MacDonald Estate v. Martin (1990), 70 Man.R.(2d) 241 (SCC)
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[French language version follows English language version]
[La version française vient à la suite de la version anglaise]
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William Steward Arnold Martin (appellant) v. William Hamilton Gray, Administrator with Will annexed of the Estate of John Edwin MacDonald (respondent)
(21469)
Indexed As: MacDonald Estate v. Martin and Rossmere Holdings (1970) Ltd.
Supreme Court of Canada
Dickson, C.J.C., Wilson, La Forest, L’Heureux-Dubé, Sopinka, Gonthier and Cory, JJ.
December 20, 1990.
Summary:
The defendant Martin applied for an order that the plaintiff’s solicitors of record be disqualified from acting for the plaintiff on the ground of conflict of interest. The alleged conflict arose when a young lawyer (Dangerfield) who acted as junior counsel for the defendant subsequently became employed with the plaintiff’s solicitor’s law firm.
The Manitoba Court of Queen’s Bench allowed the application and declared that the plaintiff’s law firm was ineligible to continue to act for the plaintiff. The plaintiff appealed.
The Manitoba Court of Appeal, Monnin, C.J.M., dissenting, in a judgment reported 57 Man.R.(2d) 161, allowed the appeal. The defendant appealed.
The Supreme Court of Canada allowed the appeal, set aside the judgment of the Court of Appeal and restored the trial judgment. The court stated that Dangerfield possessed relevant confidential information and there was insufficient evidence that all reasonable measures were taken to rebut the strong inference of disclosure.
Barristers and Solicitors – Topic 1611
Relationship with client – Conflict of interests – Conduct of action against former client – The Supreme Court of Canada stated that “a lawyer who has relevant confidential information cannot act against his client or former client. In such a case the disqualification is automatic. No assurances or undertakings not to use the information will avail” – See paragraph 47.
Barristers and Solicitors – Topic 1615
Relationship with client – Conflict of interests – Where lawyer joins opposite party’s lawyer’s firm – The Supreme Court of Canada stated that the firm was disqualified if the lawyer received confidential information attributable to a solicitor and client relationship relevant to the matter at hand and there was a risk of its use to the client’s prejudice – If a previous relationship sufficiently related to the alleged conflicting matter existed, there was a strong rebuttable inference that confidential information was imparted – The additional inference that such information was disclosed to partners or associates could be discharged only with clear and convincing evidence that all reasonable measures were taken to ensure nondisclosure – The court suggested that the lawyers’ governing body determine which institutional guarantees could satisfy this requirement.
Barristers and Solicitors – Topic 1615
Relationship with client – Conflict of interests – Where lawyer joins opposite party’s lawyer’s firm – A lawyer acting as junior counsel for a defendant joined the plaintiff’s solicitor’s firm – The lawyer possessed confidential information obtained in assisting in the defendant’s defence – The issue was whether the plaintiff’s solicitor’s firm was disqualified from continuing to act in the litigation by reason of a conflict of interest – The Supreme Court of Canada stated that three competing values were to be considered: (1) maintaining the high standards of the legal profession and the integrity of the justice system; (2) the countervailing value that a litigant not be deprived of counsel of his choice without just cause; and (3) the desirability of permitting reasonable mobility in the legal profession – See paragraph 13.
Barristers and Solicitors – Topic 1615
Relationship with client – Conflict of interests – Where lawyer joins opposite party’s lawyer’s firm – A lawyer acting as junior counsel for a defendant joined the plaintiff’s solicitor’s firm – The lawyer possessed confidential information from the defendant respecting the action – There was no danger of deliberate or inadvertent disclosure; the lawyer was not acting for the plaintiff and undertook not to disclose the information – The Court of Appeal refused to disqualify the plaintiff’s solicitor’s firm on the mere appearance of prejudice or impropriety – The Supreme Court of Canada disqualified the firm – The lawyer possessed relevant confidential information and there was insufficient evidence that all reasonable measures were taken to rebut the strong inference of disclosure.
Barristers and Solicitors – Topic 1618
Relationship with client – Conflict of interests – Remedies – Disqualification – The Supreme Court of Canada stated that “the courts, which have inherent jurisdiction to remove from the record solicitors who have a conflict of interest, are not bound to apply a code of ethics. Their jurisdiction stems from the fact that lawyers are officers of the court and their conduct in legal proceedings which may affect the administration of justice is subject to this supervisory jurisdiction. Nonetheless, an expression of a professional standard in a code of ethics relating to a matter before the court could be considered an important statement of public policy” – See paragraph 18.
Cases Noticed:
Morton v. Asper (1987), 49 Man.R.(2d) 167 (Q.B.), affd. (1987), 51 Man.R.(2d) 207 (C.A.), refd to. [para. 6].
Rakusen v. Ellis, Munday & Clarke, [1912] 1 Ch. D. 831, not folld. [para. 9].
Law Society of Manitoba v. Giesbrecht (1983), 24 Man.R.(2d) 228 (C.A.), refd to. [para. 18].
Re a Solicitor (1981), 131 Sol. J. 1063, refd to. [para. 21].
T.C. Theatre Corp. v. Warner Bros. Pictures Inc. (1953), 113 F. Supp. 265 (S.D.N.Y.), refd to. [para. 22].
Emle Industries Inc. v. Patentex Inc. (1973), 478 F.2d. 562 (2d Cir.), refd to. [para. 22].
E.F. Hutton & Co. Inc. v. Brown (1969), 365 F. Supp. 371, refd to. [para. 22].
Nemours Foundation v. Gilbane, Aetna, Federal Ins. Co. (1986), 632 F. Supp. 418 (D. Delaware), refd to. [para. 22].
U.S.A. for the Use and Benefit of Lord Electric Co. v. Titan Pacific Construction Corp. (1986), 637 F. Supp. 1556 (W.D. Washington), refd to. [para. 22].
In Re Asbestos Cases (1981), 514 F. Supp. 914 (E.D. Virginia), refd to. [para. 22].
Analytica Inc. v. NPD Research Inc. (1983), 708 F.2d. 1263 (7th Cir.), refd to. [para. 23].
Novo Terapeutisk Laboratorium AIS v. Baxter Travenol Laboratories Inc. (1955), 607 F.2d. 186 (7th Cir.), refd to. [para. 25].
Akerly v. Red Barn System Inc. (1977), 551 F.2d. 539 (3th Cir.), refd to. [para. 25].
Gas-A-Tron of Arizona v. Union Oil Co. of California, 534 F.2d. 1322 (9th Cir.), certiorari denied (1976), 429 U.S. 861, refd to. [para. 25].
Silver Chrysler Plymouth Inc. v. Chrysler Motors Corp. (1975), 518 F.2d. 751 (2d Cir.), refd to. [para. 25].
Laskey Bros. of W. Va. Inc. v. Warner Bros. Pictures (1955), 224 F.2d. 824 (2d Cir.), certiorari denied (1956), 350 U.S. 932, refd to. [para. 25].
City of Cleveland v. Cleveland Electric Illuminating Co. (1977), 440 F. Supp. 193 (N.D. Ohio), affd. mem. 573 F.2d. 1310 (6th Cir.), certiorari denied (1977), 435 U.S. 996, refd to. [para. 25].
Fleischer v. A.A.P. Inc. (1958), 163 F. Supp. 548 (S.D.N.Y.), refd to. [para. 25].
& J Constructions Pty. Ltd. v. Head (1987), 9 N.S.W.L.R. 118, refd to. [para. 27].
National Mutual Holdings Pty. Ltd. v. Sentry Corp. (1989), 87 A.L.R. 539, refd to. [para. 27].
In the Marriage of Thevanaz (1986), 11 Fam.L.R. 95, refd to. [para. 28].
Re the Marriage of R.P. and A.A. Gagliano (1989), 12 Fam.L.R. 843, refd to. [para. 28].
Steed & Evans Ltd. v. MacTavish (1976), 12 O.R.(2d) 236, refd to. [para. 31].
Canada Southern Railway Co. v. Kingsmill, Jennings (1978), 8 C.P.C. 117, refd to. [para. 32].
Falls v. Falls (1979), 12 C.P.C. 270, refd to. [para. 33].
Goldberg v. Goldberg (1982), 141 D.L.R.(3d) 133, refd to. [para. 34].
Lukic v. Urquhart (1984), 11 D.L.R.(4th) 638 (Ont. H.C.), affd. in part (1985), 15 D.L.R.(4th) 639 (Ont. C.A.), refd to. [para. 35].
O’Dea v. O’Dea (1987), 68 Nfld. & P.E.I.R. 67; 209 A.P.R. 67 (Nfld. Unif. Fam. Ct.), refd to. [para. 36].
Fisher v. Fisher (1986), 76 N.S.R.(2d) 326; 189 A.P.R. 326 (C.A.), refd to. [para. 37].
Thomson v. Smith Mechanical Inc., [1985] C.S. 782, refd to. [para. 38].
Canada v. Consortium Designers Inc. (1988), 72 Nfld. & P.E.I.R. 255; 223 A.P.R. 255 (P.E.I.S.C.T.D.), affd. (1989), 80 Nfld. & P.E.I.R. 12; 249 A.P.R. 12 (C.A.), refd to. [para. 39].
Farmers Mutual Petroleums Ltd. v. United States Smelting, Refining & Mining Co. (1961), 28 D.L.R.(2d) 618 (Sask. C.A.), refd to. [para. 41].
R. v. Burkinshaw (1967), 60 D.L.R.(2d) 748 (Alta. S.C.), refd to. [para. 41].
Devco Properties Ltd. v. Sunderland, [1977] 2 W.W.R. 664 (Alta. S.C.), refd to. [para. 41].
Mercator Enterprises Ltd. v. Mainland Investments Ltd. (1978), 29 N.S.R.(2d) 703; 45 A.P.R. 703 (T.D.), refd to. [para. 41].
Christo v. Bevan (1982), 36 O.R.(2d) 797 (H.C.), refd to. [para. 41].
Schmeichel v. Saskatchewan Mining Development Corp., [1983] 5 W.W.R. 151; 31 Sask.R. 79 (C.A.), refd to. [para. 41].
Davey v. Woolley, Hames, Dale & Dingwall (1982), 35 O.R.(2d) 599 (C.A.), refd to. [para. 43].
United States Surgical Corp. v. Downs Surgical Canada Ltd. (1982), 141 D.L.R.(3d) 157 (F.C.T.D.), refd to. [para. 43].
Authors and Works Noticed:
Canadian Bar Association, Code of Professional Conduct (1974), ch. 5, commentaries 11, 12 [para. 17].
Dean, M.R., and C.F. Finlayson, Conflicts of Interest: When May A Lawyer Act Against A Former Client?, [1990] N.Z.L.J. 43, p. 52 [para. 29].
Finn, Conflicts of Interest and Professionals, in Professional Responsibility (New Zealand), generally [para. 27].
Kryworuk, P.W., Acting Against Former Clients – A Matter of Dollars and Common Sense, 45 C.P.C. 1, generally [para. 22].
Kryworuk, P.W., Developments in the Law – Conflict of Interest in the Legal Profession (1981), 94 Harv.L.R. 1247, pp. 1315-1334 [para. 22]; 1355-1359 [para. 24].
Steele, Graham, Imputing Knowledge From One Member of a Firm to Another: “Lead Us Not Into Temptation” (1990), 12 Adv.Q. 46, p. 58 [para. 43].
Counsel:
R.A. Dewar and R.A. Watchman, for the appellant;
A.D. MacInnes, Q.C., for the respondent.
Solicitors of Record:
Pitblado & Hoskin, Winnipeg, Manitoba, for the appellant;
Thompson, Dorfman, Sweatman, Winnipeg, Manitoba, for the respondent.
This appeal was heard on May 4, 1990, before Dickson, C.J.C., Wilson, La Forest, L’Heureux-Dubé, Sopinka, Gonthier and Cory, JJ., of the Supreme Court of Canada.
On December 20, 1990, the judgment of the Supreme Court of Canada was delivered in both official languages and the following opinions were filed:
Sopinka, J. (Dickson, C.J.C., La Forest and Gonthier, JJ., concurring) – see paragraphs 1 to 54;
Cory, J. (Wilson and L’Heureux-Dubé, JJ., concurring) – see paragraphs 55 to 75.
