Carlingwood Motors Ltd. v. Nissan Canada Inc. (2001), 52 O.R. (3d) 242 (C.S.)

  • Document:
  • Date: 2018

Carlingwood Motors Ltd. v. Nissan Canada Inc. et al.

[Indexed as: Carlingwood Motors Ltd. v. Nissan Canada Inc.]

52 O.R. (3d) 242

[2001] O.J. No. 236

Court File No. 93-CV-076110

Ontario Superior Court of Justice

Panet J.

January 19, 2001

 

Professions–Barristers and solicitors–Conflicts of interest –Institutional measures–Law firms in different municipalities merging to form national law firm–Plaintiff’s action ready for trial when his lawyers’ law firm merged with another firm that had long-standing relationship with defendant, although other firm had not acted for defendant in immediate case–Defendant independently represented –Institutional measures put into place so that defendant’s confidential information would not be disclosed to lawyers acting for plaintiff–Defendant moving to have plaintiff’s lawyers removed as solicitor of record–Motion for disqualification refused.

 

The defendant Nissan Canada Inc. (“Nissan”) terminated the car dealership of the plaintiff Carlingwood Motors Ltd. (“Carlingwood”), and in 1993, Carlingwood retained the Ottawa law firm of Scott & Aylen (“S&A”) to act for it in an action against Nissan. In 1999, S&A merged with a Toronto law firm, which, with subsequent mergers, became Borden Ladner Gervais (“BLG”). BLG had a 10-year on-going solicitor and client relationship with Nissan, but the Toronto firm had not acted in the Carlingwood action. At the time of the merger of the law firms, Carlingwood’s action was ready for trial, and Carlingwood had already been billed in excess of $100,000 in legal fees for the action. Nissan moved to have BLG removed as solicitors of record for Carlingwood on the grounds of a conflict of interest. The Master granted the motion and removed BLG as solicitors for Carlingwood. Although the Master concluded that there was no concern that Nissan’s confidential information would be disclosed because adequate institutional me asures had been implemented to prevent disclosure of the confidential information, he nevertheless disqualified BLG on the basis that it had a fiduciary obligation to its client Nissan. Carlingwood appealed and Nissan cross-appealed.

 

Held, the appeal should be allowed and the cross-appeal should be dismissed.

 

The emergence of national and international law firms with offices in a number of Canadian cities was the new environment for the consideration of the conflict of interest problem that arose in this case. In determining whether there is a disqualifying conflict of interest, the question to ask was whether the public, represented by a reasonably informed person, would be satisfied that no use of confidential information would occur. In the immediate case, BLG had received relevant confidential information from Nissan, but the Master had concluded that adequate steps were in place to prevent the risk of prejudice to Nissan. The Master made no error in reaching his conclusion. A reasonably informed member of the public would conclude that no confidential information had or would pass. The overriding policy considerations about the high standards of the legal profession and the integrity of the system of justice had been met. The further considerations that a litigant should not be deprived of his or her choice      of counsel without good cause, that Nissan had delayed, that it had continued to retain BLG on other matters after the merger, and that the relief sought was equitable and should only be granted where there is a genuine concern about the merits of the conflict of interest supported these conclusions.

Accordingly, the cross-appeal should be dismissed and the appeal should be allowed. As to the appeal, the circumstances in the case were unique in terms of considering the competing values of the integrity of the profession and the system of justice, the right to counsel of choice, and the desirability of permitting reasonable mobility within the legal profession. These values compete and their application in each case necessarily involved a balancing among them in order that the interests of justice be served. While BLG had a fiduciary duty to Nissan, the scope of the duty was dependent on the particular facts of the case. In the present case, BLG was not acting in the opposite interest with respect to the present action as was Nissan, and had been throughout, represented by another law firm. In the circumstances, BLG’s fiduciary obligation was limited to the preservation of confidential information, and, as found by the Master, this had been done.

 

Cases referred to

 

Baumgartner v. Baumgartner (1995), 2 B.C.L.R. (3d) 126, 122 D.L.R. (4th) 542, [1995] 5 W.W.R. 289 (C.A.); Drabinsky v. KPMG (1999), 33 C.P.C. (4th) 318, 10 C.B.R. (4th) 130, [1999] O.J. No. 1416 (Div. Ct.); MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, 70 Man. R. (2d) 241, 77 D.L.R. (4th) 249, 121 N.R. 1, [1991] 1 W.W.R. 705, 48 C.P.C. (2d) 113 (sub nom. MacDonald Estate v. Martin & Rossmere Holdings, Martin v. Gray, Gray v. Martin); McEvenue v. Robin Hood Multifoods Inc., [1997] O.J. No. 1519; Moffat v. Wetstein (1996), 29 O.R. (3d) 371, 135 D.L.R.  (4th) 298, 5 C.P.C. (4th) 128 (Gen. Div.); Prince Jefri Bolkiah v. KPMG (a firm), [1999] 1 All E.R. 517 (H.L.)

 

APPEAL from an order of the Master removing a law firm as solicitors for the plaintiff.

 

Allan O’Brien and Krista Cajka, for appellant. Steven F. Rosenhek, for respondents.

 

[1]  PANET J.:–This is an appeal from an order of the Master, dated October 17, 2000, removing the law firm of Borden Ladner Gervais as solicitors for the plaintiff, based on a conflict of interest.

 

[2]  The law firm of Scott & Aylen acted for the plaintiff in this action for approximately seven years. The law firm of Borden & Elliot had acted for the defendant Nissan Canada Inc. (Nissan) on other matters, but had not acted for Nissan in this litigation. In June 1999, Scott & Aylen merged with Borden & Elliot to form Borden Elliot Scott & Aylen. As a result of a second merger with several other firms in March 2000, the firm became known as Borden Ladner Gervais.

 

[3]  The Master stated that the removal of Borden Ladner Gervais was not based on concerns regarding the potential disclosure of confidential information, but on the basis of the fiduciary obligation found to be owed by the Borden firm to its client Nissan.

 

[4]  The plaintiff appeals from that order. The defendant cross-appeals from the finding by the Master that there was no potential for the disclosure of confidential information.

 

Background

 

[5]  This action was commenced by Carlingwood against Nissan in 1993 and involves the termination by Nissan of a dealership sales and service agreement between the parties. Throughout the litigation, Carlingwood has been represented by Scott & Aylen, which is now part of the merged firm Borden Ladner Gervais. The solicitors for the defendants in this action have been other than Borden Ladner Gervais or any of its predecessors.

 

[6]  In 1999, Scott & Aylen, which was located in Ottawa, merged with Borden & Elliot, which was located in Toronto, to form Borden Elliot Scott & Aylen. In March 2000, that firm merged with several other firms and is now known as Borden Ladner Gervais (Borden).

 

[7]  At the time of the first merger, this action was ready to proceed to trial. Examinations for discovery took place between March 1994 and December 1997, motions took place between March 1997 and April 1999, mediation took place in September 1997, a settlement conference took place in June 1999, one week after the first merger, and the plaintiff served its expert reports in June 1999. There was evidence before the Master, and it does not appear to have been contradicted, that by the end of 1999, Carlingwood had been billed in excess of $110,000 in legal fees with respect to this litigation.

 

[8]  Although Nissan has at all times in this action been represented by another law firm, Nissan had been a client of the former Borden & Elliot firm for approximately 10 years. The Master found that Borden & Elliot was the primary counsel for Nissan in product liability cases and that Nissan remains a significant client of the merged firm. He found that, over the course of 10 years, Borden & Elliot had billed Nissan over $500,000 in fees and, in addition to representation on product liability matters, the firm had advised Nissan with respect to a number of other areas.

 

[9]  The Master found that, given the nature and extent of the relationship between Borden & Elliot and Nissan over the years, Borden stands in a fiduciary relationship with Nissan, particularly when this type of conflict with a dealer is involved. It was on this ground that he concluded that Borden & Elliot should be restrained from acting for Carlingwood in this action. The Master stated that the removal was not based on concerns of the potential disclosure of confidential information but on the basis of the fiduciary obligation which he found owing by Borden to its client Nissan.

 

[10]  The Master concluded that confidential information was provided by Nissan to Borden & Elliot that could be relevant to the issues in this action, including significant financial and non-financial information. He also found that the firm would have acquired information about Nissan’s general strategies with respect to litigation (such as defence, attitude toward publicity, propensity to settle) all of which would be advantageous to a solicitor suing Nissan.

 

[11]  Given that finding, he stated that the plaintiff then had the onus of establishing that there is no risk that the confidential information would be used to the prejudice of Nissan. He concluded that Borden & Elliot had met that test and that adequate steps were put in place to prevent the risk of prejudice to Nissan.

 

The Appeal

 

[12]  The plaintiff submits that the Master erred in his finding that, in the circumstances of this case, Borden had breached a fiduciary obligation owed to Nissan. The respondent cross-appeals from the finding by the Master that Borden took all reasonable steps to prevent the disclosure of confidential information, and that adequate steps were put in place to prevent the risk of prejudice to Nissan.

 

[13]  The standard of review on an appeal from a Master on a question of law is one of correctness (see McEvenue v. Robin Hood Multifoods Inc., [1997] O.J. No. 1519).

 

Analysis

 

(a)  The cross-appeal

 

[14]  In cases such as the present one, the question is whether the Borden firm is “disqualified from continuing to act in this litigation by reason of a conflict of interest” (see MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235 at p. 1242, 70 Man. R. (2d) 241).

 

[15]  In that decision, Sopinka J. stated at p. 1243 S.C.R.: In resolving this issue, the Court is concerned with at least three competing values. There is first of all the concern to maintain the high standards of the legal profession and the integrity of our system of justice. Furthermore, there is the countervailing value that a litigant should not be deprived of his or her choice of counsel without good cause. Finally there is the desirability of permitting reasonable mobility in the legal profession.

 

[16]  Sopinka J. indicated that different standards have been adopted from time to time to resolve this issue which reflect the differing emphases placed at different times on the basic values.

 

[17]  And at p. 1244 S.C.R.: Nothing is more important to the preservation of this relationship than the confidentiality of information passing between a solicitor and his or her client. The legal profession has distinguished itself from other professions by the sanctity with which these communications are treated.

 

[18]  In answering the question whether there is a disqualifying conflict of interest, Sopinka J. stated that the overriding policy which applies and must inform the court is that the public, represented by the reasonably informed person, would be satisfied that no use of confidential information would occur.

 

[19]  He then set forth at p. 1260 S.C.R., the two questions to be asked in considering whether a law firm should be disqualified from continuing to act by reason of a conflict of interest:

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?

 

[20]  In considering these questions, Sopinka J. concluded that 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. He indicated that this would be a difficult burden to discharge. In considering the second question as to whether the confidential information will be misused, Sopinka J. indicated that the answer was less clear with respect to partners and associates in a firm. He concluded that the proper approach is that there should be a strong inference that lawyers who work together share confidences and the court should draw the inference that confidences are likely to be disclosed unless satisfied on the basis of clear and convincing evidence that all reasonable measures have been taken to ensure that no disclosure will occur by the lawyer involved to the member or members of the firm who are engaged against a former client.

 

[21]  This obligation to avoid a conflict of interest extends not only to the actual fulfilment of this obligation to the client, but it is essential to the integrity of our system of justice that there be a public perception that the obligation is being fulfilled.

 

[22]  Many of the decided cases in this area have considered the obligation of an individual solicitor to his or her client or to a former client. However, in the last several decades, we have seen in Canada the emergence of national and indeed international law firms with offices in a number of Canadian cities and, in some cases, offices in other countries. The form of organization of these firms may range from formal or informal associations to full operating partnerships. Although the internal arrangements may vary, in most cases the public image is usually one of an integrated law firm, with offices in a number of cities.

 

[23]  This new environment involves a consideration of actual and potential conflicts of interest from two aspects: first, the obligation of the individual lawyer to his or her present or former client; and second, the obligation of the firm of lawyers, that is other partners and associates in the firm where those individuals have had no involvement with that client. Of particular importance, as in the present case, is the situation where the other partners and associates are practising in other cities.

 

[24]  There are several situations which may be considered. The first relates to the obligations of the law firm to a former client when that firm is considering taking on a new client. The other, and perhaps more difficult issue, relates to the obligations of the law firm to a present client where the client deals with one or more partners or associates in one city where that firm is considering acting for a new client in another city. What might be considered a variation on this question is reflected in the present case where, as a result of a merger, a partner in one of the predecessor firms in one city acts for a client on one matter and other partners or associates in another predecessor firm in another city act for another client on other matters.

 

[25]  As stated by Sopinka J. in MacDonald Estate v. Martin, supra, in determining whether there is a disqualifying conflict of interest, the question to ask is whether the public, represented by a reasonably informed person, would be satisfied that no use of confidential information would occur. In considering whether there is a disqualifying conflict of interest, the two questions to be asked are:

1.  Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand?

2.  If so, is there a risk that it will be used to the prejudice of the client?

 

[26]  In dealing with the second question, whether the confidential information will be misused, Sopinka J. stated that the lawyer who has relevant confidential information cannot act against his client or former client. However, and of relevance to the present case, he indicated that answer is less clear with respect to the partners or associates in the firm. As to the question of imputed knowledge, that the knowledge of one member of the firm is the knowledge of all, he concluded that while this rule has been adopted by some law firms, and is commendable and to be encouraged, it is, in his opinion, an assumption which is unrealistic in the era of the mega-firm. He indicated that he was not convinced that a reasonable member of the public would necessarily conclude that confidences are likely to be disclosed in every case despite institutional efforts to prevent it.

 

[27]  He stated at p. 1262 S.C.R.:

In answering this question, the court should therefore draw the inference, unless satisfied on the basis of clear and convincing evidence, that all reasonable measures have been taken to ensure that no disclosure will occur by the “tainted” lawyer to the member or members of the firm who are engaged against the former client. And he concluded at p. 1263:

These standards will, in my opinion, strike the appropriate balance among the three interests to which I have referred. In giving precedence to the preservation of the confidentiality of information imparted to a solicitor, the confidence of the public in the integrity of the profession and in the administration of justice will be maintained and strengthened. On the other hand, reflecting the interest of a member of the public in retaining counsel of her choice and the interest of the profession in permitting lawyers to move from one firm to another, the standards are sufficiently flexible to permit a solicitor to act against a former client provided that a reasonable member of the public who is in possession of the facts would conclude that no unauthorized disclosure of confidential information had occurred or would occur.

 

[28] In Moffat v. Wetstein (1996), 29 O.R. (3d) 371, 135 D.L.R. (4th) 298 (Gen. Div.), Mr. Thompson, who was a former partner in the defendant accounting firm Peat Marwick Thorne, was later a partner in the law firm of McCarthy Ttrault, who were solicitors for the plaintiff. Mr. Thompson had left the law firm of McCarthy Ttrault, but he was also acting, together with McCarthy Ttrault, as solicitors for the plaintiff. Peat Marwick Thorne had been represented in the past by McCarthy Ttrault. Peat Marwick Thorne took the position that McCarthy Ttrault should be removed as solicitors of record for the plaintiffs on the basis of an actual or apparent conflict of interest. It also argued that Thompson himself should be removed as one of the solicitors of record for the plaintiffs.

 

[29]  In reaching his conclusion, Granger J. followed the approach set out by Sopinka J. in MacDonald Estate v. Martin, supra. He found that Mr. Thompson’s personal representation of the plaintiffs had the appearance of unfairness and created the possibility of an unfair use of confidential information and he was therefore disqualified from acting for the plaintiffs.

 

However, that did not apply to the firm of McCarthy Ttrault.

 

[30]  At p. 400 O.R., Granger J. stated that:

If it is accepted that McCarthy Ttrault, through its past and present relationship with Peat Marwick does possess confidential information relevant to a matter at hand, the second part of the test in MacDonald Estate v. Martin must be considered, whether there is a risk that the confidential information will be used to the prejudice of the former client.

 

[31]  Granger J. concluded that the client, Peat Marwick Thorne, bore the onus of establishing that there existed a previous relationship which was sufficiently related to the retainer from which it was sought to remove the solicitor. However, he stated that, given the drastic nature of that remedy, there should be compelling and cogent evidence which provides a sufficient connectiveness between the partners. And he continued at p. 400-01 O.R.:

A party does not meet its onus of establishing that the prior relationship is sufficiently related to the present retainer, merely by making a bald assertion that the past relationship has provided the solicitor with access to insurance policies, partnership agreements, and litigation philosophy. At the very least, in order to discharge its onus, the client should describe how the solicitor gained that information, and why it is related to the matter at hand.

 

[32]  Granger J. concluded that, given the lack of strong evidence demonstrating how the past retainers are sufficiently related to the matters at hand, Peat Marwick Thorne had failed to meet its onus of establishing the requisite connectiveness. He decided that the removal of McCarthy Ttrault was not warranted on this branch of the MacDonald Estate v. Martin test.

 

[33]  In the present case, the Master concluded that confidential information was provided to the predecessor Borden & Elliot law firm that could be relevant to the issues in the present action.

 

[34]  He then considered the second question, as articulated by Sopinka J., as to whether there is a risk that the confidential information will be used to the prejudice of the client Nissan.

 

[35]  The Master reviewed the measures which had been established in this regard with the partner of Scott & Aylen in Ottawa and concluded that no confidential information was ever disclosed to the Borden & Elliot firm in Toronto. There is evidence that there had been no communication of confidential information relating to Carlingwood to any lawyers with the Borden & Elliot firm in Toronto and that no confidential information relating to the defendant was ever disclosed to or discussed with the Ottawa lawyers representing the plaintiff. In addition, more formal measures were established in both the Ottawa and Toronto offices to prevent this from occurring. The solicitor client relationship with respect to the two clients arose while the two predecessor law firms were separate entities and operated in separate cities. The defendant corporation is separately represented on this action, and has always been, by a separate law firm. There has been no discussion or communication of any confidential information, either way, with respect to these two clients in the merged firm, and procedures have been established to ensure that this does not occur.

 

[36]  The defendant submits that, in considering the steps taken by Borden to prevent the disclosure of information, the Master applied the wrong test in asking the question whether Borden had failed to take adequate steps to prevent the disclosure of confidential information as a result of the merger of the two firms. The defendant contends that the correct test is whether “all reasonable measures” were taken. It submits that Borden would have failed to discharge the onus that all reasonable steps were taken.

 

[37]  I agree with the submission of the defendant that the proper question in this regard, as set forth in MacDonald Estate v. Martin, supra, is whether all reasonable measures were taken to ensure that no disclosure would occur. However, in my view, the Master correctly identified the question to be asked and, in fact, he quoted, properly, the test as set forth in MacDonald Estate v. Martin, supra. He also correctly stated that there was a heavy onus on the firm to rebut that presumption. He concluded that Borden & Elliot had met that test, referring obviously to the test established in the MacDonald Estate decision. In my view, when he went on to state that “adequate steps were put in place to prevent the risk of prejudice to Nissan” the Master did not demonstrate an error in having applied the wrong test but rather, by way of a statement after his conclusion, was using a different phrase in support of his conclusion. I find that the Master made no error in reaching his conclusion.

 

[38]  In my view, in this situation, a reasonably informed member of the public would conclude that no confidential information has passed or will pass. The overriding policy considerations have been met with respect to meeting the high standards of the legal profession and the integrity of our system of justice.

 

[39]  There are further considerations which are supportive of this conclusion.

 

[40]  The first is the countervailing value, as expressed by Sopinka J. in the MacDonald decision, that a litigant should not be deprived of his or her choice of counsel without good cause. In the present case, the plaintiff has been represented by the same partner and the original law firm of Scott & Aylen for approximately seven years, has expended approximately $110,000 in legal fees to date, and the action is ready for trial. This right to counsel should weigh heavily in considering the removal of counsel in the circumstances.

 

[41]  I note also and agree with the comments made by Granger J. at p. 405 O.R. in Moffat v. Wetstein, supra, with respect to “preemptive prevention of adverse representation”. This phrase describes the possible practice where institutional clients might retain larger firms and disclose information relating to this financial structure and other matters in order to prevent that firm from acting on a matter adverse to the institutional client in the future. In my view, the concern expressed with respect to such possible practices is met by the disclosure approach established by Sopinka J. in the MacDonald Estate decision. The determination of the issue of disclosure of confidential information by clients to several firms is properly resolved by the statement of Granger J. in Moffat v. Wetstein, supra, that the party proposing the disqualifying conflict be required to establish that there [is] compelling and cogent evidence which provides a s ufficient connectiveness between the retainers.

 

[42]  I note also that delay is a factor which can be considered by a court when it exercises its discretion to remove a solicitor of record (see Baumgartner v. Baumgartner (1995), 122 D.L.R. (4th) 542, 2 B.C.L.R. (3d) 126 (C.A.)). Further, the relief sought is equitable and should only be granted where there is a genuine concern with respect to the merits of the alleged conflict. Nissan has continued to retain the Borden Ladner Gervais firm on other matters after the merger. Although the issue was previously raised by Nissan, it was only in October 2000 that the motion was brought to disqualify the Borden firm from acting as solicitors for the plaintiff in the present action.

 

[43]  The cross-appeal is therefore dismissed.

 

(b) The appeal

 

[44]  I turn now to the appeal from the decision of the Master that the Borden firm should be removed as solicitors for the plaintiff in this action.

 

[45]  As stated previously, the Master found that, given the nature and extent of the relationship between Borden & Elliot and Nissan over the years, Borden stands in a fiduciary relationship with Nissan, particularly when this type of conflict with a dealer is involved. He stated that the removal was not based on concern of the potential disclosure of confidential information but on the basis of the fiduciary obligation the court found them to owe to their client Nissan.

 

[46]  The position of the plaintiff is that given the findings of the Master that the applicable tests as set forth in MacDonald Estate v. Martin, supra, have been met, there is no inherent conflict or division of loyalty which would prevent Borden from continuing to act for the plaintiff. The plaintiff contends that in this situation, the high standards of the legal profession and the integrity of the legal system would be preserved. Further, the plaintiff submits that, in these circumstances, insufficient weight was given to the principle that a litigant should not be deprived of his or her choice of counsel.

 

[47]  The position of the defendant is that the Master did not err in his decision and that there is an inherent conflict of interest in this situation which requires the disqualification of the Borden firm from acting for the plaintiff.

 

[48]  The starting point in considering this issue is as set forth in the decision of Sopinka J. in MacDonald Estate v. Martin, supra, at p. 1243 S.C.R.

 

[49]  As indicated, in resolving the issue as to whether a firm is disqualified from continuing to act, the court is concerned with at least three competing values:

1.  The concern to maintain the high standards of the legal profession and the integrity of our system of justice.

2.  The countervailing value that a litigant should not be deprived of his or her choice of counsel without good cause.

3.  The desirability of permitting reasonable mobility within the legal profession.

 

[50]  The circumstances in this case are unique in terms of

the consideration and application of these competing values. While the preservation of the first value must be paramount, the second value weighs heavily in the present case in that the plaintiff may be deprived of its choice of counsel who has acted for the plaintiff for a period of seven years since the commencement of this action.

 

[51]  In my view, because these values are in competition in the sense that they may be in conflict in any given case, their application in each case necessarily involves a balancing between them in order that the interests of justice are served.

 

[52]  As stated by Sopinka J. in MacDonald Estate v. Martin, supra, at p. 1260, the overriding policy that applies and must inform the court in answering the question whether there is a disqualifying conflict of interest is that the public, represented by the reasonably informed person, would be satisfied that no use of confidential information would occur. The Master concluded that Borden & Elliot had met the test that it had taken all reasonable measures to ensure that no disclosure would occur by the “tainted lawyers” and that adequate steps were put in place to prevent the risk of prejudice to Nissan. I agree with that conclusion.

 

[53]  However, in arriving at his decision, the Master found that Borden owed a fiduciary obligation to Nissan, given the nature and extent of the relationship between Borden & Elliot and Nissan over the years.

 

[54]  In reaching his conclusion, the Master relied on the decision of the House of Lords in Prince Jefri Bolkiah v. KPMG (a firm), [1999] 1 All E.R. 517, and in particular the statement at p. 526:

My Lords, I would affirm this as the basis of the court’s jurisdiction to intervene on behalf of a former client. It is otherwise where the court’s intervention is sought by an existing client, for a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the inescapable conflict of interest which is inherent in the situation.

 

[55]  However, any consideration of the scope of the fiduciary obligation owed will, of necessity, be dependent on the particular facts of the case. The court in the Prince Jefri decision referred to a partner acting for another “in the opposite interest”.

 

[56]  In the present case, Borden is not acting “in the opposite interest” with respect to the present action as Nissan is, and has been throughout, represented by another law firm.

 

[57]  It must then be determined whether Borden is opposite in interest to the plaintiff generally because it has acted for and continues to act for Nissan on other matters. Indeed, the Divisional Court in Drabinsky v. KPMG (1999), 33 C.P.C. (4th) 318, [1999] O.J. No. 1416 (Div. Ct.), appears to contemplate that the fiduciary obligation owed to a client may be limited to a duty to preserve confidentiality. At [p. 319 C.P.C.] the court stated:

Although in other circumstances (where, for example, the client in question is a former client, or where the accounting firm is engaged as the company’s auditors), the fiduciary duty owed to the client may be narrower and may be limited to a duty to preserve confidentiality only, in the unique circumstances of this case, there is a reasonable basis to believe that the duty may be sufficiently broad to prohibit KPMG from taking on the forensic mandate from Livent which would be directly adverse to the interests of Garth Drabinsky, its on-going client.

 

[58]  I conclude that the scope of the fiduciary obligation owed to a client will depend on the particular facts of the case. Where the other client is not directly opposite in interest, then, depending on the facts of each case, the fiduciary obligation may be limited to the preservation of confidential information. In the circumstances of the present case, I conclude that the fiduciary obligation of Borden is limited to the preservation of confidential information and, as found by the Master, this has been done.

 

[59]  I turn now to a consideration of the second of the competing values, the right of a client to the counsel of his or her choice.

 

[60]  As stated by Granger J. in Moffat v. Wetstein, supra, at p. 406 O.R.:

The right of a party to be represented by counsel of his or her choice is one which is fundamental to the adversarial process, and, accordingly, must only be impaired in cases of clear necessity. The courts must act with great caution before they interfere with a party’s choice of counsel, by removing that counsel as solicitor of record, and must consider all the circumstances surrounding the current and previous retainers.

 

[61]  In this case, where the partner in the Ottawa office of the former firm of Scott & Aylen has acted for the plaintiff for seven years and the action is now ready for trial, this second competing value is in my view of importance. There is not only the factor of additional cost which would be incurred by the plaintiff, but perhaps of greater significance, the confidence reposed by the plaintiff in its solicitors over this period and the reasonable expectation of continued representation at this important point in the litigation.

 

[62]  I conclude therefore that a proper balance between both of the referenced competing values can be achieved without the removal of the Borden firm as solicitors for the plaintiff. Appropriate weight is in this manner given to the second competing value and the plaintiff is able to retain counsel of its choice for the trial of this action.

 

[63]  I conclude therefore that the Borden firm should not be removed as solicitors for the plaintiff. The appeal from the decision of the Master is allowed and the order of the Master is set aside.

 

[64]  Brief written submissions as to costs may be made within 15 days.

 

Order accordingly.