COURT FILE NO.: CV-17-588831
MOTION HEARD: 20210316
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Elkay Management Inc., Plaintiff
AND:
Law Studio Professional Corporation, also known as The Law Studio and Jonathon Baker, Defendants
BEFORE: Master Jolley
COUNSEL: Lauren Rakowski, Counsel for the Moving Party Defendants, assisted by Kevin Mooibroek, student-at-law
Karey Anne Dhirani and Spencer Malthouse, Counsel for the Responding Party Plaintiff
HEARD: 16 March 2021
REASONS FOR DECISION
[1] The defendants (hereinafter “Baker”) bring this motion for an order removing James Wortzman and Teplitsky, Colson LLP (“Teplitsky”) as lawyers of record for the plaintiff and the defendant by counterclaim, Larry Krauss, (together, “Elkay”). Baker also seeks an order requiring Elkay to produce an unredacted copy of all of their file materials, including those of Teplitsky, concerning the underlying dispute and for leave to examine Ms. Dhirani as a non-party witness. Baker also sought to examine John Ventrella but Teplitsky has advised, through Elkay, that Ventrella is no longer with the firm. I do not have evidence that he was separately served with these motion materials.
Background
[2] Teplitsky acted for Elkay in a commercial lease dispute with its tenant Artisan Baker and the tenant’s indemnifiers, Bruno Beaudoin and Ronit Teschner. It commenced an action against those parties on behalf of Elkay in April 2014. Both Beaudoin and Teschner then filed for bankruptcy. Teplitsky went on to act for Elkay in those bankruptcies.
[3] Beaudoin’s primary asset was an interest in property located at 33 Woodsworth Road (the “Beaudoin Property”). The Trustee in Bankruptcy obtained an appraisal which valued the Beaudoin Property at $616,000 and determined that Beaudoin’s equity amounted to $5,000. It is undisputed that Teplitsky did not obtain an independent valuation of the Beaudoin Property or challenge the proposed settlement. Beaudoin’s discharge hearing was set for 29 July 2015.
[4] Teschner’s primary asset was an interest in property located at 78 Taunton Road, Toronto (the “Teschner Property”). The Trustee obtained an appraisal which valued the Teschner Property at $1,150,000. Dhirani opined that there was only about $200,000 in equity available from Teschner’s Property interest and that the Trustee’s offer of $200,000 appeared reasonable. The Trustee ultimately settled that amount at $160,000.
[5] Teplitsky submitted a proof of claim on behalf of Elkay in the Teschner Bankruptcy of $1,461,514.40 but ultimately accepted an allowed claim amount of $395,157.79. Elkay admits that this reduction was agreed to on Teplitsky’s watch.
[6] On 17 July 2015, shortly before Beaudoin’s discharge hearing, Elkay retained Baker to act for it in both bankruptcies. During Baker’s retainer, both Beaudoin and Teschner were discharged from bankruptcy. Baker alleges that Dhirani advised him that the Beaudoin bankruptcy was not a primary concern and that the exigible equity in the Beaudoin Property was $5,000. She did not offer any grounds upon which to challenge the valuation and her opinion was consistent with that of the Trustee.
[7] Baker did obtain an appraisal of the Teschner Property but it was lower than the Trustee’s appraisal figure. In September 2015 the inspectors approved the Trustee’s proposed settlement of the Teschner bankruptcy and she was discharged in February 2016.
[8] Elkay ended Baker’s retainer in December 2016 and returned to Teplitsky.
[9] In December 2017, Teplitsky, on behalf of Elkay, commenced this action against Baker for breach of contract and negligence. In its statement of claim, Elkay alleges that Baker failed to exercise all reasonable care and skill in providing it with advice and services. In particular, it pleads that Baker failed to: (a) provide the advice, recommendations and information necessary for Elkay to make informed decisions regarding its interests; (b) failed to follow Elkay’s instructions; (c) failed to challenge the bankrupts’ and/or Trustee’s valuations of property in the estates, which significantly undervalued the assets available for distribution to creditors, including Elkay; (d) failed to act with sufficient knowledge and adequate consideration of the law applicable to Elkay’s position in the respective estates; (e) failed to adequately represent Elkay’s interest to the standard expected of capable bankruptcy counsel in the circumstances; and (f) failed to advance the interests of Elkay.
[10] Among the specific allegations levied against Baker is that he failed to obtain property valuations for the Beaudoin Property or the Teschner Property and failed to challenge the settlement of the equity in the Beaudoin Property when instructed to do so. The equity was fixed at $5,000, a number that Baker said Dhirani advised was reasonable.
A. Motion to remove Teplitsky as lawyers of record for Elkay
[11] Baker argues that Teplitsky must be removed as counsel for Elkay because it acted for Elkay both before and after Baker’s retainer and has a conflict of interest. He argues that Teplitsky provided advice to Elkay on the same issues over which Elkay is now suing him. Given’s Baker’s position that Teplitsky may be a party in its own right, there is a substantial risk that its representation of Elkay will be impacted by its own interests. In any event, Dhirani and other lawyers at the firm will be witnesses at the trial as they have relevant evidence about the claim. Lastly Baker argues that by suing him, Elkay has waived any solicitor-client privilege over matters in issue.
[12] Baker denies any wrongdoing. He also intends to defend the action on the basis that Elkay suffered no loss. If there were any loss, it was to due to Elkay’s failure, while represented by Teplitsky, to take appropriate action to protect itself both before and after Baker’s retainer. He intends to argue at trial that Elkay failed to mitigate any damages it did suffer and, in particular, that it took no steps, when represented by Teplitsky, to appeal the discharge order in the Beaudoin matter or the Certificate of Discharge in the Teschner matter.
[13] The relevant paragraphs of Baker’s defence and counterclaim are set out below:
The plaintiff was represented in that litigation (in which Elkay sued Beaudoin and Teschner) by its current counsel Teplitsky Colson LLP (“Teplitsky Colson”). The Defendants were not retained to and did not provide any advice to the plaintiff with respect to that litigation or the underlying commercial lease, including, but not limited to, any security that might have been available to protect the plaintiff’s interest thereunder. At all times material to the lease negotiations, the plaintiff relied on the advice of persons other than the Defendants;
The plaintiff continued to be represented by Teplitsky Colson in connection with those bankruptcies for well over a year prior to the Defendants’ retainer;
… The Defendants deny that there was any viable basis on which to oppose Beaudoin’s discharge from bankruptcy in any event, or to challenge the Trustee’s proposed settlement;
Despite being represented by Teplitsky Colson for well over a year prior to the Defendants’ retainer, the plaintiff took no steps to obtain an independent valuation of the [Beaudoin] property, such as would allow the plaintiff to attempt to challenge the Trustee’s valuation. In the alternative, the Defendants state that if the plaintiff did obtain such a valuation, of which the Defendants have no knowledge, then said valuation confirmed the reasonableness of the Trustee’s valuation in the [Beaudoin] Property;
In or around December 2016, the plaintiff terminated the Defendants’ retainer and re-retained Teplitsky Colson;
Notably, the plaintiff, as represented by new counsel and with the benefit of legal advice, took no steps to challenge the settlement or any other acts of the Trustee;
As was the case with the Beaudoin bankruptcy, the plaintiff terminated the Defendants’ retainer in or around December 2016 and again, re-retained Teplitsky Colson to act on its behalf;
Again, the plaintiff, as represented by new counsel and with the benefit of legal advice, took no steps to attempt to challenge the settlement or the conduct of the Trustee after-the-fact;
To the extent that the plaintiff has suffered a loss in connection with Beaudoin and/or Teschner, which is denied, said loss is a result of the plaintiff’s failure to obtain security in respect of the commercial lease, years prior to the Defendants’ retainer;
The plaintiff has failed or neglected to take any steps to challenge any of the acts of the Trustee in connection with those bankruptcies, even with the benefit of new counsel;
The plaintiff received the benefit of legal advice from Teplitsky Colson in connection with the Beaudoin and Teschner bankruptcies both immediately before and after the Defendants’ retainer. The Defendants state that the plaintiff relied upon Teplitsky Colson in respect of those bankruptcies. To the extent that the plaintiff had grounds on which to challenge the Trustee’s conduct but failed to do so, its remedy is against Teplitsky Colson and not the Defendants; and
The Defendants state that the plaintiff’s action against them with respect to the Beaudoin bankruptcy is statute-barred.
[14] Based on his pleading, Baker argues that the advice that Teplitsky gave Elkay, the extent to which Elkay relied on that advice and the steps that Teplitsky took or failed to take on behalf of Elkay are live issues in this action. He intends to call Dhirani and perhaps other lawyers at Teplitsky as witnesses at trial.
[15] In response to this motion, Elkay, through Krauss, swore an affidavit stating that it relied exclusively on the advice of Baker concerning the bankruptcies.
[16] Elkay admits that Teplitsky was its long-time trusted advisor. It admits that Teplitsky acted on the underlying commercial lease litigation and, subsequently, on the Beaudoin and Teschner bankruptcies. It admits that it spoke to Teplitsky about the discharges from bankruptcy and about the advice it received from Baker on or about 19 December 2016. It denies that it still could have appealed Beaudoin’s discharge from bankruptcy or challenged Teschner’s discharge. Krauss deposed that “Elkay determined, based on a cost-benefit analysis, that there would be no reasonable chance of success in challenging the discharges in either bankruptcy given that after Baker’s retainer, in reliance upon Baker’s guidance and advice, Elkay had failed to take appropriate steps in a timely manner to challenge either discharge.”
The law on removal of a lawyer of record
[17] It is a fundamental principle of our legal system that clients should not be deprived of their counsel of choice absent good cause.
[18] In Mazinani v. Bindoo 2013 ONSC 4744 at paragraph 60, Master Glustein, as he then was, helpfully set out the following principles to consider on a motion to remove a lawyer of record who may be a witness at trial:
[60] I adopt the following principles as the applicable law on a motion to remove a lawyer of record who may be a witness at trial:
(i) The court has inherent jurisdiction to remove a lawyer from the record who has a conflict of interest. The inherent jurisdiction “stems from the fact that lawyers are officers of the court and their conduct in legal proceedings which may affect the administration of justice is subject to this supervisory jurisdiction” (MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235 (“MacDonald Estate”), at para. 18);
(ii) The inherent jurisdiction extends to removing a lawyer who may be a witness in a case in which the lawyer acts as counsel (Ontario Realty Corp. v. P. Gabriele & Sons Limited et al, 2006 37844 (Ont. S.C.J.) (“Ontario Realty”), at para. 16);
(iii) The court on a motion to remove a lawyer of record who may be a witness at trial must consider “(a) the maintenance of high standards of the legal profession and the integrity of our system of justice and (b) the right of a litigant to its choice of counsel, which he or she should not be deprived of without good cause” (Ontario Realty, at para. 17, citing MacDonald Estate, at para. 13);
(iv) The test to be applied on a motion to remove a lawyer from the record who may be a witness is whether a fair-minded reasonably informed member of the public would conclude that the proper administration of justice requires the removal of the lawyer. This determination is objective, fact-specific and based on an examination of all factors in the case (Karas v. Ontario, 2011 ONSC 5181 (S.C.J.-Mast.) (“Karas”) at para. 26; Ontario Realty, at para. 20);
(v) The court’s concern of a lawyer appearing as a witness is that (i) there may be a conflict of interest between the lawyer and client and (ii) the administration of justice can be impaired by a conflict between the lawyer’s obligations of objectivity and detachment which are owed to the court and the lawyer’s obligation to his or her client to present evidence in as favourable a light as possible. In Urquhart v. Allen Estate, [1999] O.J. No. 4816 (S.C.J.) (“Urquhart”), Gillese J. (as she then was) held (Urquhart, at paras. 27-28):
When counsel appears as a witness on a contentious matter, it causes two problems. First, it may result in a conflict of interest between counsel and his client. That conflict may be waived by the client, as indeed, was done in this case. The second problem relates to the administration of justice. The dual roles serve to create a conflict between counsel's obligations of objectivity and detachment, which are owed to the court, and his obligations to his client to present evidence in as favourable a light as possible. This is a conflict that cannot be waived by the client as the conflict is between counsel and the court/justice system.
Counsel are independent officers of the court. The trial judge must be able to rely upon plaintiffs' counsel for a high degree of objectivity. The overriding value, in these circumstances, is concern for the proper administration of justice. A distinction must be drawn between the role of counsel as an independent officer of the court and the role of a witness whose objectivity and credibility are subject to challenge.
(See also Karas, at para. 27);
(vi) The integrity of a lawyer`s role as an advocate is also undermined if the lawyer was a witness to a critical meeting. In Young-Tangjerd v. Official Board of Cavalry United Church, 2006 17946 (Ont. S.C.J.) (“Young-Tangjerd”), Hockin J. held (Young-Tangjerd, at paras. 6-7):
The material fact on the motion and the fact which raised the possibility that the solicitor might be called as a witness at trial is this. The solicitor was present at a meeting at which the plaintiff was present with members of the defendant church. He was there as a member of the church not as solicitor. The plaintiff alleges that she was dismissed from her employment constructively during the course of the meeting or because of the meeting. The reasons of the motion judge posit that in this circumstance, the solicitor's disqualification is not automatic and that it could be left to another judge by motion (presumably on the eve of trial) to quash his subpoena or to the trial judge to determine whether he could act as trial counsel if he was to be called as a witness.
In my view, the issue is not the lawyer's position as a witness but his position as advocate. I doubt whether any party or a witness may be cross-examined by a lawyer who could cross-examine not on the basis of his brief but on the basis of his participation in the event or transaction cross-examined on. Any question, leading or not, once posed by the lawyer is unfair to the witness and carries with it the appearance of an unsworn offer of the advocate's version of the facts. In addition, questions put in cross-examination by the lawyer witness would create the uneasy feeling in the mind of the plaintiff in this case that the measure of his credibility could be based not on the basis of the evidence but the unsworn declaration of a judicial participant in the proceeding, the defendant's lawyer. It goes without saying that the lawyer cannot compartmentalize his or her mind to exclude actual knowledge of the event. As well, the court should ensure no conflict in the lawyer's duty as advocate and as an officer of the court. For example, what is the lawyer to do if his memory of the event differs from the evidence in-chief he hears from his witnesses.
(vii) Rule 4.02(2) of the Rules of Professional Conduct of the Law Society of Upper Canada provides that “Subject to any contrary provisions of the law or the discretion of the tribunal before which a lawyer is appearing, a lawyer who appears as advocate shall not testify before the tribunal unless permitted to do so by the rules of court or the rules of procedure of the tribunal, or unless the matter is purely formal or uncontroverted”;
(viii) The commentary to Rule 4.02(2) sets out the concern that a lawyer who puts personal beliefs into issue acts contrary to the lawyer’s role as an objective advocate and puts the lawyer’s credibility at issue. The commentary provides:
“A lawyer should not express personal opinions or beliefs or assert as a fact anything that is properly subject to legal proof, cross-examination or challenge. The lawyer should not in effect appear as an unsworn witness or put the lawyer’s own credibility in issue. The lawyer who is a necessary witness should testify and entrust the conduct of the case to another lawyer”.
(ix) Rules of Professional Conduct are not binding on a court, but are persuasive as an important statement of public policy (MacDonald Estate, at paras. 16 and 18; Karas, at para. 29);
(x) Courts should be reluctant to make what may be premature orders preventing lawyers from continuing to act. If the evidence does not necessarily have to come from the lawyer and may be obtained through admissions or documentary productions, a removal order will be premature (Essa (Township) v. Guergis; Membery v. Hill, [2003] O.J. No. 2581 (Div. Ct.) (“Essa”), at para. 43; Lesniowski v. H.B. Group Insurance Management Ltd., [2002] O.J. No. 3194 (S.C.J. - Mast.) (“Lesniowski”), at para. 15);
(xi) 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 (George S. Szeto Investments Ltd. et al v. Ott, 2006 9307 (Ont. S.C.J. - Mast.) (“George S. Szeto”), at para. 13);
(xii) “In view of the expense of litigation and the enormous waste of time and money and the substantial delay which can result from an order removing solicitors, courts should only do so in clear cases” (Essa, at para. 43);
(xiii) “[A] court should be slow to interfere with the litigant’s right to choose his or her counsel. … When a litigant is deprived of the services of a lawyer whom she has chosen, there will be some hardship imposed on her. The imposition of such hardship can only be justified if it is done to prevent the imposition of a more serious injustice. It follows that the removal of counsel should be only to relieve the risk of real mischief and not a mere perception of mischief” (Urquhart, at para. 19);
(xiv) Certainty that a lawyer will be called as a witness is not required. Rather, the court must consider the likelihood of the lawyer being called as a witness (Ontario Realty, at para. 33);
(xv) “It is not sufficient for a moving party to suggest opposing counsel is a potential witness or allege only that he or she might provide material evidence. Rather, it must be established that there is a real basis to believe counsel can likely, or probably, provide material evidence” (Graham v. Ontario, [2006] O.J. No. 763 (S.C.J.) (“Graham”), at para. 35; Ontario Realty, at paras. 34-35);
(xvi) “While courts have acknowledged that the freedom to choose counsel is an important interest to protect, it is not an absolute right. The right to be represented by counsel of choice can be outweighed when the administration of justice would be detrimentally affected” (Karas, at para. 45; George S. Szeto, at para. 21; Urquhart, at paras. 21 and 28); and
(xvii) The court should approach a motion to remove a lawyer of record who may be a witness at trial by following a flexible approach and consider each case on its own merits (Essa, at para. 48).
[19] As stated by Master McAfee in Karas, supra at paragraph 26 and referenced in part, above:
This determination is very fact specific and based on an examination of all of the factors in the case and the specific reason why the motion is being brought. The task of the court is to uphold and preserve the integrity of the justice system while ensuring that litigants are not deprived of their counsel of choice without good cause.
[20] In addition to the Mazinani v. Bindoo factors, the court in Essa set out a list of factors to be considered on a motion such as this. I have considered the facts of this case, below, in the context of each of these factors.
(i) The stage of the proceedings
[21] The matter is at an early stage, despite being commenced in 2017. Pleadings are completed but the parties have yet to deliver sworn affidavits of documents or arrange discoveries.
[22] There is no satisfactory explanation why this motion was not brought in early 2018 when Baker first alleged that Teplitsky had an apparent conflict of interest and that Dhirani would likely be a witness at trial. That same notice letter also took the position that the firm’s files were producible. It was not until 20 January 2020 that Baker advised of his intention to bring this motion. Attempts to book a long motion date were then interrupted by the pandemic.
[23] The failure to bring the motion at that time means that all of the litigation steps needed to set the matter down must be completed in the next 18 months, potentially with new counsel. If Teplitsky remains counsel, the timelines remain tight, all the same.
[24] I find the stage of the action to be a neutral factor.
(ii) The likelihood that the witness will be called
[25] Teplitsky does not intend to call any lawyer from the firm as part of Elkay’s case. It argues that it is entirely unnecessary for Baker to call the firm’s lawyers as witnesses and they see this as a purely tactical motion to remove Elkay’s long time and trusted counsel. It argues that many of the issues about which Baker wishes to call Teplitsky have been admitted or would not be relevant, as discussed further, below.
[26] Baker has confirmed that he intends to call Dhirani and Ventrella to support his defence that Elkay relied on their advice before, during and after his retainer, that any damages were caused by their legal advice to Elkay and that they advised Elkay not to appeal because they knew Baker had not erred at all in his representation of Elkay and knew any appeal would have no chance of success.
[27] I find it likely that Baker will call Dhirani, Ventrella and perhaps other lawyers at Teplitsky as witnesses in support of his defence.
(iii) The good faith (or otherwise) of the party making the application
[28] There is nothing conclusive about Baker’s good faith or lack thereof in bringing this motion and I find this factor to be neutral.
(iv) The significance of the evidence to be led
[29] Elkay argues that its cause of action against Baker is based on the events that took place exclusively during his retainer and not any events that occurred before or after his retainer. I accept that is true but Baker’s defence and counterclaim puts in issue events that go beyond that timeframe.
[30] Baker argues that the evidence of Teplitsky is significant. He argues that the steps that Teplitsky took or didn’t take and the advice and recommendations it gave Elkay in the period before and after and, indeed, during his retainer are material to his defence that he was not negligent and material to his argument that Elkay filed to mitigate any losses it may have suffered.
[31] Teplitsky argues that the advice it gave or why it gave the advice it did is not relevant for two reasons. First, the material facts are not in issue. Elkay does not contest that it did not challenge the discharges. If Baker demonstrates that there were reasonable grounds to challenge the discharges, the argument that Elkay failed to do so remains available to him.
[32] Second, Elkay’s decision-making process and the reasons behind Teplitsky’s recommendations are not relevant. Teplitsky disagrees with Baker’s assertion in his factum that the lawyers “will be required to give evidence on their state of mind, reasoning behind their decisions, advice and recommendations as they relate to steps taken to protect Elkay’s interests both prior to and after Baker’s retainer, and who or what caused the purported loss…. They can testify about the advice provided to Elkay, including what steps were taken to minimize Elkay’s losses, and why they gave that advice or made certain decisions not to challenge the bankruptcy discharges or the acts of the Trustee.”
[33] Teplitsky argues that whether Elkay made the decision not to challenge on its own or on good advice from Teplitsky or bad advice from Teplitsky is not relevant to Baker’s defence that the discharges could or should have been challenged. Further, in a matter of solicitor’s negligence, it is not Teplitsky’s opinion that will carry the day, as the issue will be informed by expert opinions on a lawyer’s standards and duty of care.
[34] Similarly, while Baker argues that he is entitled to evidence that Teplitsky took no steps on behalf of Elkay to obtain an independent valuation to challenge the Trustee’s valuation, Teplitsky and Elkay admit they did not obtain any such valuation. If they did not and should have, Baker may argue that they failed to mitigate.
[35] I am of the view that the strategy or rationale behind the decision not to appeal and not to obtain a valuation may be relevant to Baker’s defence. On this motion, I note that in its affidavit sworn in opposition to this motion, Elkay relied on that legal advice from Teplitsky to justify why no appeal was taken. Krauss deposed: “By December 19, 2016, I am advised by Dhirani that the deadline for appealing the discharge Order in the Beaudoin bankruptcy had expired and that the deadline had also passed to challenge the Certificate of Discharge in the Teschner bankruptcy.” Baker wishes to explore that legal advice. He expects that, when summoned, the Teplitsky lawyers will admit that they did not recommend an appeal because they did not believe that Baker had given unsound advice. In fact, his advice was similar to the advice Teplitsky had given and continued to give Elkay. On this basis, the strategy or reasoning behind these decisions will be of significance.
[36] As Master Robinson noted in 8657181 Canada Inc. v. Medhi Au LLP 2019 ONSC 6380 at paragraph 27 (affirmed at 2021 ONSC 1295):
I am satisfied, though, that there is sufficient evidence to support that he [the lawyer who was ultimately removed] would reasonably have given advice to 865 Canada regarding the merits of appeal grounds and that he has relevant evidence on both that issue and what other options were considered and assessed in seeking to mitigate any losses suffered by 865 Canada by dismissal of the set aside motion.
[37] Further, Baker pleads in his statement of defence that Elkay knew about Beaudoin’s discharge from bankruptcy on or about 6 August 2015 but did not commence this action until 20 December 2017, during Teplitsky’s second retainer and after expiry of the limitation period. In Baker’s view, what is relevant, in addition to the fact that the limitation period was allegedly missed, is why it was missed. He argues that Dhirani has relevant evidence that Teplitsky did not take action with respect to the Beaudoin bankruptcy outcome because it agreed with his assessment and the actions he took.
[38] Lastly, Baker also swore that he was briefed by Dhirani about both bankruptcies. According to Baker, Dhirani told him that the Beaudoin bankruptcy was not a primary concern. The exigible value in the home was $5,000 and Dhirani did not proffer any grounds upon which to challenge the valuation or that decision.
[39] For these reasons, I am of the view that the evidence that Baker proposes to elicit from Dhirani and perhaps others at Teplitsky will have significance in determining Baker’s liability and Elkay’s mitigation efforts and the quantification of its damages claim.
(v) Impact of removing counsel on the party’s right to be represented by counsel of choice
[40] While Elkay would no doubt prefer to have its long-time counsel represent it, there is no evidence before me that it could not retain other counsel for this matter, just as it retained Baker to assume carriage of the bankruptcy matters from Teplitsky when it felt it was appropriate.
(vi) Whether trial is by judge or jury
[41] The Essa factor concerning juries is not relevant as this case will be heard by judge alone.
(vii) Who will call the witness; if, for example, there is a probability that counsel will be in a position to cross-examine a favourable witness, a trial judge may rule to prevent that unfair advantage arising
[42] Elkay does not intend to call Teplitsky as a witness. It is Baker who intends to call the Teplitsky lawyers as witnesses and who has referenced Teplitsky throughout his statement of defence and counterclaim. The spectre looms of Teplitsky cross-examining lawyers from its own firm, which would give the Elkay an unfair advantage that militates in favour of removal of counsel (see Kitchen v Johnson McMaster Professional Corporation 2018 ONSC 3717 at paragraph 32(vii)).
[43] One also foresees Teplitsky arguing that Baker should be found liable for not appealing the discharges when they, too, advised Elkay not to appeal. If Baker’s theory holds, Teplitsky will be challenging him for not taking actions that they also believed were not warranted and did not take themselves.
(ix) Connection/relationship between counsel, the prospective witnesses and the parties involved in the litigation.
[44] Dhirani will have evidence concerning what she told Baker, what advice she gave Elkay concerning the appeal, whether she advised Elkay that an appeal would likely not succeed and why. Her direct role in advising Elkay about the appeal options and the strategy and whether an appeal was necessary to mitigate damages raises issues that could directly impact the outcome of the trial.
[45] While Krauss argues that there is no reason why Baker cannot ask him questions regarding the decisions made by Elkay in mitigation of its damages, he has already indicated that the legal advice he received from Teplitsky played a part in Elkay’s decision-making. He would be required to speak about that advice, putting it in issue at trial, while being examined in chief by the very lawyers who gave him that advice.
Conclusion on the motion to remove Teplitsky as lawyers for Elkay
[46] Given the likelihood of Baker calling the Teplitsky lawyers as witnesses, given the significance of the issues about which they will testify and considering the other factors set out above, I find that Teplitsky cannot continue to act for Elkay in this action.
[47] In my view, a fair-minded reasonably informed member of the public would conclude that the proper administration of justice requires that Wortzman and Teplitsky be removed as lawyers of record for Elkay.
B. Motion for Productions
[48] Baker seeks production of unredacted copies of all of Teplitsky’s file materials concerning the underlying lease with Artisan Baker, the lease dispute and litigation against Beaudoin and Teschner and the subsequent bankruptcies of Beaudoin and Teschner.
[49] He argues that the files should be produced for the same reason that he argues Teplitsky should be removed as counsel: the legal advice Teplitsky gave with respect to the commercial lease, the litigation against Beaudoin and Teschner, the strategy on the bankruptcies and this solicitor’s negligence action are all material to Baker’s defence and to the determination of liability and damages.
[50] Elkay has already or has agreed to produce Teplitsky’s files relating to the underlying lease litigation and bankruptcies, other than the solicitor client privileged communications.
[51] At this juncture Baker has not narrowed his request and seeks the entire Teplitsky file. I am not satisfied, based on the materials before me, that privilege has been waived over the entire file or that all of the documents in the file are relevant to the issues advanced by Baker.
[52] Based on the dicta in Kota v Raphael [2003] O.J. No. 3003, it is likely that any documents in Teplitsky’s file concerning advice to Elkay about the steps to be taken in the bankruptcies during both the first and second retainers will be relevant and solicitor-client privilege deemed waived. As noted in that case at paragraph 16:
16 . . . There is a deemed waiver of solicitor-client privilege when the plaintiffs put into issue the nature of the legal advice they received. In my view there was a deemed waiver over [the current solicitor’s] file as the plaintiffs alleged reliance on [the former solicitor’s] advice to their detriment, and the defendants [i.e. the former solicitors] denied reliance alleging that the plaintiffs relied on other legal advice (i.e. that of [the current solicitor]). It would be unfair to deny to the defendants access to documents that might shed light on the plaintiffs’ instructions and state of mind and about delineation of responsibility between the law firms. See Woodglen & Co. v. Owens (1995), 1995 7070 (ON SC), 24 O.R.(3d) 261 (Ont. Gen. Div.).
[53] As further noted by Ferguson, J. on the appeal of 8657181 v. Medhi Au LLP, supra at paragraph 25:
… the act of suing one’s former lawyer constitutes a waiver of the solicitor-client privilege between them. In particular, the client waives privilege over all matters going to the issue of what caused the loss suffered by the client and to what extent the loss is attributable to their lawyer.
[54] However, absent disclosure of some particulars concerning the contents of the file, it would be inappropriate to make a final determination on this issue. This portion of the motion is adjourned to permit Elkay to provide a revised affidavit of documents that includes in Schedule “A” those documents from Teplitsky’s file that it is prepared to produce. It should consider the comments of Kota, supra, and 8657181 v. Medhi, supra in determining what to list in Schedule “A”. Elkay is then to list in Schedule “B” those documents over which it claims privilege, with sufficient particulars about the document and the grounds for not producing it to enable Baker to challenge that position. Lastly Elkay shall provide a listing of documents in the Teplitsky file that it considers irrelevant and is not producing, again with sufficient particularity to allow Baker to challenge the position, should he wish. The updated affidavit of documents and list of irrelevant documents is to be provided within 30 days of the date of this order.
C. Leave to examine Dhirani and Wortzman as non-party witnesses
[55] While the request for this relief was mentioned in the “order sought” portion of Baker’s factum, this issue was not addressed in either party’s factum or argued by either side. This portion of the motion is adjourned to be argued, should Baker wish, along with the motion for production of the Teplitsky file, if that issue cannot be resolved. If Baker continues to seek relief against Ventrella, he must be served with the motion materials.
D. Costs
[56] The parties shall attempt to reach agreement on the issue of costs over the next month. If they cannot do so by 28 May, they may each file a costs outline along with submissions that are no more than three pages in length by email to my assistant trial co-ordinator Ms. Meditskos at Christine.Meditskos@ontario.ca.
Master Jolley
Date: 28 April 2021