Court File and Parties

COURT FILE NO.: 32-2438494 DATE: 20231017

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: In the Matter of the Consumer Proposal of Angella Christine Briscoe

BEFORE: Associate Justice Rappos

COUNSEL: Bruce Simpson, for msi Spergel Inc. and Colin Boulton Osborne Barnwell, for Angella Briscoe

HEARD: In Writing

E N D O R S E M E N T

Background

[1] Angella Briscoe filed a consumer proposal with msi Spergel Inc. (“Spergel”) as administrator in October 2018. Colin Boulton, a Licensed Insolvency Trustee with Spergel, had carriage of Ms. Briscoe’s consumer proposal proceeding.

[2] An amended consumer proposal was approved by creditors in January 2019 and deemed approved by the court. Ms. Briscoe subsequently failed to make the required payments, and the amended consumer proposal was deemed annulled as of July 1, 2021.

[3] Pursuant to a statement of claim issued on March 27, 2023 (the “Claim”), Ms. Briscoe has commenced a Small Claims Court action against Spergel and Mr. Boulton as defendants (the “Defendants”) bearing Court File No. SC23000005780000 (the “Small Claims Action”).

[4] In the action, Ms. Briscoe seeks damages of $35,000 for negligence of the Defendants, breach of good faith and inconvenience and an order of the court that the Defendants rectify her credit profile by removing the entry “annul” or any negative entry which appears on her credit profile/history relating to the consumer proposal.

[5] The Defendants brought a motion in the consumer proposal proceeding for an order staying the Small Claims Action unless and until the Court grants leave to proceed pursuant to section 215 of the Bankruptcy and Insolvency Act (the “BIA”).

[6] Ms. Briscoe brought a counter motion seeking leave from the Court to commence and continue the Small Claims Action on a nunc pro tunc basis, and an order directing Bruce Simpson, counsel to the Defendants, to “step down from being said Counsel in this particular matter”.

[7] The parties appeared before me on June 6, 2023. In my Endorsement dated June 9, 2023, I adjourned the motions related to the Small Claims Action sine die and ordered that Ms. Briscoe’s motion for an order requiring Mr. Simpson to step down as counsel proceed in writing.

Facts

[8] In the Claim, Ms. Briscoe alleges that the Defendants failed to exercise their duties under the BIA in connection with her consumer proposal proceeding and were negligent and reckless.

[9] In her factum, Ms. Briscoe states that the “heart of her claim is that the administrator failed to do the most rudimentary preliminaries before he accepted her case to make a consumer proposal” and that “the damages alleged was the failure of the defendants to comply with specific provisions of the BIA”.

[10] Mr. Simpson is not a defendant in the Small Claims Action. He is referenced in paragraphs 24, 25, 28, 44 and 45 of the Claim. Ms. Briscoe alleges that a Spergel employee advised her to contact Mr. Simpson in connection with payments she had missed under her consumer proposal. Ms. Briscoe alleges that Mr. Simpson told her that she would have to pay him $800 to reinstate her consumer proposal, and that if it wasn’t reinstated, it would negatively affect her credit rating.

[11] Ms. Briscoe further alleges in the Claim that Mr. Simpson acted in bad faith in attempting to have her pay him $800 to reinstate the consumer proposal.

[12] Prior to the issuance of the Claim, in an e-mail dated December 4, 2022, Osborne Barnwell, Ms. Briscoe’s lawyer, informed Mr. Simpson that he may be a potential witness and would be in a conflict of interest if he were to continue to act for the Defendants. Mr. Simpson did not share Mr. Barnwell’s views on this issue.

[13] Mr. Boulton has confirmed in an affidavit that the Defendants do not intend to call Mr. Simpson as a witness. Ms. Briscoe has stated that Mr. Simpson “is likely to be called as a witness.”

Issue

[14] The sole issue before the Court is whether Mr. Simpson should be removed as lawyer of record for the Defendants in this consumer proposal proceeding.

Law and Analysis

[15] As stated by Master McAfee (as she was then titled) in Karas et al. v. Her Majesty the Queen et al., 2011 ONSC 5181, “[t]he 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 the removal of the lawyer. This determination is very fact specific and based on an examination of all of the factors in the case and the specific reason why the motion is being brought. The task of the court is to uphold and preserve the integrity of the justice system while ensuring that litigants are not deprived of their counsel of choice without good cause” (para. 26).

[16] Ms. Briscoe’s argument is that, as Mr. Simpson will likely be a witness in the Small Claims Action, he should not be permitted to continue to represent the Defendants in this proceeding.

[17] The Defendants’ position is that Ms. Briscoe obtaining leave is a threshold issue that must be determined before Mr. Simpson’s representation of the Defendants needs to be resolved, that there is no conflict of interest, and that Mr. Simpson is unlikely to be called as a witness in the Smalls Claims Action.

[18] Both parties cite the decision of Justice Leach in Rice v. Smith, 2013 ONSC 1200 (“Rice v. Smith”) in support of their arguments on this motion. In that decision, Justice Leach described the tension between “the right of litigants not to be deprived of their counsel of choice without good cause” (para. 14) and “the courts’ inherent jurisdiction to remove from the record lawyers who have a conflict of interest” (para. 16).

[19] Justice Leach detailed the conflict-of-interest prohibition where a lawyer simultaneously acts as counsel and witness. At paragraph 20 of the decision, Justice Leach noted that it is not an absolute prohibition and that the courts have adopted a flexible approach and should consider each case on its own merits, having regard to a variety of listed factors.

[20] In my view, the “lawyer as witness” conflict of interest issue is not applicable in this matter.

[21] The motions that have been adjourned were brought in Ms. Briscoe’s consumer proposal proceeding. They deal with the issue of whether Ms. Briscoe required leave of the Court under section 215 of the BIA to commence the Small Claims Action, and if so, whether leave should be granted now on a nunc pro tunc basis for the action to be continued.

[22] There is nothing in any of the materials filed with the Court that suggests that Mr. Simpson is a witness in connection with these motions in this consumer proposal proceeding. Whether or not Mr. Simpson may be called as a witness in the Small Claims Action is putting the proverbial “cart before the horse”, since no decision has been rendered to date as to whether leave will be granted for the Small Claims Action to continue.

[23] In my view, the possibility, or even likelihood, that Mr. Simpson will be a witness in the Small Claims Action if leave is granted for it to proceed does not constitute good cause for the Defendants to be deprived of their counsel of choice on the leave motions in this consumer proposal proceeding.

[24] Based on the record before me, a fair-minded reasonably informed member of the public would not conclude that the proper administration of justice requires the removal of Mr. Simpson as lawyer for the Defendants in the consumer proposal proceeding.

Disposition

[25] As a result, Ms. Briscoe’s motion to remove Mr. Simpson as counsel for the Defendants in this consumer proposal proceeding is hereby dismissed.

[26] The parties shall contact the Bankruptcy Court Office to schedule a case conference to discuss next steps in this proceeding, including costs submissions with respect to this in-writing motion.

Associate Justice Rappos DATE: October 17, 2023