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COURT FILE NO.

: 15327/07 SR DATE: 20090122

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N: PETER J. DOUCET

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PAUL COUSINEAU

) ) ) Murray N. Ellies, for the Plaintiff ) ) ) Plaintiff ) ) ) ) ) ) Erin Cullen, for the Defendant ) ) ) Defendant ) ) ) ) HEARD: January 16, 2009

Paul Kane, S.C.J.

[1] Mr. Doucet brings the present motion for an order that the Defendants lawyers, Sylvano A. Carlesso of the Timmins law firm, Carlesso Barazzutti, be removed and prohibited from acting as counsel against this Plaintiff in this simplified procedure action because it is argued that Mr. Doucet shared confidential information about issues in this action with Ms. Barazzutti at a time when she was employed as a lawyer by Mr. Doucet. [2] Mr. Doucet concedes that no relationship of solicitor and client existed between himself and Ms. Barazzutti. He argues however, that in the course of her employment with him, Mr. Doucet shared information with her which is relevant to issues in this action, that she was a trusted adviser to him during the break-up of his marriage and, as a result of both of these points, she owes him a duty of loyalty which prevents Mr. Carlesso and their firm from acting for the Defendant in this action.

2009 CanLII 1801 (ON S.C.)

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[4] Mr. Doucet in his personal capacity claims $36,000 in damages for breach of contract or on the basis of unjust enrichment, consisting of the cost of 10 years of electricity for two water tanks used by the Defendant tenant in his hair salon in a building allegedly owned by the Plaintiff. [5] The Defendant counterclaims for $40,000 for breach of the same verbal lease or in the alternative, as damages for unjust enrichment in the form of free hair styling and hair products to the Plaintiff, his wife and staff members of the Plaintiffs law firm. According to paragraphs 13, 16 and 17 of the counterclaim, the rent paid by the Defendant under the lease included his providing hair styling, hair products and decoration of Mr. Doucets law office to the Plaintiff on a no fee basis. In paragraph 17 of the counterclaim, the Defendant alleges that the Plaintiff has been unjustly enriched for 10 years by the Defendant providing hair styling, hair products and laundry services on a no charge basis. [6] In argument, the Defendant acknowledged that the decoration services he provided to the Plaintiff will not be included or relied upon as part of his counterclaim in contract or unjust enrichment. [7] Notwithstanding the Defendants undertaking to not call her as a witness or crossexamine Ms. Barazzutti if called by the Plaintiff and the Defendants withdrawal of decoration services in support of the counterclaim, there remains the underlying question whether Ms. Barazzutti has confidential information about issues in the action obtained in her employment with, or as a trusted advisor of Mr. Doucet which creates a conflict preventing her present firm from acting as counsel to the Defendant in this action. [8] By way of background, Mr. Doucet and the Carlesso Barazzutti firm practiced law in the City of Timmins which has a population of just under 45,000. I note as well, my surprise by the number of motions to remove counsel during the last 18 months brought by lawyers in or to remove lawyers in Timmins. Neither of these points are determinative of this motion but cause this court to review carefully the issues before me, including what I understand to be the starting point which is that a clients choice of counsel is a substantive right, which the courts will not lightly interfere with. [9] The onus on this motion begins upon the moving party seeking the removal order. It can then shift to the responding party as stated by the Supreme Court in the seminal case of MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, 77 D.L.R. (4th) 249. To determine whether a lawyer has a disqualifying conflict of interest, Justice Sopinka therein articulated the test to

2009 CanLII 1801 (ON S.C.)

[3] Mr. Doucet acknowledges that it is not known whether Ms. Barazzutti will be a witness at trial. Mr. Cousineau has undertaken to neither call Ms. Barazzutti as a witness and has undertaken to not exercise the right of cross-examination if she is called as a witness by the Plaintiff. Mr. Doucets counsel on this motion stated that he will not know whether to call Ms. Barazzutti as a witness until he hears the evidence of the Defendant on his counterclaim.

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determine whether a lawyer is disqualified from continuing to act for a client by reason of a conflict of interest and stated: 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? In my opinion, 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. This will be a difficult burden to discharge. . The second question is whether the confidential information will be misused. 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. The lawyer cannot compartmentalize his or her mind so as to screen out what has been gleaned from the client and what was acquired elsewhere. Furthermore, there would be a danger that the lawyer would avoid use of information acquired legitimately because it might be perceived to have come from the client. This would prevent the lawyer from adequately representing the new client. Moreover, the former client would feel at a disadvantage. Questions put in crossexamination about personal matters, for example, would create the uneasy feeling that they had their genesis in the previous relationship [10] Mr. Doucet acknowledges that Ms. Barazzutti and he were never in a solicitor-client relationship and she therefore has no information about him obtained in such a relationship. That acknowledgement fails the first above test enunciated by Justice Sopinka in MacDonald Estate. [11] Mr. Doucet continues however, and argues that as a former employee and confidant of his, Ms. Barazzutti has information about his personal affairs which prohibits her partner from acting for a party against him in this action. [12] I have been presented with no authority by the moving party that a former employee or former confidant of someone cannot later in an action testify against the interest of their former employer or person who revealed information as to their personal affairs. I do not understand either of those principles to be the law in Ontario. [13] Mr. Doucet argues that Ms. Barazzutti may still be called as his witness and her firm should therefore be removed because she has information about Mr. Doucet gleaned from her
2009 CanLII 1801 (ON S.C.)

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[14] In analyzing Justice Sopinkas articulation in MacDonald Estate of the applicable test, the Court of Appeal of Ontario in Chapters Inc. v. Davies, Ward & Beck LLP, (2001) 52 O.R. (3d) 566, stated: [19] The approach seeks to balance three competing values: the concern to maintain the high standards of the legal profession and the integrity of our system of justice; the countervailing value that a litigant should not be deprived of his or her choice of counsel without good cause; and finally (although it is not relevant in this case) the desirability of permitting reasonable mobility in the legal profession. [20] Sopinka J. clearly saw the preservation of the confidentiality of information passing between client and solicitor as fundamental to the integrity of the administration of justice and the confidence of the public in it. His resolution to this problem gives this consideration precedence. Ultimately, public faith in the lawyers who staff the justice system depends on it. [21] The question is not so much whether a lawyer acting for a new client against an old client offends an obligation of loyalty to the old client. As unseemly as it may appear in some circumstances for a lawyer to do so, this alone does not trigger a legal prohibition. [22] Rather, the overriding policy focuses on the need for public confidence in the security of the cloak of confidence surrounding client-solicitor communications. [29] It is clear from MacDonald Estate that the onus of showing the two retainers to be sufficiently related rests with the client asserting the conflict of interest. It is also clear that it is not enough for that client to rest on a bald assertion that the retainers are sufficiently related. There must be clear and cogent evidence from which the court can reach that conclusion [30] In my opinion this inquiry must be guided by the need to avoid the evil addressed in MacDonald Estate, namely, the possible misuse by the lawyer of information acquired in confidence. In the end, the client must demonstrate that the possibility of relevant confidential information having been acquired is realistic, not just theoretical For the court to find that the retainers are sufficiently related, it must conclude that in all the circumstances it is reasonably possible that the lawyer acquired confidential information pursuant to the first retainer that could be relevant to the current matter.

2009 CanLII 1801 (ON S.C.)

former employment and confidant of Mr. Doucet. The cases however, where counsel have been removed because a partner or associate of that firm will be a witness at trial, independent of the absence of a former solicitor and client relationship, requires an examination whether the information the witness possess relates to an issue in the action.

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[16] What remains to be examined is the alleged confidential information possessed by Ms. Barazzutti as it relates to this action. [17] Mr. Doucet does not allege that his former associate ever worked on or saw his personal file about the office building which housed his law offices and the Defendants hair salon. He simply says that she could have accessed the file if she had looked for and found it. As to the building, the issue in the action is who was the registered or beneficial owner of the building during the 10 year term of the verbal lease with the Defendant. In other words, does the Plaintiff have status to bring the present action? [18] Whoever was the registered owner is recorded on public title. For most of the term of the lease, Mr. Doucets wife was the registered owner, although in his claim, he seeks damages as registered owner and/or beneficial owner. Mr. and Mrs. Doucet separated on July 18, 2003 and in settlement of their affairs in a separation agreement in October 2003, all interest in the building was transferred to Mr. Doucet. Ms. Barazzutti left Mr. Doucets employment on July 31, 2003 and joined her present firm. She worked as a summer student one day per week in the years 1996 and from May to August in 1997 and 1998. She returned as an articling student and then associate from May 1999 until July 31, 2003. [19] The period of electrical costs claimed by the Plaintiff is from July 1995 until July 2005. It is to be noted that Ms. Barazzutti was not in the Plaintiffs employ at the time the terms of the verbal lease were negotiated and entered into with the Defendant. [20] Mr. Doucets position is limited to the following. As a student or associate, Ms. Barazzutti could have looked at his personal files and such files may have contained some information as to his alleged beneficial ownership interest in the office building which forms the basis of his claim as landlord. That falls far short of the moving party demonstrating that Defendant counsels partner possesses confidential information on this issue. [21] Mr. Doucet goes further and states that he discussed his financial affairs on separation including what was to happen regarding this building as a result of his separation with Ms. Barazzutti between July 18 and 31, 2003. His affidavits on this point are general in wording as he and Mr. Josselyn do not state that Mr. Doucet discussed with Ms. Barazzutti any issue as to the registered versus beneficial ownership of this building during this 13 day period leading to July 31, 2003. Whether Mr. Doucet acted as owner in his relationship with his wife or the tenant Defendant, or was beneficial owner, is not something he alleges Ms. Barazzutti received information from him about or can testify to. Surely this is the relevant information on this issue in the action. I find the absence of this allegation on this point crucial to this issue.

2009 CanLII 1801 (ON S.C.)

[15] Once again, the interest being protected is that between a solicitor and his former client. In addition, if a lawyer may, on a separate and unrelated matter act against his former client, so may a lawyer act against her or his former law firm employer.

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[23] The cases refer to a second test established by the Supreme Court in R. v. Neil, [2002] 3 S.C.R. 631, 218 D.L.R. (4th) 671. In that case the court enunciated a second set of rules, which apply even if there is no issue of confidentiality. [24] The Supreme Court said these rules apply to relationships with both current and former clients. It said the rules concerning current clients were more strict than those applicable to former clients. The court said the fiduciary nature of the solicitor-client relationship gave rise to duties of avoiding a conflict of interest, of commitment to the clients cause and of candor with the client on matters relevant to the retainer. [25] The Supreme Court in Neil describe the duty of loyalty as follows: The bright line is provided by the general rule that a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client even if the two mandates are unrelated unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other. I adopt, in this respect, the notion of a conflict in [para.] 121 of the Restatement Third, The Law Governing Lawyers (2000), vol 2, at pp. 244-45, as a substantial risk that the lawyers representation of the client would be materially and adversely affected by the lawyers own interests or by the lawyers duties to another current client, a former client, or a third person. [26] This definition introduces two conditions which must be met before a solicitor can be removed due to a conflict of loyalty, namely: that there is a substantial risk that the new clients representation will be will be adversely affected and that it will be affected in a material way. [27] This second test is again inapplicable as no solicitor and client relationship existed between Mr. Doucet and Ms. Barazzutti. In addition, the interests of Mr. Cousineau are not shown to be adversely effected by the partnership of Ms. Barazzutti with Mr. Carlesso and his representation for the Defendant in this action. [28] The Plaintiff has failed to show that it is reasonable to believe that Ms. Barazzutti has confidential information regarding Mr. Doucet that would be relevant to the issues in his action against Mr. Cousineau. The absence of a solicitor and client relationship under either test enunciated by the Supreme Court prevents Mr. Doucets reliance on this area of jurisprudence as a basis to remove Defendants counsel.

2009 CanLII 1801 (ON S.C.)

[22] On his counterclaim, the Defendant has withdrawn or clarified that he is not relying upon decoration work and restricts his counterclaim to hair styling, hair products and the regular washing of towels from the Plaintiffs office. The Plaintiff makes no allegation that Ms. Barazzutti has any information as to these subjects or their interplay, if any, to the verbal lease. There is no confidential information on this subject to remove the Defendants lawyers.

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[30] In summary, I find that the Plaintiff has failed to establish a factual or legal basis to justify the removal of the Defendants current law firm and therefore dismiss this motion. [31] Costs should normally follow this outcome but may be spoken to in written submissions, not exceeding two pages, which shall be provided within 15 days from the date of this decision.

___________________________ Paul Kane, S.C.J.

Released:

January 22, 2009

2009 CanLII 1801 (ON S.C.)

[29] There is no impropriety or risk as to the administration of justice of having Mr. Carlesso act as defence counsel and Ms. Barazzutti testify as dealt with in; Urquhart v. Allen Estate, [1999] O.J. No. 4816, given this Defendants undertaking to neither call as a witness nor crossexamine her if she is called by the Plaintiff. This double undertaking prevents contravention of Chapter 9(5) of the Rules of Professional Conduct of the Canadian Bar Association.

COURT FILE NO.: 15327/07 SR DATE: 20090122

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N: PETER J. DOUCET Plaintiff and

PAUL COUSINEAU Defendant

REASONS FOR JUDGMENT

Paul Kane, S.C.J.

Released:

January 22, 2009

2009 CanLII 1801 (ON S.C.)

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