COURT FILE NO.: CV-17-574181

MOTION HEARD: 20180108

REASONS RELEASED: 20180130

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

SHEILA ALEXANDER and KEITH ALEXANDER

Plaintiffs

• and-

DEBRA ALEXANDER and STEVEN WARSH

Defendants

BEFORE: MASTER M.P. McGRAW

COUNSEL: N. Tourgis Email: ntourgis@srglegal.com -for the Plaintiffs

Y. Pejman Email: yp@friedmans.ca
-for the Defendants Debra Alexander and Steven Warsh as against the Plaintiff Sheila Alexander

R. Malen Email: malen@gsnh.com -for the Defendants Debra Alexander and Steven Warsh as against the Plaintiff Keith Alexander

REASONS RELEASED: January 30, 2018

Reasons For Endorsement

I. Background

Introduction

[1] This is a motion by the Plaintiffs for an order removing Friedman Law Professional Corporation (“FLPC”) as lawyers of record for the Defendants as a result of an alleged conflict of interest arising from FLPC’s prior representation of the Plaintiff Keith Alexander (“Keith”).

[2] This motion arises amid highly contentious litigation involving family members including family law proceedings, multiple commercial proceedings related to family business interests and this action for defamation and counterclaim for damages arising from allegations of sexual, physical and emotional abuse. This motion also involves a unique representation arrangement whereby, in an attempt to avoid a conflict of interest, FLPC purports to act for both Defendants but only in respect of the claims of Keith’s co-Plaintiff, his wife Sheila Alexander (“Sheila”).

The Parties and this Action

[3] Keith and Sheila have been married for over 61 years. Keith is 84 and Sheila is 79. They have 3 daughters: the Defendant Debra Alexander (“Debra”), Denise and Donna. Debra is married to the Defendant Steven Warsh (“Steven”).

[4] The Plaintiffs commenced this action by Statement of Claim dated April 28, 2017 seeking general damages of $1,000,000 and punitive damages of $1,000,000 for defamation as a result of a text message sent by Debra to Keith’s brother, Dennis Alexander (“Dennis”) on December 5, 2016 (the “Text”). In the Text, Debra alleges that Keith sexually abused her as a child; that Sheila was aware of Keith’s sexual abuse; and that Sheila physically and emotionally abused Debra as a child. In the Text, Debra states:

I have always treated you and Nancy with the utmost respect and for you to have done what you did to me demonstrates that you are only out to save your own ass which I totally get when it’s my mother who’s doing the threatening. She’s a very sick woman mentally ill with borderline personality disorder which I’ve come to understand and filled with revenge and jealously from what happened to me with my dad and towards anyone who gets in her way.

I’ve lived my whole life with her abuse and thank God for my bubbies Myrtle and Pauline who gave me the love that my mother couldn’t ever give me or I’d be as fucked up as the rest of my family are. Kay knows how abusive my mother was to me even when I was still a baby because she witnessed it and told me a horrible story which I’d like to tell you. While everyone has [sic] busy demonizing Steven for years, I thank God for Steven as he saw how broken and damaged I was when married and with love and support has encouraged me throughout my 10 years of traumatic self discovery that has culminated in finally being able to unblock the horrible memories that I’ve been too ashamed to speak about to anyone until a few months ago but I’ve been haunted by it my whole life!......and would stay perfectly still and quiet just like my father told me to when he would sneak into my bedroom when I was 4 until around 7. It was only after he started his affair with Gail did he stop and then protected me from my mother. Maybe you can remember how I would never want to go home when I was at your house because my mother abused me. Dennis, you can make a real difference now if you act from your heart from now on and we can put this behind us or you can continue to keep up your charade and let this get worse. I’d like to think that you really do have a conscience and all those years that you said that you loved me I’d like to believe you again but sadly right now I don’t trust you because of what you’ve done……..I’d like to tell you everything that I now know so you can hear the truth from my mouth and not from the mouths of all those sick twisted family of mine not to mention that lying piece of scum ‘partner’ of mine Sam. If you were ever Gord’s buddy you’d think you’d want to make sure that me and his kids get what he busted his balls for which is Jetco. Sam and Joanne are thieves!.....Gord was the president of Jetco and owned 89% which he gave me in lieu of spousal support when we divorced but my father stole those shares from me and tucked them away in his and my mother’s numbered company and now Sam and my father in their affidavits that he was only a worker. What a crock of shit! He also suffered for 25 years and was broken and abused by my parents. So who are you Dennis? My father’s and mother’s snake or are you a mensch with a heart? I always thought you were the latter but only you can say….”

[5] The Plaintiffs also allege that Steven told two of Keith’s nieces that Keith sexually abused Debra. The Plaintiffs allege that Debra’s allegations in the Text are false and that the incidents never took place.

[6] The Plaintiffs allege that the Text was concocted and published by Debra and Steven to extort a settlement from the Plaintiffs in a commercial application (the “Jetco Application”) commenced by Debra against, Keith and Sheila, among others, with respect to her interest in Jetco Inc. (“Jetco”), the Alexander family business; and 2 actions involving Three Dees Management Ltd. (“Three Dees”) a company owned by Debra, Donna and Denise (the “Three Dees Actions”). The Plaintiffs further allege that the Text was intended to obtain the support of Dennis and Saul Alexander (“Saul”), Keith’s and Dennis’ brother, in the Jetco Application and the Three Dees Actions.

[7] In the Text, “Gord” is Gordon Verk (“Gordon”), Debra’s ex-husband and the former President of Jetco, and “Sam” is Sam Gogas (“Sam”), Jetco’s Controller and the owner of the remaining 11% of Jetco through a holding company. These proceedings are discussed in detail below.

[8] The Defendants retained Robert Malen of Goldman Sloan Nash & Haber LLP (“GSNH”) to represent them in this action. On June 2, 2017, GSNH served a Notice of Intent to Defend (the “NOI”) on behalf of the Defendants. On July 12, 2017, GSNH served a Statement of Defence and Counterclaim to Keith’s claim only.

[9] On July 19, 2017, FLPC served the Defendants’ Statement of Defence and Counterlcaim to Sheila’s claim only in which Debra pleads and relies on the defence of justification, alleging that Sheila physically, mentally and emotionally causing her to suffer from Post-Traumatic Stress Syndrome and depression. Debra states that the alleged sexual abuse by Keith is addressed in her separate Statement of Defence to Keith’s claim served by GSNH.

[10] On or about July 24, 2017, FLPC served and filed a Notice of Change of Solicitors in which FLPC purports to act for the Defendants as against Sheila only with GSNH acting for the Defendants as against Keith only. Under this arrangement, that the Defendants would have different counsel against each of the Plaintiffs.

[11] In her Counterclaim, Debra claims damages of $2,000,000 against Sheila for personal injury for physical assaults and $2,000,000 for intentional infliction of mental injury and psychological distress resulting from physical and mental abuse abuse (in both cases, Debra seeks $750,000 in general damages; $750,000 in aggravated damages and $500,000 in punitive and aggravated damages). Debra also claims $500,000 for defamation.

The [Family Application](https://www.canlii.org/en/on/laws/stat/rso-1990-c-f3/latest/rso-1990-c-f3.html)

[12] On or about April 19, 2015, Keith suffered a minor stroke while in Florida. Shortly after, Keith and Sheila separated. On June 2, 2015, Keith suffered a massive stroke in Toronto leaving him paralyzed on his left side, confined to a wheelchair and with impaired speech and swallowing.

[13] In or about August 2015, after Keith was moved to Bridgeport Hospital (“Bridgeport”) for rehabilitation, Keith retained FLPC to, among other things, represent him in an Application commenced by Sheila under the Family Law Act (Ontario) (the “Family Application”). Keith was referred to FLPC by Steven who has a longstanding relationship with William Friedman and FLPC. Sharon Hamilton of FLPC was Keith’s lawyer of record in the Family Application.

[14] On September 12, 2015, Sheila commenced the Family Application seeking a preservation order, spousal support and a division of net family property. In his Answer, Keith sought a restraining order, equalization of net family property and the sale of family property. On October 6, 2015, Justice Horkins granted an Order, among other things, preserving all property.

[15] Sheila and Keith reconciled prior to the first case conference scheduled for November 16, 2015 and FLCP’s retainer was terminated. In the 4 months that FLPC represented Keith, FLPC prepared Keith’s responding materials to the Family Application including Keith’s Answer, responding affidavit and Financial Statement and reviewed his will, powers of attorney and the corporate records of various companies associated with Keith and his financial interests. Over 1 year later, Keith commenced proceedings against FLPC to have its fees assessed.

[16] In Sheila’s affidavit sworn September 29, 2015 filed in the Family Application (“Sheila’s Affidavit”), she states the following:

i.) she believes that Debra and Steve and Debra’s 2 daughters from her marriage to Gordon estranged themselves from the family and isolated Keith in order to take advantage of Keith’s failing physical and mental health for their own financial gain including orchestrating and manipulating Keith and his separation from Sheila and does not believe that Keith has the capacity to decide to separate;

ii.) she believes that Debra and Steven hired Mr. Friedman and FLPC on Keith’s behalf given Steven’s relationship with FLPC including FLPC’s representation of Steven as litigation guardian for his father in proceedings against Steven’s step-mother;

iii.) in a letter dated August 25, 2015, Saul Muskat, Keith’s former accountant, resigned as Keith’s Power of Attorney for Property and as Trustee of The Gordon Verk Family Trust, stating: “In the last thirty days, I have watched you turn on various family members, including your wife……Keith, I have already told you that it appears to me that you are being manipulated by your daughter Debra and her husband Steven;”

iv.) approximately 1 week before his stroke in June 2015, Donna advised Sheila that Keith complained that he did not trust Steven and that Debra and Steven were looking for additional funds from him;

v.) a guard was hired, she believes at Debra’s request, to prevent Sheila, Denise and Donna from visiting Keith at Bridgeport;

vi.) prior to his scheduled discharge from Bridgeport, Debra arranged for Keith to be moved to Living Life, a residential facility in Toronto, without consulting a social worker at Bridgeport to assist Keith with choosing the appropriate facility.

[17] In his responding affidavit in the Family Application sworn October 3, 2015 (the “October 2015 Affidavit”), drafted by FLPC, Keith states as follows:

i.) he does not lack capacity, is not being influenced to make financial decisions by Debra or Steven, is not being told by anybody what to do in his marriage, that Sheila’s allegations regarding capacity are being raised “to try to take away my rights to deal with my person and property” and that he decided to separate from her while in Florida because “our situation became intolerable”;

ii.) he believes that Sheila’s allegations about his lack of capacity are a means to keep him out of the picture in order to keep the court from hearing his evidence while Sheila “launches baseless attacks against Debra, who she has long rejected”;

iii.) certain allegations by Sheila in her affidavit are fabricated “as a means of emotional blackmail” and that his “greatest fear was to be disabled and trapped in the condo with Sheila”;

iv.) Sheila would bring friends to Bridgeport who she would encourage to pressure Keith to reconcile with her, which he found exhausting: “I would ask Sheila to leave me alone and she would refuse. I believe it is this kind of stress exerted on me by Sheila that caused my stroke in the first place.”;

v.) he changed his power of attorney for property and executor and trustee of his will to Harley Mintz, Vice-Chairman and Partner at Deloitte as a result of family infighting and because Sheila cancelled their credit line, issued demands on the promissory notes subject to the Three Dees Actions without consulting him “in order to put pressure on Debra for helping me, taken my will, and taken my personal possessions hostage and tried to force me to return to the condo against my will”;

vi.) since he separated from Sheila, Denise, Donna and Donna’s husband Jason Berns have continually harassed him regarding his financial affairs and their interests in his estate and “launched an aggressive smear campaign against Debra and Steven which I believe was intended to intimidate me and force me to change my mind and return to my wife, so that she and they could control me and my financial affairs”;

vii.) Denise made a formal complaint to the police against Debra and Steven of elder abuse “after two months of yelling and grilling me in my hospital bed did not yield the result Sheila, Denise and Donna wanted – to have me return to Sheila”. This complaint led to a police investigation in which Debra and Keith were questioned by police;

viii.) he believes that Sheila and Denise have no concern for his health and welfare “and that their sole consideration is the financial benefit they will receive on my death”, adding “It is a bitter irony to me that they have focused their resentment on my daughter Debra, who has been the only one devoted to caring for me in my recovery. Sheila and Denise portray Debra’s concern for me as a sinister desire to influence me. This is twisted and wrong.”;

ix.) although essentially all of the income from his family business interests is used to support his family “despite my generosity, bitter feelings of jealousy and resentment is the gratitude I have received and what I continue to be exposed to. I believe that this resentment and jealousy is fueled by Sheila.”;

x.) “While I was in hospital, I specifically asked Sheila when she started hating Debra so much, and her reply was “since the day she was born.” I cannot forget this statement.”;

xi.) when he gave Debra and Steven $300,000 pursuant to the promissory notes which are the subject of the Three Dees Actions, he also gave Donna $300,000 as he always treated his children equally. Debra was, as always, upset about him giving funds to his children and Steven insisted that the funds be taken as a loan and interest paid pursuant to promissory notes. However, he never intended on pursuing a demand on the notes because he did not request Donna to repay her funds either and he did not cash post-dated cheques Steven provided for interest payments because he did not want the money and intended the funds to be a gift;

xii.) he refused to return home with Sheila because he “could no longer tolerate her endless criticism and bitterness directed towards me, her children, and others around her. She does not listen to me or recognize my needs…..When I asked her to bring me my wallet, watch, bracelet and ring, she refused on the basis that she believed Debra would steal it”;

xiii.) it was his decision to move to Living Life and to hire the security guard because Sheila and others would not listen to him when he told them to leave or that their aggressive behavior was unwanted and stressful. After the guard was hired, Sheila began to call him repeatedly and had her lawyer write to Living Life asserting that Keith was incapable and any lease that he signed would be void;

xiv.) Sheila also made unwanted visits to the hospital and Living Life where she and others continued to harass Keith and cause scenes, therefore, he instructed Ms. Hamilton to send a letter requesting that Sheila, Donna and Denise not visit on his birthday, requested that the police contact Donna and Denise and had Ms. Hamilton send a Notice of Trespass to Sheila and others to permit him to contact the police for assistance if they visited without his express permission;

xv.) mutual friends of Keith and Sheila advised Debra that they did not visit him on his birthday because Sheila threatened that she would never speak with them again if they did;

xvi.) he denies that he complained about Debra and Steve to Donna.

The Three Dees Actions

[18] On November 18, 2015, Three Dees, a holding company which owns the building where Jetco is located, commenced the Three Dees Actions: i.) one against D. Alexander Holdings Limited (“DAHL”), owned by Debra and Steven, for payment of $200,000 plus interest pursuant to a promissory note dated May 24, 2013; and ii) another against Steven for payment of $100,000 plus interest pursuant to a promissory note dated March 13, 2014 (together, the 2 promissory notes are referred to as the “Notes”). GSNH are lawyers of record for DAHL and Steven in the Three Dees Actions.

[19] In his Statement of Defence dated September 6, 2016, Steven, citing the October 2015 Affidavit and Keith’s capacity assessment report dated October 2, 2015, claims that the funds advanced under the Notes were gifts from Keith; Sheila had no authority to issue demands under the Notes and only did so to hurt Debra; and that Keith only resiled from his October 2015 Affidavit because he reconciled with Sheila.

The Jetco Application

[20] Jetco is a corporation located in Toronto which manufactures indoor and outdoor seating including chairs and barstools. Keith and Sheila founded Jetco’s predecessor company around the time of their marriage.

[21] Until on or about March 22, 2016, Debra received dividends, salary and other benefits from Jetco for approximately 30 years. She estimates that these benefits totaled approximately $120,000 annually, were her sole source of income and the shares her only assets other than her home.

[22] Gordon was employed by Jetco, including as President, for almost 25 years. Pursuant to a separation agreement dated March 27, 2007 (the “Separation Agreement”), Debra agreed to forego spousal support and to an equalization payment in exchange for Gordon transferring all of his shares in Jetco which he held through 1012375 Ontario Inc. (“101”) a holding company which owns 89% of Jetco, giving Debra 100% of the shares of 101 and through 101, 89% of Jetco.

[23] By letter dated February 19, 2016, Sam, on behalf of Jetco, advised Debra that as of March 22, 2016, Jetco would be terminating all payments and benefits including her health insurance, leased vehicle and cellphone. Debra was later advised by Jetco’s counsel that the termination of her payments and benefits were for the benefit of Jetco given that Debra was not an officer, director, security holder or creditor of Jetco, provided no services which would entitle her to compensation as an employee and past payments were gratuitous and authorized by Keith.

[24] On April 14, 2016, Debra commenced the Jetco Application against Jetco, Keith, Sheila, Sam, 101, 530414 Ontario Inc. (“530”) a company owned and controlled by Keith and Debra which purports to control 101 and therefore, Jetco, the Debra Alexander Family Trust and the Gordon Verk Family Trust. In the Jetco Application, Debra seeks, among other things, various oppression remedies; an interim and permanent order directing Jetco to continue providing Debra with her payments and benefits and judgment for unpaid amounts; an order transferring the shares representing 89% ownership of Jetco; damages of $500,000 for wrongful dismissal; and punitive damages of $200,000. GSNH are Debra’s lawyers of record in the Jetco Application.

[25] In support of the Jetco Application, Debra cites Keith’s statements in the October 2015 Affidavit that the funds advanced under the Notes were a gift. She also alleges that: Sheila and other family members manipulated Keith to reconcile with Sheila; the Three Dees Actions reflect Sheila’s continued jealousy and resentment against her and Steven; and Debra has turned Debra’s sisters against her and remains committed to ensuring that Debra is ostracized by Keith and other family members. Debra further alleges that the termination of Debra’s payments and benefits is oppressive in the context of “the vendetta being waged against her by Sheila, there being no legitimate corporate reason for doing so”.

[26] In response to the Jetco Application, Keith filed an affidavit sworn June 6, 2016 (the “June 2016 Affidavit”) in which he states:

“I understand that I signed a document that is an affidavit on October 3, 2015. I did not read that affidavit prior to signing it but it may have been read to me. When documents were provided to me to sign by Mr. Friedman and Ms. Hamilton, I was often tired and it was late at night. Although they may have tried to tell me what documents were about, I, given my condition, did not fully understand what they said to me, nor was I made aware of what was to be accomplished by such documents. At all times I was being pressured by my daughter Debra and her husband Steven. Mr. Friedman and Ms. Hamilton I was told were their lawyers and that I should use them.”

[27] On November 21, 2016, Debra brought a motion in the Jetco Application for a declaration that, by his statements in the June 2016 Affidavit, Keith had waived solicitor-client privilege with respect to his communications with Mr. Friedman and Ms. Hamilton when he swore the October 2015 Affidavit and an order under Rule 39.03 that Mr. Friedman and Ms. Hamilton be examined or otherwise disclose the circumstances under which the October 2015 Affidavit was prepared. In her Notice of Motion, Debra states that Keith “has blamed his previous lawyers for having him sign an affidavit that he did not read and that he did not understand, late at night and at a time when he was tired….He further brings the veracity of the October 2015 Affidavit into issue by alleging that Mr. Friedman and Ms. Hamilton permitted Debra and Steven to exert undue influence upon him.” Most of the issues raised by Debra on the Rule 39.03 motion relate to the Notes which are the subject of the Three Dees Action.

[28] Pursuant his Endorsement dated November 21, 2016, Justice Penny held that a waiver of privilege had occurred, limited to Keith’s state of mind in connection with the preparation and execution of the October 2015 Affidavit as it relates only to the Notes. Justice Penny also ordered that Mr. Friedman and Ms. Hamilton be examined as witnesses on a pending application under Rule 39.03.

[29] At pages 7-8 of his Endorsement, Justice Penny states:

“Keith has put his state of mind when reviewing and signing the October 3 Affidavit in issue…..Keith has, in trying to disclaim his sworn statement of October 3, 2015, opened the door to enquiry of what his lawyers said to him about these documents and whether they explained it to him and whether he appeared to understand what was being said and to understand the content and purpose of the document itself.

The issue is relevant because issue has been joined on the point in this proceeding. Debra says Keith never intended to collect on these notes, and relies on his sworn statement to this effect from October 3, 2015. Keith now says he did not know what he was signing and seeks to nullify the evidentiary effect of his October 3 Affidavit.”

[30] In her affidavit sworn February 26, 2017 (the “February 2017 Affidavit”) delivered in her Reply and Supplementary Record in the Jetco Application, Debra repeats the allegations made in the Text.

[31] On October 5, 2017, Mr. Friedman was examined by Mr. Malen on behalf of Debra and by Ms. Tourgis on behalf of the Respondents in the Jetco Application. Ms. Hamilton’s examination by Mr. Malen started but was adjourned and has not been completed.

II. The Law and Analysis

[32] The Plaintiffs submit that FLPC is in a conflict of interest and should be removed as lawyers of record for Debra and Steven as against Sheila in this action as a result of, among other things, FLPC’s previous representation of Keith in the Family Application,

[33] In Canadian National Railway Company v. McKercher LLP, 2013 SCC 39, the Supreme Court held that a lawyer, and by extension a law firm, owes a duty of loyalty to clients. This duty has three salient dimensions: (1) a duty to avoid conflicting interests; (2) a duty of commitment to the client's cause; and (3) a duty of candour (McKercher at para.19).

[34] At paragraph 13 of 1298781 Ontario Inc. et al v. Levine et al., Master McAfee, citing the leading case of MacDonald Estate v. Martin, 1990 CanLII 32 (SCC), [1990] 3 S.C.R. 1235, stated that the principal issue on a motion for removal of counsel is the balancing of 3 competing values: i.) the maintenance of high standards of the legal profession and the integrity of our system of justice; ii.) the right of a litigant to its choice of counsel, which he or she should not be deprived of without good cause; and iii.) the desirability to permit mobility in the legal profession. The most important and compelling value is the integrity of our system of justice (MacDonald Estate at para. 58; Levine at para. 15).

[35] In Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2010 ONCA 788, the Court of Appeal held that a lawyer’s duty of loyalty is not premised on or confined to confidentiality obligations, but flows from a broader concept of fidelity that is essential to the proper functioning of the solicitor-client relationship. Doherty J.A. stated at para. 22 of Consulate Ventures:

“Clients must be able to speak frankly and without fear of exposure to their lawyers about their legal problems. To do so, clients must be confident that their lawyers will not become their adversaries' lawyers at some subsequent point in the course of the same dispute. The prospect of one's lawyer switching sides must undermine the confidence essential to the operation of the client/solicitor relationship. There is also concern that if lawyers act against former clients in the same manner, the public confidence in the integrity of the legal profession will suffer. That confidence is crucial to the effective and just administration of justice.”

[36] Disqualification of counsel may be required: (1) to avoid the risk of improper use of confidential information; (2) to avoid the risk of impaired representation; and/or (3) to maintain the repute of the administration of justice (McKercher at para. 61).

[37] The test to be applied in determining if counsel should be disqualified based on a conflict of interest is whether the reasonably informed person would be satisfied that no use of confidential information would occur (MacDonald Estate at para. 44). Typically, two questions must be answered: (1) did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? and (2) is there a risk that it will be used to the prejudice of the client? (MacDonald Estate at para. 44).

[38] With respect to the first question, the Supreme Court stated at paragraph 46 of MacDonald Estate:

“… once it is shown by the client that there existed a previous relationship which is sufficiently related to the 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. Not only must the court's degree of satisfaction be such that it would withstand the scrutiny of the reasonably informed member of the public that no such information passed, but the burden must be discharged without revealing the specifics of the privileged communication.”

[39] In Chapters Inc. v. Davies, Ward & Beck LLP, 2001 CanLII 24189 (ON CA), [2001] O.J. No. 206 (C.A.), the Court of Appeal provided further guidance on the first question at paragraphs 29-30:

“the onus of showing the two retainers to be sufficiently related rests with the client asserting the conflict of interest. It is also clear that it is not enough for that client to rest on a bald assertion that the retainers are sufficiently related. There must be clear and cogent evidence from which the court can reach that conclusion.

….There may be cases in which a simple description of the two retainers shows them to be so closely connected that the court will infer the possible misuse of confidential information and hence find the retainers to be sufficiently related. More commonly, as in this case, an outline of the nature of the confidential information passed to the lawyer pursuant to the first retainer will be needed. In the end, the client must demonstrate that the possibility of relevant confidential information having been acquired is realistic not just theoretical. For the court to find that the retainers are sufficiently related it must conclude that in all the circumstances it is reasonably possible that the lawyer acquired confidential information pursuant to the first retainer that could be relevant to the current matter.”

[40] With respect to the second question, the Supreme Court has provided the following guidance:

“A lawyer who has relevant confidential information cannot act against his client or former client. In such a case the disqualification is automatic. No assurances or undertakings not to use the information will avail. The lawyer cannot compartmentalize his or her mind so as to screen out what has been gleaned from the client and what was acquired elsewhere. Furthermore, there would be a danger that the lawyer would avoid use of information acquired legitimately because it might be perceived to have come from the client. This would prevent the lawyer from adequately representing the new client. Moreover, the former client would feel at a disadvantage. Questions put in cross-examination about personal matters, for example, would create the uneasy feeling that they had their genesis in the previous relationship.” (MacDonald Estate at para. 47)

[41] Applying the above factors to the present case, in my view, the Plaintiffs have provided sufficient cogent evidence to establish that it is reasonably possible that FLPC acquired confidential information from Keith during the Family Application which could be relevant to FLPC’s representation of Debra and Steven in this action.

[42] The October 2015 Affidavit prepared by FLPC demonstrates that FLPC acquired confidential information on a wide range of issues during the course of its retainer in the Family Application including with respect to complex and inter-related family and business disputes. At that time, Keith was embroiled in ongoing disputes with Sheila, Donna and Denise over his separation, business interests and alleged undue influence by Debra and Steven all while recovering from a massive stroke which left him partially paralyzed.

[43] Keith’s vulnerability at the time of FLPC’s retainer is underlined by the fact that many of these issues played themselves out at his bedside at Bridgeport and Living Life and he now alleges that he was being pressured by Debra and Steve who he says told him to retain FLPC. He also alleges that he did not read the October 2015 Affidavit and did not understand the nature and purpose of documents provided to him by Mr. Friedman and Ms. Hamilton.

[44] Sheila’s alleged conduct towards Debra and Keith is discussed in great detail in the October 2015 Affidavit, including Sheila’s long term resentment, rejection, jealousy and smear campaign towards Debra and the fact that Sheila allegedly told Keith she hated Debra since her birth. The October 2015 Affidavit also includes significant discussion of Sheila’s alleged harassment of Keith to the extent that he attributes his stroke to the stress she caused and prohibited her from visiting, hiring a security guard and enlisting the assistance of the police to do so. The October 2015 Affidavit also responds in detail to the allegations in Sheila’s affidavit including Debra’s alleged elder abuse of Keith which resulted in a police investigation.

[45] The Defendants submit that there is no reasonable possibility that FLPC acquired confidential information which may be relevant to this action because the alleged abuse set out in the Text was not disclosed or discussed during the course of FLPC’s representation of Keith in the Family Application. This submission is inconsistent with the content of the October 2015 Affidavit, the Text and the pleadings in this action.

[46] In their Statement of Defence and Counterclaim, Debra and Steven plead and rely on the defence of justification such that they allege that the allegations and statements in the Text are true. Further, in Debra’s Counterclaim, she claims damages on the basis that the abuse alleged in the Text occurred.

[47] At paragraph 10 of the Statement of Defence and Counterclaim, the Defendants state:

“10. Sheila made Debra the object of jealousy, vindictiveness and hatred causing Debra various mental health problems.”

[48] Sheila’s alleged hatred of Debra dating back to her childhood, in addition to her ongoing, historical jealousy and resentment of Debra, is addressed in the October 2015 Affidavit. Further, there are references to Sheila’s treatment of Debra as “sinister” and her actions against Keith as “emotional blackmail”. All of this leads to the conclusion that Keith likely discussed these issues with Mr. Friedman and/or Ms. Hamilton.

[49] The relevance of these issues to this action is reflected in Debra’s repeating of many of the same allegations in the Text which are repeated again in the Statement of Defence and Counterclaim including Debra’s allegations that Keith and Sheila “stole” her shares in Jetco and that Sheila’s vendetta against her continues through the termination of her payments from Jetco and the Three Dees Actions. Debra has also repeated the allegations from the Text in the February 2017 Affidavit in the Jetco Application. Accordingly, I conclude that there is sufficient evidence that FLPC acquired confidential information during the Family Application which may be relevant to its representation of Debra and Steve with respect the abuse allegations in this action.

[50] The Defendants argue that the abuse allegations against Keith and Sheila are separate and distinct and not inter-dependent. This includes the fact that the alleged physical and emotional abuse occurred over a considerable number of years while the alleged sexual abuse occurred over a 3-year period during Debra’s early childhood. Therefore, the Defendants submit that as the distinct sexual abuse allegations against Keith were not raised until after their retainer was terminated and since, out an abundance of caution, FLPC is only representing the Defendants against Sheila, not Keith, there is no reasonable possibility that FLPC acquired relevant confidential information. In my view, these submissions ignore the evidence before me and oversimplify the serious, sensitive and complex matters at issue in this action and on this motion.

[51] The Defendants’ assertion that the alleged abuse by Sheila and Keith are separate and distinct claims is contradicted by the Text itself. Debra alleges in the Text that underlying Sheila’s treatment of her and others is that Sheila is “a very sick woman mentally ill with borderline personality disorder which I’ve come to understand and filled with revenge and jealously from what happened to me with my dad and towards anyone who gets in her way.” The Defendants do not dispute that the words “what happened to me with my dad” is a reference to Keith’s alleged sexual abuse. Therefore, in her own words, Debra attributes Sheila’s resentment, revenge and jealousy to Sheila’s knowledge of Keith’s alleged sexual abuse.

[52] Therefore, contrary to the Defendants’ submissions, it is not possible for FLPC to represent the Defendants with respect to the abuse allegations against Sheila without also addressing the abuse allegations against Keith. I also arrive at this conclusion based on the evidence of the long history of tumultuous relations between Sheila, Debra and Keith and the nature and sensitivity of the serious, overlapping allegations between them. In doing so, I reject the Defendants’ attempts to impose temporal and other finite and artificial limits and boundaries on these serious and sensitive abuse allegations in an attempt to explain away FLPC’s conflict of interest.

[53] With respect to the Defendants’ proposed representation arrangements, the Defendants have not provided any legal authority to support the proposition that it is permissible or even possible for FLPC and GSNH to act for the same Defendants but as against different Plaintiffs in the same action. The Defendants are unable to provide any Rule or case law which supports such an arrangement, nor can the Defendants explain how this might work in practice. In my view, even if it were possible to deal with the Plaintiffs’ claims separately, the Defendants’ proposal would appear to effectively impose bifurcation on the Plaintiffs without the Plaintiffs’ consent or bringing a motion for bifurcation under Rule 6.1.01.

[54] When questioned as to how FLPC and GSNH would, among other things, examine Keith and Sheila on discovery or, more generally, ensure that any privileged and confidential information would not pass between the two sets of lawyers, Defendants’ counsel could only state that it could be managed. The Defendants have not provided a draft discovery plan or affidavit evidence to demonstrate how this might be accomplished. Therefore, even if this representation arrangement was permissible, and even if the claims could be separated, I am not satisfied that having FLPC and GSNH both represent the Defendants as against one Plaintiff each would be a sufficient or appropriate safeguard to permit FLPC to act in this action.

[55] Even if I accept the Defendants’ submissions that there is no reasonable possibility that FLPC obtained relevant confidential information regarding the abuse allegations, given the nature, scope and number of the allegations and issues raised in the October 2015 Affidavit, the Family Application, the Text and the pleadings, I conclude that it is also reasonably possible that FLPC obtained confidential information which could be relevant to other issues in this action.

[56] As set out above, the disputes over Keith’s, Sheila’s and Debra’s respective family business interests are all raised and discussed in the October 2015 Affidavit, the Family Application, the Text and the pleadings, including issues regarding the Notes giving rise to the Three Dees Action. This includes the Plaintiffs’ allegations at paragraphs 13 and 15 of the Statement of Claim that one of Debra’s purposes in sending the Text was to extort a settlement from Keith and Sheila in the Jetco Application and the Three Dees Actions and to obtain the support of Dennis and Saul in the Jetco Application and the Three Dees Action.

[57] Further, in the Text, Debra references the business disputes including her ownership claim in Jetco and statements in Keith’s and Sam’s affidavits filed in the Jetco Application. Many of these same issues are canvassed in the October 2015 Affidavit, including references to Sheila’s conduct with respect to the Notes, her alleged desire to control Keith’s financial interests and to exclude Debra and Steven. This further demonstrates that it is reasonable to conclude that FLPC acquired confidential information during the Family Application which may be relevant to this action.

[58] Further, at paragraph 29 of the Statement of Defence and Counterclaim, Debra pleads the following in support of her counterclaim for defamation:

“29. On numerous occasions and times known to the plaintiffs and not known to Debra, Sheila has defamed Debra by stating to family members, their friends, and members and staff at Maple Downs Golf and Country Club located in Maple, Ontario, that: Debra and Steven (as well as Debra’s daughters) manipulated Keith to steal family assets and to steal his Rolls Royce, that she altered legal documents in order to steal other assets, that she has stolen jewelry and vehicles, that she committed elder abuse, that she’s a liar and that she attempted to convince Keith to divorce Sheila.”

[59] Debra goes on to claim at paragraphs 30-31 that Sheila’s alleged statements were maliciously false, amount to slander and were published with actual malice including for the improper purpose of causing Debra “great emotional injury and distress”. Again, the allegations of elder abuse, alteration of legal documents and manipulation of Keith are all referenced in the October 2015 Affidavit.

[60] Further complicating FLPC’s representation of the Defendants, Keith alleges in the June 2016 Affidavit that he did not understand the October 2015 Affidavit or the nature and purpose of other documents, that he was told by Debra and Steven to retain FLPC and that FLPC permitted him to be unduly influenced by Debra and Steven, the very parties FLPC purports to represent in this action. These allegations ultimately led to Justice Penny’s Order and Endorsement and the examination of Mr. Friedman and Ms. Hamilton in the Jetco Application.

[61] The Plaintiffs submit that the examination of Mr. Friedman and Ms. Hamilton in the Jetco Application is independent grounds for FLPC’s removal on the basis that they are witnesses in these proceedings. However, while there is a potential that Mr. Friedman and Ms. Hamilton may become witnesses in this action, I cannot conclude that it is likely at this time. If there is some doubt or "merely a potential" that a lawyer will be called as a witness at trial, the courts should be more generous in allowing the lawyer to remain on the record and deferring the matter until after discoveries or leaving the matter to the trial judge (Mazinani v. Bindoo, 2013 ONSC 4744 at para. 60). Where neither party has indicated a clear intention to call the lawyer as their witness, the motion to remove on that basis is premature, although the issue can be revisited should the likelihood of the lawyer testifying change (Forsyth v. Blue Rock Wealth Management Inc., 2015 ONSC 6666 at para. 34.). Therefore, I reject this as an independent basis for FLPC’s removal.

[62] However, the fact that Debra brought a successful motion in the Jetco Application to compel FLPC to disclose privileged communications with Keith regarding his state of mind around the time that FLPC prepared the October 2015 Affidavit is relevant to this motion. In my view, this further demonstrates that relevant privileged information which FLPC acquired in the Family Application could be relevant to this action, given that many of the issues, including Keith’s state of mind and Keith’s statements in the October 2015 Affidavit which are relevant in the Jetco Application and the Three Dees Actions may also be relevant to this action.

[63] Having considered all of the above factors and circumstances, I conclude that, in addition to the Plaintiffs establishing that FLPC’s two retainers are sufficiently related and that it is reasonably possible that FLPC acquired relevant confidential information, the Defendants have not discharged their burden of demonstrating that FLPC did not acquire relevant confidential information from its representation of Keith in the Family Application which may be relevant to this action. Having concluded that FLPC acquired confidential information which may be relevant to this action, FLPC’s disqualification as counsel for the Defendants as against Sheila automatically follows.

[64] In my view, FLPC’s disqualification as counsel for the Defendants is also consistent with a balancing of the broader values and principles which apply to a removal motion including FLPC’s duty of loyalty to Keith and the maintenance of high standards of the legal profession and the integrity of our system of justice. In order to have confidence in their lawyers and the legal profession, clients must be able to speak frankly without fear that their lawyers will become their adversaries’ lawyers.

[65] While, unlike the situation in Consulate Ventures, FLPC is not proposing to act against Keith in the same dispute, in my view, the principles enunciated by Doherty J.A. in that case are applicable to the present circumstances. There are serious, complex, overlapping and wide-ranging allegations which are or may be relevant between the Family Application and this action. This is in addition to the Jetco Application and the Three Dees Action, and in the context of Keith’s allegations that he did not understand the nature and purpose of the October 2015 Affidavit and other documents provided to him by FLPC and that they permitted him to be unduly influenced by Debra and Steven, the very parties who FLPC would be representing in this action who he alleges told him to retain FLPC in the first place. These same Defendants have also moved for and obtained access to solicitor-client communications related to FLPC’s previous retainer for Keith, including on evidence which may be relevant across all of these proceedings.

[66] In all of these circumstances, I conclude that to permit FLPC to act for the Defendants would undermine the high standards of the legal profession and the confidence that former clients like Keith must have when fully and frankly disclosing the nature of their legal disputes. The need to protect these standards and the related values is further pronounced in circumstances like the present case with multiple contentious proceedings, serious and complex allegations and allegations of incapacity and failure of the former client to understand key evidence and documents related to the previous retainer.

[67] In balancing these values, I further conclude that the Defendants’ right to be represented by their counsel of choice is not at risk. The Defendants’ initially retained GSNH to represent them as against both Plaintiffs in this action and GSNH continues to represent Debra, Steven and DAHL in the Jetco Application and the Three Dees Actions. As such, the Defendants have counsel of their choice other than FLPC able and available to represent them in this action.

[68] Having considered all of the factors and circumstances set out above and balanced the competing values, I conclude that a fair-minded reasonably informed member of the public would conclude that the proper administration of justice requires the removal of FLPC as Defendants’ counsel as against Sheila.

III. Disposition

[69] Order to go removing FLPC as lawyers of record for the Defendants as against Sheila.

[70] If the parties cannot agree on costs, they may file written costs submissions not to exceed 3 pages (excluding costs outlines) with me through the Masters Administration Office on or before April 6, 2018.

Released: January 30, 2018

Master M.P. McGraw