CITATION: Services Financiers Element v. 1851424 Ontario Incorporated, 2017 ONSC 5224
COURT FILE NO.: CV-15-530398
MOTION HEARD: 20170531
REASONS RELEASED: 20170911
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
Services Financiers Element / Element Financial Corporation
Plaintiff
- and-
1851424 Ontario Incorporated, Ibrahim Basrawi, 1874000 Ontario Limited And Randolph Mendonca
Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL: Thomas Wilson, F (416) 863-4592 for plaintiff
Jonathan Frustaglio F (905) 695-5501 for proposed defendant Xin Tao Chen
RELEASED: September 11, 2017
Reasons for Decision
I. Overview
[1] This motion brought on behalf of a non-party, who has filed an affidavit opposing the granting of a Certificate of Pending Litigation, arises out of a dispute between the parties as to whether or not a counsel presently acting for the plaintiff ought to be barred from continuing to act on the matter. In addition, there is a question as to whether or not his law firm ought also to be prevented from participating in a pending motion seeking a Certificate of Pending Litigation.
[2] For the reasons that follow, I have determined that, while there should be some restriction on the interim involvement of Mr. Fleming, the circumstances of this case do not require a removal of the firm, nor his disengagement for the balance of this action.
[3] This matter originally came before me on June 6 of this year. At that time the parties filed voluminous materials, and I determined to reserve my decision, following a comprehensive argument by both counsel.
[4] On September 1, counsel re-attended seeking at least to have an interim timetable established for purposes such as cross examinations, etc., to facilitate the future progress of the CPL motion.
[5] While my decision on the first motion was under reserve I did schedule a long motion return date of September 26, in the expectation that I would have had my reasons released and a new timetable established before now.
[6] A variety of circumstances have resulted in a delay in issuing my decision. Because this procedural motion was scheduled to come before me on September 1st, I had occasion to reconsider my approach to the pending decision regarding representation.
[7] I am now satisfied that the plaintiff’s position is the correct one and I am therefore, in part for the reasons that follow, denying the motion brought on behalf of the proposed defendant Xin Tao Chen seeking an Order preventing a specific counsel from conducting a cross-examination and an Order requiring Dentons Canada LLP to retain an agent for the cross-examination of the Defendant, Ms. Xin Tao Chen and preventing and member of Dentons Canada LLP from arguing the Plaintiff’s motion.
II. Continuing Representation Permitted
[8] Both counsel presented a large number of authorities having various degrees of relevant to the issues before me. In my view, many of the cases cited on behalf of Ms. Chen motion appear to address situations where a lawyer was acting against his or her present or former client. To the extent the cases cited by Chen may apply to the issue on her motion, I find that in fact present some arguably support Element's position, in that Mr. Fleming is not a necessary or critical witness.
[9] In the result, I have largely the adopted and accepted many of the arguments made by the plaintiff’s counsel. In order to facilitate moving this matter ahead without inordinate delay, I am reproducing portions of the plaintiff’s factum I found particularly helpful to my determination of the issues in this motion.
[10] In arguing the inapplicability of several of the cases put forward by counsel for Ms. Chen, I noted particularly these summaries contained in the factum filed on behalf of the plaintiff (including the factum’s list numbers and comments):
- “Ontario Realty Corp. v. P. Gabriele & Sons Ltd., 2006 CanLII 37844 (ON LRB), [2006] O.J. No. 4497 (SCJ)
Defendants' solicitors had significant and ongoing involvement in the alleged fraudulent transactions of their clients. The solicitors were highly likely to be witnesses at trial with material evidence.
Distinguishable: Mr. Fleming's conduct is not in issue and his evidence is unnecessary.
- Stevens v. Salt, 1995 CanLII 7173 (ON SC), [1995] O.J. No. 813 (Gen. Div.)
Action based on agreement of purchase and sale, which turned on the evidence of solicitors who acted for the parties involved in the transaction. Solicitors for defendants, who were crucial witnesses, restrain from acting as counsel in the action.
Distinguishable: Mr. Fleming has no direct involvement or personal knowledge and is evidence is on necessary.
- Young-Tangjerd v. Official Board of Calvary United Church, [2006] OJ. No. 2162 (SCJ)
Solicitor was a possible material witness at trial: defendant's solicitor was present at a meeting (as a member of the church, not as a solicitor) during which the plaintiff alleged she was being constructively dismissed.
Distinguishable: Mr. Fleming's has no direct
involvement or personal knowledge and his
evidence is unnecessary.
- MacDonald Estate v. Martin, [1990] 3 SCR 123
Junior lawyer acted for the appellant, and then moved to the law firm that represented the respondent.
Irrelevant: this motion does not involve allegations of acting against current or former clients (nor could it)
- Clay-Jen Holdings Ltd. v. Inner Core Corporation et. al., 1983 CarswellOnt 490 (OSC)
Counsel was a necessary witness and swore an affidavit for use on a motion (pertaining to the enforcement of a settlement). Counsel was not permitted to conduct the cross-examination on the affidavit prepared by the opposing party for use on the motion.
Distinguishable: Mr. Fleming's has no direct involvement or personal knowledge and his evidence is unnecessary.”
[11] The above cases are those most analogous to the present matter. Even these authorities, however, are distinguishable inasmuch as it would appear that in each of those cases, the challenged counsel was a material, crucial, or key witness. Such is not the case in the present matter.
III. Plaintiff’s Counsel Should be Permitted to Represent Element on its Motion
[12] In contrast to what much of the factum filed in support of Chen’s Motion addresses, the issue to be determined by this court was whether a partner or associate of a law firm can act as a witness on a motion. There is no debate that it is improper for the deponent on an affidavit to act as counsel and appear on a motion or at trial and rely on his or her own evidence. On my reading of the record, this was never the case here. (see Essa (Township) v. Guergis (sub. nom. Heck v. Royal Bank), 1993 CanLII 8756 (ON SCDC), [1993] O.J. No. 2581 (Ont. Div. Ct.) at paras 18-20.)
[13] I believe the current state of practice in civil litigation in Ontario supports a conclusion that the fact that a partner or associate of a firm has filed an affidavit on a motion (which is not an unusual practice) and has thereby become a witness on that motion, does not, in and of itself, lead to the automatic conclusion that the partner’s law firm must cease to act as lawyers on the matter. When considering the issue, a distinction is drawn between the partner or associate appearing as a witness at trial, versus the partner or associate appearing as a witness on a motion: a stricter approach will be had in the trial context, as compared to the motion context. (see Zesta Engineering Ltd. Cloutier, [2000] O.J. No. 1060 (SCJ) at para. 8.)
[14] Our courts have recognized that the practice in Ontario is that lawyers frequently appear on motions where their colleagues have filed affidavits, even when the matters are controversial and where there has been long and contentious cross-examination on the affidavits.
[15] One of the guiding principles in civil litigation today, is proportionality. If Chen’s position were to be accepted, a significant number of law firms would be subject to the same challenge every time a controversial issue was argued on a motion – something that would become prohibitively expensive, as separate counsel would always need to be retained on such motions. Convenience, cost effectiveness and efficiency are important considerations.
[16] Master MacLeod, as he then was, considered this situation in Mapletoft v. Service et al. [2008] O.J. No. 693 (SCJ). In 2008, prior to the addition of proportionality to the Rules, he summarized the applicable law:
“8. The issue of counsel swearing affidavits is a problematic one and I agree with Mr. Cavanagh's submissions that it should be taken seriously. It is worth taking a moment to describe the problem and the appropriate approach to it.
- In motions court evidence is normally tendered by way of affidavit. As a matter of practical convenience it is not uncommon for affidavits to be sworn by a staff member or by another lawyer in the firm. This practice is followed and permitted for the obvious reason that it would be unnecessarily cumbersome and costly to require routine facts be deposed by the client or by an outside independent source. In some circumstances the first-hand knowledge is peculiar to counsel or the law firm and the knowledge of the client would actually be second hand. This might be true of procedural information such as receipt or service of documents, correspondence, file management or chronology. Convenience, cost effectiveness and efficiency are important considerations. The countervailing concern however is that the practice not be allowed inappropriately in circumstances where counsel becomes a material witness…”
[17] Moreover, the Rules of Professional Conduct adopted by the Law Society of Upper Canada, permit counsel to rely on the affidavits of their partners and associates in support of a motion. While this practice was prohibited by the Canadian Bar Association’s Code of Professional Conduct, lawyers in Ontario are required to abide by the LSUC Rules.
[18] In fact in Essa (Township) v. Guergis (sub. Nom. Heck v. Royal Bank), 1993 CanLII 8756 (ON SCDC), [1993] O.J. No 2581 (Ont. Div. Ct) at paras 20-31, the Divisional Court noted, the LSUC Rules deliberately deleted the prohibition with respect to relying on the affidavit of a partner or associate, as found in the CBA Code. Thus, I am satisfied that the LSUC Rules govern and there is nothing improper in a lawyer filing an affidavit and his or her colleague arguing a motion in instances where the lawyer is not a necessary witness to the motion.
[19] As a general proposition, a lawyer will be removed as counsel on the basis that the lawyer is a witness if the court determines on the evidence that the lawyer is a necessary witness on an important issue and that the appropriate relief is the removal of the lawyer and/or the firm.
[20] In my view, even where a partner/associate is likely to be a witness at trial, the Court should be reluctant to make premature orders preventing solicitors from continuing to act and only do so in the clearest of cases.
[21] However, there is no doubt in my mind in the present case, Mr. Fleming will not be a witness at trial and Chen has not sought to disqualify Dentons from representing Element at trial. It would be an unnecessary waste of time and money to remove Dentons as counsel for the purposes of arguing Element’s Motion. (see MKD Security Awareness & Training Inc. v. Summerville, [2008] O.J. No. 5244 (SCJ) at paras 87-90).
IV. Offers to Mitigate and Moving Forward
[22] Dentons has stated that it is prepared to withdraw, or not rely on, the Fleming Affidavit. An affidavit, once served, can only be withdrawn with consent of the other side or with leave of the Court. Chen has not consented to the withdrawal of the Fleming Affidavit.
[23] Based upon my consideration of all the jurisprudence placed before me by both counsel, I see no reason to deviate from the further guidance of now Justice MacLeod in Mapletoft v. Service, 2008 CarswellOnt 897, where he stated:
a) A partner or associate lawyer or a member of the clerical staff may swear an affidavit identifying productions, answers to undertakings or answers given on discovery. These are simple matters of record, part of the discovery and admissible on a motion pursuant to Rule 39.04. Strictly speaking an affidavit may not be necessary but it may be convenient for the purpose of organizing and identifying the key portions of the evidence. Used in this way, the affidavit would be non- contentious.
b) If it is necessary to rely on the information or belief of counsel with carriage of the file, it is preferable for counsel to swear the affidavit and have other counsel argue the motion. This approach with not be appropriate for highly contentious issues that may form part of the evidence at trial. If the evidence of counsel becomes necessary for trial on a contentious issue, it may be necessary for the client to retain another law firm.
c) Unless the evidence of a lawyer is being tendered as expert testimony on the motion, it is not appropriate for an affidavit to contain legal opinions or argument. Those should be reserved for the factum.
[24] Here the filing of an affidavit from another member of the firm having virtually the same content, is a more than adequate solution.
[25] When I indicated to counsel my intended decision on this issue, counsel prepared a timetable, which I approved that contemplates the CPL motion being argued before me, if still necessary, on November 15, 2017.
[26] I further advised counsel that while I recognized that the September 26 date is no longer practical for a full argument of the CPL motion, given the delays to-date, a further delay ought not be allowed to further prejudice the Plaintiff.
[27] I therefore advised counsel that I would proceed with that motion on the 26 September date, unless an interim order was issued to prevent the property being dealt with pending a final decision on the entitlement to a Certificate of Pending Litigation.
[28] I advised counsel that I was prepared to consider making at that time, an interim CPL in the nature of that recently granted by my colleague Master Pope in another matter. I regard this approach as appropriate in the present matter.
[29] In my recent decision in Sach v. Viola, 2017 ONSC 5202, I observed:
“[4] On the return of the motion various procedural issues were dealt with. In her endorsement Master Pope indicated that she was satisfied that more time “is required for the plaintiffs to respond to this motion and to conduct cross exams.” She also indicated she was satisfied that there was “some evidence from the defendant that may support an order for a CPL."
[5] In particular her written endorsement observes that the plaintiffs had not produced any evidence that they were undertaking “not to dispose or otherwise deal with the property now or after the caution expires”. She also noted that the plaintiffs had listed the property for sale recently and “although counsel advised that the plaintiffs had terminated the listing agreement, there is no evidence to that effect.”
[6] Master Pope went on to issue an “interim CPL” and gave these additional observations:
“I am not satisfied that an interim CPL would affect the plaintiffs anymore than the Caution has. Further, given that the Caution will likely expire before the motion can be heard, and the likelihood that the Caution cannot or will not be renewed again by the Land Registrar, I am granting an interim CPL to the defendant without prejudice to the plaintiffs arguing that the defendant is not entitled to a CPL. There will be no greater onus or burden on the plaintiffs in arguing against the CPL due to the granting of the interim CPL”
[7] This direction appears to me to be an appropriately proportional, interim preservation of the property in dispute, in keeping with the spirit of Rule 45.01 and the guidance of Rule 1.04.”
[30] I have therefore advised counsel that I will proceed on 26 September, unless an interim order has been established to prevent the property being dealt with, pending a final decision on the entitlement to a Certificate of Pending Litigation.
V. Disposition
[31] Thus with respect to the specific issue before me, I am satisfied that the plaintiff’s position is the correct one and I am therefore dismissing the motion brought on behalf of the proposed defendant, Chen.
[32] This decision will allow the establishment of a timetable on a going forward basis. I am doing so on the basis that no review of my decision will be sought.
[33] While recognizing that entitlement, I established, at the most recent hearing before me, a timetable on the assumption that my decision on this motion will remain in force.
[34] At this latest hearing, I directed that there were to be no costs awarded with respect to that attendance on September 1st.
[35] However, the costs of the main motion to block the use of the Fleming affidavit are reserved to the Master ultimately hearing the main CPL motion.
R. 202/DS (original signed)
Master D.E. Short