[CITATION](http://intra.judicialsecurity.jus.gov.on.ca/NeutralCitation/): 2658396 Ontario Inc. v. Sanayei; 2022 ONSC 3189

COURT FILE NO.: CV-20-641960

RELEASED: 2022/05/30

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2658396 Ontario Inc. v. Homayoon Sanayei, Alireza Aliziloubaf, IBrokerpower Capital Inc., carrying on business as The Mortgage Centre, Daniel Grieco and Apprise Limited

BEFORE: Associate Justice Graham

COUNSEL: Patricia Virc, for the plaintiff

James R. G. Cook and Kevin Mooibroek, for the defendant Sanayei (moving party)

HEARD: December 13, 2021

REASONS FOR DECISION

(Defendant Sanayei’s motion to remove plaintiff’s counsel)

[1] The plaintiff 2658396 Ontario Inc. (“265 Ontario”) held a second mortgage on the property at 3A Stuart Avenue, Toronto, on which the mortgagor Vahid Salehi defaulted on April 22, 2019. The defendant Sanayei is a real estate lawyer who acted for the plaintiff with respect to the registration of the second mortgage and then acted for Salehi to register a third mortgage on the same property. Mr. Sanayei referred the plaintiff to David Brooker of the law firm Steinbergs for advice regarding enforcement of the mortgage and on September 5, 2019, Mr. Brooker commenced a mortgage enforcement action on behalf of the plaintiff against the mortgagor Salehi. On January 9, 2020, the mortgagor Salehi filed for bankruptcy.

[2] On June 30, 2020, Mr. Brooker, again on behalf of 265 Ontario, issued the statement of claim in this action naming as defendants their real estate lawyer Mr. Sanayei, mortgage brokers Alireza Aliziloubaf and IBrokerpower Capital, and real estate appraisers Daniel Grieco and Apprise Limited.

[3] Sanayei contends that before 265 Ontario retained Mr. Brooker to enforce its second mortgage on 3A Stuart, he consulted Mr. Brooker with respect to the fact that he had acted both for 265 Ontario on the second mortgage and for the mortgagor Salehi on the third mortgage. He now brings this motion to remove Mr. Brooker as the plaintiff’s lawyer of record on the grounds both that his earlier consultation by Mr. Sanayei places him in a conflict of interest, and that he will be a necessary witness at trial.

[4] For the following reasons, I conclude that Mr. Sanayei’s consultation with Mr. Brooker regarding his having acted for the plaintiff on the second mortgage and then for the mortgagor Salehi on the third mortgage disqualifies Mr. Brooker from acting against Mr. Sanayei in this action. I also conclude that there is sufficient likelihood of Mr. Brooker being a witness for the plaintiff at trial to warrant his removal on that basis as well.

Pleadings in the action

Statement of claim

[5] As indicated above, the plaintiff 265 Ontario names as defendants their real estate lawyer Mr. Sanayei, mortgage brokers Alireza Aliziloubaf and IBrokerpower Capital, and real estate appraisers Daniel Grieco and Apprise Limited. The claim is for damages of $400,000.00 for breach of contract, negligence and breach of fiduciary duty. The allegations against Mr. Sanayei are:

• Sanayei is a barrister and solicitor in Markham, Ontario who also acts as a mortgage broker. In 2018, Sanayei informed Sharam Bayat, the principal of 265 Ontario, for whom he had previously acted, that he could introduce him to mortgage opportunities for investment purposes.

• Sanayei introduced Bayat to a potential second mortgage investment on the 3A Stuart Avenue property (“3A Stuart”), and represented that the proposed mortgage amount of $300,000.00 was a safe second mortgage because the first mortgage was $1.7 Million and the appraisal report of the defendants Grieco and Apprise valued the property at $2.75 Million. On this basis, Bayat agreed to lend $300,000.00 secured by a second mortgage.

• On the advice of Sanayei, Bayat incorporated the plaintiff 265 Ontario to be the mortgagee and on November 23, 2018, Sanayei registered the mortgage identifying Vahid Salehi as the “Borrower/Chargor”. A term of the mortgage prohibited the registration of subsequent encumbrances against 3A Stuart by Salehi without the consent of the plaintiff.

• On December 10, 2018, Sanayei, acting for Salehi as owner/mortgagor, and without the plaintiff’s knowledge or consent, registered a third mortgage on 3A Stuart in the amount of $110,000.00.

• On or about April 22, 2019, Salehi’s second mortgage to the plaintiff went into default when his payment cheque was returned NSF. Bayat informed Sanayei immediately and requested that he collect the missed payment and take any other permissible steps to protect his interest. Sanayei still did not inform the plaintiff of the registration of the third mortgage.

• Sanayei informed the plaintiff that Salehi sold 3A Stuart with a closing date of May 30, 2019, following which the plaintiff would be paid in full. Sanayei subsequently told the plaintiff that the closing date was extended to mid-June 2019 but did not give a reason for the extension or for the fact that the sale eventually failed to close.

• On or about June 13, 2019 the first mortgagee of 3A Stuart issued a Notice of Sale under the Mortgages Act. The plaintiff learned of the Notice of Sale two week later when Sanayei informed him of it and provided him with a copy. The plaintiff then learned of the third mortgagee which was named in the Notice. Sanayei was asked how the third mortgage could be registered given the prohibition under the plaintiff’s second mortgage and Sanayei informed the plaintiff that he had acted for the borrower Salehi with respect to the registration of the third mortgage. Sanayei also advised that the sale of 3A Stuart in May, 2019 failed to close because the sale price only provided proceeds sufficient to pay the first and second mortgages and the third mortgagee would not provide a discharge without full payment.

• The plaintiff retained new counsel (i.e. Mr. Brooker, although he is not identified by name in the pleading) who issued a notice of sale and on September 5, 2019 commenced an action against Salehi to enforce the second mortgage. This action was stayed following Salehi’s assignment in bankruptcy on January 9, 2020. Meanwhile the first mortgagee had sold 3A Stuart under power of sale with a closing date of November 7, 2019, which extinguished the plaintiff’s interest in the property. The amount owing to the plaintiff on the date of closing was approximately $325,577.53 plus additional costs. Applied against this amount was the $58,983.80 that the plaintiff received from the proceeds of the sale.

• The claim against Sanayei is based on his acting for Salehi to register the third mortgage on 3A Stuart with the knowledge that the second mortgage to the plaintiff prohibited the registration of subsequent charges without the plaintiff’s consent. The plaintiff alleges that Sanayei acted in a conflict with respect to his representation of the plaintiff and in breach of his fiduciary duty. Specifically, the plaintiff pleads (paras. 40 and 41):

40 Accordingly, and in summary, Sanayei’s liability to the plaintiff, as its solicitor, lies in his following actions:

(i) Registration of the third mortgage;

(ii) Failure to advise of the plaintiff’s right to conduct power of sale proceedings, in order to conceal the existence of the third mortgage; and

(iii) Failure to advise that the agreement signed by Salehi would not close because of the refusal of the third mortgagee to grant a discharge, again to conceal the existence of the third mortgage.

41 Accordingly, if not for the actions of Sanayei, in his capacity as the plaintiff’s solicitor as set out herein, the plaintiff would have been paid in full on its mortgage from the proceeds of sale of the Property.

Statement of Defence and Crossclaim of the defendant Sanayei

[6] The defendant Sanayei pleads:

• He acted only as a lawyer, and not as a mortgage broker with respect to the mortgages referred to in the statement of claim. He admits that he was retained by the plaintiff in November 2018 in connection with the second mortgage for $300,000.00 on Mr. Salehi’s property at 3A Stuart. Ms. Shirin Hodjat, a law clerk in his practice, is the niece of Mr. Bayat, the principal of the plaintiff corporation.

• Mr. Bayat was an experienced mortgage lender and he confirmed to Mr. Sanayei that he was satisfied that the value of 3A Stuart was $2.75 Million and had determined the approximate value of the property based on recent sales in the area. Mr. Bayat signed a document on November 18, 2018 confirming that there had been no independent appraisal of the property and that the responsibility for assessing the financial merits of the mortgage rested with him as the investor.

• Sanayei acknowledges registering the third mortgage on the property for $110,000.00 on December 10, 2018. He pleads that he did so on behalf of the third mortgagee and denies that he acted as solicitor for the mortgagor Mr. Salehi.

• He acknowledges that on April 22, 2019, Salehi defaulted on the second mortgage on 3A Stuart. Sanayei’s office then took steps to obtain replacement funds from Salehi and to inform him that the mortgage had to be paid by the maturity date of May 23, 2019. Salehi’s lawyers then advised that 3A Stuart was being sold with a closing date of May 30, 2019.

• Sanayei denies the plaintiff’s allegation that he had advised the plaintiff to “wait until the sale closes” before taking any steps to enforce its rights as a second mortgagee. Sanayei pleads that the plaintiff was aware of those rights and could have retained mortgage enforcement counsel to commence enforcement proceedings against Salehi but chose not to do so.

• Sanayei pleads that on or about June 28, 2019, he “repeated his recommendation in writing to the plaintiff to retain a mortgage enforcement lawyer” (there is no pleading of any previous recommendation in this regard), and the plaintiff chose not to do so. He made this recommendation at an in person meeting with Mr. Bayat, which Mr. Bayat confirmed in written communication to the paralegal Ms. Hodjat. After “considerable delay” the plaintiff retained a lawyer and made an offer to purchase the property which Salehi did not accept.

• On September 5, 2019, the plaintiff commenced a mortgage enforcement action against Mr. Salehi. (It is common ground that Mr. Brooker acted for the plaintiff in this action.) “However, the Plaintiff failed to take any steps to bring the first mortgage into good standing, take over the power of sale proceedings, buy out the first mortgagee, or otherwise protect its interests as second mortgagee.” (para.36)

• On October 16, 2019, the first mortgagee sold 3A Stuart under power of sale for $2,018,880.00. On October 18, 2019, the plaintiff filed a requisition for default judgment against Salehi, who subsequently made an assignment in bankruptcy. (para. 37-38)

• Sanayei denies that he was retained to act on behalf of the plaintiff with respect to enforcement of the second mortgage. He advised the plaintiff to retain and seek legal advice from a counsel who practices mortgage enforcement and the plaintiff refused or failed to do so.

• Sanayei pleads that the plaintiff’s remedies are those available to a second mortgagee and not as against Sanayei. The plaintiff’s damages were a result of its own negligence, and have not been mitigated.

Plaintiff’s Reply to the Statement of Defence of Homayoon Sanayei

[7] In its Reply, the plaintiff pleads as follows:

• Before financing the second mortgage at 3A Stuart, Mr. Bayat had never previously lent funds on a mortgage.

• While Shirin Hodjat is Bayat’s niece, she at all times acted as an employee of Sanayei.

• Sanayei is also the sole officer, director and shareholder of 10100781 Canada Corp. (“101 Canada”) which he uses to hold mortgage investments on his behalf.

• Sanayei provided information on several properties to Bayat which he had recommended prior to the plaintiff investing in the second mortgage on 3A Stuart. One of these properties was located on Farrell Road in Toronto. Sanayei subsequently advised Bayat that this property was not a good investment but then invested in it himself through 101 Canada.

• Bayat, on behalf of the plaintiff, first learned from Sanayei on June 28, 2019 that the sale of 3A Stuart by Salehi could not close because there were insufficient funds to pay the third mortgagee.

• On July 2, 2019 at a meeting at Sanayei’s office, Sanayei admitted his negligence and liability to Bayat and indicated that he would ensure that the plaintiff’s investment in the second mortgage on 3A Stuart would be repaid in full.

• Following the communication of June 28, 2019 notifying the plaintiff of the third mortgage on 3A Stuart, Sanayei indicated that the plaintiff should retain litigation counsel, and shortly after the July 2, 2019 meeting, he retained a lawyer named Joseph Virgilio for that purpose. Given Sanayei’s advice that he would ensure that the plaintiff would not suffer damages as a result of the second mortgage, no further litigation was pursued against Salehi.

• In August, 2019, following unsuccessful efforts by Bayat to purchase 3A Stuart, Sanayei again advised Bayat that the plaintiff had a claim against him and to retain counsel to commence an action.

Evidence on the motion

[8] The evidence with respect to the various mortgages on 3A Stuart, the plaintiff’s earlier action to enforce the second mortgage, and the relationship between the plaintiff, the defendant Sanayei and plaintiff’s counsel Brooker is contained in the following affidavits:

• Mr. Sanayei’s affidavit of June 15, 2021;

• the responding affidavit of Shahram Bayat, the president of the plaintiff 265 Ontario, sworn July 14, 2021;

• the responding affidavit of David Brooker sworn July 14, 2021;

• Mr. Sanayei’s reply affidavit of July 30, 2021;

• Mr. Sanayei’s further reply affidavit of November 2, 2021 prepared following the disclosure of Mr. Bayat’s tape recording of a November 19, 2021 meeting involving Mr. Sanayei, Mr. Bayat (the principal of the plaintiff 265 Ontario), and Shirin Hodjat, the law clerk in Mr. Sanayei’s office who is also a niece of Mr. Bayat.

[9] The evidence in Mr. Sanayei’s affidavit of June 15, 2021 is:

• Paras. 2 and 4: Mr. Sanayei is a lawyer licenced in Ontario and practices primarily as a real estate solicitor. He states generally that Mr. Brooker had previously acted for him in matters that overlap with the events at issue in this action, and he had consulted Mr. Brooker and sought his advice about the specific transactions that are at issue in the claim against him. He is concerned that, owing to their prior relationship, Mr. Brooker has knowledge of confidential and privileged matters.

• Paras. 5 and 7: Mr. Sanayei has known Mr. Brooker for over 20 years, since being introduced to him in 1998 when looking to retain litigation counsel for a friend on a separate matter. He and Mr. Brooker maintained a personal and professional relationship during which he frequently sought Mr. Brooker’s informal counsel when he had a matter that “contained a litigation aspect.” Mr. Sanayei believes that he referred approximately 15 different clients to Mr. Brooker in the past 22 years.

• Para. 6: Mr. Sanayei himself had retained Mr. Brooker on three separate matters before this action was commenced, two mortgage enforcement actions and a partnership dispute with a former firm.

• Paras. 8-12: Mr. Sanayei owns a private mortgage corporation, 10100781 Canada Corporation (“101 Canada”) through which he provides private residential mortgages, and in January 2019, this corporation registered a second mortgage on property at 138 Farrell Road in Vaughan, Ontario (“the Farrell Road mortgage”). In July, 2019, he retained Mr. Brooker to pursue a mortgage enforcement action in respect of this mortgage and in the course of this retainer, met with Mr. Brooker “to discuss the circumstances” and deliver the file to him. This claim was resolved in or around the end of July, 2019 and the mortgage was “paid out”. Mr. Sanayei had no contact with Mr. Bayat or 265 Ontario regarding this mortgage.

• Para. 13: The Farrell Road mortgage and Mr. Sanayei’s ownership of 101 Canada are referred to in the plaintiff’s reply pleading. Mr. Sanayei has no recollection of informing the plaintiff that he owned 101 Canada and that 101 Canada held the Farrell Road mortgage. He believes that the only reason that the plaintiff was aware of his involvement in the Farrell Road mortgage was due to Mr. Brooker’s retainer.

• Paras. 14-17: Mr. Sanayei confirms that in November, 2018 he acted for the plaintiff and its principal Mr. Bayat on the registration of the second mortgage on 3A Stuart Avenue, Toronto (“the second mortgage”) in respect of a loan to Vahid Salehi. Mr. Bayat was referred to Mr. Sanayei by his niece Shirin Hodjat who works with Mr. Sanayei as a law clerk.

• Para. 18: On December 10, 2018, Salehi entered into a third mortgage on 3A Stuart in respect of a loan from Maser Venus Inc., and Sanayei acted for the mortgagee Maser Venus to register the mortgage.

• Para. 20-21: Mr. Sanayei confirms that on April 22, 2019, the second mortgage went into default and on April 29, 2019, Ms. Hodjat wrote to Salehi’s lawyer to demand payment. On June 13, 2019, the first mortgagee on 3A Stuart commenced power of sale proceedings against Salehi.

• In para. 22, Sanayei states: “On or about June 15, 2019, and thereafter when the plaintiff’s mortgage went into default, I discussed the circumstances with Mr. Brooker via telephone and in person on at least one occasion. I discussed my concerns with him about my involvement in the matter as the lawyer for the second and third mortgages, and I sought his advice as my friend and counsel. I did not enter into a formal retainer with Mr. Brooker regarding the plaintiff’s mortgage, but I viewed the information that I conveyed to him to be confidential and protected by privilege.” [emphasis added]

• Paras. 23-25: On or about June 27, 2019, owing to the default on the second mortgage, Mr. Bayat asked Mr. Sanayei and Ms. Hodjat for the name of a litigation lawyer to represent 265 in an enforcement claim against the mortgagor Salehi. Ms. Hodjat provided Mr. Bayat with the contact information for a few lawyers, including Mr. Brooker. At that time, Mr. Brooker was acting for 101 Canada regarding the Farrell Road mortgage. Mr. Brooker then issued the statement of claim in the plaintiff’s action against the mortgagor Salehi on September 5, 2019.

• Paras. 26-27: The property at 3A Stuart was sold by the first mortgagee on or about October 16, 2019. The mortgage enforcement claim of 265 Ontario against Mr. Salehi was stayed in January, 2020 when Mr. Salehi made an assignment in bankruptcy.

• Para. 28: The action in which Sanayei brings this motion was commenced by 265 Ontario on June 30, 2020, with Mr. Brooker as plaintiff’s counsel.

• Para. 30: Based on the chronology, Mr. Sanayei believes that Mr. Brooker’s retainer by 101 Canada (in respect of the Farrell Road mortgage), overlapped with his retainer in 265 Ontario’s mortgage enforcement action and their communications regarding his personal concerns.

• Para. 31: The plaintiff in this action alleges that Sanayei was negligent in the registration of the third mortgage on 3A Stuart without the plaintiff’s consent, that the registration of the third mortgage was a breach of the terms of Salehi’s second mortgage to the plaintiff, and that Sanayei negligently advised Mr. Bayat on the merits of 265 Ontario’s investment.

• Para. 33-34 : Mr. Sanayei refers to the pleadings in the plaintiff 265 Ontario’s Reply that Sanayei is the principal of 101 Canada which he uses for mortgage investments, that Sanayei first recommended the Farrell Avenue property as a sound investment, subsequently advised him that it was not a good investment, and then invested in a mortgage on that property. He then refers to the plaintiff’s affidavit of documents which includes the corporate profile for 101 Canada, and various documents registered on title and otherwise relating to the Farrell Road property, including an appraisal.

• Para. 35: Based on the plaintiff’s Reply pleading and affidavit of documents, Mr. Sanayei is concerned that privileged information, which he shared with Mr. Brooker before Mr. Brooker commenced this action for the plaintiff, may be used by the plaintiff against him.

[10] The evidence in the responding affidavit of Shahram Bayat, sworn July 14, 2021, is:

• Paras. 5-7: He first met Mr. Sanayei in about 2011 through his niece Ms. Hodjat and Sanayei subsequently acted for him on three property transactions and drafted his will. He declined an initial offer to invest with Sanayei through a “mortgage company” but in 2018 informed him that he may be interested in investing. Sanayei introduced him to several properties including 138 Farrell Road for which he sent him an appraisal, then told him that it was not a good investment, but later told him that he had invested in that property through a company.

• Para. 8-10, 13: Subsequent to showing him the Farrell Road property, Sanayei recommended that he invest in 3A Stuart, and he agreed to do so through 265 Ontario. He confirms that the mortgage was registered on November 23, 2018. As deposed in his affidavit, on December 10, 2018, Sanayei acted for Maser Venus Inc. in registering a third mortgage, in contravention of the terms of the mortgage to the plaintiff. Mr. Bayat did not consent to the third mortgage, and he did not know of it until after the mortgage to 265 Ontario went into default.

• Paras. 14-17: Following the default, Sanayei informed Mr. Bayat that 3A Stuart had been sold, and, as the plaintiff 265 Ontario’s interest would be paid in full on closing, he did not need to take any steps to protect that interest. The sale did not close. Mr. Bayat received no information as to why although documents produced by Sanayei indicate that this was because there were not sufficient funds to pay off all of the mortgages. Sanayei then told him that the first mortgagee may be selling the property and not to take any proceedings of his own to enforce 265 Ontario’s mortgage as it would be paid from the first mortgagee’s sale.

• Para. 20: After learning of the third mortgage on 3A Stuart, Mr. Bayat met with Mr. Sanayei and Ms. Hodjat on July 2, 2019 at which time Mr. Sanayei informed him that he had registered the third mortgage and that “he was negligent in doing so.” Mr. Sanayei told him that if he could not recover his mortgage funds, Mr. Bayat would be able to bring a claim against him and his insurance company would pay for his losses, but if he were to do so he would have to retain a separate lawyer.

• Para 22 and 24: Mr. Bayat retained a lawyer, Joseph Virgilio, to monitor power of sale proceedings commenced by the first mortgagee to know whether or not the property was sold. Mr. Bayat deposes that the possible purchase of the property by the plaintiff (265 Ontario) did not occur because at the end of July 2019 Mr. Sanayei indicated that he was not prepared to contribute the commission that he had earned from the mortgages toward the purchase price.

• Para. 25: Mr. Sanayei then told Mr. Bayat to see Mr. Brooker to try to recover the funds from the second mortgage to 265 Ontario. Mr. Bayat first met with Mr. Brooker, together with Ms. Hodjat, on August 30, 2019. On Mr. Bayat’s instructions, on September 5, 2019, Mr. Brooker issued the statement of claim against the mortgagor Salehi.

• Paras. 26 and 30: Mr. Sanayei did not inform Mr. Bayat that he had retained Mr. Brooker to enforce 101 Canada’s mortgage on the Farrell Road property.

• Paras. 27-28: On November 12, 2019, the plaintiff received $48,983.80 through the first mortgagee’s power of sale proceedings with respect to 3A Stuart, which was much less than the original mortgage of $300,000.00. After receiving this payment, Mr. Bayat instructed Mr. Brooker to commence proceedings on behalf of 265 Ontario against Mr. Sanayei and the other defendants in this action. Those instructions were contained in email communications between Mr. Bayat and Mr. Brooker on which Ms. Hodjat was copied, but over which Mr. Bayat is not waiving privilege.

• Para. 29: Subsequent to instructing Mr. Brooker to commence this action but before it was actually started (on June 30, 2020), Mr. Bayat met with Mr. Sanayei and Ms. Hodjat at his office on November 21, 2019. At that meeting, Mr. Bayat noted that Mr. Sanayei had copies of email exchanges between himself and Mr. Brooker in which he had instructed him to commence proceedings, and on which Ms. Hodjat was copied. Mr. Bayat further deposes that Mr. Sanayei informed him that (a) Mr. Brooker had previously advised him directly that 265 Ontario had a claim as against him and that Mr. Brooker would not be able to compromise his interests as against Mr. Sanayei, (b) Mr. Sanayei agreed with Mr. Brooker that 265 Ontario had a claim against him, and (c) his insurance company would pay the claim as against him and Mr. Brooker would be a good lawyer for Mr. Bayat to retain to sue him.

• Para. 31: Although Mr. Brooker had informed him that he had acted for Mr. Sanayei on a few occasions during the time that they knew each other, he did not tell him that Mr. Sanayei had retained him to enforce a mortgage on the Farrell Road property until after Mr. Sanayei’s statement of defence was served in September, 2020.

• Paras. 34-35: As Mr. Brooker had not disclosed anything to Mr. Bayat with respect to his involvement on behalf of 101 Canada in enforcing the mortgage on the Farrell Road property, Mr. Bayat arranged for another lawyer to conduct searches for that property which disclosed 101 Canada’s mortgage, and then had that lawyer conduct a corporate search for 101 Canada, which revealed Mr. Sanayei as its sole officer and director. Mr. Bayat then informed Mr. Brooker of Sanayei’s actions in introducing him to the Farrell Road property. Mr. Bayat had never previously discussed the Farrell Road property with Mr. Brooker.

• Para. 36: When telling Mr. Brooker about Mr. Sanayei having introduced him to the Farrell Road property, Mr. Bayat also told him that Mr. Sanayei had informed him about Mr. Brooker’s representation of him with respect to enforcement of the mortgage on that property. Mr. Brooker had not previously disclosed his representation of 101 Canada in that enforcement action, and Mr. Bayat’s knowledge of Mr. Brooker’s representation of 101 Canada came solely from information provided by Mr. Sanayei.

• Paras. 38-39: Following the close of pleadings in this action on or about October 7, 2020, counsel for the parties agreed to schedule examinations for discovery to proceed on March 1-4, 2021. Examinations were subsequently rescheduled for four days between April 23 and 30, 2021.

• Para. 40: On March 26, 2021, Mr. Sanayei’s lawyer, Mr. Cook, informed Mr. Brooker in correspondence that he took the position that Mr. Brooker was in a conflict of interest. Mr. Sanayei had never previously raised any conflict of interest. Mr. Bayat reiterates that “Mr. Sanayei referred me to, and recommended, Mr. Brooker to represent the Plaintiff in bringing a claim as against him for his own negligence in registration of the third mortgage, which he admitted to me he had committed.”

[11] The evidence in the responding affidavit of David Brooker sworn July 14, 2021 is:

• Paras. 1 and 4: He has been a member of the Law Society of Ontario since 1994 and represents the plaintiff in this action. He has known Mr. Sanayei for over 20 years although there would be periods of several years during that time when he would have no communication with him. During the early years of their acquaintance, Mr. Sanayei did refer a number of clients to him. After 2002 or 2003 there were no regular communications between them, although he occasionally heard from Mr. Sanayei seeking advice in relation to one of his clients, usually with respect to mortgage enforcement matters. A few of these calls did result in the client retaining Mr. Brooker. He describes their relationship as “friendly acquaintances”.

• Paras. 5-7: Mr. Brooker also represented Mr. Sanayei on a few (less than 5) matters over the years, although, other than the enforcement action with respect to the Farrell Road mortgage, he does not recall them specifically. In July, 2019, he was retained by Mr. Sanayei to act for 101 Canada on the enforcement of the Farrell Road mortgage. He sent one letter to counsel for the mortgagor and the retainer was ended when the mortgage was paid in full on July 31, 2019.

• Para. 8: Mr. Brooker did not disclose to Mr. Bayat that he had acted for 101 Canada or Mr. Sanayei until September, 2020 after Mr. Bayat told him that Mr. Sanayei had given him this information.

• Paras 9: Mr. Brooker does not recall any specific conversations with Mr. Sanayei in June, 2019 but acknowledges that it is likely that he spoke with him around that time, and certainly in July, 2019 with respect to his representation of 101 Canada.

• In paras. 10 and 11, Mr. Brooker deposes as follows:

10 I do not recall Mr. Sanayei imparting any confidential information to me regarding his representation of the plaintiff. I do not know of anything at this time. I do recall that Mr. Sanayei mentioned to me that he may have a mortgage enforcement matter for a client to refer to me, and when I first met with and spoke with Mr. Bayat at the end of August, 2019, together with Mr. Sanayei’s legal assistant Shirin Hodjat, they confirmed to me that it was the same matter that Mr. Sanayei had spoken with me about earlier that summer.

11 I cannot imagine that Mr. Sanayei would disclose confidential information to me that could be used against him in relation to his dealings with the Plaintiff and then refer the Plaintiff to me for representation of those events. [emphasis added]

• Para. 12: Mr. Brooker states that in November, 2019 he received instructions from the Plaintiff to commence a claim against Mr. Sanayei. After receiving those instructions but before issuing the statement of claim, Mr. Brooker spoke with Mr. Sanayei who advised him that Mr. Bayat had informed him of the impending action. Mr. Sanayei knew that Mr. Brooker was acting for Mr. Bayat in the lawsuit against him, yet he told Mr. Brooker that he had admitted to Mr. Bayat that he was liable.

[12] The evidence in Mr. Sanayei’s reply affidavit of July 30, 2021 is:

• Paras. 4 and 6: After 265 Ontario’s second mortgage on 3A Stuart went into default in 2019, he was in regular communication with Mr. Bayat and “I repeatedly advised Mr. Shahram [Bayat] to retain mortgage enforcement counsel . . . which he inexplicably delayed doing. However, at no time did I admit to Mr. Shahram that I was negligent or tell him that my “insurance company” would pay his losses.” Further “I categorically deny that I told Mr. Shahram that I was negligent during a meeting on July 2, 2019, or at any time.”

• Para. 7: As pleaded in his statement of defence, Mr. Sanayei acknowledges that he acted for a third mortgagee on 3A Stuart in addition to acting on the second mortgage. He denies that he breached any duty to Mr. Bayat by doing so. In response to Mr. Bayat’s complaint that he should have informed him about his retainer for the third mortgagee, Mr. Sanayei told Mr. Bayat that he would need to retain independent counsel to advise him of any claims that he may have against him.

• Paras. 8-9: Mr. Sanayei reiterates that he referred Mr. Bayat to Mr. Brooker to enforce his (265 Ontario’s) mortgage because Mr. Brooker had previously acted for him. When he did so, he did not anticipate that the plaintiff would retain Mr. Brooker to sue him. Subsequent to June 15, 2019, after the mortgage went into default, he discussed the circumstances with Mr. Brooker by telephone and in person on at least one occasion. Specifically, “I discussed my concerns about my involvement in the matter as the lawyer for the second and third mortgagees and I sought his advice as my friend and counsel.” He was concerned that Mr. Bayat had complained about his retainer for the third mortgagee.

• Para. 10: The fact that at a meeting at his office in November, 2019, Mr. Bayat confirmed that he discussed with Mr. Brooker the details of a claim against him illustrates his concerns. Mr. Sanayei had discussed his “private and confidential concerns with Mr. Brooker over my involvement in the two mortgage transactions at issue” and “Mr. Brooker should not have been discussing a claim against me with Mr. Shahram [Bayat].” Mr. Sanayei “referred Mr. Shahram [Bayat] to Mr. Brooker to enforce his second mortgage against the mortgagor not to commence an action against me based on confidential information that I had previously shared with Mr. Brooker.” [emphasis added]

• Para. 11: Mr. Sanayei responds to the contents of Mr. Brooker’s affidavit of July 14, 2021, and specifically the statement that Mr. Brooker “cannot imagine” that Mr. Sanayei would disclose confidential information to him that could be used against him and then refer the plaintiff to him. Mr. Sanayei states “I disclosed my confidential information and concerns to Mr. Brooker precisely because of our long relationship and my trust in his advice as experienced litigation counsel. I relied on him not to disclose such information to the plaintiff. I did not expect that he would then act as counsel in an action against me. He could have represented the plaintiff against the mortgagor without also naming me as a defendant. If he believed that I need [sic] to be included as a party in the action then he could have referred the plaintiff to other counsel with whom I had not personally communicated about my involvement in the events in issue.” [emphasis added]

• Para. 12: In response to Mr. Brooker repeating Mr. Bayat’s allegation that he admitted liability to him, Mr. Sanayei reiterates that he did not admit any liability for the plaintiff’s claims.

• Para. 13: He remains concerned that confidential and privileged information that Mr. Brooker was privy to based on their prior relationship may be used by the plaintiff in this action.

[13] Mr. Sanayei’s further reply affidavit of November 2, 2021 was sworn in response to the receipt on August 27, 2021 from plaintiff’s counsel of an audio recording of a meeting on November 21, 2019 involving himself, Mr. Bayat, and his law clerk Ms. Hodjat. In this affidavit, he deposes:

• The audio recording was previously in schedule “B” of the plaintiff’s affidavit of documents. The conversation recorded was in Farsi, which is the language in which he communicated with Mr. Bayat. He was unaware that the conversation was being recorded and did not provide his consent to the recording. A translation of the conversation was subsequently provided by plaintiff’s counsel.

• Paras. 8-9: Mr. Sanayei refers to Mr. Bayat having suggested in his affidavit that Sanayei had told him that if Bayat sued him, he would admit liability to his professional liability insurer and ask them to calculate damages. Mr. Sanayei deposes that “instead” as revealed in the recording of their conversation, he advised Bayat that any lawsuit in which he was named as a defendant would be assigned by his professional liability insurer to litigation counsel. In the recording, Sanayei specifically denied that he was liable for Bayat’s loss.

• Paras. 10-11: Mr. Sanayei reiterates that he did not tell Bayat that he would admit liability to his professional liability insurer but that he would follow the advice of his litigation counsel. He told Bayat that he may incur costs of $70,000 - $80,000 in an unsuccessful claim against him.

• Para. 14-16: The referral of the plaintiff 265 Ontario to Mr. Brooker came directly from Ms. Hodjat to Mr. Bayat, and Ms. Hodjat also provided Mr. Bayat with contact information for other lawyers. Mr. Sanayei did not instruct Ms. Hodjat to refer Mr. Bayat to Mr. Brooker. Mr. Sanayei spoke with Mr. Brooker regarding the matter on more than one occasion in June, 2019 but does not recall whether he was aware that Ms. Hodjat had referred Mr. Bayat to Mr. Brooker at that time.

• Para. 17: When Mr. Bayat was referred to Mr. Brooker, Mr. Sanayei had no expectation that he may be named as a defendant in a claim commenced by Mr. Brooker on behalf of 265 Ontario. He was aware that 265 Ontario had not yet collected on its mortgage to Salehi and understood that it may need to look to other parties to recover its loss. He accepted that he may be named as a defendant in a lawsuit but denies that “this constitutes a tacit waiver of any privilege that Mr. Brooker already owed to me.”

• Paras. 18-19: In his statement of defence, Mr. Sanayei pleads that 265 Ontario was contributorily negligent for failing to promptly retain mortgage enforcement counsel, actively move to enforce his mortgage, and purchase the property under a power of sale proceeding. In the recording of the November 21, 2019 meeting, Mr. Bayat discussed the advice that he was receiving from Mr. Brooker regarding his mortgage enforcement strategy.

• Paras. 20-21: Specifically, Mr. Bayat informed Mr. Sanayei that Mr. Brooker advised him that he considered the appraisal that he relied on in granting the mortgage to be illegal, that Mr. Brooker had advised him not to accept settlement offers in respect of the enforcement, and that he (Mr. Bayat) was not interested in power of sale proceedings or purchasing the property. On this basis, Mr. Sanayei states his belief that Mr. Brooker “will necessarily be a material witness at the trial of this action concerning the reasons why the plaintiff took or did not take various steps in enforcing the mortgage.”

The law

[14] The law with respect to removal of a lawyer for a conflict of interest was set out in MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235. The court (at p. 1246 ff) considered the two basic approaches adopted in Canada and in other jurisdictions in determining whether a lawyer had a disqualifying conflict of interest, being (1) the probability of real mischief and (2) the possibility of real mischief, with the term “mischief” meaning the misuse of confidential information by a lawyer against a former client.

[15] Justice Sopinka, writing for the majority, concluded (at pp. 1259-1260) that the “probability of mischief” standard was not sufficiently high to satisfy the public requirement that there be an appearance of justice. In answering the question: “Is there a disqualifying conflict of interest?” Sopinka J. stated,

“[T]he test must be such that the public represented by the reasonably informed person would be satisfied that no use of confidential information would occur.”

[16] The court continued (at p. 1260):

“Typically, these cases require two questions to be answered: (1) Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? (2) Is there a risk that it will be used to the prejudice of the client.”

[17] The defendant Sananyei’s motion to remove Brooker as plaintiff’s counsel is also based on their submission that the issues in the case will require him to give evidence. The case law on the issue of when a lawyer should be precluded from acting for a party because he will also be a witness in the same proceeding was summarized thoroughly by Master Glustein (as he then was) in Mazinani v. Bindoo, 2013 ONSC 4744 at paragraphs 60 and 61:

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] O.J. No. 4497, 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] O.J. No. 2161, 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. [Italics in original.]

(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, 1993 8756 (ON SCDC), [1993] 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] O.J. No. 1174, 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). . . .

61 Given the above law, the Divisional Court in Essa set out "a variety of factors" to be considered on a motion to remove a lawyer of record who may be a witness at trial. Those factors are (Essa, at para. 48) (quoted verbatim):

(i) the stage of the proceedings,

(ii) the likelihood that the witness will be called,

(iii) the good faith (or otherwise) of the party making the application,

(iv) the significance of the evidence to be led,

(v) the impact of removing counsel on the party's right to be represented by counsel of choice,

(vi) whether trial is by judge or jury,

(vii) 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

(viii) the connection or relationship between counsel, the prospective witness and the parties involved in the litigation.

Issues on the removal motion

[18] Based on the applicable law, the issues on this motion are:

1. Does Mr. Sanayei’s consultation with Mr. Brooker with respect to his involvement in both the plaintiff’s mortgage on 3A Stuart and the third mortgage on the same property give rise to a conflict of interest that disqualifies Mr. Brooker from acting against him in this action?

2. Does Mr. Brooker’s involvement in the plaintiff’s mortgage enforcement action create a sufficient likelihood that he will be a witness at the trial of this action to warrant removing him as plaintiff’s counsel?

Analysis and decision

Issue: Does Mr. Sanayei’s consultation with Mr. Brooker with respect to his involvement in both the plaintiff’s mortgage on 3A Stuart and the third mortgage on the same property give rise to a conflict of interest that disqualifies Mr. Brooker from acting against him in this action?

[19] The first issue is whether Mr. Brooker has a disqualifying conflict of interest on the basis that, after Mr. Sanayei consulted him with respect to having acted both on the plaintiff’s second mortgage on 3A Stuart and on the registration of the third mortgage on the same property, Mr. Brooker now represents the plaintiff in this action against Mr. Sanayei.

[20] The parties agree that the applicable test from MacDonald Estate v. Martin, supra is first, whether the lawyer whose removal is sought received confidential information attributable to a client relationship that is relevant to the matter at hand, and second, whether there is a risk that that information will be used to the prejudice of the client.

[21] Mr. Sanayei has deposed (para. 22 of his initial affidavit) that when he discussed the circumstances of the default of the plaintiff 265 Ontario’s second mortgage with Mr. Brooker, “I discussed my concerns with him about my involvement in the matter as the lawyer for the second and third mortgagees, and I sought his advice as my friend and counsel. I did not enter into a formal retainer with Mr. Brooker regarding the plaintiff’s mortgage, but I viewed the information that I conveyed to him to be confidential and protected by privilege.”

[22] This statement is evidence of the communication by Mr. Sanayei of confidential information regarding his involvement in the two mortgages on 3A Stuart to Mr. Brooker, a lawyer whom he had previously consulted with respect to other matters.

[23] Mr. Brooker’s responding affidavit includes the statement (at para. 10):

“I do not recall Mr. Sanayei imparting any confidential information to me regarding his representation of the plaintiff. I do not know of anything at this time.”

[24] Mr. Brooker also deposed (at para. 11) that “I cannot imagine that Mr. Sanayei would disclose confidential information to me that could be used against him in relation to his dealings with the Plaintiff and then refer the Plaintiff to me for representation of those events.”

[25] Plaintiff’s counsel submits that Mr. Sanayei has no record of his discussion with Mr. Brooker on June 15, 2019, but it would be incongruous for him to talk to Mr. Brooker on that date about possible liability to his client 265 (of which Mr. Bayat was the principal), and then refer Bayat to him two weeks later.

[26] Mr. Brooker seems to assume that if Mr. Sanayei communicated information to him, and then referred the Plaintiff to him, he should have expected that he would use that information against him, so any such information could not have been conveyed in confidence. However, Mr. Sanayei deposes that he first spoke with Mr. Brooker about his concerns regarding his involvement in both mortgages “on or about June 15, 2019” but makes no mention at that time of referring the plaintiff to him for enforcement of the second mortgage. Mr. Sanayei deposes (para. 23-25 of his initial affidavit) that it was not until June 27, 2019 that Mr. Bayat asked for the name of a litigation lawyer to represent 265 Ontario in the enforcement of the second mortgage.

[27] Referring to the transcript of Sanayei’s cross-examination, the plaintiff submits that there were no restrictions on the advice that Mr. Bayat could seek from Mr. Brooker. Specifically, the transcript reads:

Q. 131 – And you did not tell Mr. Bayat at the end of June or the beginning of July 2019 that there was any impediment to him hiring Mr. Brooker, correct?

A. – I referred Mr. Bayat to these lawyers from which he picked two, I understand, Mr. Brooker and later Mr. Abadi, to get consultation regarding enforcing his rights as a second mortgagee on the property.

Q. 132 – Are you saying that you sent Mr. Bayat out to get advice but there were restrictions on the kind of advice he could get?

A. – No, but the only subject that we were talking about was me forcing him and trying to convince him to have a lawyer to protect his interest in the second mortgage. I don’t know if you understand that as a restriction.

Q. 133 – No, but certainly, sir, you weren’t trying to tell him that he could claim against persons other than you, but that he could not consult a lawyer in respect to his claims against you?

A. I do not understand your question, would you rephrase it, please?

Q. 134 – You did not tell him that he could not consult the lawyers that you were referring him to in respect of any potential claims against you?

A. No, I did not. There was no reason.

[28] Mr. Brooker overlooks the fact that when his name was given to Mr. Bayat of 265 Ontario, it was to enforce the second mortgage on 3A Stuart against the mortgagor Salehi and not to pursue an action against Mr. Sanayei. The mortgagor Salehi’s obligations to the plaintiff with respect to the second mortgage were separate from any issue between the plaintiff and Mr. Sanayei relating to the third mortgage, and enforcement of the second mortgage would not require use of any information obtained from Mr. Sanayei regarding the third mortgage. It is therefore entirely plausible that Mr. Sanayei would expect that Mr. Brooker would accept the retainer on behalf of the plaintiff to enforce the second mortgage, but also maintain confidentiality with respect to Mr. Sanayei’s previous discussions with him regarding his involvement in the third mortgage. He would have had no expectation that Mr. Brooker would act against him in respect of his involvement in the third mortgage.

[29] I also note that, on August 30, 2019, when Mr. Bayat of 265 Ontario retained Mr. Brooker to commence an action to enforce the second mortgage on 3A Stuart, he did so with the assistance of Ms. Hodjat, Mr. Sanayei’s legal assistant. Mr. Brooker should have had no reason to expect that Mr. Bayat would also be retaining him to sue Mr. Sanayei with the help of Mr. Sanayei’s own legal assistant, even if Ms. Hodjat was Mr. Bayat’s niece.

[30] In opposing the motion to remove Mr. Brooker as its counsel, the plaintiff relies on the timing of the motion, and the basis on which the defendant Sanayei first objected to his involvement.

[31] Mr. Sanayei was aware at or before his November 21, 2019 meeting with Mr. Bayat that the plaintiff had consulted Mr. Brooker with respect to a possible action against him. He therefore knew Mr. Brooker was acting against him when he was served with the statement of claim naming him as a defendant, presumably shortly after June 30, 2020, the date the action was commenced.

[32] Pleadings in the action closed on October 7, 2020 when the plaintiff delivered its reply. Examinations were then scheduled to proceed from March 1 to 4, 2021 and the parties exchanged affidavits of documents. On February 23, 2021, owing to an illness in the family of one of the lawyers, examinations were rescheduled to proceed over four days between April 23 and April 30, 2021.

[33] The evidence reflects that the defendant Sanayei first alleged that Mr. Brooker was in a conflict of interest in acting for the plaintiff against him shortly before examinations for discovery were to be held. On March 26, 2021, the defendant Sanayei’s counsel Mr. Cook sent correspondence to Mr. Brooker alleging for the first time that Mr. Brooker was acting in a conflict of interest, stating that he would not proceed with examinations for discovery until the issue was addressed, and advising that they had instructions to bring a removal motion if necessary. The conflict was described in the letter as follows:

“Dear Mr. Brooker,

In reviewing this matter with our client in preparation for the examinations for discovery, we have learned that you previously acted for our client and his mortgage company, 10100781 Canada Corporation (“101”) on a number of occasions. Upon investigation it appears that there is considerable overlap with your retainer for our client and the events at issue in this proceeding. Further, it appears that you attained [sic] privileged and confidential information, some of which has been improperly disclosed in the plaintiff’s Reply to our clients’ Statement of Defence, namely, the plea that Mr. Sanayei is the sole shareholder of 101. Respectfully, you ought not to have agreed to act against our client in these circumstances.”

[34] The defendant Sanayei’s first notice of motion, dated May 11, 2021 and contained in the original motion record on this motion, describes the defendant Sanayei as the principal of 101 Canada and Mr. Brooker as formerly counsel to 101 Canada and Sanayei and privy to privileged information in connection with his retainers. The original motion record contains Mr. Sanayei’s first affidavit of June 15, 2021, which includes his evidence of his discussions with Mr. Brooker “on or about June 15, 2019” with respect to his “involvement in the matter as the lawyer for the second and third mortgages.” Mr. Cook’s March 26, 2021 letter to Mr. Brooker did not allege a conflict based on these discussions. Based on this discrepancy, the plaintiff challenges the defendant Sanayei’s good faith in bringing the motion.

[35] There is no evidence that Mr. Brooker, through his retainer for 101 Canada on the Farrell Road mortgage, received any confidential information from Mr. Sanayei relating to the second and third mortgages on 3A Stuart. The fact that there was a brief temporal overlap between Mr. Brooker’s retainer on behalf of Mr. Sanayei’s corporation 101 Canada with respect to the enforcement of an unrelated mortgage, and his retainer by the plaintiff 265 Ontario, would not in itself be disqualifying.

[36] As summarized above, Mr. Sanayei’s evidence is that he spoke with Mr. Brooker about his concerns regarding his involvement in both the second and third mortgages on 3A Stuart. Given that, rather than denying any such discussion Mr. Brooker simply states that he has no recollection of it, I accept Mr. Sanayei’s evidence that he consulted Mr. Brooker with respect to the fact that he had also acted on the third mortgage on 3A Stuart that apparently compromised enforcement of the second mortgage. In the face of that evidence, Mr. Brooker, after the unsuccessful attempt to enforce the second mortgage for 265 Ontario, ought not to have acted for 265 Ontario against Mr. Sanayei without first obtaining his express consent, which he failed to do.

[37] Applying the first part of the McDonald Estate v. Martin test, I accept that Mr. Brooker received confidential information from Mr. Sanayei, who had consulted him in a lawyer-client capacity with respect to the subject matter of the action currently against him.

[38] The second issue to be addressed under the McDonald Estate v. Martin test is whether there is a risk that that information will be used to the prejudice of Mr. Sanayei. As stated by Sopinka J. in McDonald Estate (at pp. 1260-1261):

“In my opinion, once it is shown by the client that there existed a previous relationship which is sufficiently related to the retainer from which it is sought to remove the solicitor, the court should infer that confidential information was imparted unless the solicitor satisfies the court that no information was imparted which could be relevant. This will be a difficult burden to discharge. Not only must the court's degree of satisfaction be such that it would withstand the scrutiny of the reasonably informed member of the public that no such information passed, but the burden must be discharged without revealing the specifics of the privileged communication. Nonetheless, I am of the opinion that the door should not be shut completely on a solicitor who wishes to discharge this heavy burden.”

[39] Mr. Sanayei’s discussion with Mr. Brooker regarding his involvement in the two mortgages on 3A Stuart goes to the heart of the claim against him in this action and it would be impossible for Mr. Brooker to compartmentalize information relating to the issue based on the source. I therefore accept that there is a risk that information received from Mr. Sanayei would be used to his detriment.

[40] In opposition to the motion, the plaintiff argues that Mr. Sanayei has delayed in objecting to the involvement of Mr. Brooker as its counsel and has not provided any explanation for that delay. I accept that there was a delay of approximately 9 months between when the plaintiff’s statement of claim was issued on June 30, 2020 and when Mr. Sanayei’s counsel first raised a possible conflict of interest on March 26, 2021. Even at that point, the basis for cancellation of the examinations was Mr. Brooker’s involvement on Mr. Sanayei’s behalf in another unrelated mortgage enforcement proceeding. It was not until Mr. Sanayei’s first affidavit of June 15, 2021 that he provided evidence of the conflict arising from his having consulted Mr. Brooker regarding his involvement in both the second mortgage to the plaintiff and the third mortgage on 3A Stuart.

[41] Defendant’s counsel relies on DeCorte v. DeCorte, 2021 ONSC 7208, which discusses the competing interests on a motion to remove an opposing lawyer, and in which the court removed a lawyer on the basis of their previous involvement on behalf of the moving party. In para. 27, Pomerance J. addressed the moving party’s delay in bringing the motion, and stated:

27 It has taken some time for this issue to come before the court. The lawyer [for Ms. DeCorte whom Mr. DeCorte was seeking to remove] discussed this with Mr. DeCorte’s former counsel Mr. Reid. Mr. Reid asserted that he did not perceive the lawyer to be in conflict. Many months later, Mr. DeCorte retained his current lawyer Ms. Reid, who quickly brought this motion before the court. The delay is unfortunate but does not prevent Mr. DeCorte from asserting a disqualifying conflict. He did not personally waive the conflict. Moreover, I have found that there is an appearance of conflict – one that would be perceived by a reasonable person, apprised of all the circumstances. It would not be appropriate to condone a disqualifying conflict merely because a former lawyer did not pursue the issue. [emphasis added]

[42] Based on the evidence, I have concluded that Mr. Brooker does have a disqualifying conflict of interest in acting for the plaintiff against Mr. Sanayei after having been consulted by Mr. Sanayei with respect to the very issue that is the subject of the action against him. Similar to the court’s decision in DeCorte, Mr. Brooker’s disqualifying conflict cannot be condoned based on Mr. Sanayei’s delay in raising it. However, there should be some consequence to Mr. Sanayei for his delay in raising a conflict of interest of which he should have been aware when he was served with the statement of claim. As set out at the end of these Reasons, the defendant Sanayei’s delay in bringing the motion based on Mr. Brooker’s conflict of interest is appropriately considered when addressing the issue of costs.

[43] For these reasons, I conclude that Mr. Brooker does have a disqualifying conflict of interest in his representation of the plaintiff 265 Ontario Inc. against Mr. Sanayei and accordingly, I order that he and his firm be removed as plaintiff’s counsel.

Issue: Does Mr. Brooker’s involvement in the plaintiff’s mortgage enforcement action create a sufficient likelihood that he will be a witness at the trial of this action to warrant removing him as plaintiff’s counsel?

[44] Separate from the issue of whether Mr. Sanayei’s previous consultation with Mr. Brooker regarding the matters in issue in this action creates a disqualifying conflict of interest, I will address the issue of whether Mr. Brooker should also be removed as plaintiff’s counsel based on a likelihood that he will be a witness at trial.

[45] The defendant Sanayei submits that Mr. Brooker’s involvement in the action to enforce the subject second mortgage means that he will be required to testify at trial with respect to what were essentially efforts to mitigate the plaintiff’s losses arising from the default of the mortgagor Salehi. The relevant pleadings are:

[46] Statement of claim, para. 28:

28 Subsequently, the plaintiff retained new counsel [i.e. Brooker] and commenced its own power of sale proceedings, by way of issuance of notice of sale dated September 12, 2019, and commencing a subsequent action. The action against Salehi [the mortgagor] has been stayed by way of operation of section 69.2 of the Bankruptcy and Insolvency Act R.S.C. 1985, c. B-3, as amended, as he has made a voluntary assignment in bankruptcy pursuant to section 49 of the said Act on January 9, 2020.

Statement of defence, paras. 35, 36, 46, 47 and 48:

35 On or about September 5, 2019, the Plaintiff commenced an action against Mr. Salehi for default under the second mortgage, bearing Court File No.: CV-19-00626848-0000.

36 In October, 2019, Mr. Bayat sent Ms. Hodjat a screenshot of a listing for the Property for sale for the sum of $2,098,880. However, the Plaintiff failed to take any steps to bring the first mortgage into good standing, take over the power of sale proceedings, buy out the first mortgagee, or otherwise protect its interests as second mortgagee.

46 To the extent that the Plaintiff has suffered any loss with respect to any outstanding monies owed under the second mortgage, the Plaintiffs’ remedies are those available in law to a second mortgagee and not as against Mr. Sanayei.

47 If the Plaintiff has suffered any losses or damages, which is not admitted, but expressly denied, such losses and damages were caused by or contributed to as a result of the Plaintiff’s own negligence and/or others whom may at law be responsible to it. Mr. Sanayei pleads and relies upon the provisions of the Negligence Act, R.S.O. 1990, c. N.1, as amended.

48 In any event, the damages claimed by the Plaintiff are excessive, exaggerated, speculative, unforeseeable, unmitigated, and untenable at law.

[47] The defendant Sanayei also relies on the evidence in his reply affidavit of November 2, 2021 summarized above, arising from the audio recording made by Mr. Bayat on November 21, 2019. The relevant paragraphs of this affidavit are:

19 In the surreptitious audio recording, Mr. Bayat discloses the recommendations he was receiving from Mr. Brooker regarding enforcement. At the time of this conversation Mr. Bayat had retained Mr. Brooker for the purpose of a claim as against Vahid Salehi, the mortgagor on the underlying mortgage transaction. This was at a time that Mr. Bayat was aware that a lawsuit may be commenced against me.

20 During the course of this conversation, Mr. Bayat discloses strategic information he was receiving from Mr. Brooker regarding the claim against Mr. Salehi. Amongst other places:

(a) At 43:05 of the recording (page 21 of 50), Mr. Bayat states:

Mr. Bayat: I don’t have any intention, but the fact is, the fact is that I went to David Brooker, and right in the first session, what was our request? To take over the sale, correct?

Ms. Hodjat: Yes.

Mr. Bayat: At the time, I was saying that for getting (Incomprehensible), I would have to go and get a loan, as I didn’t have the full amount. In the first session, in particular, he said that I can, he can take on the sale, and you need not provide money, and with it has been sold, we will pay their money.

Ms. Hodjat: But he advised not to do it, David himself said not to do it.

Mr. Sanayei: Why?

Mr. Bayat: Now besides this, let me tell you something else, when we came out of that session, this was extremely strange for me that I asked Shirin several times, that Shirin, are you sure he said this? Am I right?

Ms. Hodjat: That he should not pay the 1.800, and undertaking to be paid, must not pay the money.

Mr. Bayat: We talked about this several times together.

I understood this discussion to mean that Mr. Bayat was purposefully discussion [sic] the advice he had received from Mr. Brooker regarding his mortgage enforcement strategy. [This is a statement of opinion and not properly affidavit evidence.]

(b) At minute 23 of the recording (page 11 of 50), Mr. Bayat told me that Mr. Brooker had advised him that he considered the appraisal Mr. Bayat relied on in granting the mortgage to be “illegal”.

(c) At minute 46 of the recording (page 22 of 50), Mr. Bayat informed me about the Notice of Sale process that had occurred and what Mr. Brooker had advised him regarding offers to settle the enforcement. Mr. Bayat told me that Mr. Brooker had advised him not to accept settlement offers. In particular, Mr. Brooker advised Mr. Bayat that “it isn’t necessary” to accept a settlement.

(d) At minute 47 of the recording (page 23 of 50), Mr. Bayat discloses the discussions he had with Mr. Brooker regarding whether they would “do the Power of Sale or not.” Mr. Bayat recounted a meeting he had with Mr. Brooker and Ms. Hodjat in which Mr. Brooker had asked if Mr. Bayat wished to commence Power of Sale proceedings. At the time Mr. Bayat was “not interested” in Power of Sale proceedings or purchasing the property.

[48] The defendant Sanayei relies on the plaintiff’s pleading of its commencement of power of sale proceedings and its action against the mortgagor Salehi and his own pleading of a failure on the part of the plaintiff to take reasonable steps to protect its interests as a second mortgagee and to mitigate its losses through the power of sale proceedings. The defendant Sanayei also relies on information provided to him by Mr. Bayat regarding the advice provided by Mr. Brooker with respect to conduct of the power of sale proceedings. He submits that Mr. Brooker’s involvement on the plaintiff’s behalf in the power of sale proceedings means that he will inevitably be a witness on the issue of the plaintiff’s mitigation of his damages.

[49] The defendant Sanayei submits that the production of Mr. Bayat’s audiotape of the meeting of November 21, 2019 involving him, Mr. Sanayei and Ms. Hodjat justified seeking the removal of Mr. Brooker as plaintiff’s counsel on the basis that the audiotape confirmed Mr. Bayat’s reliance on his advice in the mortgage enforcement action. The plaintiff submits that it would have been apparent when Mr. Brooker first became involved in the mortgage enforcement action on August 30, 2019 that he would have been giving advice to the plaintiff on issues related to that action. The audiotape does confirm that the plaintiff relied on Mr. Brooker’s advice in attempting to mitigate its losses in the mortgage enforcement action but does not explain Mr. Sanayei’s delay of 16 months between the commencement of the action and his objection to Mr. Brooker acting as counsel on the basis that he would be a witness at trial.

[50] The Divisional Court in Essa (Township) v. Guergis, supra (see paragraph 61 of Mazinani, supra) set out a list of factors to be considered on a motion to remove a lawyer of record who may be a witness at trial. My review of those factors is as follows:

(i) The stage of the proceedings:

The action is still at a relatively early stage and examinations for discovery have not been held. This does not in itself favour either party. However, if other factors support the removal of Mr. Brooker as plaintiff’s counsel, removal before examinations for discovery is less prejudicial to the client because new counsel will be required to spend less time acquainting themselves with the file than if they were retained at a later stage.

(ii) The likelihood that the witness will be called:

The plaintiff has not indicated that they will be calling Mr. Brooker to give evidence. However, Mr. Bayat, the principal of the plaintiff, will presumably be cross-examined at trial with respect to his efforts to mitigate his damages by enforcing the second mortgage given by the mortgagor Salehi to the plaintiff, and these efforts consisted primarily of the mortgage enforcement action on which Mr. Brooker acted and presumably gave him advice.

The plaintiff acknowledges that Mr. Sanayei is entitled to know what steps Mr. Bayat took to mitigate his losses in respect of the second mortgage but submits that he is not entitled to know what legal advice he received in that regard. However, Mr. Brooker represented Mr. Bayat when he commenced the action to enforce the second mortgage and presumably received his instructions with respect to the conduct of that action based on his advice. The trial judge will ultimately determine whether Mr. Bayat must answer questions about what legal advice he relied on in making decisions in the mortgage enforcement action. However, if he is asked why he took certain steps in that action, and his response is that he did so on the advice of counsel, then his reliance on counsel’s advice will make that advice relevant. The relevance of Mr. Brooker’s advice to Mr. Bayat’s decisions means that Mr. Brooker will likely be required to testify as well.

(iii) The good faith (or otherwise) of the party making the application:

The plaintiff submits that the defendant Sanayei would have known of Mr. Brooker’s involvement in attempting to enforce the mortgage on 3A Stuart since August, 2019 when Mr. Bayat retained him, but did not raise the possibility of Mr. Brooker having to be a witness at trial until more than a year after this action was commenced, and after this motion was initiated solely on the basis of an alleged conflict of interest. On this basis, he challenges the defendant Sanayei’s good faith in arguing that Mr. Brooker will be a witness at trial.

The defendant Sanayei submits that it was not until after August 27, 2021, when he received the plaintiff’s recording of the November 21, 2019 meeting involving Mr. Bayat, Ms. Hodjat and himself, that he was aware of the specific advice that Mr. Brooker had provided to Mr. Bayat, so he had no basis on which to raise the issue. However, the problem with this argument is that Mr. Sanayei was a participant in the November 21, 2019 meeting at which Mr. Bayat told him about Mr. Brooker’s advice, but did not use that information to impugn Mr. Brooker’s involvement until approximately 16 months after the action was commenced. I therefore accept that there is reason to question Mr. Sanayei’s good faith in moving to remove Mr. Brooker on the basis that he will likely be a witness at trial.

(iv) The significance of the evidence to be led:

The evidence is relevant to the plaintiff’s efforts to mitigate its damages arising from the default on the second mortgage on 3A Stuart which will be a significant issue at trial.

(v) The impact of removing counsel on the party's right to be represented by counsel of choice:

As is always the case when a party’s lawyer is prohibited from acting further, there are adverse consequences to that party. In this case, the plaintiff will be forced to seek and retain other counsel who will have to spend time acquainting themselves with the case. This will cause the plaintiff to incur further expense and will likely cause some delay in the progress of the matter. This factor militates against a removal order.

(vi) Whether trial is by judge or jury:

This action will be tried by judge alone. This factor is neutral on this motion.

(vii) Who will call the witness if, for example, there is a probability counsel will be in a position to cross-examine a favourable witness:

The plaintiff will almost certainly lead its evidence regarding damages through Mr. Bayat, who will likely be cross-examined on the issue of mitigation, which, as indicated above, will likely lead to questions about the advice obtained from Mr. Brooker that informed his decisions. As Mr. Bayat cannot be compelled to call Mr. Brooker as a witness, Mr. Sanayei may have to, which would put plaintiff’s counsel in the position of being able to cross-examine his client’s own lawyer. It is an open question as to how the trial judge would manage this.

(viii) The connection or relationship between counsel, the prospective witness and the parties involved in the litigation:

The prospective witness Mr. Brooker is plaintiff’s counsel in this action and also acted in the action to enforce the mortgage on 3A Stuart, which means that he has information about decisions made in that action. Mr. Brooker also had a relationship with the defendant Sanayei during which he occasionally provided mortgage enforcement advice and accepted client referrals.

[51] Most of the factors set out in Essa (Township) v. Guergis either favour the removal of Mr. Brooker as plaintiff’s counsel or are neutral. The factor that clearly does not favour removal is that the plaintiff will be put to the expense of retaining new counsel, which will also likely result in some delay in the action. The delay in the defendant Sanayei raising the possibility of Mr. Brooker being a witness at trial also raises a question as to his good faith in seeking his removal on that basis. The problem is, as was also the case when considering whether Mr. Brooker should be removed owing to a conflict of interest, that even in the face of a significant delay that suggests bad faith, Mr. Brooker still cannot be both counsel and a witness. I therefore conclude that Mr. Brooker also be removed as plaintiff’s counsel on the basis that he will likely be required to be a witness at trial.

[52] My conclusion that Mr. Brooker must be removed as plaintiff’s counsel because he will likely be required to be a witness at trial is consistent with the decisions in Kitchen v. McMaster, 2018 ONSC 3717, 8657181 Canada Inc. v. Medhi Au LLP, 2019 ONSC 1295 and Elkay Management Inc. v. Law Studio Professional Corporation and Jonathan Baker, 2021 ONSC 7880.

[53] In Kitchen v. McMaster, 2018 ONSC 3717, the plaintiff Kitchen claimed damages from the real estate lawyer who represented him with respect to his unsuccessful efforts to purchase a condominium townhouse. Kitchen’s real estate lawyer McMaster referred him to various possible litigation lawyers to act for him against the vendor; Kitchen then retained a different lawyer for that purpose. Kitchen’s real estate action was dismissed with costs.

[54] The same litigation lawyer who Kitchen retained to act against the vendor then brought an action on Kitchen’s behalf against the real estate lawyer McMaster. On McMaster’s motion, the litigation lawyer was ordered removed as Kitchen’s counsel on the basis that he would be a witness in respect of the claim against McMaster because he had provided Kitchen with advice regarding the unsuccessful real estate litigation that resulted in the award of costs against him and the loss of the funds paid as deposits.

[55] In 8657181 Canada Inc. v. Medhi Au LLP, 2019 ONSC 1295, Master Robinson (as he was then titled) ordered the removal of the plaintiff’s lawyer on the basis that he would be a witness with respect to the plaintiff’s mitigation efforts, and the decision of Ferguson J. upholding this decision on appeal (2021 ONSC 1295). The plaintiff 8657181 Canada Inc. (“865 Canada”) alleged that the defendant lawyers Mehdi Au had acted for it when it was a defendant in a previous power of sale proceeding and foreclosure action. Mehdi Au disputed that they were retained. The plaintiff mortgagee had obtained default judgment against 865 Canada. The damages claimed by 865 Canada from Mehdi Au included the fees that it paid to its lawyer Starkman for the unsuccessful appeal of the dismissal of a motion to set aside the default judgment. Starkman also acted for 865 Canada against Mehdi Au.

[56] Both Master Robinson and Ferguson J. found that Starkman, having been 865 Canada’s lawyer on the appeal, would likely be a witness as to advice given regarding 865 Canada’s mitigation efforts in pursuing the appeal and as to damages claimed for recovery of legal fees charged by that lawyer. Master Robinson concluded (at para. 42) that the lawyer’s “position as advocate cannot be reconciled with his position as a likely witness.”

[57] On the appeal, Ferguson J. held that Master Robinson had correctly found that the plaintiff’s lawyer would likely be a material witness at trial, creating a conflict with his duty to the court. Counsel for Sanayei relies on the following words of Ferguson J. (para. 16):

16 [I]n cases such as this one, where a lawyer assumes carriage of a matter, completes the proceeding, and subsequently initiates a solicitor’s negligence action against a former lawyer, courts routinely disqualify the lawyer that assumed carriage from acting against the former lawyer. In my view this is just common sense.

[58] In Elkay Management Inc. v. Law Studio Professional Corporation and Jonathan Baker, 2021 ONSC 7880, the defendant Baker, a lawyer, had assumed carriage of bankruptcy proceedings on behalf of the plaintiff Elkay against two indemnifiers under a commercial lease. Elkay’s previous counsel were TC LLP. Elkay ultimately sued Baker, alleging that he failed to oppose inadequate valuations of the interests of the two indemnifiers in two properties, failed to effectively oppose their discharges from bankruptcy, and failed to report on the bankruptcy proceedings in a timely manner, thus depriving Elkay of the ability to appeal the discharges. Elkay retained TC LLP to pursue its claim against its former counsel Baker.

[59] Baker then moved to remove TC LLP as Elkay’s counsel as counsel of record in their action against him, alleging a conflict of interest on the basis that Elkay received and relied on legal advice from TC LLP in connection with the bankruptcies both before and after his involvement. Baker specifically alleged that a TC LLP lawyer provided advice to both Elkay and Baker with respect to the valuation of the indemnifiers’ properties. On the appeal from Master (now Associate Justice) Jolley’s decision removing TC LLP as Elkay’s counsel, Black J. accepted that the likelihood that one or more lawyers from that firm would be called to testify at trial warranted that firm’s removal as Elkay’s counsel.

[60] In all these cases, the court disqualified counsel who participated in a party’s efforts to mitigate their damages from acting to recover damages from a former lawyer on the basis that they would be required to give evidence on the issue of damages. The circumstances of Mr. Brooker’s involvement in this case do not warrant a different conclusion.

[61] I therefore order that Mr. Brooker be removed as plaintiff’s counsel in this action both because he has a conflict of interest based on having previously been consulted by the defendant Sanayei with respect to the subject matter of this action against Mr. Sanayei, and because he will likely be required to testify as a witness at trial.

Costs

[62] At the conclusion of the hearing, both counsel filed costs outlines. However, as I stated above, the defendant Sanayei’s significant delay in raising the issue of Mr. Brooker’s removal on both grounds should be a factor in the disposition of the costs of the motion. I accept that I am obliged to receive submissions from counsel before ruling on costs. However, counsel should be aware that my strong preliminary view is that, notwithstanding the granting of the requested removal order, owing to the failure of the defendant Sanayei to raise both the issue of Mr. Brooker’s conflict of interest and the likelihood of his being a witness at trial promptly after receiving the statement of claim, there should be no costs payable on the motion.

[63] If the parties cannot agree to the disposition of the costs of the motion, they may make written submissions, the defendants within 30 days and the plaintiff within 20 days thereafter.

ASSOCIATE JUSTICE GRAHAM

Date: May 30, 2022