Gloger v. Evans
Ontario Reports Ontario Superior Court of Justice Vallee J. August 16, 2018 143 O.R. (3d) 73 | 2018 ONSC 4919
Case Summary
Professions — Barristers and solicitors — Conflict of interest — Father's will naming plaintiff and defendant as trustees — Plaintiff suing to remove defendant as trustee for alleged misconduct — Plaintiff moving to remove law firm as counsel for defendant on basis that law firm had disqualifying conflict of interest as it had prepared father's will in 2010 — Motion dismissed — Any information provided to law firm by father for preparation of 2010 will not relevant to issues in action.
G retained a law firm, SE, to prepare his will in 2010. The will named his children, the plaintiff and the defendant, as trustees, and the estate was divided equally between them. The plaintiff subsequently brought an action to remove the defendant as a trustee based on alleged misconduct involving misappropriation of assets and breach of fiduciary duty. The defendant was represented by SE. The plaintiff brought a motion to remove SE as counsel on the basis of a disqualifying conflict of interest.
Held, the motion should be dismissed.
The plaintiff himself did not provide any confidential information to SE. Any information provided to SE by G when he gave instructions for the preparation of his 2010 will was not relevant to the issues in this action.
MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, [1990] S.C.J. No. 41, 77 D.L.R. (4th) 249, 121 N.R. 1, [1991] 1 W.W.R. 705, J.E. 91-85, 70 Man. R. (2d) 241, 48 C.P.C. (2d) 113, EYB 1990-68602, 24 A.C.W.S. (3d) 553, apld
Other cases referred to Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291, [2004] O.J. No. 2634, 188 O.A.C. 201, 48 C.P.C. (5th) 56, 132 A.C.W.S. (3d) 15 (C.A.); Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., [2010] O.J. No. 4996, 2010 ONCA 788, 97 C.P.C. (6th) 16, 270 O.A.C. 182, 195 A.C.W.S. (3d) 331; Essa (Township) v. Guergis (1993), 15 O.R. (3d) 573, [1993] O.J. No. 2581, 22 C.P.C. (3d) 63, 52 C.P.R. (3d) 372 (Div. Ct.); Goldberg v. Goldberg, [1982] O.J. No. 1412, 141 D.L.R. (3d) 133, 31 R.F.L. (2d) 453; Khataan v. Kozman (c.o.b. College Medical Group), [1997] O.J. No. 3104, 41 O.T.C. 42 (Gen. Div.); Robinson Estate v. Robinson (2011), 106 O.R. (3d) 321, [2011] O.J. No. 3084, 2011 ONCA 493, 7 C.P.C. (7th) 231, 282 O.A.C. 189, 67 E.T.R. (3d) 175, 337 D.L.R. (4th) 193, 204 A.C.W.S. (3d) 217
Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 39.02(4)(b)
MOTION by the plaintiff to remove the law firm as counsel for the defendant.
Hans Klohn and Evelyn Contino, for moving party/plaintiff/defendant by counterclaim. Chris Salazar, for responding party/defendant/plaintiff by counterclaim.
VALLEE J.: —
Nature of the Motion
1The plaintiff brings a motion to remove the law firm of Stewart Esten ("SE") as counsel for the defendant.
2Otillie and Jochen Gloger, whose children are the parties to this action, retained SE to prepare their wills. Otillie passed away first, after which Jochen retained Andrew Zyp of SE to prepare a survivorship application regarding their property. Jochen subsequently passed away. His will named both the plaintiff and the defendant as trustees. His estate was divided evenly between the two of them after payment of the typical expenses and obligations.
3In this action, the plaintiff seeks to have the defendant removed as a trustee based on allegations such as misappropriation of assets and breach of fiduciary duty. The defendant retained Christopher Salazar of SE to represent her in the litigation. The plaintiff alleges that the firm cannot represent the defendant because there are several conflicts of interest. Furthermore, such representation would undermine public confidence in the administration of justice.
The Test
4Both parties rely on MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, [1990] S.C.J. No. 41, 1990 CarswellMan 233. In MacDonald, in para. 45, the court stated"[t]ypically, these cases require two questions to be answered: (1) Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? (2) Is there a risk that it will be used to the prejudice of the client?"
5The court also commented on the overriding policy. Because prejudice is difficult to prove"the test much be such that the public, represented by the reasonably informed person would be satisfied that no use of confidential information would occur . . . [This] must inform the court in answering the question: Is there a disqualifying conflict of interest?" (See MacDonald, para. 44.)
Issues to be Determined
6Did SE receive confidential information from Jochen Gloger, attributable to a solicitor-client relationship relevant to the matter at hand when he provided instructions for the preparation of this will?
7If such information was received, is there a risk that it will be used to the prejudice of the plaintiff in this litigation?
The Plaintiff's Position
8The plaintiff states that after his father passed away, on January 16, 2015, he and the defendant contacted SE to have the estate administered. He states that they retained Mr. Zyp. 1 Specifically, the plaintiff states that he had a telephone conversation with a SE staff member who advised him that Mr. Zyp had drafted an updated will for his father that was never signed.
9A dispute arose between the parties. Three days later, the plaintiff retained Peter Chin of Chin and Orr on January 19, 2015. The defendant retained Mr. Stewart of the law firm of Stewart House. 2
10The plaintiff states that his counsel, Peter Chin, sent a letter to SE dated January 19, 2015, to the attention of Linda Orr, who was a clerk at SE, 3 to advise that he had been retained. The letter requested that all work on the estate cease. Mr. Chin requested copies of Otillie and Jochen Gloger's wills, among other things. Mr. Zyp sent a responding letter dated January 20, 2015. He enclosed copies of the wills. He stated that SE was the solicitor for the estate and would require advice and a direction from both trustees instructing it to release the original documentation to the new estate solicitors if the firm was not to continue acting. He commented that the defendant had advised that she intended to contact counsel in St. Catharines. He noted that because there was a dispute between the executors, neither party's solicitor should act as estate solicitor. He concluded by stating that the firm was prepared to continue to act as estate solicitor"taking action only when instructed by both executors in accordance with their respective solicitor's advice and agreement".
11The plaintiff states that the defendant retained Mr. Stewart on January 22, 2015, who has been her counsel for approximately three years. She retained Mr. Salazar of SE on May 1, 2018. This was confirmed by a notice of change of lawyer.
12The plaintiff states that SE prepared his father's will in 2010. This gives rise to a conflict of interest. In Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., [2010] O.J. No. 4996, 2010 ONCA 788, the court stated, in para. 22, that a law firm owes a duty of loyalty to a former client. "[C]lients must be confident that their lawyers will not become their adversaries' lawyers at some subsequent point in the course of the same dispute."
13The plaintiff states that Mr. Zyp and Mr. Salazar continue to work at SE. SE ought to be removed as solicitor of record for the defendant for several reasons. Mr. Zyp will be called as a witness at trial. It would not be fair for SE to represent one party because it would have information regarding the drafting of the father's will. SE is privy to this information. The plaintiff is not. Mr. Salazar may be required to cross-examine Mr. Zyp, a lawyer at his own firm. This would be highly inappropriate.
14There is a real risk that confidential information disclosed to Mr. Zyp related to the matter of drafting the wills could be used against the plaintiff to his prejudice. Permitting Mr. Salazar to continue as solicitor of record for the defendant would be severely prejudicial to the plaintiff's case. There is a presumption that lawyers at a firm share confidences. The plaintiff alleges that Mr. Zyp took notes with respect to a new will which was not signed. There may be significant evidence in those notes. The plaintiff has not seen them. The plaintiff cannot access them while Mr. Salazar is counsel. If there is evidence that someone dies while he is in the process of changing his will, it is relevant.
15Although Jochen Gloger passed away in 2015, the proceedings are still at an early stage. An easy and quick solution to this issue would be for the defendant to retain new counsel. Mr. Salazar has represented her for only three months.
16The plaintiff states that his confidence in the legal profession would be seriously eroded if Mr. Salazar of SE is allowed to remain on the record as solicitor for the defendant. On the whole of the circumstances, the public's confidence in the legal system would be undermined if SE were permitted to continue to represent the defendant.
17The plaintiff states that the optics of the situation are bad. It is unfair that SE is now representing the defendant in this dispute when it was his father's solicitor for the preparation of his will. A reasonable person looking at this would consider it to undermine public confidence in the administration of justice.
18According to Goldberg v. Goldberg, [1982] O.J. No. 1412, public interest outweighs a person's choice of counsel. The court stated, in para. 7, that"when the public interest is involved, the appearance of impropriety overrides any private interests claimed by waiver". 4
19In Khataan v. Kozman (c.o.b. College Medical Group), [1997] O.J. No. 3104, 41 O.T.C. 42 (Gen. Div.), the court noted that one of the witnesses was the defendant's solicitor's partner. An undertaking had been given to call the partner as a witness. In para. 8, the court commented"[A]t some point in the future, the relationship between defence counsel and the witness will lead to at least the appearance that the high standards of the legal profession are not being observed."
20The plaintiff states that the parties retained SE briefly, for three days, three years ago. Although Mr. Zyp states that he was not retained by them, he might not remember.
Analysis
Did SE receive confidential information from Jochen Gloger, attributable to a solicitor-client relationship relevant to the matter at hand, when he provided instructions for the preparation of this will?
21Mr. Zyp swore an affidavit in this matter. In it, he states that he reviewed the relevant file. There are no notes after 2010. There is no further will. The plaintiff did not cross-examine Mr. Zyp on this affidavit. There is nothing in the statement of claim about an unsigned will or any instructions for it. No relief is claimed relating to it.
22The plaintiff states that he may call Mr. Zyp as a witness at trial. Based on his affidavit, it seems that Mr. Zyp will testify that there was no second will. Even if there was one, the estate is being administered under the father's 2010 will. There is no challenge to this will. It is hard to see how any notes with respect to an alleged unsigned second will could be relevant to this action.
23As noted above, in Consulate Ventures, the court stated that a law firm owes a duty of loyalty to a former client. The client must be sure that the lawyer will not become his adversary's lawyer. At its best, the plaintiff's evidence is that he and the defendant initially retained SE and then, three days later, he retained Chin and Orr. Mr. Zyp's evidence is that he was never retained by the plaintiff. I accept this evidence. The plaintiff never met with Mr. Zyp. He states that he had a telephone conversation with a man at SE while the defendant listened to the call; however, he could not say who this person was, nor did he know the person's occupation. The plaintiff stated that he did not sign a retainer agreement nor did he provide a retainer. He sent a letter to a law clerk. I find that the plaintiff did not retain SE. He is not a former client. Even if he was, on his cross-examination, he stated that he did not provide any confidential information to SE.
24The plaintiff states that Jochen Gloger provided confidential information. It is hard to see how any instructions that Mr. Gloger provided for his 2010 will, which named both the plaintiff and the defendant as trustees, is relevant to this action regarding alleged trustee misconduct.
25In Robinson Estate v. Robinson (2011), 106 O.R. (3d) 321, [2011] O.J. No. 3084, 2011 ONCA 493, at para. 28, the court stated that a will speaks for itself. The testator's intentions and instructions are not relevant unless the will is ambiguous. I accept the defendant's argument that this will is not ambiguous. The testator had two children and left his estate to both of them. The will is not being challenged. It is illogical to leave a will intact, then raise an issue regarding the testator's intentions.
26In Essa (Township) v. Guergis (1993), 15 O.R. (3d) 573, [1993] O.J. No. 2581, 1993 CarswellOnt 473 (Div. Ct.), at paras. 43 and 44, the court stated that premature orders should not be made. The parties should wait until there is certain to be a problem. The motives of a party who is attempting to remove the other party's counsel are not always pure. The court should consider the right of the client to be represented by counsel of choice and take a flexible approach.
27By his own admission, the plaintiff did not provide confidential information to SE. I find that any information that Mr. Gloger provided to SE for the preparation of his 2010 will is not relevant to the issues in this action which concerns alleged trustee misconduct. Accordingly, I do not need to consider the second step of the test.
Conclusion
28The plaintiff's motion is dismissed.
Costs
29The defendant provided a costs outline for partial indemnity fees of $11,565.99 plus disbursements and HST totalling $13,668.71. Cross-examinations were held. The defendant states that a transcript of the plaintiff's evidence was required. The defendant relied on this evidence. A factum was prepared. Counsel states that this matter was extremely important to the defendant. Counsel attended court for the whole day because this matter was heard last.
30The plaintiff submits that $8,000 would be an appropriate amount for the defendant's fees. Rule 39.02(4)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 states that a party who cross-examines is responsible for the costs of every adverse party in respect of a cross-examination, regardless of the outcome in the proceeding, unless the court orders otherwise.
31The plaintiff did not provide a costs outline. Accordingly, his costs on the cross-examination cannot be determined. It appears that the defendant's costs relating to the cross-examination were approximately $2,200 in fees and $811 in disbursements plus HST.
32I note that the purpose of rule 39.02(4)(b) is to cut down on the number of cross-examinations on affidavits unless there is a valid and reasonable reason for them. Here, on his cross-examination, the plaintiff stated that he did not provide any confidential information to SE. This was important evidence on the motion. I find that given the nature of the motion, there was a valid and reasonable reason for the cross-examination of the plaintiff. Accordingly, the cost of the cross-examination is properly included in the defendant's fees.
33Taking into account the principles expressed in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.) and considering an amount that is fair, reasonable, proportionate and within the parties' expectations, I fix costs in the amount of $13,668.71 to be paid by the plaintiff to the defendant within 30 days.
Motion dismissed.
Notes
1 He provided an account which indicated that the plaintiff had advised him that the father had passed away and probate would be required.
2 There is no relationship between SE and Mr. Stewart of Stewart House.
3 There is no connection between Linda Orr and law firm of Chin and Orr.
4 In this family law case, the wife, who owned shares of the management company related to her husband's dental practice. The court stated that her conduct during the negotiation of the sale of her interest to the husband cannot constitute a waiver as submitted to the court.