2016 QCCQ 8877, 2016 QCCQ 8877

Traffic Tech inc. c. 7779534 Canada inc. 2016 QCCQ 8877 COURT OF QUEBEC (Practice division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-22-222164-157 DATE: July 6, 2016 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ TRAFFIC TECH INC. Plaintiff vs. 7779534 CANADA INC.

Defendant and SEAN HOWLETT Defendant in warranty ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Defendant, 7779534 Canada Inc. (“Canada Inc.”), presents a Motion for the disqualification of the Plaintiff’s attorneys. [ 2 ] The attorney of record is Maître Anne-Marie Hanna, a member of a group of in- house attorneys employed by the Plaintiff. The conclusions of the Motion also mention Maître Annie St-Cyr, a colleague of Maître Hanna.

It is also clear from the allegations of the Petition, at paragraph 25, that the Defendant asserts that “the entirety of the in-house council could not represent the Plaintiff, as the testimony of these lawyers will inevitably lead to a lack of independence”.

The suit [ 3 ] The suit introduced is a claim for unpaid transportation and storage costs initially in the amount of $ 23,224.19. [ 4 ] Canada Inc. called in warranty a certain Sean Howlett, alleging that this individual gave the contract to Traffic Tech Inc. for the storage of the goods in question, without having the authority to do so on behalf of Canada Inc. [ 5 ] The emerging defence, being oral and only summarily mentioned in the form known as the “Gestion de temps”, is that of absence of “lien de droit”, and the answer to this defence will be that Mr Howlett acted with either real or apparent authority to bind Canada Inc., or that, through some other means, a contract was formed between the Plaintiff and the Defendant for transportation and storage of the goods in question. [ 6 ] Two weeks before the trial that was scheduled for January 13, 2016, the Plaintiff amended its Introductory Motion adding an additional $ 20,273.47 in damages for prejudice associated with the ongoing storage and disposal of the goods and alleging a series of communications between the parties concerning the disposal of the goods in order to mitigate this prejudice. [ 7 ] The allegation is made that the Defendant, through its Director of International Sales, Mr Martin Chartier, authorized the Plaintiff to dispose of the goods. [ 8 ] When it became impossible to find a buyer, there were exchanges between the parties’ lawyers that did not lead to a solution to the problem, hence the additional charges.

Origin of the Motion [ 9 ] The Defendant was entitled, given the increased amount, to examine representatives of Traffic Tech Inc. prior to trial, and an examination was held on March 4, 2016, to obtain the deposition of Carolyne Pelletier, director of the vrac and liquid division of Traffic Tech Inc. in Montreal. [ 10 ] The Defendant asserts that, as a result of this examination, it became clear that lawyers working as in-house counsel for the Plaintiff would be witnesses in the file.

In addition to the conclusions in disqualification, the Defendant also asks the Court to allow the examination of Maître St-Cyr and Maître Hanna before trial and to modify the “Gestion de temps” document to include these two

lawyers as witnesses in the trial. The involvement of the lawyers [ 11 ] The Defendant quotes a passage from the deposition of Ms Pelletier, concerning the authorization that was allegedly given, which appears to be central to the claim for the cost of disposal of the goods. [ 12 ] In the passage quoted, Ms Pelletier is examined about Exhibit P-13, a letter written by Maître Hanna to another lawyer, Maître Steven Roch of Colby Monet, representing Canada Inc.

She informs Maître Roch that Traffic Tech Inc. is still in possession of certain goods, that on May 5, 2015, Mr Martin Simamusa, gave Traffic Tech Inc. the authorization to dispose of the goods in order to mitigate its damages, that Traffic Tech Inc. has been unsuccessful in selling the product and that it has “no other alternative than to return the product to your client’s possession or to destroy the product, both of which involve associated costs”. [ 13 ] She seeks Maître Roch’s collaboration in advising her whether Canada Inc. will assume possession of the product, and, if it will not, she reaffirms that Traffic Tech Inc. will dispose of the product. [ 14 ] The extract relied upon by the Defendant is as follows: R- L’autorisation nous a été donnée deux (2) fois de se départir de la marchandise, ça été donnée aux avocats, puis ça l’a été donnée à moi, par courriel.

Q- Qui l’a donné aux avocats? R- Je pourrais pas vous répondre , c’est pas moi qui travaille le dossier au niveau des avocats. Q- O.K. Si vous regardez la pièce P-14, puis vous lisez 10.8, est ce que c’est là, ou est-ce que vous parliez que ça a été donné aux avocats? Que ça a été donné aux avocats? R- Je ne peux vous répondre . Q- Vous ne pouvez pas répondre. Qui vous a dit que ça a été donné aux avocats? R- L’avocate . Q- Quelle avocate ?

R- À ce moment-là… [ 15 ] The Defendant also refers to an exchange of emails between Maître Steven Roch and Maître Annie St-Cyr, between August 26, 2015 and October 21, 2015. [ 16 ] The exchange documents and the fact that the Plaintiff’s in-house counsel has not received a proper response and that the claim will therefore be augmented to take into account the additional storage and disposition costs.

The dialogue breaks down into a dispute between the two litigators about whether this will cause the trial to be postponed or not. [ 17 ] On the basis of that passage from the deposition and the two exhibits, the Defendant argues that : 14. […] the Plaintiff’s lawyers are the only ones who are able to testify as to the supposed agreement with the representative of 7779534 Canada Inc. giving an authorization to dispose of the goods and at what costs; 15. It is clear that the attorneys had an active role in the discussions and negotiations regarding the disposal of the goods and, according to Ms.

Pelletier, are knowledgeable about the disposal of the product; 16. In subsequent emails regarding the disposal of the product, Ms. Pelletier contacts the in-house attorneys for directives and advises them that the product will finally be returned to Howlett in November 2015 (Exhibits P-15, P-16); [ 18 ] In fact, the emails in October and November show that the legal department is kept informed by Carolyne Pelletier as to her efforts in disposing of the product.

She is seeking the approval of the legal department for the costs she is planning to incur. [ 19 ] Then, the Defendants examined Mario Roy, a former employee of Traffic Tech, who was asked by the latter to find a way to dispose of the product.

Referring to that examination, the Defendant asserts in the present motion that “it became evident that the in- house attorneys for the Plaintiff were directly involved in the discussions and made the final decision to remit the goods to the possession of Mr Howlett”, who allegedly could bind the Defendant. [ 20 ] The Defendant’s attorneys now wish to examine Maître Hanna and Maître St-Cyr on discovery: 23.

The discovery of the Plaintiff’s attorneys involvement in the present dispute lead the Defendant to believe that Me Anne-Marie Hanna and/or Me Anne-St-Cyr also be called to testify on the question of the disposal of the goods and the costs claimed therefor [sic]. 24.

Seeing as the cost of the storage and subsequent discussions regarding the disposal of the goods are an integral and essential part of the Plaintiff’s claim, essentially representing half of the amount claimed, the Defendant will undoubtedly call upon the Plaintiff’s attorneys as witnesses whose testimony is essential seeing their involvement; [ 21 ] In response to the Motion, the Plaintiff filed an affidavit [1] of Carolyne Pelletier (I-1). In the affidavit, Ms Pelletier states:

4. Il est faux de prétendre que j’aurais, lors de mon interrogatoire, mentionné que je n’avais pas la connaissance des négociations relativement à la disposition des biens; 5. Je me suis personnellement occupée de la disposition des biens, autant au niveau des discussions que des négociations; 6. Tel qu’il appert de l’engagement no. 3 qui réfère à la pièce P-12, c’est M. Martin Simamusa qui m’a personnellement donné l’autorisation de disposer des biens le 5 mai 2015, lequel engagement est joint à la présente déclaration; 7. Il est également faux de prétendre que je n’avais jamais vu les pièces au soutien de la requête introductive d’instance amendée car mis à

part les Pièces P-13 et P-14, soit les correspondances entre les procureurs des parties, j’ai personnellement remis aux procureurs de Traffic Tech les pièces pertinentes au dossier et leur ai relayé les informations pertinentes; 8. Ayant obtenu l’autorisation de disposer des biens de la défenderesse même, j’ai personnellement contacté M.

Mario Roy afin qu’il assiste la demanderesse, lequel a contacté directement le défendeur en garantie afin d’organiser la disposition des biens, le tout tel qu’il appert de la page 45 de mon interrogatoire ayant eu lieu le 14 mars 2016; [ 22 ] The Defendant did not contest the filing of this « Déclaration sous serment » in the context of the Motion, so the Court considers it as part of the material that is relevant to the question at hand. [ 23 ] The email attached to the declaration, the response to undertaking # 3 (P-12) is an exchange between Ms Pelletier and Martin Simamusa.

The essence of the communication is that Ms Pelletier is confirming to Mr Simamusa that: We understand from your email that you have given us the authorization to dispose of the goods in order to mitigate our damages.

The file regarding the outstanding invoices for services rendered will be transferred to our legal department copied on the present. [ 24 ] This email is an important element in the examination, as it tends to show that Ms Pelletier, as opposed her lawyers, is the source of information on this issue of the disposal of the goods and the quantification of the claim. [ 25 ] Mr Roy is part of the process and was a party to the communications by email involving Carolyne Pelletier and Martin Simamusa of which Maître Roch and the Plaintiff’s legal department, referred to as “legal”, received copy.

Whether the lawyers are simply observers or actively involved in the decision-making process is not readily apparent. But, according to what is provided by Ms Pelletier in undertaking #3 and in her sworn statement, she and Mario Roy are communicating directly in the attempts to resolve the issue of the ongoing storage of the goods and the efforts to dispose of them.

ANALYSIS [ 26 ] This disposition of the present Motion depends upon the criteria to be applied to gage the sufficiency of the Defendant’s demonstration that the lawyers they seek to disqualify will be called as witnesses and the degree of importance of their testimony to the case. [ 27 ] The rule is set out in the Code of Ethics of Advocates ,

article 3.05.06: 3.05.06 An advocate shall not personally act in a dispute if he knows or if it is evident that he will be called upon as witness. However, he may accept or continue to act if the fact of not doing so is of a nature to cause serious and irreparable harm to the client, or if his testimony only refers to: (

a) an uncontested matter; (

b) a question of form and where there is no reason to believe that serious proof shall be offered to contradict such testimony; (

c) the nature and value of the professional services he or another person engaging in his activities within the same partnership or joint-stock company have rendered to the client. [ 28 ] The degree of importance of the testimony required is expressed as follows by the Court of appeal in Donohue inc. c. Barvi ltée [2] through Mr Justice J.J. Michel Robert, J.C.A., as he then was: Il ne s’agit pas nécessairement de la pierre angulaire du dossier mais d’un élément important du litige. [ 29 ] In Hornstein c.

Hornstein [3] , Mr Justice Jean-Yves Lalonde used the term “nécessaire” : [23] Le Tribunal ne pourra conclure que le témoignage d’un avocat est « nécessaire » s’il demeure possible de prouver les faits qui sous-tendent son témoignage par d’autres personnes, ou par d’autres documents.

Il importe d’examiner les faits sur lesquels témoignera l’avocat pour vérifier s’ils peuvent faire l’objet d’une admission ou s’ils font l’objet de contradictions dans les procédures. [ 30 ] It is necessary to know something of the issues of the case in order to ascertain whether the testimony is truly required. [ 31 ] The Defendant’s Motion is drafted in a way that is reminiscent of the Mamelonet case [ 4] : [40] Il ne s’agit pas seulement d’un élément important du litige mais d’un élément primordial et le témoignage de Me Gaudreau sera essentiel compte tenu du rôle qu’il a joué dans cette affaire.

En effet, lors de l’interrogatoire du responsable du dossier à la Banque de Montréal, Me Gaudreau déclare à quelques reprises qu’il est plus apte à répondre à certaines questions que monsieur Girard lui-même.

[ 32 ] There is now a codification [5] of the applicable principles in the new Code of Civil Procedure , at

article 193: [193] On a party's application, a lawyer may be declared disqualified to act in a proceeding, as when the lawyer is in a conflict of interest situation and does not take steps to remedy it, has disclosed or is likely to disclose confidential information to another party or a third person, or is called to testify in the proceeding on essential facts.

In the latter case, the lawyer may only be declared disqualified for serious cause. [ 33 ] The words “serious cause” convey the jurisprudential notion of “compelling reasons”. [ 34 ] While the principal that prohibits the confusion of the role of lawyer with that of witness is well established, the right to choose one’s attorney is a fundamental and, in certain aspects, a constitutional right [6] . There must be compelling reasons for a Court to disqualify an attorney that has been freely chosen by a litigant.

In the case of the anticipated testimony of the attorney, the rule is that the Court will not disqualify an attorney, unless it is necessary for the attorney to testify on a significant or important issue of the case. [ 35 ] Whether this is the case here depends upon the purpose for which the lawyers’ testimony is contemplated. [ 36 ] It was difficult for the Defendant’s counsel to articulate the precise purpose of the lawyers’ anticipated testimony, partly because the Defendant has not yet had the opportunity to examine them. [ 37 ] In the present case, because of the way in which issue will be joined, it is the Plaintiff who will have the burden of proving that an authorization was given. [ 38 ] Since Ms Pelletier, in her initial testimony on discovery, seemed to hesitate and referred to the attorneys as having carried out certain communications, one gains the impression that the Plaintiff, not the Defendant, may need to rely upon the attorneys’ testimony to establish the authorization that the Plaintiff is alleging. [ 39 ] The attorneys present at the hearing, however, confirmed to the Court that they have no intention of testifying in the file, and that they will rely exclusively upon the testimony of Ms Pelletier and Mr Roy to make the case on behalf of their client. [ 40 ] While the Defendant perhaps would like to know, through the discovery process, how likely it is that the Plaintiff will be able to prove that allegation, if the Plaintiff chooses not to have the lawyers testify, then it will not be necessary for the Defendant to meet that testimony with contrary evidence, and therefore not necessary to know exactly what the attorneys would say if they were to testify. [ 41 ] The Defence will be relying upon the fact that the individual or individuals who allegedly gave the authorization on the Defendant’s behalf, in fact had no real authority to do so.

If they are successful in demonstrating that fact, then the application of the indoor management rule or of the doctrine of apparent authority will depend upon the Plaintiff’s ability to prove that the Defendant did something to make it appear that certain individuals had authority, even if they did not.

This may involve aspects of the individuals’ behaviour or status as revealed in their communications with the Plaintiff’s representatives. [ 42 ] It is certainly not crucial to know what the attorneys would say about their own knowledge or communications on this point if their own client accepts their decision, in their presentation of the case, not to call themselves as witnesses. [ 43 ] The Defendant has not established that their presence would be necessary as witnesses for the Defence.

The sworn declaration of Ms Pelletier is an assertion that she is aware of the facts that the Plaintiff wishes to prove and will testify to them, without the need for the lawyers to be involved as witnesses. [ 44 ] It would be different if the Defendant was alleging that it had something essential to prove in connection with its defence and could only prove it through these witnesses. [ 45 ] While the issue of authorization or the lack thereof may be essential to the case, the Defendant has not demonstrated that opposing counsel’s testimony is necessary for its defence bearing on that issue. [ 46 ] Though the Court is of the view that the Defendant has not established that the Plaintiff’s lawyers will be called as witnesses on essential facts, the present motion was not perceived as being dilatory or obstructive as suggested the Plaintiff’s lawyer in argument.

The issue was debated loyally by both opponents. FOR THESE REASONS, THE COURT: DISMISES the Motion for the disqualification of the Plaintiff’s attorneys; Legal costs to follow suit. __________________________________ DAVID L. CAMERON, J.C.Q. Me Annie St-Cyr Me Anne-Marie Hanna TRAFFIC TECH INC. Attorneys for the Plaintiff

Me Serena Trifino COLBY MONET Attorneys for the Defendant 7779534 Canada Inc. Mr Sean Howlett Defendant in warranty Date of hearing: May 18, 2016