citation: "McCarthy v Labonté, 2017 ONSC 4" parties: "Diane McCarthy v. Marcel Labonté" party_moving: "Marcel Labonté" party_responding: "Diane McCarthy" court: "Superior Court of Justice" court_abbreviation: "ONSC" jurisdiction: "Ontario" case_type: "motion" date_judgement: "2017-01-03" date_heard: "2016-12-15" applicant:

• "Diane McCarthy" applicant_counsel:
• "Bruce F. Simpson" respondent:
• "Marcel Labonté" respondent_counsel:
• "Stéphane A. MonPremier" judge:
• "Marc R. Labrosse" summary: > The respondent brought a motion to remove the applicant's solicitor due to a conflict of interest arising from prior joint retainers for wills and property transfer. The applicant brought a cross-motion for summary judgment regarding the joint ownership and sale of a condominium, trailer, and boat. The court granted the respondent's motion, finding that the solicitor had not discharged the burden of proving no confidential information was exchanged and was likely to be an essential witness. The applicant's cross-motion for summary judgment was dismissed, as there were genuine issues for trial regarding financial contributions and the nature of ownership, requiring viva voce evidence. interesting_citations_summary: > The decision applies the principles from MacDonald Estate v. Martin regarding solicitor conflict of interest, emphasizing the inference of confidential information in sufficiently related retainers and the high burden on the solicitor to prove no relevant information was imparted. It also references Hryniak v. Mauldin in the context of summary judgment, reiterating that complex factual disputes, particularly those involving financial contributions and credibility assessments, are not suitable for summary disposition and require a trial. final_judgement: > The Respondent's motion to remove Bruce Simpson as the Applicant’s solicitor of record is granted. Bruce Simpson is ordered to make himself available for questioning and produce files related to the previous retainers. The Applicant is ordered to serve and file a brief detailing consideration for the property, boat, and trailer. The parties are to proceed with a settlement conference. The Applicant’s Cross-Motion for summary judgment is dismissed. Leave is granted for each party to proceed with two hours of questioning. Costs are to be addressed if the parties cannot agree. winning_degree_applicant: 5 winning_degree_respondent: 1 judge_bias_applicant: 0 judge_bias_respondent: 0 year: 2017 decision_number: 4 file_number: "FC-15-2578" source: "https://www.canlii.org/en/on/onsc/doc/2017/2017onsc4/2017onsc4.html" cited_cases: legislation:
  • title: "Family Law Act, R.S.O. 1990, c. F.3" url: "https://www.ontario.ca/laws/statute/90f03" case_law:
  • title: "MacDonald Estate v. Martin, [1990] 3 SCR 1235" url: "https://www.minicounsel.ca/scc/1990/32"
  • title: "Mastron v. Cotton, 58 O.L.R. 251" url: "https://www.canlii.org/en/on/onca/doc/1925/1925canlii464/1925canlii464.html"
  • title: "Hryniak v. Mauldin, 2014 SCC 7" url: "https://www.minicounsel.ca/scc/2014/7" keywords:
• Conflict of interest
• Solicitor removal
• Summary judgment
• Family law
• Joint ownership
• Confidential information
• Resulting trust
• Family Law Act areas_of_law:
• Civil Procedure
• Family Law
• Legal Ethics

COURT FILE NO.: FC-15-2578 DATE: 2017/01/03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Diane McCarthy, Applicant AND Marcel Labonté, Respondent

BEFORE: Justice Marc R. Labrosse

COUNSEL: Bruce F. Simpson, Counsel, for the Applicant Stéphane A. MonPremier, Counsel, for the Respondent

HEARD: December 15, 2016

Endorsement

1The Respondent has brought a Motion seeking an order that Bruce Simpson be removed as the Applicant’s solicitor of record in this matter and for other related relief. The Applicant has brought a Cross-Motion seeking summary judgment with respect to the joint ownership by the parties to a condominium, a trailer and a boat. The Applicant also seeks some additional orders relating to the sale of the condominium and the use of the proceeds of such sale.

2Prior to the separation of the parties, the Applicant’s solicitor was counsel to both parties and was retained by both parties for the preparation of new wills and for the transfer of one half of the Respondent’s interest in a condominium to the Applicant in 2011. Having acted on these two joint retainers, the Respondent now objects to Mr. Simpson’s ongoing involvement as solicitor of record for the Applicant in their family law dispute.

3For the reasons which follow, I am of the view that Mr. Simpson should be removed as solicitor of record for the Applicant because the Applicant has not satisfied me that there was no exchange of confidential information during the previous joint retainers and thus Mr. Simpson is in a position of conflict of interest. He is also likely to be an essential witness in any trial of this matter. He will be unable to act as both witness and solicitor for the Applicant and there is risk that confidential information will be used against the Respondent.

4With respect to the Cross-motion, I am of the view that this request for summary judgment should not have been brought. The evidence presented by the Applicant in support of her Cross-motion is by no means conclusive. There are important issues for trial as to the nature of her financial contributions to the joint expenses of the parties and if these contributions result in her having been an equal or joint contributor to the purchase of the condominium, trailer and boat. The Cross-Motion for summary judgment had no likelihood of success. It was clearly brought for retaliatory purposes.

5Finally, the parties consent to an order for questioning. Leave is therefore granted to the parties to each proceed with two hours of questioning.

Background Facts

6The parties were in a relationship for approximately 8.5 years. They began their relationship in August or September 2006 and separated on April 26, 2015. The parties briefly separated in 2010 but reconciled shortly thereafter.

7Prior to residing with the Applicant, the Respondent owned a condominium municipally known as 408-40 Laundry Street, Ottawa. In 2007, the Respondent sold the Laundry Street property and purchased 555 Brittany Drive, Apt 403, Ottawa. The purchase price was $165,000. The Respondent paid $65,000 down and took out a line of credit secured against the property for the balance of $100,000. In 2009, the Respondent increased the line of credit to $225,000.

8The boat and trailer were both purchased in June 2009. Title to these assets was put in the name of both parties. The Applicant’s evidence suggests that her credit card was used to put a $500.00 downpayment on the trailer and a $1,000.00 downpayment on the boat.

9At the time of the temporary separation in 2010, the parties signed an agreement setting out how they intended to manage their financial affairs. This agreement provided for the joint ownership of the condominium at 555 Brittany Drive (the “Condominium”) together with the boat and trailer. There is no dispute that this signed agreement does not satisfy the requirements of s. 55 of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) and as such it is not a domestic contract.

10In March 2011, the Applicant signed on to become jointly liable for the line of credit secured against the Condominium when the line of credit was increased by the Respondent.

11In April 2011, the Applicant and the Respondent retained Mr. Simpson to have the Respondent’s name added to the title of the Condominium as joint owner. The Respondent claims that he was never advised to seek independent legal advice and no waiver of independent legal advice was signed. The same also seems to apply to the Applicant when she signed on to the line of credit.

12Mr. Simpson was also retained by the parties for the preparation of their wills. The Respondent claims that confidential information was provided to Mr. Simpson during both retainers.

13The Respondent has claimed that at the time of the transfer to the Applicant, Mr. Simpson stated to the Applicant: “Just because your name is being added onto the title, it does not necessarily mean that you are entitled to half”. The Applicant does not recall Mr. Simpson making such a statement.

14The Respondent states that he did not understand that he could be prejudiced by giving effect to the transfer of half his interest in the Condominium to the Applicant.

15The parties separated on April 26, 2015. At that time, the amount owing on the joint line of credit exceeded the original price of the Condominium.

16Mr. Simpson has not provided an affidavit confirming that he did not obtain confidential information from the Respondent during the two retainers. He relies on two letters written to the Respondent’s counsel setting his position on the issue of confidential information.

17The Respondent has pleaded the existence of a resulting trust as a result of the gratuitous transfer of half his interest in the Condominium to the Applicant. The Respondent states that the intention of the transferee at the time of the transfer is a key consideration.

Analysis

Conflict of Interest

18The leading case on solicitor conflict of issue is the decision of the Supreme Court of Canada in MacDonald Estate v. Martin, [1990] 3 SCR 1235 where the SCC set out the three underlying principles in determining whether a disqualifying conflict of interest exists:

(a) The concern to maintain the high standards of the legal profession and the integrity of our system of justice;

(b) The countervailing value that a litigant should not be deprived of his or her choice of counsel without good cause; and

(c) The desirability of permitting reasonable mobility in the legal profession. (see MacDonald Estate v. Martin at page 9)

19The SCC also stated in MacDonald Estate that there are typically two questions to be answered:

(a) Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? and

(b) Is there risk that it will be used to the prejudice of the client?

20The SCC went on to say that once the court determines that there is a sufficiently related 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. This will be a difficult burden to discharge. (see MacDonald Estate, page 21)

21In the present circumstances, it is relevant to note that these were joint retainers and that the parties would have always been together when information was being conveyed by the Respondent to Mr. Simpson. As such, in the context of this matrimonial dispute, the Applicant states that there is no information that Mr. Simpson would have that the Applicant does not also have.

22While I have considered this as a factor in my analysis, it is certainly not determinative. I am of the view that any information given to Mr. Simpson in the course of either the Condominium transfer and/or the drafting of wills has the potential to be confidential information. When considering the direction of the SCC in MacDonald Estate, the Court must focus on “relevant information” and the need for the solicitor to satisfy the Court that no information was given that could be relevant.

23There is no doubt that both the instructions provided for the Condominium transfer and the instructions provided for the Respondent’s will are retainers that are sufficiently related to the intention of the Respondent at the time of the transfer. Mr. Simpson has not satisfied me that no information was given to him which could be relevant to the present dispute for the following reasons:

(i) the Applicant does not state that no confidential information was given in either of her July 20, 2016 or August 24, 2016 affidavits;

(ii) with respect to a key comment the Respondent alleges was made by Mr. Simpson during the Condominium transfer about the meaning of a joint tenancy (para 22 of his affidavit), the Applicant says she does not recall the statement being made;

(iii) Mr. Simpson has not provided an affidavit in these proceedings;

(iv) when considering his March 9, 2016 and March 16, 2016 letters, these are not sworn evidence from Mr. Simpson. Regardless, in the March 9, 2016 letter, Mr. Simpson indicates that he does not have a specific recollection of the details of those meetings;

(v) the evidence before the Court suggests that the joint retainers with Mr. Simpson are in issue and neither the Applicant nor Mr. Simpson have demonstrated clear evidence of what transpired during those retainers;

(vi) it is clear from Mr. Simpson’s March 9, 2016 letter that he is of the view that the Respondent understood the effect of transferring half his interest in the Condominium. He has not satisfied the Court that his conclusions are not based on confidential information.

24I have therefore not been persuaded that Mr. Simpson did not receive confidential information from the Respondent during his previous retainers. He will surely be a witness should the issue of resulting trust proceed to trial. The previous retainers are sufficiently related to this family law dispute and there is risk that the information could be used against the Respondent. As such, the Respondent’s motion to have Bruce Simpson removed as the Applicant’s solicitor of record is granted.

25I also make the following ancillary orders as requested in the Respondent’s Notice of Motion:

(1) Bruce Simpson shall make himself available for questioning in relation to the services he provided to the parties, including the transfer of title of the property municipally known as 555 Brittany Drive, Apt. 403, Ottawa, Ontario K1K 4C5 (“the Property”) on April 8th, 2011, and the drafting of the Respondent’s will;

(2) Bruce Simpson shall produce a full executed copy of the Respondent’s will, together with the entire file relating to this particular retainer, within the next thirty (30) days.

(3) Bruce Simpson shall produce the entire file relating to the transfer of title of the Property, within the next thirty (30) days.

(4) The Applicant shall serve and file a brief setting out all of the consideration she claims to have paid or given for the Property, the boat and the trailer, within thirty (30) days. The alleged consideration shall be accompanied by supporting documents.

(5) The parties shall proceed with a settlement conference, following questioning and the completion of disclosure.

Summary Judgment

26The Applicant seeks summary judgment on the following issues:

(a) That the Respondent pay to the Applicant the sum of $12,500.00, being one half of the proceeds from the sale of a jointly owned trailer that the parties purchased on June 16, 2009, together with pre-judgment interest;

(b) A declaration that the Applicant is a 50% owner of a property registered in the joint names of the parties and known for municipal purposes as Unit 403, 555 Brittany Drive, Ottawa, Ontario, K1K 4C5;

(c) An order that the property referred to in the previous paragraph be listed for sale with a realtor agreed to by the parties or appointed by the Court, and an order that next proceeds of sale be divided equally between the parties, subject to the usual accounting as set out in Mastron v. Cotton, 58 O.L.R. 251, after payment to the Applicant of any monies owing to her from the sale of the boat and payment of the sum of $12,500.00 plus pre-judgment interest as referred to in paragraph 2 (a) above.

27The Applicant’s motion for summary judgment should not have been brought. It was clearly retaliatory.

28The Applicant’s position that she contributed equally to the purchase of the Condominium is clearly an issue for trial. As for the boat and trailer, the evidence seems to be that the Applicant was a co-owner since the date of purchase however there are issues as to what contributions were made by the Applicant to the purchase of these assets. These are genuine issues for trial.

29During the motion, counsel for the Applicant conceded as much but asked the Court to use its fact finding powers as found under FLR Rule 16(6.1) to infer that the various payments found at Tab 9(o) of the Applicant’s Affidavit and the other supporting documents filed by the Applicant could lead to a conclusion that the Applicant had made an equal contribution to the purchase of the Condominium, trailer and boat.

30Not only do I disagree, but there is no basis to arrive at such a conclusion on the available evidence. The Applicant could not provide any caselaw to suggest that the various contributions made to ongoing living expenses could defeat a claim for resulting trust or be deemed to be an equal contribution to the Condominium. Further, there is a lack of information surrounding the cheques at Tab 9(o) to allow the Court to know what these cheques were for. Counsel for the Applicant could not even advise the Court if the ScotiaLine Visa account and the joint line of credit on the Condominium were linked.

31While the Court is very familiar with the direction of the SCC in Hryniak v. Mauldin, 2014 SCC 7 and how this decision has been applied in the family law context, there are clearly issues in this matter which require questioning between the parties and a trial. Further, there is a likelihood that viva voce evidence will be required to assess the credibility of the parties. I am unable to conclude that this can be done by way of a mini-trial as permitted by FLR Rule 16(6.2) or that a mini-trial will help narrow the issues.

32If this family law dispute goes to trial, it will likely be a short trial whereby all issues should be dealt with at the same time. However, the parties will have to give serious consideration to merits of going to a trial on these issues given the financial implications of a trial.

33Consequently, the Applicant’s Cross-Motion is dismissed.

Conclusion

34For the reasons set out above, I make the following orders:

a. The Respondent’s motion to have Bruce Simpson removed as the Applicant’s solicitor of record is granted;

b. Bruce Simpson shall make himself available for questioning in relation to the services he provided to the parties, including the transfer of title of the property municipally known as 555 Brittany Drive, Apt. 403, Ottawa, Ontario K1K 4C5 (“the Property”) on April 8th, 2011, and the drafting of the Respondent’s will;

c. Bruce Simpson shall produce a full executed copy of the Respondent’s will, together with the entire file relating to this particular retainer, within the next thirty (30) days;

d. Bruce Simpson shall produce the entire file relating to the transfer of title of the Property, within the next thirty (30) days;

e. The Applicant shall serve and file a brief setting out all of the consideration she claims to have paid or given for the Property, the boat and the trailer, within thirty (30) days. The alleged consideration shall be accompanied by supporting documents;

f. The parties shall proceed with a settlement conference, following questioning and the completion of disclosure;

g. The Applicant’s Cross-Motion is dismissed.

h. On consent, leave is granted to the parties for each to proceed with two hours of questioning.

Costs

35The Respondent has been substantially successful on the Motion and Cross-Motion. If the parties are unable to agree as to the costs of this Motion for Leave to Appeal, the Respondent will have 15 days to provide written costs submissions of a maximum of 3 pages in length excluding attachments. The Applicant will then have 15 days to respond, subject to the same limitations for length of the written submissions.