, it is likely that it would require me to abort the trial at that time. Such a course of events would result in more prejudice to the plaintiff than does dealing with the issue now.

[38] The Law Society of Upper Canada’s Rules of Professional Conduct provide that a lawyer shall not act or continue to act for a client where there is a conflict of interest, except as specifically permitted. The commentary to section 3.4, entitled “Duty to Avoid Conflicts of Interest,” sets out a definition of conflict of interest that is almost identical to the definition accepted by the Supreme Court of Canada in its 2002 decision in R. v. Neil, cited at paragraph 33 above. The commentary states:

[1] As defined in rule 1.1-1, a conflict of interest exists when there is a substantial risk that a lawyer’s loyalty to or representation of a client would be materially adversely affected by the lawyer’s own interest or the lawyer’s duties to another client, a former client, or a third person. In this context, “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. The risk must be more than a mere possibility; there must be a genuine, serious risk to the duty of loyalty or to client representation arising from the retainer. A client’s interests may be seriously prejudiced unless the lawyer’s judgment and freedom of action on the client’s behalf are as free as possible from conflicts of interest.

[2] A lawyer should examine whether a conflict of interest exists not only from the outset but throughout the duration of a retainer because new circumstances or information may establish or reveal a conflict of interest.

[3] In order to assess whether there is a conflict of interest, the lawyer is required to consider the lawyer’s duties to current, former and joint clients, third persons, as well as the lawyer’s own interests.

[39] The courts have long recognized that a code of professional conduct is designed to serve as a guide to lawyers and typically it is enforced in disciplinary proceedings. However, courts are not bound to apply a code of ethics as courts have inherent jurisdiction to remove from the record solicitors who have a conflict of interest. As stated Sopinka J. in MacDonald Estate at paragraph 21:

The court’s jurisdiction stems from the fact that lawyers are officers of the court and their conduct in legal proceedings which may affect the administration of justice is subject to this supervisory jurisdiction. Nonetheless, 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.

[40] There are a number of factors that a court will consider when considering the removal of a lawyer from the record on the basis that the lawyer will also be a witness. The court adopts a flexible approach and considers each case on its merits. The following are the factors that should be considered:

(a) the stage of the proceedings;

(b) the likelihood that the witness will be called;

(c) the good faith (or otherwise) of the party making the application;

(d) the significance of the evidence to be led;

(e) the impact of removing counsel on the parties’ right to be represented by counsel of choice;

(f) whether the trial is by judge or jury;

(g) the likelihood of a real conflict arising or that the evidence will be tainted;

(h) who will call the witness if, for example, there is a probability that counsel will be in a position to cross examine a favourable witness, a trial judge may rule to prevent that unfair advantage arising;

(i) the connection or relationship between counsel, the prospective witness and the parties involved in the litigation.

Stage of the proceedings and likelihood that the witness will be called

[41] This action is at an early stage. Pleadings have closed in this action as the defendant delivered an amended statement of defence in mid-January 2017. At the writing of these reasons, it is unknown whether the plaintiffs delivered a reply; however, the timeline has passed to do so.

[42] A court is not precluded from granting an order removing a lawyer from the record on the basis that the counsel will be a witness merely because the action is at an early stage. In fact, Master McAfee cited at paragraph 32 in Karas the decision of Master Beaudoin, as he then was, in George S. Szeto Investments Ltd. v. Ott, [2006] O.J. No. 1174 (Ont. Master), where the Master held that where the court is satisfied on the record before it that there is more than a real likelihood that the solicitor will be called as a witness, the courts favour an early determination of the issue.

[43] It is clear from paragraph 28A of the amended statement of claim that the plaintiffs pled that their new counsel performed some ten steps or actions on behalf of the plaintiffs in the Underlying Action, including obtaining leave of the court to commence proceedings on behalf of 142 against Taurasi and the Taurasi companies, conducted “protracted” negotiations with counsel for Taurasi and the Taurasi defendants with respect to deletion of an added statute-barred Counterclaim, prepared and delivered a reply and defence to the fresh amended statement of defence, and negotiated settlement with the RBC. In my view, these are pleadings of material facts that they rely on in support of their allegations of negligence against the defendant. Given that the plaintiffs cannot give this evidence at trial as it would be hearsay, in my view, they must call Tanner to do so. As such, I am satisfied that there is more than a real likelihood that Tanner will be called as a witness.

The good faith (or otherwise) of the party making the application

[44] The defendant brought this motion at an early stage after learning of the plaintiffs’ position and after advising Tanner of the defendant’s position regarding his ability to act and Tanner’s response that he did not agree. In my view, there is no evidence of bad faith or otherwise on the part of the defendant in bringing this motion.

The significance of the evidence to be led

[45] As stated above at paragraph 43, Tanner’s evidence as a witness will be significant given the pleadings of material facts of steps he took on behalf of the plaintiffs after he became lawyer of record for the plaintiffs in the Underlying Action.

[46] In that respect, he has first-hand knowledge of the issues and facts that form the basis of this action.

The impact of removing counsel on the parties’ right to be represented by counsel of choice

[47] The only evidence filed by the plaintiffs is the affidavit of Tanner’s legal assistant. Notably, there is no evidence from any of the plaintiffs regarding the impact on them of having to retain new counsel at this stage of the action. The plaintiffs’ factum contains a statement at paragraph 8 regarding the impact on the plaintiffs; however, it is improper for this statement to be placed in the factum and it is inadmissible as evidence.

[48] Therefore, I find there is no evidence to support the bald statement that the plaintiffs would be greatly prejudiced by Tanner’s removal.

Whether the trial is by judge or jury

[49] This action will be heard by a judge as no party delivered a jury notice.

Likelihood of a real conflict arising or that the evidence will be tainted

[50] The defendant raises several points regarding this factor. Firstly, it is submitted that Tanner has already refused to produce his entire litigation file for the Underlying Action on the grounds that it is unnecessary which demonstrates a foreshadowing of the types of issues that will pervade this action if Tanner remains as counsel. Secondly, at trial, questions posed by Tanner would be unfair to a witness as they would appear as an officer of the court’s version of the facts such that Tanner’s evidence in-chief or in cross-examination would be tainted by the other witnesses and his own litigation strategy. Thirdly, any order at the outset of trial excluding all witnesses would be unworkable.

[51] The defendant relies on the decision in 1298781 Ontario Inc. v. Levine, 2013 ONSC 2894, 2013 CarswellOnt 6307, which involved almost identical facts as the within action. Regarding this factor, Master McAfee found that the role of plaintiff’s counsel as advocate cannot be reconciled with his role as witness for the following reasons, at paragraph 29:

His dual roles will give rise to a conflict and taint his evidence (see George S. Szeto Investments Ltd. at para. 23). Given Mr. Bleta’s involvement in the underlying action, any questions posed by him is unfair to a witness and carries with it the appearance of an unsworn offer of the lawyer’s version of the facts. Questions put in cross-examination by Mr. Bleta would create the uneasy feeling that the measure of credibility could be based not on the evidence but the unsworn declaration of Mr. Bleta. Mr. Bleta will be left in a difficult position if his memory of the events differs from the evidence in chief of the plaintiffs’ witnesses.

[52] I find that for the same reasons as found by Master McAfee in Levine, Tanner’s role as an advocate cannot be reconciled with his role as a witness.

Who will call the witness?

[53] It is possible that if Tanner is not called as a witness for the plaintiffs, the defendant would likely call him as a witness. If that were to happen, difficult issues would arise which would be untenable such as, would another member of Tanner’s firm be entitled to cross-examine him, could Tanner consult with his co-counsel or continue to work on the file in the event there was a lengthy delay during this cross-examination.

Connection or relationship between counsel, the prospective witness and the parties involved in the litigation

[54] In this case the prospective witness is Tanner who is counsel for the plaintiffs.

[55] Master McAfee found in Karas, at paragraph 49, that it is in the interest of justice to prevent this conflict from arising.

Additional Factor – Tanner’s direct interest beyond that of an advocate

[56] The defendant submits that Tanner has a pecuniary interest in the outcome of this professional negligence claim given the allegations in the amended statement of defence that Tanner caused or contributed to the plaintiffs’ damages. As such, the defendant submits that Tanner could be the subject of a professional negligence claim because, for example, of his failure to seek leave to bring this action on behalf of 142.

[57] The plaintiffs submit that the defendant’s argument is not a tenable claim as Tanner could owe no duty to 142 beyond that arising from the derivative action order in the Underlying Action, nor to Taurasi. They say that Tanner, in this action, could not be liable to 142 for damages arising from Singer’s failure to prosecute Taurasi and his related corporations effectively because 142 was dissolved in 2009 when Singer still had carriage of the Underlying Action, and Tanner had no authority from Taurasi to revive 142.

[58] The question of whether Tanner was negligent in failing to seek leave to bring this action on behalf of 142 prior to the expiry of the limitation period on October 21, 2013 is an issue for trial. While it is my view that this allegation has some merit, albeit not strong, given the facts, it is abundantly clear that Tanner will be called as a witness for the defendant on this issue unless the defendant abandons these allegations before trial. Furthermore, given these allegations in the amended statement of defence, it is possible that Tanner could be examined as a witness on a summary judgment motion.

[59] With respect to a pecuniary interest, courts have held that a lawyer acting for plaintiffs who is also a plaintiff, which is not the case here, should be removed. The basis for the removal is that counsel with a direct interest in the litigation may be perceived to put his or her own interests over their obligations and that such a perception would bring the administration of justice into disrepute. (Karas, at para. 55)

[60] In conclusion on this factor, given the defendant’s allegations, combined with the fact that Tanner acted both for the plaintiffs in the Underlying Action as well as the plaintiffs in this action against their former counsel, it is not inconceivable that Tanner may have a direct interest in the outcome of this action beyond that of advocate.

Conclusion

[61] The Divisional Court in Essa held that a court should only remove a party’s counsel in the clearest of cases having regard to the expense of litigation, the waste of time and money and the substantial delay which may result from an order removing solicitors.

[62] Having regarding to the factors in Essa and the additional factors set out above, in my view, it is clear that Tanner will be called as a witness for the plaintiffs or the defendant. As such, Tanner’s role as advocate for the plaintiffs cannot be reconciled with his role as a witness and he must be removed as plaintiffs’ counsel to ensure the proper administration of justice.

[63] Therefore, the defendant’s motion is granted.

Costs

[64] Given the defendant’s success, he is entitled to partial indemnity costs which are fixed in the amount of $8,500 inclusive, payable within 30 days.

June 20, 2017 _ (original signed)_____________ Master Lou Ann M. Pope