“In MacDonald Estate v. Martin, 1990 CanLII 32 (SCC), [1990] 3 SCR 1235 (“MacDonald Estate”), the Supreme Court of Canada set out a two-part test as to whether a lawyer can act against a former client. The court must determine (i) did the lawyer receive confidential information to a solicitor and client relationship relevant to the matter at hand and (ii) is there a risk that it will be used to the prejudice of the client (MacDonald Estate, at para. 45).
In MacDonald Estate, the court noted that “nothing is more important to the preservation of [the solicitor-client] relationship than the confidentiality of information passing between a solicitor and his or her client” (MacDonald Estate, at para. 15).
On a motion to remove counsel for conflict of interest, the court must weigh the competing values of “[t]he concern to maintain the high standards of the legal profession and the integrity of our system of justice” and (ii) “[t]he countervailing value that a litigant should not be deprived of his or her choice of counsel without good cause” (MacDonald Estate, at para. 13).
The preservation of the integrity of our system of justice is the “most important and compelling” value (Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2010 ONCA 788 (“Consulate Ventures”), at paras. 35-36).
Confidential information is information one would not ordinarily reveal to an opposing lawyer. It includes such matters as personal expenses, assets, and liabilities, as well as information about the “personal habits, faults and foibles of the ‘client’, knowledge of which might be valuable to the lawyer in the adversarial world of litigation” (Paylove v. Paylove, 2001 CanLII 28169, 2001 CarswellOnt 4454 (SCJ), at para. 19).
The importance of confidentiality has been particularly noted in family law cases since clients often “come to family lawyers when they are at their most vulnerable” (Marinangeli v. Marinangeli, 2004 CarswellOnt 3015 (SCJ), at paras. 17-20).
If a former client can establish 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 which could be relevant “unless the solicitor satisfies the court that no information was imparted which could be relevant”. That burden must be discharged without revealing the specifics of the privileged communication (MacDonald Estate, at para. 46).
The former client bears the onus of showing that the previous retainer is sufficiently related to the current retainer (Canadian National Railway Co. v. McKercher, 2013 SCC 39 (“McKercher”), at para. 24; Chapters Inc. v. Davies, Ward & Beck LLP (2001), 2001 CanLII 24189 (ON CA), 52 OR (3d) 566 (CA) (“Chapters”), at para. 29).
The former client must adduce “clear and cogent” evidence, not mere assertions that the two retainers are sufficiently related. The former client must show that the possibility of relevant confidential information having been acquired is realistic, not just theoretical (Chapters, at paras. 29-30).
The test of “sufficient relationship” is whether “given the nature and detail of the confidential information received” in the first retainer, it is “likely that at least some of that information could be relevant to the current matter” and “likely to be part of the factual context directly informing” counsel’s advice to the new client. The information “will be relevant if it assists the lawyers to advance the cause of the new client against the old client” (Chapters, at para. 36).
It is incumbent on a party seeking to disqualify a solicitor to specify why the documents and information supplied previously to the solicitor are connected or related to the new matter rather than leave the court to have to guess at the degree of connection (Remus v. Remus (2002), 2002 CanLII 2763 (ON SC), 61 OR (3d) 680 (SCJ), at para. 14).
There may be cases in which a simple description of the two retainers shows them to be so closely connected that the court will infer the possible misuse of confidential information and, hence, find the retainers to be sufficiently related. More commonly, an outline of the nature of the confidential information passed to the lawyer pursuant to the first retainer will be needed (Chapters, at para. 30).
The court must determine whether the former client has shown that the former matters on which they retained counsel could have yielded relevant confidential information that could be used against it in “some tangible manner” (McKercher, at para. 54).
The court must carefully review and compare the retainers to determine whether they are sufficiently related (see Chapters, at paras. 4-6 and 32, in which the court reviewed the first retainer in detail and then reviewed the new retainer, at paras. 10, 35-36).
The test for determining whether there is a conflict of interest is whether the “public, represented by the reasonably informed person would be satisfied that no use of confidential information would occur” (MacDonald Estate, at para. 44). The test was stated recently as “whether a fair minded and reasonably informed member of the public would conclude that the proper administration of justice compels the removal” (Mallory v. Werkmann Estate, 2015 CarswellOnt 1223 (C.A.) at para. 28).
Because the test is objective, “[t]here does not need to be a finding of impropriety in order for the solicitor to be removed, rather it is the appearance of impropriety that is the test”, a principle which has been applied in the family law context (Zaldin v. Zaldin, 2014 CarswellOnt 15887 (SCJ), at para. 13).
While the court is not limited to the narrow scope of the pleadings to determine whether issues may arise in which relevant confidential information could be used against a former client, there must be “a real possibility that the issues will expand beyond” the range of the pleadings (Consulate Ventures, at para. 14).
If the former client cannot meet the onus to establish that the previous retainer is sufficiently related to the current retainer, no presumption arises (Trizec Properties Ltd. v. Husky Oil Ltd., 1997 ABCA 182, at para. 12).
The necessary corollary of the “sufficiently related” rule in MacDonald Estate is that if a party cannot demonstrate that the two matters are sufficiently related, the former client can lead evidence that the law firm actually possesses relevant confidential information.
Unlike the “rebuttable presumption” that will be a “difficult burden to discharge” because it must be discharged “without revealing the specifics of the privileged communication” (MacDonald Estate, at para. 46), the burden to show actual knowledge of relevant confidential information necessarily falls on the party who cannot establish that the retainers are sufficiently related, and leaves that party with the choice of the extent to which the party must disclose enough information about the communications to satisfy that burden.”