NEWMARKET COURT FILE NO.: CV-22-429-00 DATE: 20250311 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: WESTHAVEN INCOME INC. (FORMERLY 2624221 ONTARIO INC.) FLEXPARK INC. Plaintiffs – and – CHICAGO TITLE INSURANCE COMPANY THE ESTATE OF ANTHONY MANIACI, DECEASED ANTHONY O. MANIACI PROFESSIONAL CORPORATION SANDY DE BRUM Defendants the Plaintiffs Jonathan Bell and Meg Bennett, for CHICAGO TITLE INSURANCE COMPANY Gavin Tighe and Alexander Melfi, for ANTHONY MANIACI Heard: October 15, 2024 DECISION EDWARDS RSJ.: Overview [ 1 ] An alleged fraudulent mortgage scheme perpetrated through a law firm has generated numerous claims against the lawyers and the law firm. Chicago Title Insurance Company (Chicago Title) is a provider of title insurance and is a defendant in a number of actions commenced by several of its insureds relating to losses suffered as a result of the fraudulent mortgage scheme. The law firm alleged to have been involved in the fraudulent mortgage scheme is Anthony Maniaci, Anthony O. Maniaci, and Anthony O. Maniaci Professional Corporation (Maniaci). [ 2 ] The motion before the Court is brought by Chicago Title for an order that would disqualify Gardiner Roberts LLP (Gardiner Roberts) as the lawyers of record for Maniaci. [ 3 ] The primary issue raised by Chicago Title on this motion is whether Gardiner Roberts should be disqualified from acting for Maniaci in what is described as the Indemnity Application. [ 4 ] Chicago Title had retained Thomas Donnelly (Donnelly) to provide a coverage opinion with respect to the matters that are at issue. [ 5 ] There is no dispute that Chicago Title obtained another coverage opinion from Bennett Jones LLP (Bennett Jones) (counsel who are arguing this motion). The Bennett Jones opinion differed from the Donnelly opinion. Bennett Jones has put Donnelly on notice that Chicago Title may pursue a claim against him in negligence. Donnelly retained Gardiner Roberts in connection with the threat of litigation from his former client Chicago Title. [ 6 ] The central thrust of Chicago Title’s position that Gardiner Roberts should be disqualified is that Gardiner Roberts received “confidential information” in connection with its retainer to act for Donnelly; that the “confidential information” is relevant to the related actions and is at risk of being disclosed to Maniaci which would give rise to prejudice to Chicago Title if disclosed. The Facts [ 7 ] Maniaci are a firm of solicitors engaged in the practice of real estate. In the underlying actions it is alleged that employees of Maniaci were involved in a fraudulent scheme that has resulted in losses to their clients. Maniaci are defendants in the various actions involving their former clients. Maniaci are also plaintiffs in a number of third party claims against Chicago Title. [ 8 ] Chicago Title is a title insurance company which issues policies of title insurance to purchasers and mortgagers of residential property. Chicago Title is a defendant in a number of actions that have been commenced by its insureds relating to the alleged losses suffered as a result of the fraudulent mortgage scheme which it is alleged was perpetrated through the Maniaci firm. These are referred to as the “related actions”. [ 9 ] Maniaci is represented in the related actions by Mark Kestenberg. [ 10 ] The related actions were all commenced between 2019 and 2020. These actions have been brought under case management as a result of an Order that I made on November 2, 2021. [ 11 ] In the related actions, claims are made against various defendants for fraud, negligence, breach of contract, and breach of fiduciary duties as against Maniaci in connection with their conduct as it relates to real estate transactions where they were acting for the plaintiffs. The related actions also include claims against Chicago Title. [ 12 ] In July 2022, Maniaci commenced third party claims against Chicago Title in 14 of the related actions. Maniaci seeks contribution and indemnity as well as a declaration that the Chicago Title policies held by the various plaintiffs provide coverage for the claims advanced by the plaintiffs. [ 13 ] Bennett Jones is representing Chicago Title. Prior to retaining Bennett Jones, Chicago Title had retained Donnelly to evaluate the claims made by the lenders under Chicago Title’s residential loan policies. [ 14 ] Donnelly provided coverage opinions to a number of Chicago Title insureds who had allegedly suffered losses resulting from the mortgage scheme which underlies the related actions and who had brought claims under the applicable residential loan policies issued by Chicago Title. [ 15 ] Donnelly is a lawyer licenced to practice law in the province of Ontario. As part of his retainer with Chicago Title, Donnelly provided a coverage opinion to Chicago Title and also wrote to the lawyer for the mortgage lenders in the actions against Chicago Title and Maniaci. Donnelly confirmed coverage under the Title insurance policies issued to them by Chicago Title. [ 16 ] Maniaci commenced an application against Chicago Title seeking the enforcement of an indemnity agreement between the Law Society of Ontario (LSO) and Chicago Title (the LSO Indemnity Agreement). While Mr Kestenberg represents Maniaci in the related actions Gardiner Roberts is retained by Maniaci solely with respect to the LSO Indemnity Agreement. [ 17 ] On January 7, 2022, Bennett Jones wrote to Donnelly. The primary purpose of this letter was to put Donnelly on notice that in the event Chicago Title was found liable as a result of the coverage opinions provided by Donnelly to Chicago Title, that Chicago Title would potentially then have a claim against Donnelly and his law firm. In its letter of January 7, 2022, Bennett Jones suggested that Donnelly and his firm enter into a tolling agreement in order to preserve Chicago Title’s rights in the hope of avoiding litigation that might never become necessary. [ 18 ] On March 24, 2022, Gardiner Roberts responded to the Bennett Jones letter of January 7, 2022 indicating that Gardiner Roberts had been retained by the Lawyers Professional Indemnity Company (LawPro) with respect to the request by Chicago Title for a tolling agreement referenced in the letter of January 7, 2022. Gardiner Roberts can be characterized as counsel to Donnelly in so far as Chicago Title may have any claim against Donnelly in connection with his coverage opinion. [ 19 ] While Mr. Kestenberg represents Maniaci in the various related actions, Gardiner Roberts is retained by LawPro on behalf of Maniaci for the sole purpose of bringing an application against Chicago Title seeking the enforcement of the indemnity agreement between the Law Society of Ontario and Chicago title (previously referred to as the LSO Indemnity Agreement). [ 20 ] In my capacity as the case management judge and in an effort to streamline the litigation and potentially settle the entirety of the litigation and with the consent of the parties, I directed that a mediation take place with the Honourable Colin Campbell. [ 21 ] On January 16, 2024, Gardiner Roberts wrote to Bennett Jones advising that they had been retained by Maniaci with respect to the issue of the application of the indemnity agreement between all members of the LSO and Chicago Title. The purpose of the letter was to obtain on behalf of Maniaci written confirmation from Chicago Title that it would honour its obligations under the indemnity agreement with respect to the claims made against Maniaci by the various plaintiffs in the related actions. [ 22 ] Gardiner Roberts sought confirmation that Chicago Title would also reimburse Maniaci for defence costs and that if the allegations of negligence against Maniaci were ultimately proven in the related actions that Maniaci would be indemnified for any damages awarded. It was also made clear by Gardiner Roberts that if the requested confirmation from Chicago Title had not been obtained by January 26, 2024, that Gardiner Roberts had instructions to commence an application seeking the declaratory relief. [ 23 ] The letter of January 16, 2024 from Gardiner Roberts to Bennett Jones was responded to by a letter from Bennett Jones dated January 25, 2024. In the letter of January 25, 2024 Bennett Jones stated: In the course of representing Donnelly, you have been privy to privileged and confidential information that related to Donnelly and Chicago Title’s decision making with respect to the coverage opinions which are now the subject of the Maniaci related actions. [ 24 ] Bennett Jones sought from Gardiner Roberts written confirmation by January 31, 2024 that Gardiner Roberts would be withdrawing as counsel for Maniaci and that their failure to do so would result in a motion to disqualify Gardiner Roberts on conflict of interest grounds. That motion is the issue this Court now has to decide. Position of Chicago Title [ 25 ] Counsel for Chicago Title raise a number of legal issues as it relates to the continued representation of Maniaci and LawPro by Gardiner Roberts. Specifically, counsel for Chicago Title summarizes the legal principles of disqualification as the duty of loyalty; the misuse of confidential information; the integrity of the legal profession; and the unlimited waiver of privilege. [ 26 ] As it relates to these various issues counsel for Chicago Title argues that there is a serious risk of improper use or disclosure of Chicago Title’s confidential information that would have been imparted to Donnelly as part of his legal opinion given that confidential information is now available to Gardiner Roberts in its dual capacity as counsel to Donnelly and to Maniaci. [ 27 ] It is also argued on behalf of Chicago Title that any suggestion that Gardiner Roberts in its representation of Donnelly is unrelated to the LSO application is not borne out by the evidence because the LSO indemnity application inevitably involves and relates to the subject matter of the related actions including the impugned mortgage transactions and the Chicago Title insurance policies that are central to the related actions. [ 28 ] It is argued on behalf of Chicago Title that there is a real and substantial risk that the confidential information imparted by Chicago Title to Donnelly could be misused. Counsel for Chicago Title point to correspondence by Gardiner Roberts in which Gardiner Roberts makes clear that it may publicly disclose all of Chicago Title’s relevant and confidential information, including Chicago Title’s privileged communications with Donnelly and Bennett Jones concerning the related actions where Gardiner Roberts’ clients (i.e. Maniaci) are direct adversaries of Chicago Title. [ 29 ] As it relates to the privilege and confidential information imparted by Chicago Title to Donnelly, it is argued that at no time has Chicago Title ever waived privilege with respect to the information it provided to Donnelly iin connection with his coverage opinions. As such, it is argued that the disqualification of Gardiner Roberts is necessary to prevent the misuse of confidential information and to protect the integrity of the legal profession. [ 30 ] Finally, it is argued on behalf of Chicago Title that there is an irreconcilable conflict of interest between Maniaci and Donnelly given the concurrent representation of Gardiner Roberts of both Donnelly and Maniaci. In that regard, it is noted that any success by Maniaci against Chicago Title in the LSO indemnity application would be to Donnelly’s ultimate and immediate legal detriment in connection with Chicago Title’s potential claim against Donnelly. In that regard, it is suggested that because Chicago Title has placed Donnelly on notice of a potential claim pending the outcome of the related actions including the indemnity action, Donnelly has an irreconcilable conflict with Maniaci. [ 31 ] It is also argued on behalf of Chicago Title that Gardiner Roberts cannot purport to uphold their duties to both Maniaci and Donnelly, and more specifically that Gardiner Roberts will be unable to uphold their duty of confidentiality to Donnelly, and Donnelly’s duty of confidentiality, which is still owed to Chicago Title, while at the same time upholding their duty of candor to Maniaci. Position of Gardiner Roberts [ 32 ] Underlying the position of Gardiner Roberts and Donnelly is that Gardiner Roberts has never acted for Chicago Title and as such there is nothing in the possession of Gardiner Roberts that is confidential that would result in any disqualifying interest. It is argued on behalf of Donnelly and Gardiner Roberts that the onus is on the moving party to show cause why Gardiner Roberts should be removed as counsel of record and this type of motion should not be an easy motion for a party to succeed on. [ 33 ] As it relates to any information within the possession of Donnelly concerning coverage, counsel for Donnelly argues that the issue of indemnity under the Chicago Title policy of insurance will only become material once the underlying claims are adjudicated. As it relates to the duty to defend unlike the issue of indemnity, it will be determined solely on the basis of the pleadings and the policy of insurance at issue. As such, any coverage opinion provided by Donnelly is not relevant to the duty to defend. [ 34 ] In that regard, it is argued that at no time was Chicago Title ever a client of Gardiner Roberts. As such, it is argued that Gardiner Roberts does not owe Chicago Title any duty of loyalty or any duty to maintain Chicago Title’s solicitor-client privilege. [ 35 ] It is noted that at all material times, Gardiner Roberts’ client on its prior retainer was Donnelly – a party also adverse in interest to Chicago Title as a result of Chicago Title’s continued threat of a negligence claim against him. [ 36 ] It is also noted that Gardiner Roberts’ current client is Maniaci with respect to the Indemnity Application and Maniaci is another party who is adverse in interest to Chicago Title. [ 37 ] While it is acknowledged in argument that Gardiner Roberts did receive confidential information with respect to Donnelly’s prior retainer by Chicago Title this was because Chicago Title threatened a negligence claim against Donnelly. Donnelly was required to report the matter to his professional liability insurer who then retained counsel for him. Donnelly disclosed his file with respect to his retainer by Chicago Title to Gardiner Roberts who are strangers to the solicitor-client relationship between Donnelly and Chicago Title. [ 38 ] Gardiner Roberts did not receive any information from Chicago Title because it was retained by Chicago Title or through some process by which it did not have a right to receive the information. The information received by Gardiner Roberts, it is argued, was as a result of Chicago Title’s threatened negligence claim against Donnelly, which required him to disclose the information to third parties who were strangers to the prior solicitor-client relationship between Chicago Title and Donnelly. [ 39 ] It is also argued that any confidentiality in respect of the information provided by Donnelly to Gardiner Roberts was waived by Chicago Title as a result of its specific pleading of the coverage opinions in defence to the allegations of bad faith made against it in the related actions. [ 40 ] It is also argued that any information and documentation received by Gardiner Roberts in connection with its prior retainer on behalf of Donnelly will be producible by Chicago Title in the related actions regardless of whether Chicago Title issues a claim against Donnelly. [ 41 ] In the related actions, Chicago Title’s insureds (the mortgage lenders) have alleged bad faith because Chicago Title initially confirmed coverage under their title insurance policies. Chicago Title made that decision based on Donnelly’s opinion. Chicago Title then reversed its decision and denied coverage under their title insurance policies. Chicago Title did so based on Bennett Jones’ opinion which differed from the Donnelly coverage opinion. [ 42 ] Chicago Title defended the mortgage lenders’ action and their allegations of bad faith by relying on the coverage opinions given by Donnelly and Bennett Jones. [ 43 ] It is therefore argued that the initial coverage opinion from Donnelly on behalf of Chicago Title was based on legal advice The subsequent coverage opinion from Bennett Jones on behalf of Chicago Title was also based on legal advice. [ 44 ] As such, it is suggested the relevant questions to be determined in the related actions on the bad faith issues raised by the mortgage lenders include what legal advice Chicago Title received from Donnelly which caused it to confirm coverage, and what legal advice Chicago Title received from Bennett Jones which caused it to reverse course and deny coverage. This puts in issue the prior advice received by Chicago Title from Donnelly, and Chicago Title’s file including its communications with Donnelly are accordingly producible as relevant documents in related actions. [ 45 ] The communications between Chicago Title and Donnelly are entirely irrelevant to the issues in the Indemnity Application – which is the only proceeding for which Gardiner Roberts is retained to act for Maniaci – and have no bearing directly or indirectly on the outcome of the LSO Indemnity Agreement issue. [ 46 ] The issues to be addressed in the proposed Indemnity Application are based solely on the pleadings (which are assumed to be true for the purposes of the inquiry) and the terms of the insurance policies at issue. [ 47 ] In such circumstances, coverage opinions given to and communications between Chicago Title and its lawyers are irrelevant to those issues. It is argued that what Donnelly, or Bennett Jones for that matter, advised Chicago Title with respect to whether the mortgage lenders have coverage under the title insurance policies is completely irrelevant. It is argued that what matters on the Indemnity Application is how the Court interprets the pleadings, the insurance policies, and the LSO Indemnity Agreement based on an objective reading of those documents. [ 48 ] Counsel for Gardiner Roberts argues that the overarching test to be applied on a motion to remove a lawyer from the record is whether a fair-minded reasonably informed member of the public would conclude that the proper administration of justice requires 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. [ 49 ] The reality of this case, it is suggested, is that Chicago Title threatened to sue Donnelly. In doing so, it waived any privilege over its communications with Donnelly, which Donnelly would be required to disclose as relevant to any claim issued against him by Chicago Title. Legal Principles [ 50 ] The Supreme Court of Canada in Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39 , makes clear that a lawyer’s duty to his or her client has three key components: a duty to avoid conflicting interests; a duty of commitment to the client’s cause; and a duty of candour. [ 51 ] It is worth recalling that the authority for the court to remove a lawyer of record comes from the court’s inherent jurisdiction which stems from the fact that lawyers are officers of the court. In that capacity, as the Supreme Court observed in MacDonald Estate v. Martin 1990 32 (SCC) , [1990] 3 S.C.R. 1235, at page 1245, the conduct of lawyers as officers of the court is subject to the supervisory jurisdiction of the court. [ 52 ] When confronted with a motion to remove counsel the court follows the test set forth in Karas v. Her Majesty the Queen et al , 2011 ONSC 5181 , at para 26 , as follows: [26] The overarching test to be applied on a motion to remove a lawyer from the record is whether a fair-minded reasonably informed member of the public would conclude that the proper administration of justice requires 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 ( see Gaeten Chip Stand Inc. v. Twp. Of North Glengarry , 2005 39884 (SCJ) at para 8 citing Everingham v. Ontario (1992), 1992 7681 (ON SC) , 8 O.R. (3d) 121 (Div.Ct) at p. 127 and see Macdonald Estate v. Martin , 1990 32 (SCC) , [1990] 3 S.C.R. 1235 at paras 16 , 47-51 and 65-66). [ 53 ] When dealing with a motion to remove counsel it is important to remember that the jurisprudence has repeatedly emphasized the right of a litigant not to be deprived of their choice of counsel without good cause. This is for good reason because depriving a litigant of their counsel of choice may impose unnecessary hardship and result in a potential increase in legal costs. The removal of a litigant’s counsel of choice should only be ordered where it is necessary to prevent the imposition of a more serious injustice and the risk of real mischief - see MacDonald Estate at paras 16 and 47 . [ 54 ] While the case law has emphasized the courts respect for the right of a litigant to choose his or her counsel this respect may have to yield where it is necessary to maintain the high standards of the legal profession and the integrity of the judicial system. In these situations, the court may have to exercise its inherent jurisdiction to remove a lawyer who has a conflict of interest - see MacDonald Estate at paras 16, 53 and 58 . [ 55 ] From the earliest days of law school lawyers are taught that they cannot occupy the dual role of counsel and witness in the same proceeding. This is made clear in the professional rules that govern the legal profession in Ontario and across the country. The conflict of interest prohibition that deals with the “lawyer as witness” is summarized by Leach J. in Rice v. Smith et al, 2013 ONSC 1200 , at paras 19 and 20 , as follows: [19] The particular conflict of interest prohibition dealing with “lawyer as witness” is intended to prevent the inevitable conflict of interest a lawyer otherwise would have between the duty owed to his or her client, and duties of independence otherwise owed to others, especially the Court. In particular, lawyers are independent officers of the court, and a trial judge must be able to rely upon counsel for a high degree of objectivity and detachment. That fundamental relationship is compromised, and the administration of justice and integrity of the system accordingly are undermined, where the objectivity and credibility of counsel necessarily are subjected to challenge in the course of determining the substantive merits of an underlying dispute. [20] However, rather than approach the general “lawyer as witness” conflict of interest concern and prohibition as an absolute rule, our courts adopt a flexible approach and consider each case on its own merits, having regard to a variety of factors that, according to the circumstances of the case, may include the following: a. the stage of the proceedings; b. the likelihood that the witness will be called; c. the good faith (or otherwise) of the party making the application; d. the significance of the evidence to be led; e. the impact of removing counsel on the party’s right to be represented by counsel of choice; f. whether trial is by judge or jury; g. the likelihood of a real conflict arising or that the evidence will be “tainted”; h. who will call the witness; and i. the connection or relationship between counsel, the prospective witness and the parties involved in the litigation. [ 56 ] Most of the cases that address the possibility that a lawyer is in a conflict arise in situations where a lawyer has acted for a client in another proceeding. In the case before this Court, Donnelly is a client of Gardiner Roberts. Donnelly through LawPro retained Gardiner Roberts as a result of Chicago Title putting Donnelly on notice that Chicago Title may have a claim against Donnelly. The Supreme Court in Celanese Canada Inc. v. Murray Demolition Corp. , 2006 SCC 36 , confirmed that a law firm can be disqualified if it obtains confidential information of an opposing client even if it never had a solicitor client relationship with them. At para 46 Binnie J. on this point said: 46 Kasowitz submits that “[t]he facts of this case do not raise the concerns whatsoever addressed by the Court in MacDonald Estate [because] Kasowitz had no relationship whatsoever with the Appellants.” I do not agree. The relevant elements of the MacDonald Estate analysis do not depend on a pre-existing solicitor-client relationship. The gravamen of the problem here is the possession by opposing solicitors of relevant and confidential information attributable to a solicitor-client relationship to which they have no claim of right whatsoever. [ 57 ] Public confidence in the administration of justice in many respects begins and ends with those who are part of the system. A key part of the judicial system are the lawyers. If the public loses faith in the impartiality of the lawyers, the whole system is undermined. It is for that reason that the Supreme Court in MacDonald Estate recognized that of the three key factors a court must consider in a motion to disqualify a lawyer the most important and compelling factor is the preservation of the integrity of our system of justice – MacDonald Estate page 1265; see also Consulate Ventures Inc v. Amico Contracting & Engineering , 2010 ONCA 788 , at para 36 and 37 . Analysis [ 58 ] Before applying the legal principles to the facts, it is worth observing that indemnity and duty to defend issues arising under the indemnity agreement between the LSO and Chicago Title have been litigated on a number of occasions in this court. In Small v. Chicago Title Insurance Co. , 2016 ONSC 3876 Lococo J. summarized the jurisprudence to that point in time as follows: [22 ] In support of his position, Mr. Glinos relied on the decision of Justice Brown (when a member of this court) in Stewart Title Guarantee Co. v. Zeppieri , [4] in which he considered and interpreted the indemnity obligation of another title insurer under parallel arrangements with the Law Society. In that case, Justice Brown provided background for the indemnity arrangements between the Law Society and private title insurance companies. In brief, because of those indemnity arrangements, as long as purchasers and chargees obtained title insurance for property that is the subject of a real estate transaction, all lawyers who provide legal services for the transaction are exempt from a transaction levy surcharge that the lawyers would otherwise be required to pay to their professional malpractice insurer, Lawyer’s Professional Indemnity Company (LAWPRO). [23] In Zeppieri , the purchasers in a real estate transaction sued their own lawyers for professional negligence, alleging that the lawyers failed to obtain good title for the property for them. The title insurer conceded that it was required to indemnify the lawyer for legal costs incurred to defend the claim, but argued that it was not required to do so until the end of the action when a court found that the claim under the title insurance policy was made out, or when the action settled. As set out in the passages that follows, Justice Brown found that the title insurer was required to fund the lawyer’s legal costs from its outset. According to Justice Brown, the obligation to indemnify arose when the claim was made, based on the allegations in the Statement of Claim. I accept the respondents' submission that the obligation to "save harmless" means that a LSUC member should never have to put his hand in his pocket in respect of a claim covered by the terms of the 2005 Indemnity Agreement. Accordingly, the 2005 Indemnity Agreement requires Stewart Title to pay for the member's ongoing costs of defending a claim that falls within the coverage of agreement. This interpretation not only is consistent with the plain meaning of the phrase "indemnify and save harmless", it also is consistent with the case law, the business sense underpinning the 2005 Indemnity Agreement and the reasonable expectations of the parties. [5] [24] In making the determination that the obligation to indemnify arose at the time the claim was made based on the pleadings, Justice Brown relied by analogy on case law relating to an insurer’s duty to defend under an insurance policy. In this regard, he made the following observations: It is well accepted that a court must decide an insurer's duty to defend by looking at the pleadings and the insurance policy…. If the pleadings allege facts which, if true, would require the insurer to indemnify the insured for the claim, then the insurer is obliged to provide a defence, even though the actual facts may differ from the allegations pleaded…. Any doubt as to whether the pleadings bring the incident within the coverage of the policy should be resolved in favour of the insured…. Nonetheless, there is no duty to defend an action if, on a review of the pleadings, no obligation to indemnify clearly exists…. [6] [25] Later in his reasons, Justice Brown also made the following observation: An obligation to defend may well arise in cases where it eventually turns out that an insured is not entitled to indemnification…. [7] [26] From that passage, it is clear that Justice Brown recognized that the title insurer may be required to indemnify the purchaser’s lawyer for his or her costs in defending the action, even if the court does not ultimately find a valid claim under the title insurance policy. [footnotes removed] [ 59 ] Chicago Title raises numerous grounds to argue that Gardiner Roberts should be removed as counsel of record for Maniaci in the Indemnity Application. These include the suggestions that because of its retainer by LawPro on behalf of Donnelly, Gardiner Roberts has obtained privileged and confidential information relevant to the LSO Indemnity Agreement as well as related and ongoing litigation in which Maniaci and Chicago Title are adverse. Chicago Title also argues that to allow Gardiner Roberts to continue as counsel would be unbecoming of the legal profession and would bring the administration of justice into disrepute. [ 60 ] Chicago Title has the onus on this motion. The onus is a heavy one because Maniaci should not be deprived of his right to his counsel of choice. [ 61 ] In coming to the ultimate conclusion in this motion, it is important to give some context to the parallel proceedings that are presently before the Court and to the realities of not just the stage at which those proceedings are at the present time but how they will likely unfold. [ 62 ] First, there are the claims of the Plaintiffs in the various related actions. In these actions the Plaintiffs claim against Chicago Title and Maniaci for losses suffered as result of alleged negligence and fraud involving Maniaci. [ 63 ] The related actions are the matters that I have referred to the Honourable Colin Campbell in the hope that with his wealth of judicial and mediation experience the matters might be settled. Apart from assessing issues relating to liability and quantum of damages, as with so many mediations and pre-trials, there will undoubtedly be a practical issue as to what if any insurance coverage might be available to a defendant to respond to the claims of the Plaintiffs. [ 64 ] The determination of what insurance coverage is available to respond to the claims in the related actions begins in part with the Indemnity Application where Maniaci seeks contribution and indemnity from Chicago Title as well as a declaration that the Chicago Title policies provide coverage for the claims advanced by the Plaintiffs. While the determination of whether there is coverage under the underlying policies will have to await the outcome in the related actions, and the determination of whether there is a duty to defend under those policies awaits more imminent judicial determination. [ 65 ] There is a major distinction between the duty to defend and the ultimate question of indemnity. The duty to defend an insured like Maniaci is generally determined solely by reference to the pleadings in the underlying claims, documents referred to in the pleadings, and the terms of the policy. The court generally will not consider facts that are not contained in the pleadings – see Halifax Insurance Co. of Canada v. Innopex Ltd. (2004) 2004 33465 (ON CA) , 72 O.R. (3d) 522 , at paras 32 , 35-37. [ 66 ] The legal concept of the duty to defend is not dependent on the insured, in this case Maniaci, ultimately being liable and the insurer, Chicago Title, actually being required to indemnify Maniaci. The jurisprudence is relatively clear that what is required is the “mere possibility” that a claim falls within the coverage provided by the insurance policy- see Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada , 2010 SCC 33 at para 19 . [ 67 ] Gardiner Roberts argues that because no evidence is admissible on the Indemnity Application (the duty to defend application) that Donnelly’s coverage opinion and anything else Donnelly may have provided to Gardiner Roberts is irrelevant. The Court as previously noted may consider documents referred to in the pleadings: Web Offset Publications Limited. v. Vickery (1999), 1999 4462 (ON CA) , 43 O.R. (3d) 802 (C.A.) , leave to appeal to S.C.C. refused, 27505 (May 11, 2000) The documents most likely to be considered on the duty to defend application will include the underlying insurance documents. It is difficult to conceive how any documents that might be part of the motion materials on the duty to defend application could include Donnelly’s coverage opinion (or anything else that Donnelly had received from Chicago Title to render his coverage opinion). [ 68 ] I began my analysis by reference to the practical realities of how this litigation will unfold. It is clear to me that the determination of some of the issues in the Indemnity Application such as the duty to defend are inevitable. The determination of whether Chicago Title has a duty to defend will not determine the more important issue of whether Chicago Title will eventually have to respond to and pay a claim made in the related actions. That issue is a long way down the road. But the parties are presently involved in court ordered mediation with the Honourable Colin Campbell. Understanding where Chicago Title may ultimately end up at the end of the day will begin with a determination of the duty to defend within the Indemnity Application. That issue will be determined on the pleadings and an analysis of the insurance policy. Extrinsic Evidence will not be permitted – see IT Haven Inc. v. Certain Underwriters at Lloyd’s, London , 2022 ONCA 71 , at para 37-39 . The information imparted to Donnelly by Chicago Title in the duty to defend application will remain where it is – in a file at Gardiner Roberts. It will not be part of any motion material. [ 69 ] As such, the position asserted by Gardiner Roberts has some merit, i.e., whatever information imparted to them by their client, Donnelly, is irrelevant to the duty to defend application. But that does not end my analysis of the practical considerations of how the totality of this litigation will unfold. [ 70 ] My analysis below presupposes that the mediation with the Honourable Colin Campbell will not resolve despite his best efforts. The Indemnity Application will proceed. The duty to defend motion will be determined. The underlying actions will proceed. The Plaintiffs may or may not succeed in their claims. Assuming the Plaintiffs have success, Maniaci will then argue Chicago Title must respond. Bad faith issues may be raised. Chicago Title may argue they relied on coverage opinions from Donnelly. It is difficult to conceive how those coverage opinions do not then become front and centre with respect to the ultimate issue of whether Chicago Title may have to pay amounts for which Maniaci may have been found responsible for. [ 71 ] As I have already indicated, the jurisprudence makes it clear that a litigant’s counsel of choice should not be removed lightly. In Karas at para 26 , a decision that has been followed on numerous occasions, the court concluded that while the decision to remove a lawyer from the record is a discretionary one, it should only be made in the clearest of cases. I rhetorically then ask is this case is one of those cases where it is clear that counsel should be removed? [ 72 ] In answer to the question of whether this is one of those “clearest of cases” the answer can be found by asking another question - whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires the removal of counsel? The ultimate decision in a motion to remove counsel must be premised on upholding and preserving the integrity of the justice system while at the same time ensuring that the litigants are not deprived of their counsel of choice without good cause. [ 73 ] It goes without saying that this Court should be reluctant to make an order that will prevent solicitors from continuing to act. I am mindful that to make a recusal order will potentially result in delay and additional costs for the client. [ 74 ] A review of the jurisprudence also requires this Court to consider the motivation of Chicago Title in seeking the removal of Gardiner Roberts. This Court should not remove Gardiner Roberts if this Court was to find that Chicago Title brought the motion for tactical rather than principled reasons. There must be a “genuine” concern with respect to the merits of the alleged conflict - see Sabean v. Aikman , 2016 ONSC 6130 at para. 59 . In that regard it is not lost on this Court that Mr. Tighe is a highly experienced and well respected counsel who has litigated similar issues to those that will be litigated in this case. [ 75 ] The litigation involving Maniaci is at a relatively early stage. Mediation is ongoing that may or may not succeed. It is patently clear, however, that insurance issues relating to who will have to respond to the claims in the underlying actions could be a significant barrier to any resolution discussions. [ 76 ] While the Court should adopt a flexible and cautious approach to any motion seeking to disqualify a litigant’s counsel of choice there still remains a fundamental underlying principle that must guide the Court. I must ask myself the question whether a fair-minded reasonably informed member of the public would conclude that the proper administration of justice requires the removal of Gardiner Roberts as counsel of record. As the Supreme Court noted in MacDonald Estate the right to counsel of one’s choice is not absolute. That right may have to yield where it is necessary to maintain the high standards of the legal profession and the integrity of the judicial system. [ 77 ] Gardiner Roberts has in its possession confidential information belonging to Chicago Title. I agree with Mr. Tighe that this information will almost without doubt become part of the underlying litigation involving Maniaci. It will also without doubt become part of any litigation involving Chicago Title and Donnelly. While there is no doubt that the documents and information imparted by Chicago Title to Donnelly was subject to solicitor-client privilege it is difficult to now conceive how that privilege can be maintained in the litigation presently ongoing in the Indemnity Application. [ 78 ] I also agree with Mr. Tighe that whatever documentary and other information Gardiner Roberts might have in its possession as a result of its retainer by Donnelly, such information will almost, without doubt, not form the basis of any documentation placed before the Court on the duty to defend the application. The Court will make its determination on the basis of the pleadings and the relevant insurance policy(s). [ 79 ] I agree with Mr. Tighe that there is good reason to question the motives of Chicago Title in seeking the relief it now seeks to disqualify Gardiner Roberts. The case law reflects that Mr. Tighe and his firm are well versed in the type of litigation presently ongoing in this court. Chicago Title may suggest otherwise but removing Gardiner Roberts will provide it a tactical advantage. To that extent, it potentially puts LawPro at a tactical disadvantage. [ 80 ] While the litigation is in a relatively early stage (discoveries have yet to be commenced) one of the most significant issues that will have to be determined is whether Chicago Title owes a duty to defend. The determination of that issue does not determine the ultimate issue of whether Chicago Title will have to provide coverage and indemnity for the claims. It can not be said with any certainty that the lawyers involved in giving advice to Chicago Title on coverage will one day have to take the witness stand. The fact remains that there is a very significant possibility that this might very well happen. [ 81 ] There are duelling coverage opinions in the hands of Chicago Title. One coverage opinion came from Donnelly. The second comes from Bennett Jones. There is a strong possibility if Chicago Title does in fact owe a duty to defend and ultimately has to provide coverage and indemnity that the underlying claims might resolve. If there is no duty to defend and/or if there is no coverage and no obligation to indemnify, the Plaintiffs in the related actions will have a possible practical problem in terms of recovering their losses (assuming of course the plaintiffs succeed in their claims which is far from a given). [ 82 ] McKercher teaches counsel that their duty to their client has three key components one of which is to avoid conflicting interests. Lawyers well know that as an officer of the court the presiding judge expects counsel to afford the court a high degree of objectivity and detachment while at the same time advocating for the best interests of their client. Where counsel have been involved in the provision of legal advice to an insurer relating to coverage it puts counsel in conflict with the duty they owe to the court of candour and objectivity if they then appear as litigation counsel for their insurance client. In my view, the same concern applies where counsel is advising Donnelly while at the same time advocating for Maniaci in the Indemnity Application. [ 83 ] I have come to the ultimate conclusion that, while I must take a cautious approach and I should not deprive Maniaci and LawPro of their counsel of choice, the integrity of the judicial system requires that Gardiner Roberts be removed as counsel of record. [ 84 ] While the issue is not before this Court I have to say as well that Bennett Jones needs to take a long hard look at their continued involvement in this litigation. I find it difficult to conceive that there will not be a situation where all of the lawyers involved in providing legal advice on the issue of coverage to Chicago Title will not find themselves in the witness box. That inevitability suggests that any lawyer involved in the coverage/duty to defend issues should yield to the possibility of becoming both a witness and counsel in the same proceeding. Coverage counsel should not be litigation counsel. [ 85 ] In light of these reasons I have deferred any decision as to whether the motion material before me should be sealed. I do so because in my view both Gardiner Roberts and Bennett Jones are in a conflict and the sealing motion should be argued by new counsel. [ 86 ] The motion to remove Gardiner Roberts is granted. It is hoped that counsel will resolve the issue of costs. If resolution cannot be achieved the court will receive written submissions limited to 5 pages in length to be received prior to April 15, 2025. If submissions are not received by April 15, 2025 the Court will assume counsel have resolved the issue of costs. _______________________________ Regional Senior Justice Edwards Released: March 11, 2025
minicounsel