Amack v. AW Holdings Corp., 2010 ABQB 759

Court of Queen ’ s Bench of Alberta Citation: Amack v. AW Holdings Corp., 2010 ABQB 759 Date: 20101202 Docket: 1003 00161 Registry: Edmonton Between: Jonathan James Amack Applicant - and - AW Holdings Corp., Booster Juice Inc., 952110 Alberta Ltd., Frozen Canuck Import Corp., Kiwi Kiss Frozen Yogurt Ltd. and Dale Wishewan Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R. Paul Belzil _______________________________________________________

Part 1 The Application [ 1 ] The Respondents in proceedings commenced against them by Jonathan James Amack apply to have the law firm of MacPherson Leslie & Tyerman LLP (“MLT”), counsel for Amack, removed on the basis that the firm is in a conflict of interest.

Part 2 Factual Background [ 2 ] In 1999 an Alberta law firm, Bennett Jones, incorporated AW Holdings Corp. the sole shareholders and directors of which are Jonathan James Amack and Dale Wishewan. AW Holdings is in the business of operating and franchising fruit drinks and products using the business name Booster Juice. [ 3 ] In 2000 Bennett Jones incorporated Booster Juice Corp. with Amack and Wishewan as the sole shareholders and directors.

Amack resigned as a director and shareholder approximately four years ago, thus Wishewan is currently the sole shareholder and director. [ 4 ] A dispute has arisen between Amack and Wishewan respecting AW Holdings with Amack alleging that Wishewan has improperly directed corporate funds and business to other corporate entities to the detriment of Amack. Wishewan vigorously denies the allegations. [ 5 ] On January 6, 2010 MLT obtained an ex parte order from me appointing an inspector pursuant to

part 18 of the Alberta Business Corporations Act to conduct an investigation and prepare a report for the Court.

An interim report has been prepared to date but at the current date these proceedings are still at an emergent stage. [ 6 ] Wishewan’s position is that he did not consent to the retaining of MLT to represent Amack and seeks an order removing MLT as counsel for him on the basis that MLT is also counsel for Booster Juice and thus is in a conflict of interest. [ 7 ] In opposition to the application, a paralegal of MLT has filed an affidavit wherein she deposes that the only services performed by MLT for Booster Juice involved filing, in the province of Saskatchewan, documents prepared by Bennett Jones and by acting as attorneys for service in that province.

It was acknowledged that on one occasion MLT was served with a Statement of Claim which was forwarded to Bennett Jones for handling. [ 8 ] Wishewan was cross-examined on an affidavit sworn April 6, 2010 and acknowledged that Booster Juice had no direct involvement with MLT respecting any other legal matters. [ 9 ] There is no evidence that Wishewan or anyone connected with Booster Juice ever contacted or retained MLT to perform legal services, rather all contact respecting Booster Juice came through the Bennett Jones firm.

Part 3 Position of the Parties [ 10 ] The Applicant’s position is that MLT must be removed as counsel for Amack as it was argued that MLT is in a solicitor- client relationship with Booster Juice and thus would be duty bound to disclose to Booster Juice all confidential information obtained from Amack. [ 11 ] Counsel for MLT argues that the firm was only an agent for filing of documentation and for the purposes of acting as an agent for service and was never in a solicitor-client relationship with Booster Juice.

Part 4 Determining Whether a Conflict of Interest Exists

[ 12 ] Counsel for the parties agree on the law governing this application, but disagree on its applicability in this factual situation. [ 13 ] In MacDonald Estate v. Martin 1990 CanLII 32 (SCC) , [1990] 3 S.C.R. 1235, it was held that the issue of whether a lawyer is in a conflict of interest respecting a client is determined by using the test of whether a reasonably informed person would be satisfied that no misuse of confidential information would occur. [ 14 ] In R. v.

Neil 2002 SCC 70 , the court discussed the concept of a bright line defined 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. In that decision the court focussed on a lawyer’s duty of loyalty to a client. [ 15 ] Case law establishes that it is not possible to formulate absolute rules as to when a conflict of interest exists justifying the removal of counsel chosen by the client. In Neil the following passage is found at paragraph 15: . . .

Yet it is important to link the duty of loyalty to the policies it is intended to further. An unnecessary expansion of the duty may be as inimical to the proper functioning of the legal system as would its attenuation. The issue always is to determine what rules are sensible and necessary and how best to achieve an appropriate balance among the competing interests. [ 16 ] Central to the reasoning in both cases is the existence of a solicitor-client relationship.

Part 5 Discussion [ 17 ] In my view, the issue of whether Booster Juice is in a solicitor-client relationship with MLT will be completely dispositive of this application. [ 18 ] It is uncontroverted that Wishewan personally had no dealings with MLT and sought no advice from that firm, nor is there any evidence that MLT performed legal services other than acting as an agent for Bennett Jones in filing documents in the province of Saskatchewan and thereafter acting as an attorney for service. [ 19 ] The case law recognizes that there is a distinction between a lawyer providing substantive legal advice and a law firm acting as an agent for the filing of documents or acting as a location for service of legal process. [ 20 ] In Friesen v.

Gimli & District Metis Assn. Inc. [1997] M.J. No. 396, at paragraph 16 it was held that the fact that a lawyer held corporate records and was the registered office for the company, did not in itself constitute the firm as counsel for the corporation. [ 21 ] In Smith v. Salvation Army in Canada 2000, 50 C.P.C. (4th) 331, at paragraph 6 it was held that a law firm which acted purely as an agent for another law firm for limited purposes was not in a solicitor-client relationship with the plaintiff.

In that case, the court observed that the agent law firm did not provide advice or represent the plaintiff and performed only administrative or procedural services.

As in this case, the principal law firm made a decision to retain the agent law firm and not the client which is analogous to the situation in this case wherein Bennett Jones made the decision to retain MLT and not Wishewan or anyone else connected with Booster Juice. [ 22 ] There is no evidence that MLT prepared any documentation for Booster Juice and no evidence that Booster Juice had any expectation that MLT would do so. [ 23 ] No authority has been cited which supports the proposition that the supply of any type of legal service by a law firm would be

sufficient to trigger the application of the principles enunciated in cases like MacDonald Estate and Neil . [ 24 ] Significantly, the documentation exhibited as part of this application was prepared by paralegals who corresponded with each other. Copies of MLT legal accounts exhibited before me reflect no billable time recorded by lawyers for giving legal advice, rather the very modest legal accounts reflect flat fees for filing of documents and acting as an address for service.

This is not at all consistent with the provision by MLT of substantive legal advice to a client for a fee. [ 25 ] In the result, no solicitor-client relationship exists currently or has ever existed between Booster Juice and MLT. [ 26 ] It necessarily follows that this application must be dismissed as the authorities relied upon in support of it do not apply where no solicitor-client relationship exists or ever existed between the law firm and the party seeking removal of the firm as counsel. [ 27 ] Although not binding on the Court, it is noteworthy that the Alberta Code of Professional Conduct in the commentary to Rule 3(

a) respecting conflicts of interest, draws a distinction between the provision of substantive legal services and merely providing a registered office or an address for service. [ 28 ] In argument, counsel for Booster Juice raised the prospect that a conflict of interest might arise in the future.

Given the foregoing analysis it is clear that concern about a possible conflict of interest could only arise if a solicitor-client relationship were to be established in the future between Booster Juice and MLT. [ 29 ] Counsel for MLT responded to this submission by undertaking on behalf of the firm that it will not act for Booster Juice in the future in any manner and will immediately discontinue acting as an agent for the filing of documentation or the acceptance of legal process on behalf of the company. This is a complete answer to any concern about a conflict of interest possibly arising in the future.

Part 6 Conclusion and Order [ 30 ] The application for removal of MLT is dismissed with costs which may be spoken to if necessary. Heard on the 24 th day of November, 2010. Dated at the City of Edmonton, Alberta this 1 st day of December, 2010. R. Paul Belzil J.C.Q.B.A. Appearances:

Richard J. Cotter QC Jonathan E. Hillson Fraser Milner Casgrain LLP for the Applicant (Respondents in Originating Application) Havelock B. Madill QC Brownlee LLP for MacPherson Leslie & Tyerman LLP