Court File and Parties
COURT FILE NO.: CV-22-00684382-0000 DATE: 20231205
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
JASMINE JAVID Plaintiff – and – LADAN JAVID, SUSSAN JAVID, and 2006361 ONTARIO INC. Defendants
Counsel: Richard Watson, for the Plaintiff Marshall A. Swadron and Matias Contreras León, for the Defendants
HEARD: September 21, 2023
REASONS FOR JUDGMENT
Merritt J.
OVERVIEW
[1] The plaintiff Jasmine Javid ("Jasmine") and the defendants Ladan Javid (“Ladan”) and Sussan Javid ("Sussan") are sisters. They are all beneficiaries of the estate of their late mother Aghdas Javid (the “Deceased”). Ladan is the estate trustee. The defendant 2006361 Ontario Inc. ("2006361") is a company owned by Ladan that has no connection to the estate.
[2] Ladan and 20006361 (the “moving parties”) move to dismiss the action as frivolous, vexatious and an abuse of the process of the court or, in the alternative, an order staying this action by reason of incurable prejudice. In the further alternative, they seek an order removing Ladan's former lawyer, Richard Keith Watson ("Mr. Watson"), as counsel of record for the plaintiff. They also seek an order preventing Mr. Watson from acting against the defendants in any other proceedings.
DECISION
[3] This action is stayed because it is an abuse of the process of the court. It overlaps significantly with other proceedings. It has been brought by Mr. Watson, who acted as counsel for Ladan throughout the events which are the subject matter of this action. There is incurable prejudice resulting from Mr. Watson’s access to privileged information from Ladan over the course of his retainer with her and this is also a basis for staying the action.
[4] Mr. Watson is removed as the plaintiff’s solicitor of record and is prohibited from acting for anyone other than himself in any proceeding that is directly or indirectly related to the Javid estate and in which Ladan is a party.
BACKGROUND FACTS
[5] The Deceased passed away on September 28th, 2018. On October 9, 2018, Ladan retained Mr. Watson to act for her with respect to her role as estate trustee. He acted as her counsel for two years. On November 19, 2019, Mr. Watson obtained a certificate of appointment of estate trustee naming Ladan as estate trustee.
[6] In the spring and summer of 2020, Mr. Watson befriended Jasmine, who was a recipient of Ontario Disability Support Plan benefits. Mr. Watson drafted a will for Jasmine that named himself as the beneficiary. He also drafted powers of attorney for property and personal care appointing himself as Jasmine's attorney.
[7] On July 17, 2020, Mr. Watson created the Jasmine Javid Trust (the "Jasmine Trust") to receive Jasmine's entitlement from the estate. His professional corporation, Richard K Watson Professional Corporation ("RKWPC"), was the trustee and had discretion over the Jasmine Trust. Mr. Watson was also the residuary beneficiary.
[8] On July 30, 2020, Mr. Watson transferred the Deceased's condominium at 7 King Street East, Unit 1709 (the "King Condominium"), which was held by Jasmine in trust for the estate, to RKWPC.
[9] On September 14, 2020, RKWPC borrowed $300,000 from private lenders, secured by a high-interest mortgage against the King Condominium (the "King Mortgage"). The next day, Mr. Watson lent the money to his long-time client and colleague Curtis Petersen. The loan was for one year and was secured by a fourth mortgage on Mr. Petersen’s commercial property at 12 Lewis Street, Toronto (the “Lewis St. Mortgage”).
[10] In late September 2020, Ladan became concerned about Mr. Watson's dealings with Jasmine and the estate, and she attempted to recover the estate assets controlled by him. Mr. Watson refused to do so. On October 22, 2020, Ladan terminated his retainer. Subsequently, Mr. Watson produced a codicil, purportedly given to him by Jasmine two months earlier, providing for the distribution of the Estate in a manner which is more favourable to Jasmine.
The 2020 Application
[11] On November 30, 2020, Ladan commenced application CV-20-00652251-00ES against Mr. Watson and RKWPC, seeking a declaration that the Jasmine Trust was invalid and to recover the estate assets and other assets transferred into the Jasmine Trust by Mr. Watson, including the King Condominium (the "2020 Application”).
[12] In the 2020 Application, Mr. Watson missed timetable deadlines, failed to comply with court orders and drafted seven affidavits for Jasmine to swear supporting his position. Mr. Watson brought an unsuccessful motion to remove Ladan’s lawyers from the record, alleging conflict of interest. In her endorsement on the motion, Gilmore J. wrote that the court was left with the impression that the motion was a strategic delay tactic. Mr. Watson’s motion for leave to appeal to the Divisional Court was dismissed.
[13] Dietrich J. decided the 2020 Application on December 7, 2022 and ruled that the Jasmine Trust was invalid and required Mr. Watson and RKWPC to discharge the mortgage, transfer the King Condominium to Ladan as estate trustee and to account regarding the transactions involving the Jasmine Trust. Her Honour further awarded Ladan her costs of the application fixed at $168,286.72.
[14] Mr. Watson did not cooperate with Ladan's counsel to take out the formal judgment of Justice Dietrich. This resulted in two appearances to settle the judgment and an 11-week delay.
[15] Mr Watson then advised that he was preparing a notice of appeal but failed to do so on time. On June 12, 2023, Mr. Watson and RKWPC served a motion returnable June 30, 2023 seeking to extend the time to appeal the December 7, 2022 judgment, stay Justice Dietrich's judgment, and add Jasmine as a party to the appeal. On June 30, 2023, Mr. Watson sought an adjournment because he and RKWPC had retained counsel. An adjournment to September 19, 2023 was granted on terms.
[16] On July 19th, 2023, Mr. Watson brought an unsuccessful urgent motion in the Court of Appeal to prevent the release of the proceeds of the sale of the King Condominium to the estate and asked that they be paid into court. Immediately after the motion was dismissed on July 19, 2023, Jasmine registered a caution on title of the King Condominium, preventing the closing of the sale of the King Condominium by the mortgagee the next day.
[17] In her reasons of July 25, 2023 on the urgent motion regarding the sale proceeds, Pardu J.A. wrote:
The overall picture is one of obstruction and delay by Mr. Watson. The administration of the Estate has been hampered by his conduct. Payment of money into court will result in further delay. The responding party, as estate trustee, will ultimately account to the beneficiaries. Jasmine's entitlement to the King Street condominium, if it ever existed, has been frustrated by Mr. Watson's actions in placing a highly improvident mortgage on that property. It is difficult to see how he can purport to represent Jasmine's interests on this motion, given that his conduct in respect of assets that she claims is in issue.
The application judge made apt observations of the conduct of Mr. Watson at paras. 99 and 102 of her reasons:
The applicant submits that Mr. Watson's conduct giving rise to the proceedings falls outside of established norms of the legal profession. The applicant submits that he has courted conflicts of interest, breached his duty of loyalty to the applicant, and has undertaken transactions that benefited other clients of his practice to the applicant's detriment. I agree. Further, I find that Mr. Watson has continued to flout court orders setting timetables and his obligation to account. He has continued to withhold documents and information regarding the King St. Condo mortgage contrary to court orders. Mr. Watson attempted to bring a motion to remove the applicant as Estate Trustee, and then he tried to remove her counsel as lawyer of record. Justice Gilmore found the latter application to be completely without merit and an unjustifiable attack on the professional integrity of the applicant's counsel.
In my view, Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, 140 O.R. (3d) 77 sets an appropriate precedent to be followed in this case, in which the respondents’ conduct falls outside of the established norms of the legal profession. In encumbering the King St. Condo, Mr. Watson has used the Estate’s asset to benefit another of his clients to the detriment of the Estate. When ordered to pay the mortgage proceeds into court, he did not. Whether Mr. Watson has also benefited personally remains to be seen. Mr. Watson has not provided the requested information and documentation regarding the mortgage loan despite multiple court orders to produce that information and documentation. Mr. Watson persisted in his lack of cooperation throughout his cross-examination.
[18] Mr. Watson and RKWPC failed to comply with the December 7, 2022 judgment. On May 24, 2023 Gilmore J. found them to be in contempt of court for failing to provide documents and information to account for their dealings with the Jasmine Trust.
[19] Mr. Watson disclosed that neither he nor RKWPC had the funds required to discharge the $300,000 mortgage against the King Condominium, despite his personal guarantee of that mortgage. Mr. Watson was unsuccessful in helping Mr. Petersen refinance the Lewis Street Property to permit him to repay the loan. Mr. Watson and RKWPC consented to judgment in favour of the private mortgagee, permitting the mortgagee to sell the King Condominium. As part of the May 24, 2023 contempt order, the excess proceeds of sale of the King Condominium were ordered to be paid to the Estate and the sale was scheduled to close on July 20, 2023.
The Present Action
[20] On October 26, 2020, Mr. Watson commenced action CV-20-00650155-0000 on Jasmine’s behalf against family friend Gordon Naylor (the “Naylor Action”). Jasmine’s claim relates to Mr. Naylor’s purchase of a condominium unit in which Jasmine was living (the “Concorde Condominium”) and alleged debts.
[21] On April 20, 2022, Mr. Watson proposed to amend the statement of claim in the Naylor Action to add Ladan as a defendant and requested Ladan’s consent. Ladan objected because Mr. Watson was her lawyer at the relevant time. She said that his involvement in the action created incurable prejudice. Her counsel requested notice of any motion to amend. Mr. Watson did not attempt to amend the statement of claim in the Naylor Action. Rather, he started the present action.
[22] The present action alleges that Ladan supported Mr. Naylor’s conduct which is the subject of the Naylor Action. In addition to damages, Mr. Watson seeks to compel Ladan to deliver to Jasmine title to the Concorde Condominium and a second condominium on Yonge Street, which are in the name of Mr. Naylor and his son. These transfers occurred while Mr. Watson was Ladan’s lawyer and Ladan discussed these with him.
[23] The statement of claim alleges breaches of trust by Ladan for falsely and wilfully concealing from Mr. Watson debts alleged to be due to the Estate from Ladan and her ex-husband Jim Collishaw. This will require Mr. Watson to be a witness and puts him in the middle of the accusations against Ladan.
[24] The statement of claim further alleges that Ladan has wrongfully attempted to undo the transactions carried out by Mr. Watson, such as creation of the Jasmine Trust and the mortgage of the King Condominium challenged in the 2020 Application. However, this Court found the Jasmine Trust to be invalid and ordered that the mortgage of the King Condominium be reversed.
[25] The damages claimed are wholly disproportionate to the value of the estate. Jasmine seeks damages of $8.3 million with respect to the estate which has a total value of approximately $2.1 million.
[26] The remaining claims relate to allegations with respect to the administration of the estate, and are also the subject matter of the 2021 Application and the 2022 Application, which are discussed below.
[27] No discernable cause of action has been pled against Susan or 2006361. Mr. Watson came to know about the existence of 2006361, through which Ladan owns property, because of Ladan’s lawyer-client relationship with Mr. Watson.
The 2021 and 2022 Applications
[28] On February 1, 2021, Mr. Watson commenced application CV-21-656091-00ES on behalf of Jasmine and RKWPC as trustee of the Jasmine Trust seeking to remove Ladan as estate trustee (the “2021 Application”). On February 9, 2021, McEwen J. declined to set a hearing date because no affidavit had been filed and he was not convinced of the application’s legitimacy in law. Mr. Watson never delivered an affidavit and he did not advance the 2021 Application after February 9, 2021.
[29] On August 23, 2022, Mr. Watson commenced application number CV-22-00685955-00ES (the “2022 Application”) naming RKWPC and Jasmine as applicants and seeking to remove Ladan as estate trustee and enforce the codicil that Mr. Watson produced after Ladan terminated his retainer. The 2022 Application makes no reference to the 2021 Application, which sought the same relief on similar grounds and which was not discontinued.
[30] The present action seeks much of the same relief on the same grounds as the 2021 Application and the 2022 Application.
[31] A tracing order granted by Dietrich J. gave Ladan authority to secure repayment of Mr. Watson’s $300,000 loan to Mr. Petersen. The loan came due on September 15, 2021, but Mr. Watson failed to require repayment, and Mr. Petersen stopped making his interest-only payments in November 2022. The debt secured by the mortgages in priority to the $300,000 loan has grown from the $1.215 million total face value to at least $1.688 million, plus there is $40,000 in property tax arrears.
[32] Mr. Watson and RKWPC have failed to pay costs awards as follows:
(a) $168,286.72 awarded on December 7, 2022 in respect of the 2020 application; (b) $3,800 awarded on February 27, 2023 in respect of the appointments to settle the judgment; (c) $22,000 awarded on May 24, 2023 in respect of the contempt motion; and (d) $4,500 awarded on July 19, 2023 in respect of the urgent motion for payment of the proceeds of the King Condominium into court.
[33] Mr. Watson has been found in contempt for failing to account for his dealings with assets of the estate despite multiple orders to do so.
THE ISSUES
[34] There are three issues:
- Is the plaintiff’s action an abuse of process?
- Is Mr. Watson in a conflict of interest?
- If so, what is the appropriate remedy?
ANALYSIS
[35] This action is an abuse of process.
[36] Section 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides:
A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.
[37] Rule 21.01(3)(c) and (d) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provide:
(3) A defendant may move before a judge to have an action stayed or dismissed on the ground that,
(c) another proceeding is pending in Ontario or another jurisdiction between the same parties in respect of the same subject matter; or (d) the action is frivolous or vexatious or is otherwise an abuse of the process of the court, and the judge may make an order or grant judgment accordingly.
[38] Abuse of process is a discretionary principle. It is used to bar proceedings that are inconsistent with the objectives of public policy. It engages the inherent power of the court to prevent a misuse of its procedure in a way that is manifestly unfair or brings the administration of justice into disrepute. The doctrine is applied is where litigation is an attempt to relitigate a claim which the court has already determined. There is a degree of overlap between the terms frivolous, vexatious and abuse of process: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77; Canam Enterprises Inc. v. Coles, 51 O.R. (3d) 481 (C.A.) at paras. 31, 55-56.
[39] There are indicia of vexation. The characteristics of vexatious proceedings may be summarized as follows:
a) the bringing of one or more actions to determine an issue which has already been determined by a Court of competent jurisdiction; b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief; c) actions brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings for purposes other than the assertion of legitimate rights; d) grounds and issues rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings; e) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered; and f) persistent conduct in taking unsuccessful appeals from judicial decisions: Lang Michener Lash Johnston v. Fabian, 59 O.R. (2d) 353 (High. Ct.) at para. 20.
[40] This action is, in part, a collateral attack on the findings in the 2020 Application that the Jasmine Trust was invalid and that Mr. Watson's conduct was improper when he mortgaged the King Condominium and lent the proceeds to his client Mr. Petersen, which led to the loss of the King Condominium.
[41] The action also overlaps significantly with the 2021 Application and the 2022 Application that the plaintiff, Mr. Watson, and RKWPC have brought against Ladan. There are claims for misappropriation of funds and ignoring the codicil which can be addressed in the proceeding for administration of the estate. There is also overlap with the Naylor action.
[42] Mr. Watson has repeatedly failed to comply with court orders. For example six court orders were required to compel Mr. Watson to account for his use of the assets he transferred into the Jasmine trust. Mr. Watson did not comply with Justice Conway’s order of December 8, 2020 requiring him and RKWPC to pay all estate funds in their possession into court. Mr. Watson failed to provide information as required by Justice Dietrich’s order of January 7, 2021.
[43] Mr. Watson has failed to comply with timetables established by court orders; for example he failed to comply with timetables established in Justice Gilmore’s January 20, 2021 order and Justice Gilmore’s July 19, 2021 order. He also failed to comply with the timetable established by Justice Koehnen on October 25, 2022 for this motion.
[44] The motion Mr. Watson brought to remove Swadron Associates as counsel was dismissed and Justice Gilmore wrote that the court was left with the impression that the motion was a ploy to delay the hearing of the 2020 Application. Mr. Watson served notice of a motion for leave to appeal Justice Gilmore’s November 18, 2021 order dismissing the motion to remove Swadron Associates as counsel. Mr. Watson failed to comply with the consent timetable ordered by Justice Favreau concerning the exchange of material for the motion for leave.
[45] The motion for leave to appeal was dismissed but Mr. Watson continues to maintain that Swadron Associates have a conflict of interest.
[46] Mr. Watson has attempted to delay proceedings, for example on March 15, 2022 he suggested that rather than proceeding with the 2020 Application the next step should be his application to remove Ladan as estate trustee. Justice McEwen had previously refused to schedule the 2021 Application to remove Ladan as estate trustee because Mr. Watson had served a Notice of Application without a supporting affidavit, and Justice McEwan was not convinced that it should be heard before the 2020 Application and he was not convinced of its legitimacy in law.
[47] Mr. Watson and RKWPC have failed to pay four costs awards in favour of Ladan, totaling $198,586.72, and have been found in contempt arising from their failure, despite multiple orders, to account for dealings with estate assets. Mr. Watson has taken steps in the various proceedings to delay the administration of the estate, to prevent the estate from recovering assets in the Jasmine Trust which has been declared to be invalid, and to prevent the enforcement of the loan that he made to Petersen which Petersen could not repay.
[48] Jasmine has aligned herself with Mr. Watson and sworn many affidavits in support of the positions he has taken. Together they have frustrated the administration of the estate. It would bring the administration of justice into disrepute to allow this action to continue.
Conflict of Interest
[49] Mr. Watson is in a conflict of interest.
[50] The Rules of Professional Conduct of the Law Society of Ontario (the “Rules”) require lawyers to hold in strict confidence all information concerning the business and affairs of the client acquired in the course of the professional relationship and to avoid conflicts of interest in respect of their current and former clients. Lawyers also have a duty not to act against a former client in the same or a related matter even where the former client's confidential information is not at risk: Rule 3.4-1, Commentary [10]; Rule 3.4-10.
[51] The action has been brought by Mr. Watson against Ladan. He is the lawyer who represented her in the administration of the estate and throughout the events that are the subject matter of the action, including the creation of the Jasmine Trust and mortgaging the King Condominium.
[52] Mr. Watson first took the position that he did not act for Ladan as estate trustee, but only acted as the lawyer for the estate.
[53] In his reasons on Mr. Watson’s motion to remove Mr. Swadron as Ladan’s counsel, dated November 18, 2021, Gilmore J. said:
[31] It is important to understand the distinction between the Estate and the Estate Trustee. Estates are not persons and cannot hire lawyers. It follows then that a lawyer hired by an Estate Trustee acts for that individual and not for the Estate. In DeLorenzo v. Beresh, 2010 ONSC 5655, a grandchild became entitled to the capital in her trust upon turning 30. The Estate Trustee refused to pay out the capital until certain outstanding litigation against the estate was finalized, accounts were passed and a Clearance Certificate obtained.
[32] In DeLorenzo, the Court grappled with the role of solicitor for the Estate Trustee and set out as follows, at paras. 15 and 16:
A solicitor retained by an estate trustee is in the first instance the solicitor for such trustee, not the estate ....
[Quoting Coppel v. Coppel Estate, [2001] O.J. No. 5246 (S.C.)] I think the source of the problem is the misconception by ... [the firm] that they are solicitors for the estate. Instead they are solicitors for the Estate Trustee: Estates cannot hire lawyers.
[33] The Respondents' position appears to be that where a conflict is claimed by a beneficiary, counsel would need to be retained for the Estate and separate counsel for the Estate Trustee. In a somewhat strange twist in this case, Mr. Watson formerly represented Ladan and is now representing Jasmine. It could be argued that he is in a position similar to the one raised in the MacDonald Estate case in that he has privileged information about Ladan's case which gives Jasmine an advantage.
[34] I reject Mr. Watson's position on the alleged conflict in this case. The presumption must be that Ladan will act in the best interests of all beneficiaries. The alleged conflict related to debts owed to the Estate by Ladan and her ex-husband and the recently discovered codicil are issues which remain to be determined in the context of the underlying Application. I accept Mr. Rendely's submission that the Respondents have failed to provide any law which suggests that a lawyer acting for an Estate Trustee must be removed because the lawyer has a conflict with the Estate. [1]
[54] In his cross-examination in the 2020 Application Mr. Watson said that Justice Gilmore was wrong and the judges of the Divisional Court who denied his motion for leave to appeal were also wrong.
[55] Mr. Watson now says there is no conflict because he only acted for Ladan in her capacity as estate trustee and did not act for her in her personal capacity.
[56] It is impossible to separate Ladan as estate trustee and Ladan as an individual in terms of the information she imparted to Mr. Watson and his duties to her.
[57] As lawyer who has relevant confidential information from his former client Ladan, Mr. Watson cannot act against her. Disqualification is automatic (MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235 at para. 50).
[58] Mr. Watson claims that Ladan put confidential information in the public record. What actually happened is that Mr. Watson, while representing Ladan, created the Jasmine Trust and then defended the creation of the trust by saying that Ladan knew about the Jasmine Trust. Ladan had to disclose some confidential information in the proceeding to set aside the Jasmine Trust. Mr. Watson now relies on his own misconduct to say Ladan’s confidential information is in the public record. I reject the submission that because Ladan was required to disclose some confidential information, she can no longer object to the incurable prejudice she has suffered as a result of her lawyer taking a retainer to represent Jasmine in proceedings against her.
[59] Mr. Watson has used his position and knowledge as Ladan's lawyer to Ladan's detriment and to Jasmine's advantage in the 2021 Application, in the 2022 Application, in the proposed motion to add Ladan as a defendant in the Naylor Action and in the present action.
REMEDY
[60] The test for determining when an action should be stayed where there is unauthorized access to privileged information is set out in Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, [2006] 2 S.C.R. 189, and MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235. “The focus is on trial fairness and the integrity of the adjudicative process”: Continental Currency Exchange Canada Inc. v. Sprott, 2023 ONCA 61, at para. 31.
[61] Here Mr. Watson has had access to privileged information from Ladan, gained over the course of his retainer with her which lasted from October 9, 2018 until October 22, 2020. Jasmine has had the benefit of any confidential information Mr. Watson received from Ladan and it cannot be restored to Ladan. Ladan is not required to recount everything she told Mr. Watson to establish the breach. She has set out in her affidavit some of the matters she has discussed with him. She says she relied upon Mr. Watson to advise her respecting all aspects of the administration of the Estate. This included “administering the registrations of the transmission of real estate owned by Aghdas Javid,” “advice in connection with joint tenancy/survivorship/trust structures previously in place prior to death,” and “advice in connection with estate claims against Gordon Naylor and his various corporations, methods of recovery and searches in support of such collection efforts.” They discussed departing from the equal division of the residue of the Estate for Jasmine’s benefit. They discussed arrangements to permit Jasmine to move into the Concorde Condo.
[62] Mr. Watson denies receiving any confidential information from Ladan during the course of his retainer. Ladan swears in her affidavit that he did and Mr. Watson did not cross examine Ladan on this statement. It is inherently unlikely that Mr. Watson did not receive confidential information during his more than two-year retainer, which covered “all aspects of the management and administration of the estate.”
[63] In his December 1, 2020 account for $38,750 for services rendered to Ladan as estate trustee, Mr. Watson describes some of the services provided as “advice in connection with all aspects of the management and administration of the estate.” The invoice is also in respect of "advice in connection with joint tenancy/ survivorship/trust structures previously in place prior to death", and services “in connection with estate claims against Gordon Naylor and his various corporations, methods of recovery and searches in support of such collection efforts.” Mr. Watson has been ordered to provide his time dockets in respect of this work but he says he did not keep dockets.
[64] I accept Ladan’s evidence that she imparted confidential information to Mr. Watson.
[65] If the litigation were to continue, even if Jasmine had new lawyers, a reasonably informed person would not be satisfied that no use of confidential information would occur. Where a party has had access to confidential and privileged information over an extended period of time, prejudice is presumed: Sprott at para. 152; MacDonald Estate. Mr. Watson has not rebutted the presumption of prejudice flowing from the imparting of confidential information.
[66] Mr. Watson's involvement in this action is a breach of his duty of loyalty and a conflict of interest, and it creates incurable prejudice to Ladan such that it is inadequate that Mr. Watson be removed from the record as Jasmine's lawyer in the present action. The only adequate remedy is a permanent stay of the action.
[67] For this action to proceed would jeopardize the confidence of the public in the integrity of the profession, the sanctity of the solicitor-client relationship, and the administration of justice.
[68] Jasmine has effective remedies through seeking to prove the codicil that she produced two years after the deceased's death and/or through a passing of estate accounts, as long as she chooses to exercise these without the involvement of Mr. Watson or any lawyer associated with him.
[69] Mr. Watson submits that he has invested significant time and has substantial knowledge of the matters, and that Jasmine would be prejudiced if she had to retain new counsel. It was Jasmine who chose to retain Mr. Watson when she knew he had acted for Ladan. In doing so she has gained an impermissible advantage and the consequence of that may be that she loses her cause of action apart from proving the codicil or requiring a passing of accounts.
[70] Ladan argues that she should not be forced to re-argue this issue over and over. She requests an order prohibiting Mr. Watson from acting for anyone other than himself in any proceeding in which she is a party. A court's discretion to interfere with a party's choice of counsel should be exercised with the highest level of restraint and, as a general rule, allegations of misconduct are to be dealt with by the Law Society of Ontario: Zawadzki v. Matthews Group Ltd., 1998 CarswellOnt 197 (Gen. Div.), at para. 6.
[71] The court declined to make the kind of order requested by Ladan in Ontario New Home Warranty Program v. Campbell, 1999 CarswellOnt 331 (O.C.J., Gen. Div.) and left the door open for the lawyer to represent parties adverse in interest to his client on “fresh and independent matters”: at para. 52. In Richmond Taxi Co. Holdings Ltd. v. Robbins, 2007 BCSC 1680, the court also declined to make such a broad order because “[the party adverse in interest] might choose to bring an application in connection with some other geographic area, or some time period sufficiently remote from the [original] Application that there is no disqualifying conflict of interest”: at para. 141.
[72] I find that an order as suggested by the defendant would be overly broad in nature considering the fact and matter-specific nature of the test laid out in MacDonald Estate, at para. 48: “(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?” However, I find that by representing Ladan in her capacity as estate trustee, Mr. Watson has received confidential information attributable to a solicitor and client relationship relevant to any future matter that involves the Javid estate, and there is a risk that such information would be used to Ladan’s prejudice.
[73] Therefore, I order that Mr. Watson is prohibited from acting for anyone other than himself in any proceeding that is directly or indirectly related to the Javid estate and in which Ladan is a party.
COSTS
[74] I have reviewed the costs outlines provided by the parties and considered the factors under r. 57.01(1) including the time spent, rates charges, reasonable expectations of the parties, as well as the importance of the matter to the parties. In my view, having regard to all of the factors, I find that $20,000 inclusive of HST and disbursements is appropriate.
Merritt J.
Released: December 5, 2023