Court File and Parties

COURT FILE NO.: CV-20-73914 DATE: 2021/12/30

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

1914699 ONTARIO LTD., CUPE LOCAL 5167 BUILDING CORPORATION, AND CUPE LOCAL 5167 Plaintiffs

• and -

METROLINX Defendant

COUNSEL: C. Harris, on behalf of the Plaintiffs B. Kurpis, on behalf of the Defendant

HEARD: November 30, 2021

ENDORSEMENT

A.J. GOODMAN J.:

[1] This motion is brought by the defendant, ("Metrolinx") for the removal of counsel, Mr. Shane Rayman and Rayman Beitchman LLP ("RB LLP") as counsel of record for the plaintiffs, 1914699 Ontario Ltd. ("CUPE").

[2] This motion was heard by videoconference.

[3] For the following reasons, the defendant's motion to remove Mr. Rayman and his firm as counsel of record is dismissed.

Background:

[4] This action concerns a claim for breach of contract and negligent misrepresentation for a failed purchase and sale of the plaintiffs' property. Mr. Rayman and the firm of RB LLP are counsel for plaintiffs in the action. They also represented the plaintiffs during the negotiations that ultimately failed and led to this action.

[5] The plaintiffs commenced its action on September 23, 2020. It alleges that Metrolinx is liable to it in negligent misrepresentation and breach of contract for damages incurred as a result of commitments that Metrolinx made about its intention to acquire CUPE's property for development of the Hamilton LRT Project.

[6] The key representations CUPE alleges in its claim were made on March 7, 2017, at a meeting between CUPE and Metrolinx representatives (the "March 7 Meeting"). CUPE alleges that Metrolinx represented that: CUPE would soon be contacted by Metrolinx with respect to a pending expropriation; CUPE's property would be "100% impacted" by the Hamilton LRT and that Metrolinx "must" have ownership of the Property by June 2018; and acquisition of CUPE's property would take place under the purview of the Expropriations Act, either by way of formal expropriation or an agreement pursuant to s. 30 of the Act. Either way, it is alleged that CUPE was told that they would be compensated for the value of the CUPE property, the cost of acquiring and retrofitting a replacement property, reasonable relocation costs, and reasonable incidental costs such as legal and appraisal fees.

[7] Metrolinx allegedly made further representations about its intention to acquire the property, which repeatedly confirmed the original alleged misrepresentations in writing after March 7, 2017. CUPE purchased a replacement property on the basis of these representations on September 17, 2017. Metrolinx ultimately did not acquire CUPE's property. The Hamilton LRT project was cancelled in December 2019. By that time, CUPE alleges that it had incurred substantial carrying costs, out of pocket expenses, and other damages associated with the acquisition and renovation of a replacement property.

Positions of the Parties:

[8] The defendant submits that counsel was either the agent of the plaintiffs, thereby making all correspondence between it and the plaintiffs producible. Or, he was the lawyer for the plaintiffs actively involved as the party in negotiating the failed deal and related issues, and, therefore, a witness to the substantive issues.

[9] The defendant says that the plaintiffs retained Mr. Rayman and RB LLP to claim against Metrolinx, relying on statements Metrolinx allegedly made to Mr. Rayman, all while shielding those statements with solicitor client privilege. The defendant says that the alleged negligent representations regarding an agreement were made to or addressed by Mr. Rayman. The defendant also says that Mr. Rayman will be a material witness with substantive evidence to provide at trial in regards to how the documents were obtained by him, the nature of these documents, and, more importantly, to address the nature of the negotiations.

[10] Mr. Rayman acted as more than CUPE's lawyer. He did not simply advise CUPE on how to approach the negotiations, he actively took part in and controlled those negotiations on CUPE's behalf. It is Metrolinx's position that Mr. Rayman's decision was CUPE's decision and Mr. Rayman and CUPE were one and the same. The defendant says that it is unfair to Metrolinx to continue to allow Mr. Rayman to be CUPE's counsel as they would be unable to examine him in court and if they could, he could shield evidence behind solicitor-client privilege. The defendant submits that despite the unresolved conflicts of interest, Mr. Rayman has breached privilege and refused to recuse himself. His refusal benefits his firm at the expense of the defendants' interests and the overall administration of justice.

[11] The plaintiffs' respond that since commencing this action, they have attempted to advance its claims on the merits and to proceed with pleadings, discovery, and eventually trial. At every step, the defendants have been met with delay tactics, including, this motion.

[12] The plaintiffs contend that Mr. Rayman may be litigation counsel, if necessary, with respect to a claim arising from Metrolinx's planned acquisition – whether before the Local Planning Appeal Tribunal (now Ontario Land Tribunal) or the Courts. This action falls squarely within the scope of such litigation. Mr. Rayman acted as counsel and transmitted information to the other party in his role. He acted in accordance with his obligations as a lawyer and not as a material party.

[13] The plaintiffs submit that there is no merit whatsoever to the relief sought in this motion and it ought to be dismissed with costs.

Issues:

[14] There are two issues on this motion:

[15] Should Mr. Rayman and RB LLP be removed as lawyers of record for CUPE?

[16] Is Metrolinx entitled to a waiver and disclosure of solicitor-client privileged communications concerning CUPE's purchase of the replacement property?

Legal Principles:

[17] The law is clear that a litigant's counsel of choice may not be removed lightly. The decision to disqualify is a discretionary one, to be made only in the clearest of cases: MacRae v. Santa, [2002] O.J. No. 4231 (S.C.) at paras. 29-32, Karas et al. v. Her Majesty the Queen, 2011 ONSC 5181, at para. 26.

[18] The overarching test to be applied on a motion to remove a lawyer from the record is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires it. This determination is fact-specific and based on an objective examination of all of the factors in the case and the specific reason why the motion is being brought: Karas v. Ontario, 2011 ONSC 5181 at para. 26.

[19] 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: MacDonald Estate v Martin (1990), [1990] 3 SCR 1235 at para. 13.

[20] A court should be reluctant to make what may result in orders preventing solicitors from continuing to act. This is 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. The jurisprudence provides that courts should do so only in clear cases.

[21] The court has inherent jurisdiction to remove from the record a lawyer who is in a conflict of interest. When their conduct affects the administration of justice in legal proceedings, that conduct is subject to the Court's supervisory jurisdiction.

[22] The motivation of the party seeking removal is a factor in the determination of such a motion. A court will not remove counsel if the moving party has brought the motion for tactical rather than principled reasons. There must be a "genuine" concern with respect to the merits of the alleged conflict: Sabean v. Aikman, 2016 ONSC 6130, at para. 59.

[23] The factors to be considered in making this determination were set out by the Divisional Court in Essa (Township) v Guergis, (1993), 15 OR (3d) 573, as follows: (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) who will call the witness if, for example, there is a probability counsel will be in a position to cross-examine a favourable witness, a trial judge may rule to prevent that unfair advantage arising; and (h) the connection or relationship between counsel, the prospective witness and the parties involved in the litigation (collectively, the "Essa Factors"). See 9657181 Canada Inc v Mehdi Au LLP, 2021 ONSC 1295 at para. 9.

[24] In this case, I am also guided by the general principles espoused by my learned colleague Leach J., in Andersson v. Aquino, 2018 ONSC 852.

Discussion:

[25] The plaintiffs retained Mr. Rayman as counsel—after the March 7, 2017 meeting. Contrary to Metrolinx's claims, the evidence suggests that CUPE did not retain Mr. Rayman solely as its "negotiator", empowered to negotiate the acquisition of its property. It retained him as counsel to represent it in "negotiations and, if necessary, litigation" arising from the planned acquisition of its property.

[26] At the time of his initial retainer in April 2017, Mr. Rayman sent an introductory letter to Metrolinx requesting that communication occur through counsel. The letter was dated April 17, 2016, acknowledged by the parties to be in error. Despite relying heavily on that letter as evidence of Mr. Rayman's involvement in key events, this was more than a month after Metrolinx made the alleged misrepresentations to CUPE at the March 7, 2017 Meeting.

[27] I find that Metrolinx's contention that "Mr. Rayman's decision was CUPE's decision" is unsupported by the evidence. It is directly contradicted by the unchallenged evidence of CUPE's Vice President – who testified that he "reviewed the productions of both parties and [has] not seen any correspondence or other documents that appear to have been sent without instructions from CUPE, or which were not reported to us. All decisions were, and are, made by CUPE".

[28] Metrolinx admits that it removed conflict allegations from its Statement of Defence. It omits to mention its factum that the allegations were only removed after CUPE objected to them and demanded particulars. Then, when CUPE attempted to schedule discoveries after productions were exchanged in February 2021, Metrolinx advised it was intending to "investigate the conflict issue" and asked to delay discoveries until August or September. Metrolinx claims that its need to "investigate" the issue arose from documents in the affidavit of documents served by CUPE. It has since admitted that most, if not all, of those documents had been in its possession since at least November 2020—prior even to the preparation of its Statement of Defence.

[29] CUPE nevertheless accommodated Metrolinx's request to postpone discoveries and its supposed need to "investigate" the matter. Discoveries were to start on June 21, 2018. On May 3, 2021, Metrolinx wrote to CUPE and stated its intention to bring a motion to remove RB LLP as counsel of record. It also contended that CUPE's counsel would need to be examined for discovery as the witness for the plaintiffs.

[30] CUPE provided its responding position within a week. It requested that if Metrolinx intended to bring a motion, it do so expeditiously.

[31] On June 15, Metrolinx stated it would not produce a representative for discovery "until the conflict matter was addressed". CUPE requested that Metrolinx confirm it could rely on the correspondence in lieu of obtaining a certificate of non-attendance refused and continued to insist Mr. Rayman be produced as CUPE's representative witness for discovery.

[32] Metrolinx finally served its motion materials on June 18, 2021, the Friday before discoveries were scheduled to occur. No one attended discovery on its behalf. CUPE obtained a certificate of non-attendance. CUPE's representative, however, did attend and was ready to be examined for discovery.

Analysis:

Application of the Essa Factors:

The Stage of the Proceedings

[33] Courts should be reluctant to make what may be premature orders preventing solicitors from continuing to act. However, delay in bringing a removal motion after learning of a potential conflict issue will weigh against the moving party.

[34] This action has been proceeding for one year. Productions were exchanged eight months ago. It first raised the conflict issue in its pleadings, then agreed to remove it when confronted. Metrolinx then brought it up again, allegedly on the basis of new information contained in CUPE's affidavit of documents – but it has admitted that there is effectively no such new information to ground the current allegations that it did not have when it removed the allegations from its Statement of Defence.

The Impact of Removing Counsel on the Party's Right to be Represented by Counsel of Choice

[35] In my view, it would be unfair to CUPE at this time to require it to give up the solicitors of its choice when the alleged "conflict" is based on documents that have been available to Metrolinx and its counsel for nearly a year. This factor weighs against Metrolinx.

The Likelihood the Witness Will be Called / Significance of the Evidence to be Led

[36] Metrolinx claims that it requires examination of Mr. Rayman as a witness for discovery and at trial. It also claims that CUPE must call Mr. Rayman as a witness. CUPE nonetheless confirmed that it does not intend to call Mr. Rayman as a witness: See Rice v. Smith, 2013 ONSC 1200, Bose v. Bangiya Parishad Toronto, 2018 ONSC 7639.

[37] CUPE's claim relies on representations made to it by Metrolinx representatives in writing, and in person at the March 7, 2017 Meeting – prior to counsel's retainer.

[38] Metrolinx does not appear to be denying the authenticity of its own correspondence. However, if Metrolinx is denying the authenticity of the relevant correspondence, it ought to have brought this to the court's attention on this motion. It chose not to, and its bare assertion that a hearsay objection is inevitable does not justify removal of counsel.

[39] Metrolinx's motion rests on a claim that Mr. Rayman is a material witness in these proceedings. I agree with the plaintiffs that there are three problems with this position: (1) it is based on a factual error; (2) it fundamentally misunderstands the role of counsel and the evidence relevant to the causes of action at issue; and (3) the insistence that Mr. Rayman be a witness is premised on an allegation—without any evidentiary foundation whatsoever.

[40] While there is no rule of law prohibiting counsel from appearing as a witness, the courts have consistently indicated that such is extremely undesirable: Karas, at para. 27.

[41] Returning back to Anderson v Aquino, Metrolinx appears to rely on the statement at para. 48, for its position on this point. The sage comments from Leach J., in that case are most helpful in my analysis. However, that case is distinguishable on its facts, as there was an actual conflict of interest, and the lawyers were forced to defend their own work product that was impugned by a faction of the corporation it had also represented.

[42] Metrolinx's own productions demonstrate that communications prior to April 2017 occurred between CUPE and Metrolinx directly, without counsel's involvement. There is no evidence to suggest Mr. Rayman was present at the very crucial March 7 Meeting—and, in fact, it suggests the opposite. After his retainer in April 2017, Mr. Rayman's role was as a lawyer acting on the instruction of his client. Defendant's counsel could not provide evidence to assert that Mr. Rayman was present during meetings where any misrepresentations were made.

[43] The heart of the issue is whether counsel is a witness to a factually contentious matter: Teixeira v. Hamburg Olsen LPC, 2017 ONSC 7532.

[44] In my view, Metrolinx's bald statement that it intends to call Mr. Rayman as a witness (or that CUPE "must" call Mr. Rayman) is not sufficient to warrant his removal. It must establish that there is a real basis to believe that counsel can likely, or probably, provide material evidence. The defendant has not satisfied this key requirement and the unchallenged evidence in the record contradicts it.

[45] Metrolinx also states that "if there was a negligent misrepresentation, that representation was made to Mr. Rayman" and "if there was a breach of contract, Mr. Rayman was the agent for CUPE in forming that contract". Evidence from any other person, it says, is hearsay. Again, these are bald assertions and these statements are not supported in the evidence before me.

[46] In negligent misrepresentation, the plaintiffs must prove that there was a representation made that was untrue, inaccurate or misleading, and that it reasonably relied on that misrepresentation to its detriment. In this case, for example, the Court might ask whether CUPE's purchase of the replacement property in September 2017 was an act of reasonable reliance on the alleged misrepresentations made to it by Metrolinx.

[47] At the time of that purchase, CUPE had met directly with Metrolinx representatives at the March 7, 2017 Meeting. Metrolinx had confirmed in writing on August 23, 2017 that the acquisition was "definitely" going ahead. A representative of CUPE would be well-positioned to testify to these facts and to explain CUPE's internal decision-making process with regard to its corporate governance, general practices, and risk tolerance. The relevant evidence would be from CUPE's decision makers and representatives—not Mr. Rayman, who only acted on the instructions of his client. There is no suggestion that CUPE purchased its replacement property based on information or advice provided by Mr. Rayman.

[48] I note that Metrolinx does not plead this in its Statement of Defence or Amended Statement of Defence. Metrolinx also does not claim that it relied on advice from Mr. Rayman.

[49] It does not even appear that Mr. Rayman was involved in the purchase of that property other than as counsel in the acquisition proceedings. Mr. Rayman's evidence is not required to determine whether it was reasonable to rely on Metrolinx's misrepresentations at the March 7, 2017 meeting and its August 23, 2017 statement that the acquisition was "definitely" going ahead as a basis for purchasing the replacement property.

[50] The breach of contract analysis is similar. The contract alleged is an agreement between the parties—not between Metrolinx and Mr. Rayman. Metrolinx claims that Mr. Rayman was "empowered" to enter into an agreement with Metrolinx. However, there is no evidence of such "empowerment". The only evidence is to the contrary.

[51] I am persuaded that Mr. Rayman's evidence would, in any event, be of no probative value in negligent misrepresentation or breach of contract as both claims are assessed objectively.

[52] While it is true that Mr. Rayman authored correspondence, which speaks for itself, I accept the evidence from the plaintiffs that all such correspondence was reported to, and sent on the instructions of CUPE. On cross-examination, Metrolinx could not point to any evidence that it is intending to call from Mr. Rayman that is only available from him and no other source.

[53] I agree with the plaintiffs that it is inappropriate to select counsel with carriage of the action at issue as a representative witness for discovery, even in circumstances where that lawyer provided legal services on the same matter prior to the commencement of litigation.

The Connection or Relationship between Counsel, the Prospective Witness and the Parties involved in the Litigation

[54] Even in the event an issue arises at trial, it is unclear why the defendant would call Mr. Rayman. He was not present at the very crucial March 17, 2017 meeting between the parties. The defendant has other representatives from the plaintiff to examine at trial.

[55] Metrolinx has claimed that it is essential to have Mr. Rayman's evidence (and privileged correspondence) in order to understand CUPE's "state of mind" in its dealings with Metrolinx. But CUPE's "state of mind" is irrelevant. It is immaterial to consider what was subjectively in CUPE's mind (or Mr. Rayman's) to determine whether a contract was formed, what its terms were, and whether it was breached. The question is whether the parties' words objectively demonstrate an intention to form a binding agreement. Even if CUPE's "state of mind" were a relevant evidentiary issue, it is not something Mr. Rayman could testify to. He is not an officer, director, or employee involved in its internal decision-making. Such an individual from CUPE— like the one who provided evidence on this motion—is a better and proper witness on those issues. See Westshore Terminals Limited Partnership v Leo Ocean, S.A., 2014 FC 136, at para. 41, aff'd. 2014 FCA 231.

[56] Metrolinx has not identified any relevant or necessary evidence from Mr. Rayman that would be determinative in this claim, apart from an apparent intention to ask questions on matters that fall squarely within the realm of solicitor-client privilege. The only material evidence that Mr. Rayman could potentially provide is about the legal advice that he gave to his client. That advice is subject to solicitor and client privilege, and it is not Mr. Rayman's privilege to waive. CUPE has not waived such privilege.

[57] Mr. Rayman's involvement in this proceeding was that of a lawyer—providing advice and communicating with the opposing party on the instructions of his client. His involvement did not transcend that role. The fact that he acted in this matter before the action began is not sufficient to warrant his removal: Rice v. Smith et al, 2013 ONSC 1200 at para. 124, Bose v. Bangiya Parishad Toronto, at paras. 123, 127. I am not persuaded in the least that Mr. Rayman will have material evidence to provide in this action and necessarily will be required to be called as a witness. No lawyer, similarly situated would act any differently.

Whether Trial is by Judge or Jury

[58] This case will be heard by a judge sitting alone and, as such, does not assist the defendant.

The Good Faith of the Party Making the Application

[59] Courts discourage parties from relying on conflicts of interest rules in a manner that is "tactical rather than principled": Boudreau v. Loba Limited, 2015 ONSC 4877, at para. 47, Milicevic v. T. Smith Engineering, 2016 ONSC 2166, at para. 80. Metrolinx suggests this motion is "not strategic" and that any application made to remove CUPE's lawyers is "in good faith". But this appears to be somewhat inconsistent with Metrolinx's conduct to date.

[60] Metrolinx possessed all of the facts and most, if not all, of the correspondence that it now says grounds this conflict motion by November 2020. It raised the issue in its pleadings and then removed it. It now seeks to put the issue back into its pleadings and before the Court based only on unfounded assertions.

[61] Metrolinx had the opportunity to discover a representative of CUPE and determine whether there was any evidence that could reasonably support its position. I am advised that it chose not to, and instead delayed for months about this motion before serving its materials on the eve of scheduled discoveries.

[62] I am also advised that Metrolinx's conduct in other proceedings with similar facts may demonstrate that this motion lacks good faith. In a recent case, Metrolinx was sued on the basis that it negligently misrepresented its intention to acquire the plaintiffs' property for a future GO Train station. Metrolinx filed evidence in that action relying on pre-litigation advice from its lawyers. Those same lawyers acted for Metrolinx in defending the subsequent action: See 1151130 Ontario Inc v. Metrolinx, 2021 ONSC 347.

[63] Yet, in this case, it insists CUPE's lawyers must be removed even though the plaintiffs argues that, unlike Metrolinx, it did not rely on its lawyer's advice to advance its case. While the above-noted factors may weigh against Metrolinx's position, including some tactical considerations, I decline to conclude that the defendant is acting in bad faith.

[64] In sum, Mr. Rayman is counsel and would have no substantive evidence to provide as to the nature, source or substance of any of the plaintiff's relevant negotiations. Even if he provided advice, that information is subject to privilege.

Entitlement to Production of Privileged Documents:

[65] The parties agree that my determination of the first question will likely resolve this one. In any event, solicitor-client privilege is a fundamental pillar of the legal system that should be set aside only where that is truly necessary. It belongs to the client, not to the lawyer. Privilege may attach to a communication that is between the solicitor and client which entails the seeking or giving of legal advice and that is intended to be confidential. It will generally apply where "the communication falls within the usual and ordinary scope of the professional relationship."

[66] Waiver of solicitor-client privilege is to be narrowly construed. A party may waive privilege expressly or impliedly. Implied waiver of privilege occurs where there has been "some manifestation of a voluntary intention to waive the privilege at least to a limited extent". Only in such cases does the law hold that for the sake of fairness and consistency, the privilege is deemed to be entirely waived.

[67] CUPE did not serve pleadings or evidence that "contained legal advice and opinion from [its] solicitors" that "set out the lawyers' views on what was important in the negotiations, what the plaintiffs' reaction was to the defendant's position, his perspective on the positions taken by the other side, speculation on what the other side may have been thinking and his opinion, indirectly, of the good faith of his own client". CUPE did not plead or rely on any summary of meetings solely between its counsel and Metrolinx's counsel or representatives. Clearly, these communications are not disclosable. Metrolinx's allegation that CUPE is conducting "trial by ambush" is, at this stage, without merit. However, I expect that the plaintiffs will produce relevant documents and proffer competent and compellable representatives related to the issues in this litigation.

Conclusion:

[68] I need not resolve whether the defendant's motion to remove Mr. Rayman as counsel for the plaintiffs was brought for tactical reasons, in bad faith, or whether it was out of their genuine concern for the administration of justice. What is clear to me is that in this motion, the defendant tends to rely on bald assertions in relation to the relief being sought.

[69] In my opinion, at this juncture, the defendant has fallen short of its onus to satisfy me that removal of Mr. Rayman and RB LLP as counsel for the plaintiffs is warranted. The defendant is also not entitled to privileged documents as between counsel and his client. The motion is dismissed.

Costs:

[70] If the parties cannot agree on the issue of costs, I will consider brief written submissions. The materials shall not exceed five pages in length, (not including any Bill of Costs). The plaintiffs shall file their costs submissions within 15 days of today's date. The defendant shall file their costs submissions within 15 days of the receipt of the plaintiff's materials. The plaintiffs may file a brief reply within five days thereafter. If submissions are not received by January 31, 2022, the file will be closed and the issue of costs considered settled.

A.J. Goodman J.

Released: December 30, 2021