Andersson v. Aquino, 2018 ONSC 852

Court File and Parties

COURT FILE NO.: 2511-17

DATE: 2018/02/05

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DAN ANDERSSON and LEO CANADA INC. Plaintiffs

AND:

GERALDINE AQUINO (aka GERALDINE BORROMEO) and ATIF KAMRAN Defendants

BEFORE: Justice I.F. Leach

COUNSEL: Michael Polvere, for the plaintiffs Edward L. Marrocco, for the defendant Geraldine Aquino (aka Geraldine Borromeo) John Downing and Jack Masterman, for the defendant Atif Kamran

HEARD: January 31, 2018

ENDORSEMENT

Introduction

1I recently had occasion to provide an extended account of the background to this complex commercial litigation, including an overview of apparent party positions and the numerous motions that have been brought to date. See Andersson v. Aquino, 2018 ONSC 811.

2That information accordingly will not be replicated here. This endorsement should instead be read in conjunction with that earlier one, in order to provide the necessary context for this further decision.

3My immediate focus now is the motion brought by the defendant Mr Kamran, (supported by the defendant Ms Aquino), for an order removing Siskinds LLP as counsel of record for the plaintiffs, and compelling Siskinds LLP to search for and produce specified documents.

4In that regard, the defendants argue:

• that ongoing involvement of Siskinds LLP in this matter as litigation counsel for either of the plaintiffs clearly raises unacceptable conflict of interest concerns, which include but are not limited to "lawyer as witness" issues;
• that related conflict of interest concerns, as well as fundamental principles of corporate law applicable to such disputes, require LEO Canada, (if it remains a party to the litigation), to have litigation counsel separate and distinct from that of the competing shareholders or would-be shareholders; and
• that Siskinds LLP, as corporate counsel to LEO Canada, should be required to locate and produce documents, said to be relevant to the current dispute, that likely would have been disclosed already had it not been for such conflict of interest concerns.

5In response, the plaintiffs say:

• that there are no manifest or significant conflict of interest concerns raised by Siskinds LLP continuing to represent the plaintiffs;
• that the raising of such concerns at this stage of the litigation is entirely premature;
• that this motion is purely tactical on the part of the defendants, who merely wish to inconvenience and prejudice the plaintiffs by depriving them of their counsel of choice, and putting the plaintiffs to the additional expense of retaining new counsel not already familiar with the matter, while further delaying progress of the plaintiffs' motion for injunctive relief;
• that such demonstrable prejudice to the plaintiffs outweighs any possible conflict of interest concerns; and
• that the documentary disclosure sought by the defendants, in advance of discovery, is premature and inappropriate.

6For the reasons that follow, I generally agree with the position of the defendants.

7In particular, I believe the conflict of interest concerns raised by the motion are significant, have merit, and necessitate the removal of Siskinds LLP as counsel of record for any party in this litigation. I also think it clear that LEO Canada should have representation separate from that of Mr Andersson.

8However, while I agree that measures are necessary to ensure proper documentary disclosure from Siskinds LLP as soon as possible, I also think it appropriate to take a somewhat different approach, to that end, than the relief requested by the motion.

Conflict of Interest and Lawyer Removal – General Principles

9In support of their respective positions, Mr Kamran and the plaintiffs provided me with numerous authorities dealing with motions to remove a party's counsel of record, based on suggested conflict of interest concerns.

10I have reviewed and considered them all.

11One of those authorities was my own decision in Rice v. Smith, 2013 ONSC 1200, [2013] O.J. No. 784 (S.C.J.), in which I had occasion to review a wide range of authorities dealing with such matters, and made a concerted effort to consolidate applicable principles for ease of reference. In that regard:

• a number of earlier authorities, relied upon by the plaintiffs, were expressly cited and relied upon by me in Rice v. Smith;¹
• a number of subsequent authorities, relied upon by the defendants, expressly cited and relied upon Rice v. Smith;²
• a "noting up" of Rice v. Smith, using the "QuickCITE" feature of LexisNexis, indicates that it has been cited or mentioned by 11 subsequent cases without disagreement;
• my review of the remaining authorities relied upon by the parties suggests no inconsistency with the principles I outlined in Rice v. Smith, supra; and
• in the course of oral submissions before me, defence and plaintiff counsel both expressly agreed that my Rice v. Smith outline of applicable principles was and remained accurate, and that the parties simply dispute whether and how principles I outlined in Rice v. Smith should be applied to the facts of this case.

12In the circumstances, it hopefully will not be regarded as hubris if, in the interests of providing the parties with a decision on this motion that all require as soon as possible, (e.g., to minimize consequential delays associated with each plaintiff's necessary retention and briefing of new counsel), I simply repeat and rely upon my Rice v. Smith summary of the general principles applicable to conflict of interest and lawyer removal.

13As I noted in that earlier decision, our courts repeatedly have emphasized the right of litigants not to be deprived of their counsel of choice without good cause.

14In particular, deprivation of preferred counsel imposes inherent hardship on a litigant, and such relief therefore should be ordered only where it is necessary to prevent the imposition of a more serious injustice, and the risk of real mischief.³

15However, the courts' respect for preferred representation is tempered by ongoing concern to maintain the high standards of the legal profession and the integrity of the justice system, and this includes the courts' inherent jurisdiction to remove from the record lawyers who have a conflict of interest.⁴

16In the exercise of that jurisdiction, courts are not bound by the codes of professional conduct to which lawyers must adhere. However, those codes reflect centuries of experience, are persuasive, and their importance has been recognized by the Supreme Court of Canada.⁵

17One specific conflict of interest concern, (identified by almost identical provisions and commentaries in the codes of professional conduct adopted by the Canadian Bar Association and the Law Society of Upper Canada – now the Law Society of Ontario), is addressed by the long-established prohibition on a lawyer simultaneously acting as counsel and witness. In particular, a "lawyer must not in effect become an unsworn witness or put the lawyer's credibility in issue", and the "lawyer who is a necessary witness should testify and entrust the conduct of the case to someone else".⁶

18The particular conflict of interest prohibition dealing with "lawyer as witness" is intended to prevent the inevitable conflict of interest a lawyer otherwise would have between the duty owed to his or her client, and duties of independence otherwise owed to others, especially the Court.⁷ In particular, lawyers are independent officers of the court, and a trial judge must be able to rely upon counsel for a high degree of objectivity and detachment. That fundamental relationship is compromised, and the administration of justice and integrity of the system accordingly are undermined, where the objectivity and credibility of counsel necessarily are subjected to challenge in the course of determining the substantive merits of an underlying dispute.⁸

19However, rather than approach the general "lawyer as witness" conflict of interest concern and prohibition as an absolute rule, our courts adopt a flexible approach and consider each case on its own merits, having regard to a variety of factors that, according to the circumstances of the case, may include the following:

a. the stage of the proceedings; b. the likelihood that the witness will be called; c. the good faith (or otherwise) of the party making the application; d. the significance of the evidence to be led; e. the impact of removing counsel on the party's right to be represented by counsel of choice; f. whether trial is by judge or jury; g. the likelihood of a real conflict arising or that the evidence will be "tainted"; h. who will call the witness; and i. the connection or relationship between counsel, the prospective witness and the parties involved in the litigation.⁹

20The above principles focus on "lawyer as witness" conflict of interest concerns.

21More generally, however, lawyers must not place themselves in any situation, or act or continue to act in a matter, where there is or is likely to be a conflicting interest. This includes situations where a lawyer owes conflicting duties of representation and confidentiality to parties on both sides of a legal dispute.¹⁰

22Of course, there are many varied circumstances in which such concerns might arise.

23However, authorities repeatedly have identified corporate shareholder disputes as situations involving inherent conflicts of interest that effectively restrict a lawyer's ability to extend joint representation.

24In particular, as emphasized by the professional codes of conduct, a lawyer representing a corporate organization must remember at all times that the corporation has a legal personality distinct from its individual directors and shareholders, and that those interests may very well diverge, thereby preventing a lawyer's continued involvement in an internal corporate dispute.¹¹

25In matters of legal representation, it accordingly is a fundamental error to regard a corporation as being synonymous with its majority directors and shareholders.

26Doing so almost inevitably leads to a corporate lawyer's disregard of obligations owed to the corporate body and structure as a whole, in favour of a particular corporate faction. Most notably, the corporate lawyer effectively may ignore his or her obligation to seek litigation instructions from the corporation's entire board of directors, and/or the lawyer's corresponding obligation to share otherwise confidential and privileged litigation information with all of the corporation's directors.

27It also ignores possible and probable distinctions between the interests of the corporation and such a majority. For example, where conduct of the director or shareholder majority is the real focus of a litigation dispute with a director or shareholding minority, (rather than any conduct of the corporation per se), corporate payment of the majority's legal representation benefits the majority directors and shareholders but not the corporation. It also results in a situation where the minority shareholders effectively are being compelled to pay, at least in part, the legal fees of opposing legal counsel.

28The above concerns have been highlighted in numerous cases emphasizing a lawyer's inability to jointly represent both a corporation and individual majority directors and shareholders in litigation focused on an internal corporate dispute.¹²

29The following comments from Mottershead v. Burdwood Bay Settlement Co., supra, at paragraphs 8-10, (expressly cited with approval by a number of the Ontario authorities noted above)¹³, exemplify the underlying concerns and conflict of interest rationale for restricting and preventing such joint representation:

In my view, it is clear that Mr Davies and his law firm are in a conflict of interest. As corporate solicitor and counsel for the Company, Mr Davies' duty is to the Company; as counsel for the three personal defendants, who are also the majority shareholders, his duty is to those individuals. The best interests of the Company are not necessarily those of the majority shareholders and directors. The Company is a separate legal entity and it is no answer for Mr Davies to say that his instructions are from the individual majority shareholders as personal defendants are one and the same as those instructions which they provide as majority directors of the Company. The duty of the solicitor for the Company is to advise all of the directors so that they may make an informed decision as a board with respect to the interests of the Company.

In shareholder litigation, there exists a potential conflict of interest between the personal interests of the individual parties both plaintiffs and defendants as shareholders and their fiduciary duties as directors of the Company. A solicitor acting both for the majority shareholders and for the Company on the sole basis of the instructions of that same majority personifies that conflict.

Moreover, a solicitor owes a duty of confidentiality to his or her client and information received from the majority shareholders in their capacity as personal defendants would be privileged. Surely a conflict arises when that solicitor receives privileged information in his capacity as solicitor for the majority shareholder defendants and declines to advise the board of directors which includes the minority shareholders of that information notwithstanding his role as corporate solicitor and counsel for the defendant Company.

[Emphasis added.]

30In the same case, the court expressly noted, in paragraph 14, the following examples of "an actual conflict of interest, and not simply the appearance of a conflict", arising from such joint representation:

a. payment of the majority shareholders' legal costs as a corporate expense effectively then assessed against all of the corporation's shares; b. provision of legal opinions to the majority shareholders and not to the minority shareholders, who are also directors; and c. refusal to disclose litigation-related documents and information to minority directors and shareholders of the corporation, on the basis of purported solicitor-client privilege.

31Where such conflict of interest concerns arise, the proper course is to require legal representation for the corporation, (if such representation is required), that is separate and distinct from the legal representation of the majority directors and shareholders. Ideally, such representation should be chosen independently of the litigating individuals. However, if no agreement in that regard is possible, and no acceptable means is found to make such an appointment, any shareholder should be given leave to make an appropriate application to the court. Similarly, if no means is found whereby corporate counsel may be properly instructed, the lawyer or lawyers in question may apply to the court for instructions.¹⁴

Application – Siskinds LLP as "Lawyer and Witness"

32As noted above, I believe the conflict of interest concerns raised by the motion are significant, have merit, and necessitate the removal of Siskinds LLP as counsel of record for any party in this litigation. In my view, that is the result dictated by a balancing of the various considerations outlined in paragraph 19, supra.

33Before turning to those factors, I think it bears repeating, as I emphasized, in Rice v. Smith, supra, that a lawyer or law firm's ability to represent a client in litigation is not necessarily precluded by that lawyer or firm merely having a degree of prior involvement and familiarity with that client's affairs, including developments giving rise to the particular dispute to be litigated.

34Parties regularly act on the recommendations and advice of lawyers, who frequently communicate decisions made and positions adopted by their clients. Corporations, in particular, routinely rely on corporate counsel to assist in the orderly and proper management of the corporation's affairs; e.g., to assist directors and shareholders, (usually lay persons), in understanding corporate law governing what fundamentally is an artificial entity permitted, created and governed by that law.

35Lawyer involvement in that sense does not necessarily disqualify continued lawyer involvement if a dispute evolves into formal litigation. Otherwise, a great many litigants automatically would be deprived of their preferred legal representation, in which they have invested considerable time and expense.

36For similar reasons, the simple fact that a lawyer or law firm may have represented a corporate client in previous unrelated litigation does not preclude the lawyer or law firm from accepting a similar litigation retainer.

37However, the situation is different when disputes as to what that lawyer or law firm may or may not have done or witnessed lie at the substantive heart of a litigation dispute between the parties, and/or when evidence of that lawyer or firm realistically may be very relevant, necessary and/or decisive in resolving critical and contentious factual issues.

38In my view, that is the case here.

39To cite but a few non-exhaustive and rather obvious examples, giving rise to what I regard as significant "lawyer as witness" and corresponding conflict of interest concerns:

i. In relation to the power of attorney for property ("POA") granted by Mr Andersson to Ms Aquino:

• Party filings in relation to the plaintiffs' outstanding injunction motion, and counsel submission, make it clear that there are serious and fundamental disagreements in this litigation as to the scope of authority granted by that POA, and the proper manner in which that granted authority was to be exercised. In particular:
  • The defendants say that the POA was intended to permit Ms Aquino's valid and binding execution of documents on behalf of Mr Andersson as a shareholder in LEO Canada – and that Ms Aquino accordingly had authority pursuant to the POA to validly execute the share transfer and issue documentation prepared and forwarded to her by Siskinds LLP in the autumn of 2016.
  • As clarified and confirmed by Mr Polvere during the course of arguing this motion before me, the position of the plaintiffs in this litigation is that Ms Aquino's execution of that share transfer and issue documentation not only violated her duties as a fiduciary, (insofar as any authority properly delegated by the POA was exercised improperly to benefit Ms Aquino personally), but also that the scope of authority delegated by the relevant POA never extended, in any event, to Ms Aquino's execution of documents on behalf of Mr Andersson as a shareholder.
• However, numerous emails from September and October of 2014, (at or about the time of LEO Canada's creation and long before the current dispute ever materialized), have been filed in evidence by Ms Aquino. They contain communications between her and Peter Dillon, (a partner at Siskinds LLP providing corporate law advice and services), relating to the initial shareholding arrangements of LEO Canada, the preparation of documents by Siskinds LLP, and the execution of documents by Mr Andersson and Ms Aquino in their capacity as shareholders. In the course of those communications, questions arose as to whether the POA already provided by Mr Andersson to Ms Aquino, (and not prepared by Siskinds LLP), provided sufficient legal authority for Ms Aquino to execute such documents on behalf of Mr Andersson as a shareholder. Mr Dillon was provided with a copy of the relevant power of attorney, apparently reviewed and considered it, and in his capacity as corporate counsel for LEO Canada, eventually provided a written indication and opinion on October 1, 2014, that "the POA is fine and covers off Dan's signature as a shareholder".
• Moreover, although shareholders normally would not be entitled to usurp and execute the decision making authority of directors, further emails and documentation filed in evidence by Ms Aquino confirm that Mr Dillon prepared and supplied her with a Unanimous Shareholders Agreement ("USA") for LEO Canada, in October of 2014, whereby the authority of the corporation's directors was "wholly restricted with the effect that each of them will have no rights, powers or duties whatsoever as Directors of the Corporation". Furthermore, pursuant to the same USA, the shareholders of LEO Canada formally assumed "all rights, powers, duties, obligations and liabilities of the Directors". Following execution of the USA, (including its execution on behalf of Mr Andersson as a shareholder by Ms Aquino using the POA), it was the expressed written opinion of Mr Dillon, on October 14, 2014, that Ms Aquino "in effect" thereafter could "sign everything" relating to the affairs of LEO Canada
• If the combined effect of the POA and USA did effectively confer legal authority on Ms Aquino to "sign anything" on behalf of Mr Andersson as a shareholder, and on behalf of shareholders in LEO Canada exercising authority normally reserved to directors, that would suggest that Ms Aquino had authority to sign documentation, prepared later by Siskinds LLP and supplied to Ms Aquino, transferring half of Mr Andersson's shares in LEO Canada to Mr Kamran and authorizing the issue of a further four shares in LEO Canada to Ms Aquino. Indeed, the documentation prepared by Siskinds LLP to effect the contemplated transfer and issue of shares expressly contemplated that it would be executed by Ms Aquino for herself personally, and by Ms Aquino on Mr Andersson's behalf using the POA.¹⁵
• In short, the explicit and implicit non-litigious opinion of Siskinds LLP corporate counsel in the autumn of 2014 and the autumn of 2016 seems to be in direct conflict with the litigious opinion of Siskinds LLP as litigation counsel in 2017. That reality in turn suggests the possibility that earlier non-partisan views of Siskinds LLP are being influenced by the partisan aspects of the litigation retainer subsequently accepted by Siskinds LLP in relation to this matter.
• Moreover, in determining contentious issues concerning the scope of Ms Aquino's legal authority to execute documents relating to LEO Canada, (on behalf of Mr Andersson as a shareholder and on behalf of all shareholders pursuant to the USA), and the true intention of the parties in that regard before the present dispute erupted, Mr Dillon seems likely to be an important witness.

ii. In relation to the documentation relied upon by the plaintiffs to support their contention that valid measures were taken to terminate Ms Aquino's position as a director of LEO Canada, and appoint Peter Dillon as a director in her place:

• As noted in my earlier endorsement, such steps were taken in March of 2017, in the wake of a falling out between Mr Andersson and Ms Aquino.
• In that regard, there apparently was no effort made to remove Ms Aquino as a director and elect Mr Dillon as a new director at any meeting of LEO Canada's shareholders, called on proper notice for that purpose. Reliance instead apparently was placed on the alternative method of effecting such changes; i.e., a unanimous written resolution of the shareholders. In particular:
  • Reliance was placed on a corporate document prepared by Siskinds LLP, and executed by Mr Andersson on or about March 15, 2017.
  • The document, (put forward by the plaintiffs as exhibit "S" to the affidavit sworn by Mr Andersson in support of the plaintiffs' injunction motion), purports to remove Ms Aquino as a director of the corporation, and elect Mr Dillon as a new director of the corporation.
  • The document, entitled "Resolution of the Shareholder", (emphasis added), purports to be a written resolution "consented to by the sole shareholder of the corporation entitled to vote thereon at a meeting of shareholders", (emphasis added).
• Whether or not that document was effective to remove Ms Aquino as a director of LEO Canada, and elect Mr Dillon as a director in her place, is a contentious issue. In particular, the defendants emphasize that, even on the theory of the case advanced by the plaintiffs, Ms Aquino has at all times held at least one share in the corporation – as Mr Andersson and Mr Dillon knew or should have known on March 15, 2017. On its face, at least, the legal document prepared by Siskinds LLP therefore arguably was neither accurate nor effective in accomplishing its intended purpose; i.e., such that Ms Aquino remained both a shareholder and a director of LEO Canada, (despite her improper termination and/or associated improper demands for confirmation of her resignation), and Mr Dillon never became a director of the corporation.
• In my view, corporate counsel at Siskinds LLP involved in preparation of such documentation to terminate Ms Aquino are not only relevant witnesses in relation to what was done or attempted in relation to termination of Ms Aquino as a director of LEO Canada, but there clearly are multiple divergent interests Siskinds LLP is attempting to represent in that regard as litigation counsel. In particular:
  • As a corporation, LEO Canada clearly has an interest in ensuring that all of its affairs are conducted in full compliance with corporate law, that all of its directors retain their office unless and until they are removed in compliance with that law, and that no one purports to speak or act as a director of the corporation unless and until they are properly elected to that status. If the "Resolution of the Shareholder" document was deficient or indeed fatally flawed, (e.g., insofar as it may have proceeded on an incorrect premise that it was executed by all of the corporation's shareholders), LEO Canada accordingly has an interest in having the invalidity of the document declared and confirmed as soon as possible.
  • That ostensible corporate interest of LEO Canada does not coincide with the interests of those who may wish to assert and defend the validity of the aforesaid "Resolution of the Shareholder" document executed on March 15, 2017, despite its possible deficiencies and its ostensible fundamental flaw. For example, Mr Andersson, as a partisan litigant, no doubt wants to ensure that Ms Aquino's ongoing status as a director of LEO Canada is rejected. Mr Dillon, as a putative director of LEO Canada, has a personal interest in seeing his status as a director recognized and respected. Siskinds LLP. Mr Dillon, as corporate counsel, has an interest in defending the propriety and effectiveness of the legal advice and work he performed in relation to preparation and execution of the "Resolution of the Shareholder" document – on which further legal advice, premised on a valid termination of Ms Aquino as a director of LEO Canada, may have been premised. (In that regard, I note that valid termination of Ms Aquino as a director apparently is an issue not only in this litigation, but in separate litigation commenced by LEO Canada and Mr Andersson against Ms Aquino.) All members of Siskinds LLP, including members of its litigation department, have a similar interest in defending the legal advice provided and legal work performed by Mr Dillon.

iii. In relation to the share transfer and issue documents relied upon by the defendants, in support of their position that they now hold a majority of shares in LEO Canada, and accordingly took perfectly proper and valid steps to appoint themselves as additional directors of the company:

• There is a fundamental issue as to whether Mr Andersson provided instructions for preparation of that documentation by Siskinds LLP, and/or was aware of its preparation and contemplated execution prior to Mr Kamran delivering notice, on or about October 20, 2017, of a "Special Meeting of Shareholders" scheduled for October 31, 2017. In that regard:
  • The plaintiffs allege that Ms Aquino fraudulently and unilaterally instructed Siskinds LLP to prepare the share transfer and issue documentation, without the involvement or approval of Mr Andersson, and without his being provided with any notice in that regard. For example, in his affidavit evidence¹⁶, Mr Andersson swears:
    • that "in September, 2016, Aquino issued instructions to Peter Dillon" to effect the transaction;
    • that Mr Andersson "was unaware that Aquino made [that] request";
    • that Mr Andersson "can confirm … that [he] did not authorize Aquino as [his] Power of Attorney to instruct Siskinds to effect any transfers of my shares to Kamran or to issue any further shares with respect to LEO Canada";
    • that Siskinds prepared the share transfer and issue documents "acting only on Aquino's instructions";
    • that Mr Kamran's notice of a Special Meeting of Shareholders came "suddenly and without warning"; and
    • that Mr Andersson was "shocked by [that] claim from Kamran that he was a shareholder of LEO Canada".
  • The defendants allege that Mr Andersson was fully aware of the contemplated share transfer and issuance, and that Siskinds LLP prepared the documents to effect those transactions on Mr Andersson's instructions. For example, in her affidavit evidence¹⁷, Ms Aquino swears:
    • that the relevant share transfer and issue was carried out "further to Mr Andersson's direction, and with Mr Dillon's assistance";
    • that, as reflected in retained and provided emails she exchanged with Mr Dillon in September of 2016, he was the one who initially followed up with her regarding the contemplated share transfer and issue arrangements; and
    • that Mr Andersson "was at all times aware" of the intended transaction, as reflected in ongoing discussions involving Mr Andersson as she and Mr Dillon were finalizing the transfer and issue documents, and her taking of further directions from Mr Andersson prior to execution of the documents provided by Mr Dillon.
  • The defendants emphasize evidence from Mr Andersson's cross-examination confirming that he communicated frequently with Mr Dillon and other lawyers at Siskinds LLP about matters relating to LEO Canada, including numerous telephone conversations with Mr Dillon;
  • The defendants also emphasize evidence indicating that, consistent with such communications, Mr Dillon attempted to copy Dan Andersson with the email sent to Ms Aquino on September 23, 2016, attaching the relevant share transfer and issue documents, but inadvertently copied it instead to an another individual with the first name Dan, ("Dan Hong"), who has "nothing to do with LEO". During the course of Mr Andersson's cross-examination, further questions about whether and how Mr Dillon may have discovered or been advised of the inadvertent email error, and made further contemporaneous efforts to supply Mr Andersson with copies of the share transfer and issue documentation as intended, were refused. However, the defendants will ask the court to infer that Mr Dillon not only was keeping Mr Andersson informed about the intended transaction, (consistent with Mr Andersson having provided the relevant initial instructions, and the regular communication between Mr Andersson and Mr Dillon noted above), but that Mr Dillon likely discovered his email error and/or had it brought to his attention by Mr Hong, after which Mr Dillon would have followed up with a further email providing Mr Andersson with the documents. If that was the case, Mr Andersson obviously had notice of the contemplated transaction long before he swears he did.
  • In the result, Siskinds LLP, (and Mr Dillon in particular), has relevant evidence to give in relation to such matters; e.g., to confirm directly whether or not Mr Andersson directly provided Siskinds LLP as corporate counsel with any instructions relating to the share transfer and issue, and whether the transaction was mentioned or otherwise brought to the attention of Mr Andersson, through his ongoing email and telephone communications with Mr Dillon and others at Siskinds LLP, prior to delivery of Mr Kamran's notice of a Special Meeting of Shareholders.
  • To be clear, such evidence may very well confirm Mr Andersson's account and refute that of the defendants, and/or the inferences the defendants will ask the court to draw. However, such evidence, tested by cross-examination, also may contradict the assertions of Mr Andersson and substantially undermine his credibility. In either case, for present purposes the fundamental point is that evidence from Siskinds LLP in relation to such central issues is likely to be important, and it should be given directly so that it can be tested directly. There nevertheless is no way for that to be done, without raising "counsel as witness" concerns, so long as Siskinds LLP continues to assume the role of corporate counsel and litigation counsel.
• There is also a fundamental issue as to whether and when the relevant share transfer and issue documentation was executed and returned to Siskinds LLP by Ms Aquino prior to formal termination of the POA on March 15, 2017, and indeed, prior to Mr Kamran delivering his notice, on October 20, 2017, calling a Special Meeting of Shareholders. In that regard:
  • The plaintiffs allege that the share transfer and issue documents were never executed and returned by Ms Aquino to Siskinds LLP, that Siskinds never received any direct or indirect authorization from Mr Andersson to cancel or otherwise fail to maintain his registered holding of 95 shares in the corporation, and that the contemplated transactions accordingly were never entered in the shareholder register and security transfer registers of LEO Canada. They say the documents purporting to complete the transaction were instead fraudulently rediscovered, executed and backdated by Ms Aquino long after the POA had been formally revoked, and were never returned to Siskinds LLP before Mr Kamran delivered his notice calling a Special Meeting of Shareholders.¹⁸
  • The defendants say Ms Aquino took proper and sufficient steps to execute and return the share transfer and issue documents to Siskinds LLP in or about September of 2016, (although Siskinds LLP already had backdated them to January 25, 2016), that their receipt by Siskinds LLP can be inferred from other documents disclosed to date, and that any suggestions to the contrary by the plaintiffs necessarily depends on evidence from lawyers and staff at Siskinds LLP, who are not being candid about such matters. In that regard, the defendants rely not only on the sworn evidence of Ms Aquino, but also on evidence and considerations such as the following:
    • As the executed share transfer and issue documentation was sent directly to Siskinds LLP in accordance with Mr Dillon's request, (according to Ms Aquino's evidence), and not to Mr Andersson, Mr Andersson accordingly would have no direct knowledge or information as to whether or not it was received by Siskinds LLP. He must instead rely upon the information and evidence of Siskinds LLP in that regard.
    • In cross-examination, Mr Andersson confirmed that he has never personally seen or reviewed the original minute book, shareholder registries or other corporate documentation maintained for LEO Canada by Siskinds LLP. He once against must rely upon the information and evidence of Siskinds LLP in that regard.
    • Such realities are demonstrated by the fact that, in his affidavit evidence, Mr Andersson already makes explicit and implicit reliance on information provided to him by Mr Dillon and others at Siskinds LLP.¹⁹ In cross-examination, Mr Andersson confirmed that he was relying on what he was told, in relation to such matters, by lawyers at Siskinds LLP.
    • On February 13, 2017, a corporate law clerk at Siskinds LLP, (Melora Lake-Rodriguez), sent an email to an articling student at Siskinds LLP, (Andrew MacIver), indicating that she had made a "shareholder amendment" to the annual return for LEO Canada required by the province of Alberta, indicating and confirming the corporation's current shareholders, and asking Mr MacIver to follow up with Ms Aquino to sign the return.
    • Later the same day, (on February 13, 2017), Mr MacIver communicated by email with Ms Aquino, forwarding the email and attached corporate filing of LEO Canada for Alberta. That corporate return prepared by Siskinds LLP, (apparently by Ms Rodriguez in the first instance but presumably reviewed and approved by Mr MacIver as well), confirmed that the shareholders and their respective shareholding in LEO Canada for 2017 were Mr Andersson (47.5 shares), Mr Kamran (47.5 shares), and Ms Aquino (5 shares); i.e., the same as that contemplated by the executed share transfer and issue documentation Siskinds LLP says it never received. That in turn suggests that Ms Rodriguez and Mr MacIver both were looking at some form of documentation at Siskinds LLP indicating and confirming that the now disputed share transfer and issue transaction had indeed been completed by February of 2017.
    • Moreover, when Ms Aquino's litigation counsel was granted limited and temporary access to the corporate minute book for LEO Canada maintained by Siskinds LLP at its office in London, an unusual handwritten note was found therein, inserted next to the provisions of the corporation's by-law addressing the subject of "SHARES". In particular, someone at Siskinds LLP, reviewing the by-law provisions, apparently had written the following words: "Could we issue new shares to Dan to give super majority? We still control the board…question is whether a shareholder vote or notice would be required to do this. How many shares can company allot?" The defendants say the note provides a further indirect indication that the author, as yet unidentified, also was at Siskinds LLP and looking at some form of record indicating that the now disputed share transfer and issue transaction had been completed. There arguably otherwise would have been no need to issue further shares to Mr Anderson to ensure his control of LEO Canada; i.e., if he still owned 95 shares in the company, while Ms Aquino still owned just one share and Mr Kamran none.
  • In the circumstances, the evidence of Siskinds LLP in its role as corporate counsel has great significance in relation to the crucial question of whether or not the relevant share transfer and issue documentation was executed and returned by Ms Aquino, and thereafter received by Siskinds LLP, in a timely way. For example, in my view, there certainly are relevant questions to be answered, by those in the corporate law department of Siskinds LLP, (such as Ms Rodriguez and Mr MacIver), as to why the law firm prepared and asked Ms Aquino to execute documents formally representing to the Alberta government, in February of 2017, (and therefore before the present dispute erupted), that the shareholdings in LEO Canada were precisely what the defendants now say they are. Identification of the person who wrote the aforesaid note in the minute book, and why that person also apparently believed the now disputed transaction had been completed, also would seem to be relevant and important issues for exploration.
  • In saying that, I do not discount in any way the possibility that evidence provided by corporate lawyers and staff at Siskinds LLP may very well include sensible explanations in relation to the above matters, and/or otherwise support the plaintiffs' position that the executed share transfer and issue documentation was never returned to Siskinds LLP on a timely basis, or at all. For present purposes, however, the important point is that evidence of lawyers and staff at Siskinds LLP in relation to such contentious issues is likely to be relevant and important, and it therefore needs to be given directly so that it can be tested directly. Once again, there nevertheless is no way for that to be done, without raising "counsel as witness" concerns, so long as Siskinds LLP continues to assume the role of corporate counsel and litigation counsel.

40The need for Siskinds LLP to be removed is, as I say, reinforced by a balancing of all the various considerations outlined in paragraph 19, supra.

41In relation to the "stage of the proceedings":

• The motion raising such conflict of interest concerns, and requesting removal of Siskinds LLP, has been brought and argued at a very early stage of this proceeding. As I write this, the litigation is less than three months old. The statement of claim has been issued but not yet served, so pleadings are not yet closed. To date, the only preliminary motions addressed on their merits have been this one and the contempt motion addressed by my earlier endorsement – and the contempt motion has not yet been heard in its entirety. All of the remaining motions, (including the plaintiffs' motion for injunctive relief, the plaintiffs' motion for court appointment of a document examination expert or leave to file evidence from the plaintiffs' own expert in relation to such matters, and Mr Kamran's defence motions requesting security for costs from Mr Andersson, and fortification of Mr Andersson's undertaking), have yet to be argued.
• Even before Mr Kamran brought his formal motion, the defendants provided the plaintiffs, Siskinds LLP and the court with formal indications, almost immediately after being served with the plaintiffs' initial court filings, that there were strong objections to Siskinds LLP representing the plaintiffs in this litigation. (That was confirmed in the endorsements of Justice Templeton, who confirmed the defendants' intention to bring a motion in that regard.)
• Moreover, through the provisions of her successive orders preventing payment of any individual litigant's legal fees by LEO Canada, Justice Templeton also indicated, I think, threshold concerns about Mr Andersson and LEO Canada having common representation in the litigation.
• In short, to the extent the plaintiffs have insisted on continued representation by Siskinds LLP following such early indications of concerns in that regard, the risk of prejudice stemming from delayed efforts to retain new counsel, and/or from fees devoted to further litigation preparation by Siskinds LLP, arguably has been assumed voluntarily by the plaintiffs.
• In the course of submissions before me on this motion, Mr Polvere argued that the early stage of the litigation was a factor militating against removal of Siskinds LLP; i.e., that consideration of removing Siskinds LLP as counsel of record for the plaintiffs, owing to conflict of interest concerns, generally should be adjourned to an unspecified later date before trial; e.g., after the initial stages of the litigation have run their course and the actual magnitude of perceived conflict of interest concerns has been confirmed. For example, it was suggested that Siskinds LLP should be allowed to continue with its representation of the plaintiffs until all aspects of the plaintiffs' motion for injunctive relief have run their course. I strongly disagree, for reasons that include the following:
  • Such motions require consideration of the "stage of the proceedings" primarily because the prejudice caused by depriving a party of chosen counsel inherently increases with the passage of time. As a case proceeds, counsel develop intimate experience and familiarity with all aspects of the litigation and its history; an asset usually developed at considerable expense to the client. Depriving a litigant of chosen counsel and that asset closer to trial inherently puts the litigant in question at a greater disadvantage.
  • Given such realities, deferring consideration of such a motion, at the request of a party seeking to retain its chosen counsel despite such manifest conflict of interest concerns, effectively allows that party to use the mounting prejudice resulting from delayed removal of counsel as a reason why conflicts of interest reluctantly should be accepted. In my view, such "bootstrapping" around important conflict of interest concerns should be discouraged.
  • In my view, serious conflict of interest concerns, and "counsel as witness" concerns in particular, already are quite manifest in this case. Even in the context of the interlocutory injunction motion, Siskinds LLP as litigation counsel already is asking the court to accept the veracity of the evidence of the explicit or implicit indirect evidence of Siskinds LLP corporate counsel, and prefer that evidence over the competing evidence and inferences being put forward by the defendants. Similarly, lawyers from Siskinds LLP already are placed in the invidious situation of owing competing duties of partiality to their client Mr Andersson and duties of independence owed to the court. I think that situation should be "nipped in the bud", and the sooner the better.

42In relation to the "likelihood that the witness will be called":

• Reference to the likelihood of a witness being "called" might be construed as a focus on whether or not the lawyer or members of a law firm acting as litigation counsel likely will be called upon to give viva voce testimony at trial. However, having regard to the serious policy and ethics concerns underlying the general principles outlined above, I do not think the consideration as worded necessarily has that constrained meaning. Such "lawyer as witness" and corresponding conflict of interest concerns clearly are capable of arising during litigation in advance of trial. For example, they underlie the general prohibition against a lawyer arguing motions based on his or her own affidavit evidence.
• As noted above, such concerns already are manifest in this case, well in advance of trial, having regard to the nature of the evidence already put forward and relied upon by the plaintiffs in relation to their injunction motion. In effect, the plaintiffs already have called upon corporate lawyers and staff at Siskinds LLP to provide evidence, albeit indirectly, on very sensitive and important issues; i.e., by supplying Mr Andersson with evidence about such sensitive matters, which he necessarily relied upon to swear his affidavits.
• Moreover, for the reasons outlined above, and as emphasized by the defendants, corporate lawyers and staff at Siskinds LLP seem likely to have further relevant and important information which may properly and fairly need to be before the court before there is a ruling on the plaintiffs' request for imposition of the inherently Draconian remedy of an injunction. Even if the plaintiffs are reluctant to lead or "call" such evidence in relation to that injunction motion, that arguably would not prevent the defendants from doing so; e.g., by using the Rule 39.03 procedures available in relation to motions. If the plaintiffs are reluctant to lead or call such evidence at trial, the defendants could summon that witness and seek leave to have the witness characterized as adverse to enable cross-examination. However, possible resort to such procedures obviously is complicated by the current reality that the witnesses the defendants wish to examine are members of the law firm representing the plaintiffs.
• In the course of submissions before me, Mr Polvere suggested that Siskinds LLP should not be removed as litigation counsel of record for the plaintiffs because it might be possible to decide certain issues, and issues on the injunction motion in particular, without the need to rely on any direct or indirect evidence of corporate lawyers and staff at Siskinds LLP. For example, it was noted that demonstration of a "serious question to be tried" can be accomplished without having to decide whether the plaintiffs ultimately will succeed in the action. It also was suggested that the court might be able to decide certain sensitive issues by reliance on evidence other than that of corporate lawyers and staff at Siskinds LLP; e.g., if the document examination experts proposed by the plaintiffs indicate that the signature of Ms Aquino on the share transfer and issue documents was made sometime after formal termination of the POA on March 15, 2017. However, I am not persuaded by such arguments, for reasons that include the following:
  • The plaintiffs themselves effectively have indicated, by their filings to date, that the evidence emanating from the corporate lawyers and staff of Siskinds LLP is relevant and important to the outcome of the injunction motion. The plaintiffs presumably otherwise would not have bothered to try supplying the court with such evidence indirectly.
  • I think it fallacious to suggest that the court can or should decide important issues, such as whether the share transfer and issue documents were received by Siskinds LLP, based only on certain evidence relied upon by the plaintiffs; i.e., the contemplated evidence from a document examination expert. At this point, there is no certainty that such an expert will be appointed by the court, or that such expert evidence will be admitted in other ways, (e.g., as supplementary evidence permitted notwithstanding resort to prior cross-examination), in relation to the injunction motion. Moreover, even if such evidence is admitted and favours the plaintiffs' theory of the case, it will not necessarily be decisive. Such evidence will only represent the opinion of the relevant expert or experts, which the court is not bound to accept. Moreover, the court obviously must also consider the competing evidence and inferences upon which the defendants intend to rely, including evidence provided and to be provided by corporate lawyers and staff at Siskinds LLP.
  • In deciding whether corporate lawyers and staff at Siskinds are likely to be called as witnesses, I also think it inappropriate to focus solely only on the injunction motion, as if all "lawyer as witness" and related conflict of interest concerns somehow will vanish once the injunction motion has been decided. Certainly, the need for a trial in any event will not disappear. Whether or not an interlocutory injunction is granted, a trial still will be needed to make final determinations as to whether a permanent injunction after trial is appropriate, and whether there is any merit to the remaining claims of the plaintiffs, including claims for substantial damages. For the reasons outlined above, it seems to me that corporate lawyers and staff therefore are likely to be called as witnesses at trial in any event.

43In relation to the good faith (or otherwise) of the party making the application:

• As noted above, the plaintiffs argue that this motion to remove Siskinds LLP as litigation counsel is purely tactical. In particular, the plaintiffs say the defendants merely wish to inconvenience and prejudice the plaintiffs by depriving them of their counsel of choice, by forcing the plaintiffs to incur the additional expense of retaining new counsel not already familiar with the matter, and by delaying progress of the plaintiffs' motion for injunctive relief.
• However, I see no evidence of bad faith on the part of the defendants.
• In that regard, I am struck by the legitimate efforts made by the defendants to obtain and confirm by indirect means, (i.e., during cross-examination of Mr Andersson), evidence concerning sensitive matters that might otherwise have to be provided directly by corporate lawyers and staff at Siskinds LLP. The willingness of the plaintiffs to provide such evidence and confirmations may or may not have made it unnecessary to proceed with this motion. However, legitimate questions posed by defence counsel in that regard were met with consistent refusals, or effective refusals when matters were "taken under advisement" without any further information then being provided. As noted below, I think such refusals simply reinforce conflict of interest concerns.
• As for suggestions that the defendants simply want to delay matters by the bringing of this motion, I think it must be remembered that, as noted in my earlier endorsement, the defendants are anxious to advance further claims themselves, (including claims for injunctive relief vis-à-vis Mr Andersson), but they effectively are being delayed by the plaintiffs withholding formal service of their statement of claim already filed with the court, in support of their issued notice of action. In the meantime, the defendants also have been obliged to accept, (through the interim arrangement imposed by the court), significant continued involvement of Mr Andersson in the operations of LEO Canada; something which the defendants consider inappropriate, given their professed concern about alleged financial improprieties on the part of Mr Andersson. In the circumstances, it seems to me that the defendants have just as much interest in moving the litigation, including the injunction motion, forward to a conclusion without delay. They simply argue that should be done in an appropriate manner, without unnecessary complications to the plaintiffs and the defendants attributable to conflict of interest concerns, including significant "lawyer as witness" issues.
• In the particular circumstances of this case, I also think it likely that the court independently would have raised such conflict of interest concerns, and invited counsel submissions in that regard, regardless of whether or not Mr Kamran had brought his motion. That obviously is not to say that the court necessarily would have resolved such concerns one way or the other, after hearing from counsel. However, in controlling its own process, (which includes having regard to the underlying conflict of interest policy concerns outlined above), it seems to me the court was likely to raise such issues sooner or later. In my view, Mr Kamran's motion placing such issues formally before the court for consideration at an early date was not a resort to "tactics", but a legitimate effort to address the inevitable.

44In relation to the significance of the evidence to be led:

• To a large extent, I already have addressed that consideration earlier in these reasons.
• Again, my comments setting forth examples of significant evidence, already being provided indirectly from corporate lawyers and staff at Siskinds LLP and/or likely to be needed from such witnesses, were not intended to be exhaustive.²⁰ For present purposes, however, I think the examples cited demonstrate why the conflict of interest and "lawyer as witness" concerns are real and pressing in this particular situation.

45In relation to the impact of removing counsel on the party's right to be represented by counsel of choice:

• To some extent, I also have touched on this concern already.
• The plaintiffs, and Mr Andersson in particular, unquestionably will be prejudiced to some degree by the removal of Siskinds LLP as their counsel of record. For example, they will need to retain and instruct new counsel in this litigation, and therefore will incur the inevitable additional expense and delay inherent in having to bring new counsel "up to speed" in relation to ongoing litigation.
• However, for the reasons noted above, some of that prejudice to the plaintiffs arguably has been self-inflicted. In particular, the plaintiffs were put on notice, almost from the outset, that it would be inappropriate in the particular circumstances of this case for Siskinds LLP to act as litigation counsel for the plaintiffs. The plaintiffs nevertheless chose to press on with continued representation by Siskinds LLP until this motion could be heard and decided.
• Early removal of Siskinds LLP as litigation counsel nevertheless should help to minimize such impact on the plaintiffs.

46In relation to whether trial of this matter will be by judge or jury, that currently is a neutral factor. Pleadings are not yet closed, and the mode of trial has not yet been selected.

47In relation to the likelihood of real conflict arising or that the evidence will be "tainted":

• For the reasons outlined above, in my view the conflict of interest concerns in this case, including "lawyer as witness" issues, already are manifest.
• As for the possibility of evidence being "tainted":
  • I certainly am not prepared to find that any lawyer or staff member at Siskinds LLP has acted or will act with the conscious intention of suppressing or modifying relevant evidence in relation to this matter. In my view, there is no evidence of any such deliberate impropriety, which should not be lightly presumed.
  • The real concern, in my view, is that Siskinds LLP has been approaching this matter in an inappropriately partisan way; e.g., looking at evidentiary issues such as relevance and privilege through an inappropriate and distorting partisan lens favouring Mr Andersson. Unfortunately, I think there are indications that has indeed been happening. For example, and without going into great detail:
    • In the wake of Mr Kamran's delivery of his notice regarding a Special Meeting of Shareholders for the corporation, corporate counsel at Siskinds LLP, (including Mr Dillon and an articling student, Liam Ledgerwood), promptly engaged in overtly partisan correspondence with counsel for Mr Kamran. Repeated demands were made for "any documentation" possessed by Mr Kamran or his counsel to support his claim that he was a shareholder in LEO Canada, coupled with categorical assertions that the records maintained by Siskinds LLP contained "no share description or any other documentation supporting this alleged issuance". [Emphasis added.] Such correspondence is remarkable for its failure to disclose or even mention the existence of various relevant documents, prepared by Siskinds LLP and therefore undoubtedly included in its files, which might offer support for Mr Kamran's position; e.g., the share transfer and issue documentation and share certificates provided by Siskinds LLP to Ms Aquino, and the corporate filing prepared by Siskinds LLP formally representing to the Alberta government that Mr Kamran did indeed own 47.5 shares in LEO Canada. Just as remarkable is the overtly aggressive tone of the correspondence written by corporate counsel at Siskinds LLP, which includes Mr Dillon going so far as to accuse Mr Kamran's counsel of having "embarked on a letter writing spree without receiving and reviewing any documentation to substantiate [Mr Kamran's] claims", and of having engaged in other supposedly "highly unprofessional" conduct "worthy of censure". Having regard to such correspondence, it is difficult to imagine Mr Dillon giving evidence in a neutral, dispassionate and unbiased manner in relation to communications and actions he witnessed, as corporate counsel to LEO Canada, before eruption of the present dispute.
    • When litigation counsel at Siskinds LLP became involved in the dispute, similar correspondence was sent by that counsel, faulting the defendants for failing to provide "any documentation supporting that Mr Kamran holds any shares in the corporation", while once again remarkably failing to make any mention of relevant documents in that regard already in the possession of Siskinds LLP through its corporate counsel. Moreover, litigation counsel at Siskinds LLP defended the actions taken by Mr Andersson and Mr Dillon to terminate the USA by asserting that the provisions drafted by Mr Dillon were sufficient to enable such measures; i.e., litigation counsel at Siskinds LLP was defending legal work done by corporate counsel at Siskinds LLP.
    • During attempted cross-examination of Mr Andersson on his affidavit evidence, there were, as noted above, numerous troubling refusals by litigation counsel at Siskinds LLP to allow certain lines of questioning; questioning which in my review was entirely relevant and appropriate, and in respect of which there would seem to be no sustainable claim of privilege. For example, as noted above, Mr Andersson himself had put in issue whether instructions received by Siskinds LLP in relation to preparation of the share transfer and issue documentation came from Ms Aquino alone, and whether Mr Andersson had any knowledge or awareness of that contemplated transaction before receiving notice of the Special Shareholders meeting. Litigation counsel at Siskinds LLP nevertheless refused to permit questions or disclose any information about such matters. I find it difficult to see the basis for such refusals – particularly insofar as the matters in question took place while Ms Aquino unquestionably was a director of LEO Canada and no thought was being given to the present dispute, which had not yet erupted. On their face, at least, the refusals accordingly seem to have no defensible basis in relevance or privilege, and seem more grounded in a disinclination, (similar to that suggested in the aforesaid correspondence of corporate counsel at Siskinds LLP), to make any disclosure that might undermine the position of Mr Andersson. Objective litigation counsel, serving a client but mindful of the duties owed by an officer of the court, arguably would and should have recognized such realities, and permitted such relevant questioning.
  • In the result, I think there is a legitimate concern that partisan influence on relevant evidence to be provided by lawyers and staff at Siskinds effectively might "taint" such evidence. In that regard, severing the ongoing link between corporate counsel, (who witnessed events prior to the current dispute), and litigation counsel, (immersed in fighting that dispute on behalf of Mr Andersson and/or the corporation), would help to minimize that influence. From the reverse perspective, severing the formal link between litigation counsel and corporate counsel ensures that the former has no direct interest in defending the prior advice or work of the latter, when doing so objectively might be inappropriate.

48In relation to what party "will call the witness" or witnesses from Siskinds LLP:

• As noted above, the content of Mr Andersson's affidavit evidence already suggests evidence provided to him by Siskinds LLP is relevant and necessary to support the position of the plaintiffs.
• In the result, a simple hearsay objection by the defendants likely would oblige the plaintiffs to call one or more lawyers or staff members from Siskinds LLP as witnesses. Should that occur, and there is no change in how the plaintiffs are represented in the litigation, litigation counsel from Siskinds LLP inherently would be asking the court to accept the credibility and reliability of others at the same law firm. For the reasons outlined above, that scenario is unacceptable.

49In relation to the connection or relationship between counsel, the prospective witness and the parties involved in the litigation:

• The relationship between litigation counsel from Siskinds LLP and other members of the firm, (and its corporate law department in particular), has already been addressed at length.
• As noted above, there is a further connection between Siskinds LLP and the parties in this case, in that Mr Dillon is also a putative director of the corporate plaintiff, trying to vindicate his status in that regard. In my view, litigation counsel should not have a direct vested interest in a client litigant, as that raises further concerns about conflict between such an interest and duties owed as an officer of the court.²¹ Moreover, as a director, Mr Dillon owes duties to LEO Canada, and the interests of the corporation do not necessarily coincide with those of Mr Andersson for reasons outlined in further detail below.

50Having regard to all the mandated considerations, I find that ongoing involvement of Siskinds LLP in this matter, as litigation counsel, poses unacceptable conflict of interest concerns, including but not limited to "lawyer as witness" issues.

51In the circumstances, an order accordingly shall go, removing Siskinds LLP as counsel of record for the plaintiffs in this litigation. In particular:

• the formal order in that regard shall be prepared and processed by Mr Kamran, as the party bringing the motion resulting in the granting of that relief;
• the formal order to be issued and entered shall, in addition to operative provisions removing Siskinds LLP as lawyers of record for the plaintiffs, include the provisions and content directed by Rule 15.04(4) of the Rules of Civil Procedure;
• Siskinds LLP shall provide counsel for Mr Kamran with confirmed address and contact information for Mr Andersson and LEO Canada, for the purposes of ensuring compliance with the requirements of Rule 15.04;
• the order, once issued and entered, shall be formally served on Mr Andersson and LEO Canada.

Application – Need for separate representation of Andersson and LEO Canada

52Pursuant to the general principles outlined above, I also find that Mr Andersson and LEO Canada must have separate legal representation in this litigation.

53In that regard, I think this litigation must be approached as a dispute between corporate directors and shareholders, thus giving rise to all of the concerns noted above.

54In particular, I think it inappropriate and far too simplistic to suggest the court should approach the matter as one involving no dispute between directors, (and therefore no danger of litigation counsel for LEO Canada failing to seek instructions from all directors or share otherwise confidential and privileged information with all directors), simply because the plaintiffs formally assert:

• that the defendants are not directors of LEO Canada; and
• that the only true directors of LEO Canada, (Mr Andersson and Mr Dillon), agree on how the litigation should be conducted.

55Adopting such an approach improperly presupposes the outcome of the litigation.

56As noted above, there are serious unresolved disputes about such matters as: whether Ms Aquino was properly removed as a director; whether Mr Dillon was properly appointed in her stead; and whether the actions taken by the defendants at the purported Special Meeting of Shareholders resulted in Mr Kamran, Ms Aquino and Mr Andersson all being directors of the company.

57Until such matters are resolved, it seems inherently perilous and inappropriate for litigation counsel representing LEO Canada to report to and take instructions only from certain putative directors while ignoring and withholding information from others.

58Moreover, so long as the interim arrangement by the court remains in place, effectively entrusting decision making for LEO Canada to Mr Andersson and Mr Kamran jointly, it seems inappropriate to allow one faction or the other to make unilateral litigation decisions for the corporation; i.e., when such decisions may have an equal or greater impact on the financial well-being of the company.

59Furthermore, leaving aside such director-related concerns, this matter remains a shareholder dispute in any event.

60Again, no one disputes that Mr Andersson and Ms Aquino both remain shareholders in LEO Canada, (although the number of shares held by each is disputed), and Mr Andersson and Ms Aquino clearly disagree on how this litigation should be decided.

61To date, however, Siskinds LLP has been conducting this litigation by taking instructions from, reporting to, and sharing confidential information with only one putative director and shareholder, (Mr Andersson), while declining to provide reports and refusing to provide information to other putative directors, (Mr Kamran and Ms Aquino), a putative shareholder, (Mr Kamran), and an acknowledged shareholder, (Ms Aquino).

62Moreover, if the corporation weighs in on the side of Mr Andersson, (as it necessarily must if LEO Canada and Mr Andersson are represented by the same litigation counsel), Ms Aquino effectively will be compelled to pay, at least in part, (if only through her contribution to legal fees of the corporation), the legal fees of opposing counsel.

63In my view, the circumstances of this case also underscore the importance of recognizing that LEO Canada has a separate and distinct legal personality, whose interests may very well diverge from those of its directors and shareholders, including any majority shareholder or shareholders. In that regard:

• Mr Andersson contends that Ms Aquino and Mr Kamran have put their own personal interests over those of LEO entities, (e.g., through conflicts of interest, financial improprieties and/or dereliction of duty), that they have started a business which threatens to undermine direct selling network of LEO Canada and other LEO entities, and that control of LEO Canada by Mr Kamran and Ms Aquino therefore would represent a very real and direct threat to LEO Canada's future.
• Ms Aquino and Mr Kamran say Mr Andersson is the one who repeatedly has put his personal interests over those of LEO entities, through various financial improprieties, and that it is his potential control of LEO Canada that would threaten its future.
• LEO Canada accordingly is said to be at risk regardless of whether Mr Anderson, or Mr Kamran and Ms Aquino together, are recognized as having a majority of shares in the company and a corresponding ability to control its future.
• The corporation itself accordingly has an interest in ensuring that the allegations of propriety against both "sides" competing for its control are objectively and thoroughly explored, while neither side has an interest in seeing its own conduct challenged and explored in such a manner.
• In the present situation, the interests of LEO Canada accordingly do not align with the interests of either Mr Andersson nor Mr Kamran, and the corporation accordingly requires legal representation that is separate and distinct from that of any of the individual shareholders or putative shareholders.

64For such reasons, a further order will go, requiring Mr Andersson and LEO Canada to have separate representation in the litigation.

Further comments regarding appointment of new corporate counsel

65Mr Andersson obviously will be free to retain new counsel of his own choosing.

66As for LEO Canada, I recognize that its retention of new litigation counsel will be more complicated and challenging in the present circumstances.

67In particular, for the reasons outlined in my previous endorsement and interim interim without prejudice order, there currently is no party with unrestrained authority to make decisions of "financial significance to the well-being LEO Canada", which in my view includes the selection of new and separate legal representation for the corporation in relation to this litigation.

68Such decisions are instead currently governed by paragraphs 1, 3 and 5 of the order I made on January 31, 2018, (essentially continuing many of the interim interim without prejudice arrangements put in place by the earlier orders of Justice Templeton), such that:

• for the time being, Mr Andersson and Mr Kamran jointly operate LEO Canada on a day-to-day basis;
• neither Mr Andersson nor Mr Kamran has the ability to make any decision concerning LEO Canada without providing written notice to the other, (at least 24 hours in advance), and obtaining the written consent of the other, (which is not be unreasonably withheld); and
• if either Mr Andersson or Mr Kamran provides written notice of a contemplated decision concerning LEO Canada in accordance with the requirements of paragraph 3, and written consent to the contemplated decision is then withheld by the party receiving notice, such that there is no agreement to proceed with the contemplated decision, either party is then entitled to seek intervention of the court if the matter is of financial significance to the well-being of LEO Canada.

69If Mr Andersson and Mr Kamran are unable to reach a consensus on new litigation counsel for LEO Canada, (which necessarily will include discussion as to how such new counsel realistically will be instructed in the circumstances), the matter should be brought back before the court using the above procedure.

70How the matter is then dealt with obviously will be up to the presiding judge, after hearing from counsel. However, it seems to me that one issue for consideration, in that event, may be whether the corporation properly or usefully should remain a litigant in this proceeding.

Document location and disclosure issues

71As noted above, this motion brought by Mr Kamran not only sought removal of Siskinds LLP as litigation counsel in this matter, but also an order compelling Siskinds LLP to search for and produce specified documents, in a specific manner, subject to oversight by the law firm's managing partner.

72In particular, paragraphs (b), (c) and (d) of the prayer for relief in Mr Kamran's notice of motion reads as follows:

THE MOTION IS FOR: …

(b) An Order compelling Siskinds LLP to search and produce from its files for LEO Canada Inc. all documents whether paper or electronic relating to:

(i) the incorporation of LEO Canada Inc.;

(ii) the corporate structure and distribution of shares in LEO Canada Inc.;

(iii) the corporate minute book of LEO Canada Inc.;

(iv) the Power of Attorney, dated September 30, 2014, its scope and use; and

(v) the transfer of shares to Atif Kamran and Geraldine Aquino;

excluding privileged documents after October 20, 2017, containing legal advice to Dan Andersson regarding the within action.

(c) An Order that the search for and production of documents from Siskinds LLP's files be conducted by personnel other than Peter Dillon, Michael Polvere or Christopher Sinal; [and]

(d) an Order that the managing partner of Siskinds LLP shall be served with a copy of the Order.

73In that regard, I accept that the defendants are entitled to disclosure of further relevant documents and information likely to be in the possession of Siskinds LLP. I also accept that the defendants fairly should have such disclosure of such documents and information before the motion for a Draconian injunction against them is argued.

74However, the precise nature of the relief requested in that regard gives me pause, for a number of reasons.

75First, I am not prepared to find that any of the named lawyers at Siskinds LLP is unwilling or unable to fulfil his duties as an officer of the court or requires supervision in that regard, as sub-paragraphs (c) and (d) of the request for relief would seem to suggest. Partisan zeal and/or an honest but mistaken view of the law to date should not readily be equated with any intention on the part of such named lawyers to engage in deliberate professional misconduct, such as the intentional destruction or suppression of relevant non-privileged documentation.

76Second, I am concerned about using arbitrary dates to limit claims of privilege that may be legitimate. For example, as I noted during the course of oral submissions, (and as defence counsel conceded), the claim advanced by LEO Canada against Ms Aquino was commenced before October 20, 2017, and Siskinds LLP accordingly may have documents and records of communication in that regard which are properly litigation privileged. In my view, concerns about proper recognition of legitimate litigation privilege also are compounded by indications, during the cross-examination of Mr Andersson, that Siskinds LLP has represented LEO Canada and Mr Andersson in relation to numerous other matters as well.

77Third, as I indicated during the course of oral submissions, I have concerns about attempting to address proper disclosure on a haphazard basis through the blunt instrument of an idiosyncratic court order, rather than the detailed mechanisms and safeguards established by Rule 30 of the Rules of Civil Procedure. For example, the latter includes detailed procedures for ensuring that all broadly defined "documents", (including those over which privilege may be claimed and those no longer in possession), are identified in a sufficiently detailed manner so that a party seeking disclosure then may follow up accordingly; e.g., with targeted challenges to specific claims of privilege in relation to specific described documents and/or by making further related inquiries. At the same time, the rules make allowance for proper claims of privilege, and extend further protections such as the deemed undertaking extended by Rule 30.1. Dealing with necessary productions through idiosyncratic orders, without the backdrop of such additional mechanisms and safeguards, seems likely to produce further uncertainty, disputes and motions.

78Fourth, I have concerns about Siskinds LLP effectively making further litigation-related determinations, affecting Mr Andersson and LEO Canada, without the input of the new counsel who will be representing those parties.

79In the circumstances, and recognizing that there now are likely to be delays in any event pending appointment of new counsel to represent each of the plaintiffs, I think the following approach is appropriate:

• In order to help define the parameters of relevance in this litigation, Siskinds LLP should be directed, as its last act before being removed as counsel of record for the plaintiffs, to serve its issued statement of claim, thereby allowing the defendants to plead in response.
• Recognizing that further pleading amendments may be required after the plaintiffs retain new counsel, and after those newly involved lawyers have reviewed the situation, service of the initial statement of claim by Siskinds LLP directed herein, and the consequential service of responding pleadings by the defendants, shall be without prejudice to the ability of parties to request leave from the court to make further amendments that may be necessary and appropriate.
• With the exchanged pleadings determining the parameters of relevance, Siskinds LLP shall then prepare a draft affidavit of documents, including a Schedule A that incorporates a listing of the documents described in sub-paragraph (b) of the prayer for relief in Mr Kamran's notice of motion for this motion, (not including any documents over which privilege is claimed), and detailed schedules B and C.
• The draft affidavit of documents thus prepared by Siskinds LLP shall then be provided to new counsel for the plaintiffs, in order to permit such counsel to finalize and serve sworn affidavits of documents, after making further inquiries of Siskinds LLP if and as necessary
• In any event, the plaintiffs nevertheless shall disclose to the defendants, within 30 days of this order, the documents described in sub-paragraph (b) of the prayer for relief in Mr Kamran's notice of motion for this motion, (not including any documents over which privilege is claimed). Siskinds LLP shall provide whatever assistance may be required in that regard, at the expense of Mr Andersson. If there are issues thereafter, concerning the adequacy of such disclosure, the defendants may then, having received formal affidavits of documents from the plaintiffs, employ the procedures contemplated by Rule 30 to resolve such disputes. If necessary, the court will be able to examine documents and communications, in respect of which privilege is claimed, to determine whether or not the claim of privilege is sustainable.
• Unless the parties agree or the court orders otherwise, hearing of the plaintiffs' motion for injunctive relief shall not proceed until the parties have made full documentary disclosure, in accordance with the above procedures.

80A further order shall go accordingly.

Costs

81Because my decision was reserved, the parties had no opportunity to make any submissions regarding costs of this motion.

82My preliminary views in that regard, subject to hearing from counsel, are as follows:

• As indicated in my earlier endorsement, care should be taken to ensure that the costs properly attributable to a particular motion, (including this motion), are segregated from those incurred primarily, or in any event, in relation to other outstanding motions.
• Mr Kamran was substantially successful on this particular motion. At the moment, I see no reason why costs should not follow the event, with costs of this particular motion being made payable forthwith.
• Although Ms Aquino nominally supported Mr Kamran, no independent material was prepared or filed on her behalf, insofar as this particular motion is concerned. Moreover, at the hearing of the motion, counsel for Aquino essentially maintained a "watching brief", making no submissions apart from briefly indicating agreement with the submissions made by counsel for Mr Kamran. Barring further information to suggest otherwise, I therefore am not inclined, in the circumstances, to award costs of this particular motion to Ms Aquino.
• It seems to me that costs of the motion should be payable by Mr Andersson alone; i.e., as opposed to having LEO Canada bear responsibility for any portion of those costs. The corporation nominally was a respondent to Mr Kamran's motion and opposed it. However, that formal position almost certainly was the result of Siskinds LLP proceeding on the basis that Mr Andersson necessarily should be taken as speaking for himself and the LEO Canada, in turn leading to Siskinds LLP accepting a retainer to represent both plaintiffs in this litigation. For the reasons set out herein, that should not have been done. The corporation accordingly should not be required to bear the costs of that improper approach. My view in that regard is reinforced by the reality that any costs payable by the corporation effectively are borne by its shareholders, and in this case those shareholders unquestionably include at least one of the defendants.²²

83It is always preferable for parties to agree on costs. However, if the parties are unable to reach an agreement on entitlement and/or quantum in relation to outstanding cost issues:

a. the defendants may serve and file written cost submissions, not to exceed five pages in length, (not including any bill of costs, settlement offers, authorities or other necessary attachments), within two weeks of the release of this decision; b. the plaintiffs then may serve and file further responding written cost submissions, also not to exceed five pages in length, (not including any necessary attachments similar to those described in the previous sub-paragraph), within two weeks of service of the defendants' written cost submissions; and c. the plaintiffs then may serve and file, within one week of receiving any responding cost submissions from the defendant, reply cost submissions not exceeding two pages in length.

84If no written cost submissions are received within two weeks of the release of this decision, there shall be no costs formally awarded in relation to the motion.

Footnotes

1. 1See, for example, my references to Mottershead v. Burdwood Bay Settlement Co., [1991] B.C.J. No. 2554 (B.C.S.C.), at paragraphs 29-30; and to Essa (Township) v. Guergis and Heck v. Royal Bank (1993), 15 O.R. (3d) 573 (Div.Ct.), at paragraph 20 and footnote 7.
2. 2See, for example, Hames v. Greenberg, 2013 ONSC 4410, [2013] O.J. No. 3398 (S.C.J.), at paragraphs 63 and 67-68; and Forsyth v. Blue Rock Wealth Management Inc. [2015] O.J. No. 6507 (Master), at paragraph 57.
3. 3See, for example, MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, at paragraphs 16 and 47; Manville Canada Inc. v. Ladner Downs (1992), 88 D.L.R. (4th) 208 at p.233; and Chapman v. 3M Canada Inc. (1995), 25 O.R. (3d) 658 at paragraphs 19-20.
4. 4MacDonald Estate v. Martin, supra, at paragraphs 16, 53 and 58.
5. 5MacDonald Estate v. Martin, supra, at paragraph 21; Stevens v. Salt, [1995] O.J. No. 813 (Gen.Div.), at paragraphs 5-6 and 22; Urquhart v. Allen Estate, [1999] O.J. No. 4816 (S.C.J.), at paragraph 16.
6. 6Commentary to Rule 4.02 of The Law Society of Upper Canada Rules of Professional Conduct, ("The Lawyer as Witness"). See also The Canadian Bar Association Code of Professional Conduct, Chapter IX, ("The Lawyer as Advocate"), Commentary 5.
7. 7Stevens v. Salt, supra, at paragraphs 8-9.
8. 8Urquhart v. Allen Estate, supra, at paragraphs 27-28.
9. 9Essa (Township) v. Guergis and Heck v. Royal Bank (1993), 15 O.R. (3d) 573 (Div.Ct.), at paragraph 48.
10. 10See Rule 2.04 of The Law Society of Upper Canada Rules of Professional Conduct, ("Avoidance of Conflicts of Interest"), and in particular, sub-rules 2.04(1), (2), (3) and (6), and the Commentaries thereto. See also The Canadian Bar Association Code of Professional Conduct, Chapter V, ("Impartiality and Conflict of Interest Between Clients"), and in particular, Commentaries 1, 3, 4 and 8 in particular.
11. 11See, for example, Rule 2.02(1.1) of The Law Society of Upper Canada Rules of Professional Conduct, ("Quality of Service – When Client an Organization"), and Commentary thereto. See also The Canadian Bar Association Code of Professional Conduct, Chapter V, ("Impartiality and Conflict of Interest Between Clients", supra), and in particular, Commentary 16.
12. 12See, for example: Mottershead v. Burdwood Bay Settlement Co., [1991] B.C.J. No. 2554 (B.C.S.C.), ("Mottershead"); Alles v. Maurice, [1992] O.J. No. 331 (S.C.J.); Edwards-MacLeod Properties Ltd. v. 1037661 Ontario Ltd., [2001] O.J. No. 145 (S.C.J.); and Canadian Arctic Trading House Ltd. v. Bronstein, [2007] O.J. No. 3278 (S.C.J.).
13. 13See Edwards-MacLeod Properties Ltd. v. 1037661 Ontario Ltd., supra, at paragraph 36, and Canadian Arctic Trading House Ltd. v. Bronstein, supra, at paragraph 12. Alles v. Maurice, supra, also cites Mottershead with apparent approval, at paragraph 26.
14. 14See the comments of Austin J., (as he then was), in Alles v. Maurice, [1992] O.J. No. 331 (Gen.Div.), at paragraphs 11, 17, 19, and 21-23. See also Algonquin Mercantile Corp. v. Cockwell, [1996] O.J. No. 1727 (Gen.Div.), at paragraphs 9, 28 and 36.
15. 15The relevant "Resolution of the Shareholders" consenting to a transfer of 47.5 common shares from Mr Andersson to Mr Kamran and allotting four additional common shares to Ms Aquino was to be signed by "Geraldine Aquino" and by "Dan Gunnar Bjarne Andersson, by his POA Geraldine Aquino". The relevant "Instrument of Transfer" was to be signed by "Dan Gunnar Bjarne Andersson, by his POA, Geraldine Aquino".
16. 16For the references that follow, see paragraphs 14, 15, 16, 37 and 40 of Mr Andersson's affidavit sworn November 7, 2017.
17. 17For the references that follow, see paragraphs 34-42 of the affidavit sworn by Ms Aquino on November 14, 2017.
18. 18Such assertions can be found in paragraphs 17, 26-27 and 56 of the affidavit sworn by Mr Andersson on November 7, 2017.
19. 19See, for example, paragraphs 14-17 and 62-63 of the affidavit sworn by Mr Andersson on November 7, 2017.
20. 20There are, for instance, additional issues relating to purported termination of the USA; issues which necessarily involve similar focus on another document drafted by Mr Dillon, and thereafter interpreted and ostensibly employed by Mr Andersson and Mr Dillon in a possible effort to limit further involvement of Ms Aquino in the affairs of LEO Canada in her capacity as a shareholder. Mr Dillon no doubt has relevant evidence in that regard, and Siskinds LLP has an interest, extending beyond that of normal litigation counsel, in defending previous legal work and advice provided by members of its corporate law department.
21. 21In my view, suggestions that such concerns are minimized by Mr Dillon being only a "nominal" director, appointed to satisfy the residency requirements of Ontario's corporate law, must be rejected. That law makes no distinctions between "real" and "nominal" directors. A person appointed as a director has all the obligations, rights and liabilities of a true director. Moreover, accepting Mr Dillon's directorial status as some kind of fiction implicitly or explicitly would suggest that the residency requirements of Ontario's corporate law are mere window-dressing, capable of being satisfied and effectively disregarded by such a fiction.
22. 22As noted above, Ms Aquino holds at least one share in LEO Canada, even on the theory of the case advanced to date by the plaintiffs. Of course, if the theory advanced by the defendants ultimately is accepted, then Mr Kamran and Ms Aquino are really the majority shareholders in LEO Canada. That would compound the injustice of making all shareholders of the corporation effectively contribute to payment of costs awarded against the corporation for formally opposing this motion.