R. v. Clarke, 2012 NSSC 406

SUPREME COURT OF NOVA SCOTIA Citation: R. v. Clarke, 2012 NSSC 406 Date: 20121122 Docket : CRH 346068 Registry: Halifax BETWEEN: Her Majesty the Queen Applicant - and - Bruce Elliott Clarke, Robert Blois Colpitts and Daniel Frederick Potter Respondents - and - Borden Ladner Gervais and Norton Rose Canada LLP Intervenors D E C I S I O N Judge: The Honourable Justice Suzanne M. Hood Heard: August 20, 2012 Written Decision: November 22, 2012 Counsel: James C. Martin, Q.C., Mark Covan and Scott Miller for the Crown/Applicant Craig M. Garson, Q.C. for R. Blois Colpitts Mark Knox for Bruce Elliott Clarke Daniel F.

Potter, self-represented James Douglas and Tyler Hodgson for Borden, Ladner Gervais (Intervenor) William L. Mahody for Norton Rose (Intervenor) By the Court :

By the Court : [ 1 ] The Crown has given Notice of Motion to remove Tyler Hodgson and Borden Ladner Gervais as counsel for R. Blois Colpitts because of a conflict of interest. The grounds for the motion are: “1. The three Respondents are jointly charged on an Indictment dated March 17, 2012 (sic 2011) , for conspiracy to defraud by unlawfully affecting the market price of the shares Knowledge House Incorporated, and other related charges; 2. There is a realistic risk that the fair trial protection afforded the Respondents under s. 11(

d) of the Canadian Charter of Rights and Freedoms will be infringed due to the conflict of interest or potential conflict of interest arising from the representation of the Respondent, Robert Blois Colpitts by Tyler Hodgson and the law firm of Borden Ladner Gervais, on the said Indictment; 3. Tyler Hodgson, and the lawyers in the law firm Borden Ladner Gervais are in a conflict of interest or a potential conflict of interest due to the representation by James Hodgson of National Bank Financial Limited, a party adverse in interests to all three accused in this matter; 4.

Given the realistic risk of a conflicting interest, respect for the integrity of the criminal justice system requires that Tyler Hodgson and the law firm of Bordon Ladner Gervais be prohibited from acting on behalf of Robert Blois Colpitts, or any other defendant, on this Indictment.” ISSUE [ 2 ] Should Tyler Hodgson and/or Borden Ladner Gervais be removed as counsel for R. Blois Colpitts? FACTS [ 3 ] R. Blois Colpitts ( “ Colpitts ” ) is charged in an Indictment with Bruce Elliott Clarke ( “ Clarke ’ ), and Daniel Frederick Potter ( “ Potter ” ). In

summary, the Indictment states that: 1. They conspired to affect the public market price of shares of Knowledge House Incorporated ( “ KHI ” ) with intent to defraud; 2. They affected the public market price of KHI with intent to defraud.; 3. They defrauded the public with respect to the market for shares of KHI. 4. They defrauded persons known and unknown in respect of the market for shares of KHI; and 5.

Bruce Elliott Clarke defrauded the United Brotherhood of Carpenters and Joiners of America Benefits Trust Fund. [ 4 ] An Agreed Statement of Facts was entered with consent of the Crown by Craig Garson, Q.C., counsel for Colpitts on this application. It provides: 1. Borden Ladner Gervais LLP (“BLG”) was first retained by Robert Blois Colpitts (“Colpitts”) in or about October, 2003, to represent him in an action commenced by National Bank Financial Ltd. (“NBFL”) arising out of the collapse of Knowledge House Inc. (“KHI”)

2. Since October, 2003, BLG has represented Colpitts in multiple civil actions and regulatory proceedings arising out of the collapse of KHI. Most recently, BLG was retained by Colpitts in the summer of 2011 to represent him in relation to criminal charges brought pursuant to an Indictment dated March 17, 2011. 3. On or about May 22, 2009, Colpitts entered into a settlement agreement with NBFL, pursuant to which NBFL agreed to dismiss all claims against him. By September, 2010, Colpitts had ceased to be a party to any civil or regulatory proceedings relating to the collapse of KHI. 4.

Tyler Hodgson joined BLG on March 23, 2009. Prior to joining BLG, Tyler Hodgson had spent three years working in Dubai, United Arab Emirates. Tyler Hodgson was not personally involved in BLG’s representation of Colpitts in any of the civil or regulatory proceedings referred to in paragraph 3 above. 5. Tyler Hodgson does not reside with his father, James Hodgson. 6.

Colpitts has paid BLG over $310,000 to represent him on these charges (excluding its work on the instant motion). [ 5 ] The facts surrounding the collapse of KHI and the resulting civil litigation and regulatory hearings have been referred to in many decisions in the civil litigation. The Crown has quoted the history set out in the decision of Warner, J. in NBFL v. Potter , 2011 NSSC 407 .

To put this matter in context, it is useful to refer to this history briefly, from that decision: 2 In 2001, Knowledge House Inc. (“KHI”), a publicly traded technology company, collapsed, when National Bank Financial Limited called in margin accounts secured in part by KHI shares. Twenty-six civil actions, involving more than fifty-four sets of related parties, ensued. 3 The first sixteen actions were commenced by NBFL in or about September 2001 for debts arising from margin accounts secured by KHI shares. They were straight-forward actions claiming debit balances.

In February 2002, the sixteen actions were consolidated into one (“ Debt Action ”). 4 In his October 2001 defence, Daniel Potter (“Potter”), one of the Debt Action defendants as well as President of KHI, alleged that NBFL was negligent and breached its duties to the defendants by the manner in which it called in the margin accounts.

He counterclaimed for his losses. 5 On the same day, Calvin Wadden (“Wadden”) filed a defence alleging that Bruce Clarke (“Clarke”), a broker employed by NBFL, and NBFL, had been negligent, and breached NBFL’s contractual and fiduciary duties to him, by manipulative trading of KHI shares, which he claimed led to KHI’s collapse. Alternatively, Clarke, Potter, and Blois Colpitts (“Colpitts”), KHI’s legal counsel, had participated in a scheme to manipulate trading in KHI shares, leading to KHI’s collapse.

Wadden counterclaimed for his losses. 6 Other defendants filed similar defences and counterclaims. 7 Based on documents received from Wadden, and its own “independent” investigation, in August 2003, NBFL commenced a new action, since called the “ Main Action ”, against several persons involved with KHI alleging a scheme to manipulate the market price of the shares of KHI, and claiming damages for its margin account losses.

While Wadden’s stock manipulation scheme allegations were restricted to Clarke, Potter and Colpitts, NBFL alleged much broader membership in the conspiracy – ten individuals, nine corporations, and a law firm. NBFL alleged that Clarke was “on a lark of his own” in respect of this scheme and NBFL was not liable either vicariously for Clarke’s actions, nor, in negligence or for breach of contract or fiduciary duties, for its own actions.

8 The Main Action lead to further claims, crossclaims, counterclaims and third party claims as well a further actions. 9 As of 2007, more than 54 groups of related persons and corporations were named in more than 11 actions. Between September2009 and October 2010, the number of parties and actions declined, as a result of settlements, to nine groups in seven actions. [6] By the time the civil trial began, there were “five actions involving six groups of related parties” (para. 11 of the decision). These included National Bank Financial Limited (“NBFL”).

The actions involving the three accused persons had been resolved, theaction involving Colpitts settling in May 2009. [7] Only Potter of the three co-accused was sued in the Debt Action. He counterclaimed against NBFL. In the Main Action,all three co-accused were sued by NBFL in August 2003. Since approximately 2005, James Hodgson has represented NBFL. He wasretained by NBFL after its previous counsel were disqualified. [8] On March 17, 2011, the Crown preferred the Indictment referred to above. In August 2011, James Douglas and TylerHodgson advised the Crown they were representing Colpitts.

This application was brought by the Crown on February 17, 2012. [9] In an earlier hearing on June 7, 2012, I granted leave to Borden Ladner Gervais (“BLG”) and Norton Rose to intervene. The decision in that matter is 2012 NSSC 243. As Norton Rose’s counsel pointed out, its sole purpose for participating is to ensure thatany allegations against the firm of Norton Rose or James Hodgson can be answered. It says there is no need for any findings to be madewith respect to James Hodgson’s ethical conduct. His client is not a party to this proceeding nor, of course, is he or Norton Rose. Iagree.

The only reference to James Hodgson will be in reference to the fact of his son being counsel to Colpitts and to the fact that he hasrepresented NBFL since 2005 in the KHI civil matters. [10] The civil trial involving NBFL has concluded and a decision has been reserved. Daniel Potter in his Affidavit filed on thisapplication included a copy of NBFL’s 133 page written closing submissions dated May 17, 2012. Those submissions were signed byJames Hodgson, Robert E. Blair (both of the firm of Norton Rose Canada LLP) and David G. Coles, Q.C. In paragraph 7, they say: 7.

NBFL submits (for the reasons set out in more detail in this argument) that the plaintiffs have failed to prove that the market priceof KHI’s stock was manipulated. However, if the Court should find otherwise, NBFL submits damages cannot be assessed on the basisthat the various plaintiffs are entitled to take advantage of artificial price. Introduction to Analysis [11] Counsel may be ordered to be removed from a proceeding where there is a conflict of interest.

Conflicts of interest can arisewhere there is a breach of a duty of confidentiality; where there is a breach of the duty of loyalty; where there is a risk of trial unfairness;where the integrity of the justice system is at risk; or where there is a public perception that the administration of justice would bebrought into disrepute. [12] An accused person’s right to have counsel of his or her choice has long been considered to be an important right.

However, itis a right which must be balanced against the potential or reality of a conflict of interest. [13] The leading case on conflict of interest is MacDonald Estate v. Martin, (SCC), [1990] S.C.J. No. 41 (alsoknown as Martin v. Gray). The facts are very different from those in this case. The key differences are that it dealt with the mobility oflawyers within the profession and there was a live issue about use or misuse of confidential information. In that context, Sopinka, J.stated the test in paragraph 44 as:

44. ... Since, however, it is not susceptible of proof, the test must be such that the public represented by the reasonably informedperson would be satisfied that no use of confidential information would occur. [14] In paragraph 45, he said: 45 Typically, these cases require two questions to be answered:

(1) Did the lawyer receive confidential information attributable to asolicitor 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? [15] In subsequent cases, the courts have struggled to apply those principles in circumstances where the conflict of interest issue isa very different one.

The “Ethics Codes” [16] Counsel have provided a number of what I will refer to as “Ethics Codes.” These include: - the previous Nova Scotia Barristers’ Society Legal Ethics Handbook which was in effect until January 1, 2012; - its replacement, The Nova Scotia Barristers’ Society Code of Professional Conduct which took effect on January 1, 2012 and wasamended in July 2012; - the Federation of Law Societies of Canada Model Code of Professional Conduct as amended December 13, 2011; - the Law Society of Alberta Code of Conduct, 2011 version; - the American Bar Association Model Rules of Professional Conduct; - the Canadian Bar Association Code of ProfessionalConduct. [17] In Montreal Trust Co. of Canada v.

Basinview Village Ltd., 1995 NSCA 131 , [1995] N.S.J. 295 (N.S.C.A.)],Bateman, J.A., in paragraph 35, referred to Martin v. Gray: 35. As to such statements by professional associations, Sopinka, J. says at p. 11: ... an expression of a professional standard in a code of ethics relating to a matter before the court should be considered an importantstatement of public policy. [18] She continued in paragraph 36: 36. While not binding on the Court, such pronouncements should not be lightly disregarded. Care must be taken, however, to ensurethat such statements of principle be applied by a Court with some restraint.

A litigant should not be deprived of counsel of choice save inclear circumstances. [19] The Legal Ethics Handbook was in effect when Colpitts retained BLG.

Chapter 7, Conflict of Interest Between Lawyerand Client, provides in the Rule: (

a) A lawyer has a duty not to act for a client when the interests of the client and the personal interests of the lawyer or, to hisknowledge, the interests of an associate of the lawyer, as defined by the Guiding Principles are in conflict.

[ 20 ] “ Associate ” is referred to under the Guiding Principles where it provides: For the purposes of this Rule, an associate of a lawyer includes ... (

c) the lawyer’s child; (

d) a relative of the lawyer or the lawyer’s spouse where the relative resides with the lawyer; ... [ 21 ] The current Code of Professional Conduct in 2.04(1) provides: 2.04

(1) A lawyer must not act or continue to act for a client where there is a conflict of interest, except as permitted under this Code. [ 22 ] Conflict of interest is defined as follows: A ‘conflict of interest’ means the existence of a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected by the lawyer’s own interest or the lawyer’s duties to another client, a former client, or a third person. In the Commentary to Rule 2.04(1), the Code states: ...

The risk must be more than a mere possibility; there must be a genuine, serious risk to the duty of loyalty or to client representation arising from the retainer. A client’s interests may be seriously prejudiced unless the lawyer’s judgment and freedom of action on the client’s behalf are as free as possible from conflicts of interest. [ 23 ] In the same Commentary, under the heading “ The fiduciary relationship, the duty of loyalty and conflicting interests ” , the Code provides: The value of an independent bar is diminished unless the lawyer is free from conflicts of interest.

The rule governing conflicts of interest is founded in the duty of loyalty which is grounded in the law governing fiduciaries. The lawyer-client relationship is a fiduciary relationship and as such, the lawyer has a duty of loyalty to the client. To maintain public confidence in the integrity of the legal profession and the administration of justice, in which lawyers play a key role, it is essential that lawyers respect the duty of loyalty.

Arising from the duty of loyalty are other duties, such as a duty to commit to the client’s cause, the duty of confidentiality, the duty of candour and the duty not to act in a conflict of interest. This obligation is premised on an established or ongoing lawyer client relationship in which the client must be assured of the lawyer’s undivided loyalty, free from any material impairment of the lawyer and client relationship. ... Accordingly, factors for the lawyer’s consideration in determining whether a conflict of interest exists include:

• the immediacy of the legal interests; • whether the legal interests are directly adverse; • whether the issue is substantive or procedural; • the temporal relationship between the matters; • the significance of the issue to the immediate and long-term interests of the clients involved; and • the clients’ reasonable expectations in retaining the lawyer for the particular matter or representation. [ 24 ] Under the heading “ Examples of areas where conflicts of interest may occur ” , one example is: 3.

A lawyer, an associate, a law partner or a family member has a personal financial interest in a client’s affairs or in a matter in which the lawyer is requested to act for a client, such as a partnership interest in some joint business venture with a client. [ 25 ] The CBA Code provides in

Chapter VI Conflict of Interest Between Lawyer and Client the following RULE: 1. Except after adequate disclosure to and with the consent of the client, preferably after receiving independent legal advice, the lawyer shall not act for the client where the personal interests of the lawyer, or a partner or associate of the lawyer, give rise to a substantial risk of material and adverse effect on representation of the client by the lawyer. [ 26 ] In the “ Guiding Principles ” , the CBA Code provides: 2. A lawyer’s personal interests may include having a personal or professional relationship with an adverse party.

This will be a conflicting interest when the interest in the relationship with the adverse party conflicts with the duty of zealous representation owed to the lawyer’s client and gives rise to a substantial risk of material and adverse effect on representation of the client by the lawyer. [ 27 ] In the Commentaries, the CBA Code provides: 4. This Rule applies also to situations involving associates of the lawyer.

Associates of the lawyer within the meaning of the Rule include the lawyer’s spouse, children, any relative of the lawyer (or of the lawyer’s spouse) living under the same roof, any partner or associate of the lawyer in the practice of law, a trust or estate in which the lawyer has a substantial beneficial interest or for which the lawyer acts as a trustee or in a similar capacity, and a corporation of which the lawyer is a director or in which the lawyer or an associate owns or controls, directly or indirectly, a significant number of shares. [ 28 ] The Law Society of Alberta Code of Conduct provides in paragraph 2.04(8)(a): 2.04(8) (

a) A lawyer must not personally represent a party to a dispute when a related person is acting for an opposing party. [ 29 ] In the commentary, “ Related person ” is defined as:

... the spouse, child, sibling, parent, grandchild or grandparent of a lawyer, and any person who is a member of the lawyer’s household. ... A close familial relationship is inconsistent with the adversarial nature of legal representation in a dispute, the meaning of which is discussed in the commentary to Rule 2.04(1).

In contrast, the absence of a dispute may permit related lawyers to act provided that Rule 2.04(10) does not apply. ... [ 30 ] Rule 2.04(10) provides: A lawyer must not act personally in a matter when the lawyer’s objectivity is impaired to the extent that the lawyer would be unable to properly and competently carry out the representation. [ 31 ] The Commentary on that Rule states: The two preceding commentaries refer to situations in which a lawyer’s professional objectivity in a matter may be threatened or destroyed by circumstances personal to the lawyer, such as a family or other close relationship; an outside activity, a financial interest; or a strong belief or viewpoint.

Another example is a mental state created or exacerbated by a particular representation, such as feelings of enmity towards a colleague acting for an opposing party. [ 32 ] Rule 2.04(9) provides: 2.04(9) A lawyer must not act when there is a conflict or potential conflict between lawyer and client unless the client consents and it is in the client’s best interests that the lawyer so act. [ 33 ] The Commentary to that Rule states: A lawyer may have a loyalty, financial interest, personal belief or outside activity that is or may potentially be in conflict with a client interest.

If this situation would materially impair the lawyer’s ability to carry out the representation properly and competently, the lawyer may not act. (See Rule 2.04(10)). [ 34 ] The ABA Model Rules of Professional Conduct under the heading “ Client- Lawyer Relationship ” state in Rule 1.7: (

a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. [ 35 ] In the commentary to the Rule, it states:

(11) When lawyers representing different clients in the same matter or in substantially related matters are closely related by blood ormarriage, there may be a significant risk that client confidences will be revealed and that the lawyer’s family relationship will interferewith both loyalty and independent professional judgment. ... ANALYSIS General [36] The Crown cites a seventeen year old Ontario Appeal decision dealing with a lawyer representing two co-accused in a sexualassault trial where both were convicted.

The Crown says it is authority for the proposition that, in this case, the court should speculateabout possible issues that might arise at trial. [37] However, in R. v. Widdifield, (ON CA), [1995] O.J. No. 2383 (Ont. C.A.), Doherty J.A. limited hiscomments about speculating to issues which might arise in a situation where counsel is acting for co-accused. In paragraph 33, he madethat comment on two occasions in that context. He said: 33 ... Where the issue is raised at trial, the court must be concerned with actual conflicts of interests and potential conflicts that maydevelop as the trial unfolds.

In deciding whether counsel should be permitted to act for co-accused, trial judges must, to some degree,speculate as to the issues which may arise and the course the trial will take. The trial judges’ task is particularly difficult since theycannot be privy to the confidential discussions which may have passed between the clients and counsel and which may reveal the sourceof potential conflicts. Given these circumstances, trial judges must proceed with caution and when there is any realistic risk of a conflictof interests they must direct that counsel not act for one or perhaps either accused.

In the end result, the Court of Appeal dismissed the appeals from conviction. Doherty, J.A. referred to the confidential informationwhich may have passed from each to their counsel. He also used the phrase “realistic risk.” [38] In an earlier decision, Re Regina and Speid, (ON CA), [1983] O.J. 3198 (Ont. C.A.), the court upheld thetrial judge’s disqualification of counsel. Speid was charged with second degree murder in the death of the infant daughter of hiscommon-law partner. Originally, the common-law partner, Nugent, had been charged with the murder and had retained counsel.

Nugentsubsequently retained new counsel and entered a guilty plea to manslaughter. Speid retained the partner of Nugent’s former counsel. Dubin, J.A. said in paragraph. 11: 11 It was well known to Mr. Speid and Mr. Pinkofsky that Miss Nugent would be the principal Crown witness, and when it waslearned that Mr. Pinkofsky was prepared to take an adversarial position against his former client with respect to the very subject-matterof his earlier retainer, Miss Nugent’s solicitor courteously wrote to Mr.

Pinkofsky, drew attention to his conflict of interest and made itclear that Miss Nugent objected to him now acting for Mr. Speid, all to no avail. [39] He continued in paragraphs. 15 and 16: 15 A client has a right to professional services. Miss Nugent had that right as well as Mr. Speid. It was fundamental to her rights thather solicitor respect her confidences and that he exhibit loyalty to her. A client has every right to be confident that the solicitor retainedwill not subsequently take an adversarial position against the client with respect to the same subject-matter that he was retained on.

Thatfiduciary duty, as I have noted, is not terminated when the services rendered have been completed. 16 Mr. Speid has a right to counsel. He has a right to professional advice, but he has no right to counsel who, by accepting the brief,cannot act professionally. A lawyer cannot accept a brief if, by doing so, he cannot act professionally, and if a lawyer so acts, the clientis denied professional services.

[40] He concluded in paragraph 26: 26 The disqualification of the solicitor of record in this case vindicated a former client’s trust in and reliance on her solicitor. Such anorder promotes the use of the legal system for the adjudication of disputes by upholding the dignity of the legal profession. [41] In R. v. Parsons (NL CA), [1992] N.J. No. 97 (Nfld. Sup. Ct. - Court of Appeal), the court refused tooverturn a decision declining to remove counsel. In that case, the Crown applied to have counsel removed “... because the accused’sfather was intended to be called as a Crown witness and Mr.

Simmonds [counsel for the accused] had earlier represented him in a disputewith the deceased . . .” Marshall, J.A. writing for the Court said, at p. 5 of 6: ... With respect the Crown’s position appears to be founded upon conjecture and assumption - both as to the presence of a conflict and toa new trial resulting from accused’s counsel continuing to act in the matter. As already indicated, while conflict of interest concernsarise from possibilities, there has to be some reasonable basis upon which the possibility is constructed.

It cannot rest, as here, solelyupon the accused’s counsel’s former representation of the Crown witness in an unrelated matter. [42] Marshall, J.A. was concerned with “possibilities”, not “conjecture and assumptions.” He also noted the matter was an“unrelated” one. [43] In R. v. Con-Drain Co. (1983), 2008 ONCJ 114, Armstrong, J. ordered counsel to be removed as counsel for the companywhere he had previously represented a co-accused individual employee facing charges arising from the same incident.

The co-accused’scharges were stayed and he would now be a Crown witness. [44] Armstrong, J. quoted Widdifield, supra, with respect to loyalty and effective assistance of counsel but set out his reasoningwith respect to the nature of the evidence of a conflict of interest. He said in paragraphs. 37-39: 37 Where a conflict of interest is alleged, a trial judge must be concerned with actual conflicts of interest and potential conflicts thatmay develop as the trial unfolds.

In deciding whether counsel should be permitted to act for co-accused, trial judges must to somedegree speculate as to the issues that may arise and the course the trial will take.

This task is particularly difficult because judges cannotbe privy to all the information bearing on these issues. (emphasis in original) 38 However, the test for removal of counsel because of a conflict is well settled: if there is any realistic risk of a conflict of interestsemerging at trial arising from the joint or successive representation of two accused by one counsel, the lawyer must [sic] prohibited fromacting for one or both for the accused: see R. v..

W. (W), supra at 238. 39 It seems that ‘any realistic risk of conflict of interest’ means a potential for conflict based on an evidentiary foundation from whichrisk can reasonably be said to flow. It would appear that any conflict-of-interest scenario that could reasonably occur at trial will besufficient to require the removal of counsel: see Proulx and Layton, op. cit., at p. 295. He concluded there must be a realistic and reasonable risk based upon an evidentiary foundation. This too was a case where counselrepresented two co-accused. [45] In R. v. Spence [1996] O.J. No. 3134 (Ont.

Ct. of Justice, Provincial Division), Fairgrieve, Prov. J. quoted Speid and Martinv. Gray. He concluded the two cases in question before him were unrelated. Spence’s counsel had previously, on one occasion, actedfor a Crown witness on drug charges to which he entered a guilty plea and he acted for him at the sentencing on those charges. [46] In considering whether Spence’s counsel should be removed at the Crown’s request, Fairgrieve, Prov. J. said at paragraph 15:

15 Whether ‘compelling reasons’ to find a disqualifying conflict of interest exist, then, will require an assessment of all thecircumstances, among which the most important will be whether waivers by both the former and present client have been obtained, theconnection, if any, between the matters which were the subject of the two retainers, and whether the court is satisfied that there will beno unfair or improper use (however defined) of the information previously imparted in confidence. [47] He concluded in paragraph 20: 20 ...

While I would not criticize anyone for raising such concerns, motivated as it was by propriety, I think the circumstances herefall well short of the ‘compelling reasons’ that could justify the court’s interference with Mr. Spence’s right to be represented by thecounsel of his choice. [48] In paragraph 23, he quoted from R. v. Marr, (BC SC), [1992] B.C.J. No. 1782, (B.C.S.C., August 20,1992,) where Fraser, J. said: The mere speculative possibility that a solicitor has some knowledge should not act as an automatic bar to his or her acting.

Theextraordinary and drastic remedy of depriving an accused of the services of counsel of choice must be based on an apprehension of ‘realmischief’. ... The scenario put forward by the Crown as justifying the disqualification of Mr. Bolton strikes me as both unlikely and peripheral. [49] In paragraph 26, he concluded that there was no evidentiary basis upon which to conclude there were compelling reasons tointerfere with Spence’s choice of counsel. [50] While it is true that the Court must speculate about the issues that could arise at trial, the court must assess the risk ofsomething occurring.

The level to which that risk must be elevated to justify the court’s interference with a client’s choice of counsel hasbeen described in the Nova Scotia Code and others as “a substantial risk” that representation will be “materially and adversely affected.” The Commentary to the Nova Scotia Code says there must be a “genuine serious risk.” It does not have to be certain or even probable butmust be more than a mere possibility. [51] The risk of a conflict of interest occurring is much greater on its face when counsel represents co-accused.

In thosesituations, there is a risk involving confidential information. [52] The Courts have stressed that there must be more than conjecture or assumptions about the reasonable risk of a conflict ofinterest arising. An “unlikely or peripheral” scenario is not sufficient. When the situations do not involve co-accused, the matters mustbe related and there must be a significant risk that the conflict of interest will have a material effect upon the lawyer’s representation ofthe client. [53] There must be an evidentiary foundation to conclude the risk rises to the level that counsel must be removed.

There must becompelling reasons to do so. Confidentiality

[ 54 ] The Crown on page 1 of its written submissions says there is no evidence that there has been a breach of confidentiality. There are no case authorities about conflicts of interest in instances where father and son represent different parties. However, there have been several where the alleged conflict of interest involved husband and wife who are lawyers and one where the lawyers were in what the court referred to as an important romantic relationship. [ 55 ] Although the “ Ethics Codes ” are not law, the courts have said they should be considered but applied with “ some restraint ” ( Montreal Trust ).

The Codes set out the standards by which the legal profession governs itself. They are an important statement of public policy. [ 56 ] The Nova Scotia Ethics Handbook, in effect until January 2012, did not include “ parent ” of a lawyer within the definition of associate unless the parent and the lawyer resided together.

There is no dispute in this case that Tyler Hodgson and James Hodgson do not reside together and have not done so for many years. [ 57 ] The Handbook did refer to “ child ” as an associate but, in this case, the issue is whether Tyler Hodgson has a conflict of interest because of his father ’ s representation of NBFL. In that context, Tyler Hodgson did not have “ a conflicting interest with an associate ” because a parent is not a defined associate. [ 58 ] The current Nova Scotia Code defines “ associate ” narrowly and focuses on the issue of loyalty which will be dealt with hereinafter.

The Nova Scotia Code mirrors the FLSC Code . [ 59 ] The CBA Code refers to a partner or associate of the lawyer in

chapter VI in much the same way as the Nova Scotia Handbook (Commentary 4). [ 60 ] The Alberta Code includes both parent and child within the definition of “ related person. ” That Code, of course, does not apply in Nova Scotia but it is also couched in terms of a “ dispute. ” I will deal with the issue of “ dispute ” or “ related matters ” hereinafter. [ 61 ] The ABA Commentary, quoted above, says there may be a significant risk of breaches of confidentiality.

That is not the law in Canada and authorities to that effect follow. [ 62 ] I give greater consideration to the previous and current Nova Scotia Codes than to the others to which I have referred. However, these Codes cannot be a substitute for the court ’ s determination of whether a conflict of interest exists.

The other Codes provide some useful information about how other bodies have dealt with issues of confidentiality but are of rather limited assistance. [ 63 ] In Down (Re), 1999 Can LII 5781 (BCSC) , a bankruptcy case, the husband was one of the counsel for the petitioning creditors and the wife was on the counsel team representing the Interim Receiver.

The allegation was that there would be a perception that confidential information would be passed between husband and wife. [ 64 ] The court referred to the lawyer ’ s duty to keep client information confidential saying in paragraph 15: [15] A lawyer who has confidential information about a client must not disclose that information to anyone outside the firm whether he or she is married to that other person or not.

If a lawyer is married, she or he is no more permitted to disclose confidential information to a spouse because that spouse happens to be a lawyer then she or he would be if a spouse was a member of any profession or of no profession. It does not follow, in my view, that it is likely a lawyer will breach his or her duty of confidentiality simply because he or she marries a lawyer.

[ 65 ] Williamson, J. continued in paragraphs 28 and 29: [28] I find that the reasonably informed person would be satisfied that a lawyer who marries another lawyer will observe fundamental duties of the profession such as the keeping of clients’ confidences. Absent an inference marriage would lead to a breach of that duty, and absent any evidence of actual wrongdoing, undertakings by counsel that confidential information will not be disclosed are sufficient. [29] In the result, I conclude: (

a) there is no presumption that a lawyer who marries another lawyer will breach fundamental professional duties and disclose confidential information to a spouse; and (

b) absent that presumption, disclosure of the marital relationship to affected parties together with an undertaking or affidavit deposing that no confidential information will be exchanged is sufficient to address the concerns underlying the test articulated in Martin . [ 66 ] In Grabber Industrial Products Central Ltd. v. Stewart & Co. , 2000 BCCA 206 , the court dealt with a conflict of interest issue involving husband and wife lawyers.

The petitioners alleged that there would be a strong inference that confidential information would be shared between husband and wife in different firms, the same inference that Sopinka, J. drew in Martin v. Gray , with respect to lawyers who work together. Finch, J.A. did not agree, referring to the lawyer ’ s duty not to disclose confidential information to anyone without the client ’ s authorization. He also referred to the lawyer ’ s duty of loyalty to the client. He then said in paragraph 29: 29 ... The lawyers who are married are not directly involved in the litigation.

There is actual evidence that no confidential information was shared between the parties. [ 67 ] In M. (B.), Re , 2009 CarswellAlta. 129 (Prov. Ct.) , the court dealt with an alleged conflict of interest involving husband and wife. In that case, the wife was a family law practitioner and the husband was the head of the department that acted in child protection matters. The wife was retained by a father in a permanent guardianship hearing. The mother objected to the father ’ s lawyer acting because she believed there was a conflict of interest. The court quoted extensively from Martin v.

Gray, supra, and also referred to Grabber and Down . The court concluded there was no evidence of confidential information having been passed. The court also considered the steps that were taken by the department to ensure the husband was not involved in matters where his wife was opposing counsel. The court also gave consideration to the father ’ s right to counsel of choice. [ 68 ] Where there was an “ important romantic relationship ” between two lawyers, Perkins, J. did not presume that confidential information would be transferred (para. 20 of Bocher v. Bocher, [1999] O.J. No. 4742 (Ont.

S.C.J., Family Court) . [ 69 ] Husband and wife living in the same household are not to be presumed to breach their duty of confidentiality nor are two lawyers not living together but in a relationship. In my view, the presumption should apply as well to father and son, when they do not live in the same household. In this case, the father and son have not done so since long before the KHI civil litigation or this criminal proceeding commenced. [ 70 ] I therefore do not conclude there has been, or that there is, a potential for a breach of confidentiality.

Accordingly, there is no conflict of interest or potential conflict of interest arising from this.

Duty of Loyalty [71] The Crown says there may be a breach of Tyler Hodgson’s duty of loyalty to Colpitts because of his father’s representation ofNBFL in the civil litigation surrounding KHI. The Crown says this is a conflict of interest or a potential conflict of interest. The EthicsCodes to which I have referred emphasize the importance of a lawyer’s duty of loyalty to a client. [72] In R. v.

Neil, 2002 SCC 70, the Supreme Court of Canada considered the conflicting duties of loyalty to two firm clients, oneof whom was the accused. [73] In paragraph 12, Binnie, J. quoted from the address of counsel in an 1871 trial where Henry Brougham said: 12 [A]n advocate, in the discharge of his duty, knows but one person in all the world, and that person is his client.

To save that clientby all means and expedients, and at all hazards and costs to other persons, and, among them, to himself, is his first and only duty; and inperforming this duty he must not regard the alarm, the torments, the destruction which he may bring upon others ... [74] Binnie, J. then continued in that paragraph: These words are far removed in time and place from the legal world in which the Venkatraman law firm carried on its practice, but thedefining principle - the duty of loyalty - is with us still. [75] Binnie, J. made the point that conflicts of interest do not always involve confidential information.

He said in paragraph 17,citing Montreal Trust, supra: 17. While the Court is most often preoccupied with uses and abuses of confidential information in cases where it is sought todisqualify a lawyer from further acting in a matter, as in MacDonald Estate, supra, the duty of loyalty to current clients includes a muchbroader principle of avoidance of conflicts of interest, in which confidential information may or may not play a role: Montreal Trust Co.Of Canada v. Basinview Village Ltd. (1995), 1995 NSCA 131 , 142 N.S.R. (2d) 337 (C.A.) ... [76] In paragraph 26, he quoted Wilson, J.A. (as she then was) in Davey v.

Woolley, Hames, Dale & Dingwall, (1982), (ON CA), 35 O.R. (2d) 599 (Ont. C.A.), where she said: The underlying premise ... is that, human nature being what it is, the solicitor cannot give his exclusive, undivided attention to theinterests of his client if he is torn between his client’s interests and his own or his client’s interests and those of another client to whomhe owes the self-same duty of loyalty, dedication and good faith. [77] In Con-Drain, supra, Armstrong, J. had this to say with respect to the duty of loyalty at paragraph. 34, citing R. v.

Neil: 34 The fiduciary relationship between lawyer and client imposes duties on the lawyer beyond the duty not to disclose confidentialinformation. It includes a duty of loyalty and good faith and a duty not to act against the interests of the client. As already noted, theduty of confidentiality is one aspect of the broad duty of loyalty.

Others include the duty to avoid conflicting interests; the duty ofcommitment to the client’s cause so as to ensure that a divided loyalty ‘does not cause the lawyer to ‘soft peddle’ his or her defence outof concern for another client’; and the duty of candour with the client on matters relevant to the retainer to ensure that if a conflictemerges, the client is among the first to hear about it: see R. v. Neil, supra at paras. 17-19. [78] In R. v. Silvini (ON CA), [1991] O.J. No. 1931 (Ont. C.A.), the issue was the balancing of the right to

counsel of choice against the duty of loyalty and the effective assistance of counsel. Lacourciere, J.A. said in paragraph 11: 11 It is generally recognized that a lawyer representing more than one accused in a joint criminal trial is potentially in a position of conflict. ... [ 79 ] He quoted from Holloway v.

Arkansas , 98 S.Ct. 1173 (1978) at p. 1181 where Burger, C.J. said: 12 Joint representation of conflicting interests is suspect because of what it tends to prevent the attorney from doing. ... [ 80 ] Lacourciere, J.A. continued in that paragraph: In a case of joint representation of conflicting interests, defence counsel’s basic duty of undivided loyalty and effective assistance is jeopardized and his performance may be adversely affected.

That is, he may refrain from doing certain things for one client by reason of his concern that his action might adversely affect his other client. [ 81 ] In that case, counsel represented two co-accused whose interests at trial were in opposition. The Court of Appeal was satisfied that the conflict of interest “ had an adverse effect on the performance of defence counsel at trial. ” (para. 22) [ 82 ] In Brookville Carriers Flatbed GP Inc. v. Blackjack Transport Ltd. , 2008 NSCA 22 , Cromwell, J.A. (as he then was), writing for the court, dealt with an issue of conflict of interest.

There a law firm acted for the company and some of its employees in a lawsuit against them and, thereafter, it acted for the company in an action against some of those same employees. The employees objected and the Chambers Judge ordered the firm removed as counsel for the company. Cromwell, J.A. cited Martin v. Gray, Neil and Montreal Trust .

In paragraph 48, he quoted from several texts on ethics and conflicts of interest as follows: 48 Gavin MacKenzie, in his text Lawyers and Ethics: Professional Responsibility and Discipline (looseleaf) (Scarborough, Ont.: Carswell, 1993) at 5-19 states that ‘it is clear in Canada that the rule that lawyers must not act against former clients in related matters ... is designed to protect clients not only against breaches by lawyers of their duty of confidentiality, but also against breach by lawyers of their duty of loyalty .’ (Emphasis in original) Similarly, Michel Proulx and David Layton in their text, Ethics and Canadian Criminal Law , (Toronto: Irwin Law, 2001) at p. 306 state that apart from the duty of confidentiality, ‘... counsel owes a broader duty of loyalty to a former client ... [A] former client has a legitimate claim to expect counsel’s loyalty to persist with respect to the subject matter of a retainer, even after the client-lawyer relationship has ended and even if there is little or no possibility that confidential information can be misused.’ To the same effect, Paul Perell (now Perell J.) wrote in his text Conflicts of Interest in the Legal Profession , (Toronto, Butterworths: 1995): ... while there is no general duty against acting against a former client, the factor of confidentiality will ground disqualification.

However, confidentiality is not the exclusive criterion for disqualification; a particular duty of loyalty may create a disqualifying conflict of interest . ... It is true that confidential information may be involved, but the emphasis of these cases is different. The dominant element for this class of case is not confidential information, but disloyalty and the emphasis is on the need to foster and maintain public confidence in the integrity of the legal profession and in the administration of justice . (emphasis in original) [ 83 ] He concluded in paragraph 49:

49 In my view, lawyers have a duty not to act against a former client in the same or a related matter and this duty may be enforced by the courts. Although in general, the focus of the analysis will be on whether, by acting, the lawyer is placing at risk the former client’s confidential information, the duty is not limited to situations in which that is the case. The chambers judge was right not to limit the duty in that way. [ 84 ] In R. v. Desmond , 2010 ONSC 2945 , Wilson, J. considered the duty of loyalty in a case involving two co-accused.

Counsel at trial for Jackson had briefly represented both co-accused at a consent bail hearing. Wilson, J. referred to R. v. Silvini , supra , but concluded no confidential information had passed and there was no impact on the lawyer ’ s duty of loyalty to his client. [ 85 ] In R. v.

Lewis , 2011 ABQB 227 , Ross, J. dealt with a Crown request for “ advice and directions regarding a potential conflict of interest ... (para 1). ” Two co-accused had been represented by the same lawyer; subsequently one was represented by another lawyer in the same firm and the other by a lawyer from another firm. [ 86 ] Ross, J. said in paragraph 9: 9 A primary concern in the context of multiple representation and conflict of interest is the potential for the misuse of confidential information.

Even where there is not an issue in relation to confidential information, a lawyer may be unable to represent a client whose interests conflict with another present or past client. The lawyer’s obligation to his or her client must be undivided. Where a lawyer acts or has acted for more than one client, there may be a concern about soft peddling the defence of one client out of concern for the other client: R. v. Caines, Alcantara and Knapczyk , para. 329 [ 87 ] She weighed the risks and benefits and concluded in paragraph 21: 21 ...

But, because of the realistic risk that a conflict of interests may develop during the course of the trial, I am directing that neither Mr. Poon nor any other member of Chadi & Company may represent Mr. Lewis at the trial of this matter. [ 88 ] The issue here is whether Tyler Hodgson, or indeed the firm of BLG, would have its duty of loyalty impaired because Tyler Hodgson ’ s father represented NBFL , which the Crown says is a victim in this case. [ 89 ] The Codes of Ethics and the principles from Martin v.

Gray , supra , give guidance. [ 90 ] The Codes quoted above speak in terms of the “ personal interests ” of the lawyer or “ duties ” to a third person. There is no allegation that Tyler Hodgson owes any “ duties ” to his father. [ 91 ] Furthermore, the Nova Scotia Code refers to a “ genuine serious risk ” to the duty of a loyalty. It must be more than a mere possibility. It must be something that would “ materially and adversely ” affect the lawyer ’ s representation of the client. [ 92 ] The Alberta Code talks about “ impairment of objectivity ” leading to ineffective representation.

The ABA Code uses the words: representation will be “ materially limited. ” The CBA Code speaks in terms of “ material and adverse effect on representation. ” [ 93 ] The situations where conflicts of interest can arise are referred to as “ substantially related matters ” (ABA Code) or legal representation in a “ dispute ” (Alberta Code).

In the context of former clients, the Nova Scotia Barristers Society Code makes an exception for “ wholly unrelated ” matters. [ 94 ] In Brookville Carriers , supra , Cromwell, J.A., in paragraph 17, defined “ related matter ” in the context of a lawyer acting against a former client. He said:

17 ... A matter is ‘related’ for this purpose if the new retainer involves the lawyer taking an adversarial position against the former client with respect to the legal work which the lawyer performed for the former client or a matter central to the earlier retainer. [ 95 ] He elaborated on that in paragraphs 50 ff, concluding that the issue is a narrow one when there is no question of confidential information being used. He said in paragraph 55: 55 ...

When, as here, confidential information is not at risk, the relationship between the two retainers is considered in order to identify whether the second retainer involves the lawyer attacking the legal work done during the first retainer or amounts, in effect, to the lawyer changing sides on a matter central to the earlier retainer.

The concept of relatedness for this purpose is much narrower and has an entirely different focus than the concept as applied in the MacDonald Estate analysis. [ 96 ] The Crown says that because of James Hodgson ’ s involvement with NBFL, there is a realistic risk that “ the duty of loyalty has been breached. ” (para. 37 Crown brief). In the context of this case, that duty must be Tyler Hodgson ’ s duty to Colpitts.

In my view, there are three answers to this. [ 97 ] First, Tyler Hodgson has no interest, personal or financial, in his father ’ s client, NBFL, and, specifically, has no interest, personal or financial, in the outcome of NBFL ’ s civil litigation in the KHI matter.

His interests in representing Colpitts is a professional interest. [ 98 ] The fact that NBFL is the client of Tyler Hodgson ’ s father does not result in Tyler Hodgson having a personal interest which is in conflict with the interests of his client, Colpitts, or which could have a material adverse effect upon Tyler Hodgson ’ s representation of Colpitts. Tyler Hodgson is able to give Colpitts his undivided loyalty.

There is no reason to think that his duty of loyalty to Colpitts would be impaired. [ 99 ] The Crown raises the spectre of James Hodgson having to testify, for example with respect to the production of documents from NBFL or some issue arising from his representation of NBFL in the civil litigation (para. 38, #7). I am not satisfied on the material before me that there is a realistic risk of that occurring. Even if it did, and if Colpitts ’ position was adverse to that of NBFL on the issue, it would be a minor matter in the context of a lengthy stock market fraud trial.

In my view, it could be handled as a discrete issue at trial, possibly by bringing in other counsel to deal with it or in some other fashion that would not create an appearance of impropriety. [ 100 ] The Crown also raises the possibility that Daniel Potter will succeed in unsealing confidentiality agreements involving NBFL. The Crown says, if that occurs, “ James Hodgson may (my emphasis) have been engaged in drafting and providing advice on these settlement offers ... ” (para. 38, #6).

As a result, the Crown says he may be a witness in the criminal proceedings. [ 101 ] There are a number of suppositions in that argument. Even if the agreements were unsealed, it is a big step to conclude that NBFL ’ s litigation counsel would be the person to testify rather than an officer of NBFL from whom James Hodgson took instructions with respect to settlement. [ 102 ] The second answer is that Tyler Hodgson is not a sole practitioner nor is he the senior counsel at BLG representing Colpitts.

Even if he did have an interest which could affect his loyalty to their client, which I have found he does not, he would have to convince his senior partner, James Douglas, to do or fail to do something on Colpitts ’ behalf as a result. As Williamson, J. said at paragraph 34 of Down , supra , [34] Ms. Buttery is not the senior counsel on the team from Fraser Milner acting for the Interim Receiver.

In order to take steps deliberately or unconsciously calculated to improve Sandrelli’s financial situation, she would have to hoodwink the reputable senior counsel with whom she works and from whom she takes direction - and probably several other counsel acting on this matter as well. I am not prepared to assume in the absence of any evidence that senior counsel would be so gullible.

[103] In this case, I cannot conclude that James Douglas, Potter or Clarke’s counsel would be “hoodwinked” by any such manoeuveron the part of James Douglas’ less senior co-counsel (again, if Tyler Hodgson had a conflicting loyalty, which I have concluded he doesnot). [104] The third answer is that this is not a situation where Tyler Hodgson is acting against a former client.

As Brookfield Carriers,supra, made clear, even in such a case, there are circumstances where a lawyer can act against a former client in an unrelated matter. [105] Even the Alberta Code allows for related parties to act for adverse parties where there is no dispute as long as their objectivityis not impaired. According to Potter, there is some question of whether Colpitts’ and NBFL’s interests are adverse. NBFL is not namedas a victim in the Indictment.

NBFL and Colpitts are not in a dispute in this matter. [106] I therefore conclude that there is no realistic possibility that Tyler Hodgson has been or would be in a position to breach hisduty of loyalty to Colpitts such that it would result in ineffective assistance of counsel. In my view, the issue does not even arise whenconsidering the position of BLG. Trial Fairness/Integrity of Justice System [107] The Crown says it has raised the conflict of interest issue out of a concern for trial fairness to the three co-accused. It saysthere is a risk of an unfair trial.

Related to this issue is the overall integrity of the justice system. The Crown raises the possibility that infuture an issue may arise that will result in BLG being removed as counsel for Colpitts. The Crown says this will cause delay in acomplex proceeding and will be costly for all. [108] In Martin v. Gray, supra, Cory, J., concurring in the result, said at paragraph 55 that he would impose a stricter standard thanthe majority. He said, in paragraph 58, with respect to the competing factors: 58 Of these factors, the most important and compelling is the preservation of the integrity of our system of justice.

The necessity ofselecting new counsel will certainly be inconvenient, unsettling and worrisome to clients. Reasonable mobility may well be important tolawyers. However, the integrity of the judicial system is of such fundamental importance to our country and, indeed, to all free anddemocratic societies that it must be the predominant consideration in any balancing of these three factors. [109] McLellan, Prov. J., referred to that paragraph in M.(B.) Re, supra, at paragraph 37. In Côté v.

Rancourt, 2004 SCC 58, [2004] 3 S.C.R. 248, Deschamps, J. said at paragraphs 11 and 12: 11 In the case of the prohibition against conflicts of interest, we must analyse the nature of the conflict in order to characterize theviolation. In some situations, the integrity of the judicial system is at stake, while in others the only interests in play are those of theparties (M. Proulx and D. Layton, Ethics and Canadian Criminal Law (2001), at p. 287).

Thus when a lawyer simultaneously representstwo co-accused who are facing related criminal charges and whose interests are adverse, he or she cannot provide both clients with theassistance to which they are constitutionally entitled. The reliability of the verdict takes on an importance that prevails over the privateinterests of the clients. Respect for the integrity of the criminal justice system derives, first and foremost, from the reliability ofverdicts.

The protection of the integrity of the justice system is necessarily a part of general public order. ... 12 However, not all conflicts of interest call higher interests into questions. Some cases involve merely private interests. ...

[ 110 ] In that case, the Court concluded there were only private interests at stake and not broader implications for the integrity of the justice system. [ 111 ] In this case, all three co-accused oppose the Crown ’ s motion. In its written submissions, the Crown says at p. 16: 4.

As noted above, Clarke is a former employee of NBFL and NBFL has alleged his involvement in a conspiracy to manipulate the market price of KHI stock and that Clarke “was ‘on a lark of his own’ in respect of this scheme and NBFL was not liable either vicariously for Clarke’s actions, nor, in negligence or for breach of contract or fiduciary duties, for its own actions.” James Hodgson would obviously be aware of Clarke’s complete employment history, including matters that may not be known to the Crown and therefore subject to Crown disclosure.

This is exacerbated by the fact that Clarke and Colpitts presented adverse defences in the civil actions. Colpitts has alleged that Clarke is solely responsible for any illegal conduct. Therefore Colpitts and NBFL could be seen as having concurrent interests in the issues before this Court but contrary to Clarke’s interests; [ 112 ] With respect to Clarke, Mark Knox, his counsel, said in his written submissions to the Court that: Having read the submissions of all counsel, my client’s position is that the Crown application should be dismissed.

He did not attend the hearing and did not file any materials for it. [ 113 ] Bruce Clarke is not objecting to BLG and Tyler Hodgson acting for Colpitts. As in many cases with co-accused, Clarke ’ s defence and Colpitts ’ defence may be adverse to each other, as were their defences in the civil actions. In spite of that, Clarke has no difficulty with the son of NBFL ’ s counsel representing Colpitts. [ 114 ] The Crown says “ Colpitts and NBFL could be seen as having concurrent interests in the issues before this Court ... . ” However, NBFL is not before this court.

Representatives of NBFL may be Crown witnesses but NBFL is not a party in the criminal proceeding. One step further removed is NBFL ’ s counsel in the civil proceedings, James Hodgson. As I have said, it is speculation that NBFL ’ s counsel would be a witness in the criminal proceeding. [ 115 ] The Crown, in its written submissions, says at p. 16: 5. Similarly, Potter has alleged improper conduct by NBFL and the other two co-accused and could be perceived as disadvantaged by the relationship between his adversary in Colpitts and his adversary in NBFL.

Indeed Potter has alleged that counsel on behalf of NBFL has litigated in bad faith and that James Hodgson was specifically mentioned in that representation; [ 116 ] Daniel Potter, representing himself, filed an Affidavit and a Brief and appeared at the hearing of the application. He said in his written submissions at paragraph 9: 9. ... It is my belief and submission that the removal of BLG from its representation of Mr. Colpitts would not only be a serious negative blow to him but also to me and to Mr.

Clarke as defendants. [ 117 ] Daniel Potter is not only not objecting to BLG and Tyler Hodgson continuing to act for Colpitts, he believes it is in his and Clarke ’ s interests for them to continue.

[ 118 ] The Crown says Potter alleges bad faith by NBFL ’ s counsel. However, that too refers to the civil proceedings. NBFL is not a party in this proceeding and, as I have said, it is only speculation to think James Hodgson would testify in this proceeding. [ 119 ] The Crown also refers to Potter ’ s adversaries as NBFL and Colpitts. It is true that NBFL is his adversary in the civil proceedings, but James Hodgson is merely counsel for his adversary.

Similarly, Potter ’ s defence may differ from that of Colpitts, but Tyler Hodgson is merely his potential adversary ’ s counsel. [ 120 ] The views of the three co-accused should lead me to conclude that this is a situation where only their private interests are at stake and not the overall integrity of the justice system. The Crown says otherwise because it says there will be a six month trial, presently scheduled to be a jury trial.

It says that raises a concern with respect to the “ efficient and effective administration of justice, ” (quoting from para. 43 of the Crown brief). [ 121 ] In my view, this is a situation where private interests are involved as long as there is no conflict of interest affecting the trial and the ultimate verdict. I refer again to the test: that is, whether there is an evidentiary foundation to support a conclusion that there is a realistic risk of a conflict of interest arising during the course of the trial. [ 122 ] The Crown also says: 8. Potter and NBFL continue to litigate matters against each other.

Potter brought a motion to challenge the ability of a witness employed by the Nova Scotia Securities Commission to answer a specific question regarding wrongdoing in the KHI matter. Initially the Nova Scotia Supreme Court determined that there was jurisdiction to grant the relief requested, but declined to do so, however the Court of Appeal overturned that decision and held that declaratory relief was not available in the circumstances. Potter wants to access this information as it apparently suggests that staff within NBFL should have been charged with offences under the Nova Scotia Securities Act .

He wants to use this material in his defence. Potter has long maintained that NBFL (beyond Clarke) knew what was going on with KHI stock and therefore could not be defrauded. When raised by Potter during the August Pre-Trial conference, defence counsel for Colpitts indicated an interest in this argument. [ 123 ] The time frame of the allegations against NBFL staff pre-dates the actual start of litigation involving NBFL in 2001. It should also be noted that James Hodgson did not even represent NBFL in that litigation until 2005. [ 124 ] The Crown says: 1.

During the RCMP investigation, James Hodgson was involved in advising NBFL staff on their interactions with the RCMP, and sat in on interviews with witnesses. He also assisted the RCMP by providing answers to questions and obtaining documents. The RCMP obtained statements and affidavits from NBFL, no doubt under his advice. [ 125 ] In my view, this has no impact on the integrity of the justice system or the fairness of the trial process itself. Information was provided which the Crown may, or perhaps even will, use at trial.

James Hodgson ’ s involvement in providing this information was in his professional role as counsel for NBFL. It gives him no role in the criminal proceeding nor any interest in the criminal proceeding, either personal or financial. Any documents to be used as exhibits will have to be proven in the usual fashion. They are NBFL ’ s documents not those of its counsel. [ 126 ] The Crown also says in its brief at p. 15: 2. NBFL is an alleged victim in these prosecutions.

Defence counsel for Colpitts will be cross-examining NBFL’s employees, who have obviously consulted with James Hodgson in preparation of the civil action, regarding the same evidence to be presented during this trial. As well his defence lawyer, Tyler Hodgson or his law partner, will be cross-examining witnesses who gave their statements to the RCMP either in the presence of, or on the advice of Tyler Hodgson’s father.

[127] For the same reason, I do not conclude this can have any effect upon trial fairness or the administration of justice. The role ofJames Hodgson was as counsel for NBFL. He acted in his professional capacity. There is only the Crown’s belief that these witnesseshave “obviously” consulted with James Hodgson as NBFL’s lawyer with respect to the civil action. I cannot conclude that there is aproblem because witnesses have given statements with James Hodgson present or on his advice, if that is the case.

The witnesses’statements will have only a limited role in the trial. [128] The Crown raises as an issue the fact that James Hodgson represented NBFL’s former counsel in the application brought byPotter to have them removed because they “had accessed the former KHI servers” (#8, p. 16). Potter alleged they had, in doing so,violated his solicitor/client privilege. I fail to see the significance of that retainer to the issue at hand. [129] None of these submissions convince me that there is a realistic risk of the trial being unfair to the three accused or to any oneof them.

They have all said they do not want this application to succeed. Nor am I convinced there is any risk to the integrity of thejustice system for the reasons the Crown suggests. Public Perception [130] The Crown also says the public’s perception of the trial process and the administration of justice in general will be adverselyaffected if Tyler Hodgson and BLG are permitted to continue to act as counsel for Colpitts. [131] In Côté, supra, the Supreme Court of Canada referred to the public interest in terms of the “general public order.” (para. 11quoted above) In Chiefs of Ontario v. Ontario (ON SC), [2003] O.J.

No. 580 (Ont. S.C.J.), Campbell, J. said atparagraphs 112 and 113: [112] The public interest in the administration of justice requires the confidence of every litigant that their legal advisers will not laterattack their honour in matters closely related to their confidential retainers. [113] Even a valid consent to act against a former client will not bar removal if the public interest in the administration of justice createsa legitimate concern about the appearance of impropriety arising from a conflict. [132] At paragraph 115, he referred to Goldberg v. Goldberg (1982), (ON CA), 141 D.L.R. (3rd) 133 (Ont.

Div.Ct.) saying: [115] Mr. Justice Callaghan, in a family law case held the conflict principles were designed to protect not only the interests of theindividual client but also the confidence of the public in the administration of justice. Where the public interest is engaged, theappearance of impropriety may override any private interest protected by consent of the kind here in question. [133] He continued in paragraphs 117 and 118: [117] This First Nations litigation involves the honour of the Crown.

It engages the public interest in ensuring full access by FirstNations litigants to independent legal advice free from conflict and free from attacks by former confidential legal advisers who enjoyedaccess to confidential information of their former clients on matters connected with the subject matter proceedings. [118] On the other hand there is a general public interest in the expedition of legal proceedings which will be delayed if Blakes isremoved and a general public interest in the right of Blakes’ present clients to be represented by the lawyers of their choice which will bedefeated if the motion is successful.

[134] At paragraph 126, he referred to the dominant factors in that case: [126] The dominant factors in this case are: the need to maintain the high standards of the legal profession; the integrity of the litigation process; the appearance of unfairness and impropriety in Blakes’ attack on its former client for which it acted on a confidential basis in closelyrelated matters over a five-year $1.2 million retainer including a role as general counsel; the public interest in the confidence of every litigant that their legal advisers will not later attack their honour in matters closely related totheir confidential retainers; the public interest in ensuring full access by First Nations litigants to independent legal advice free from conflict and free from attacks byformer confidential legal advisers who enjoyed access to confidential information of their former clients on matters connected with thesubject matter of the proceedings; [and] the ineffectiveness of the consent. [135] He removed counsel having concluded in paragraphs 139 to 141: [139] This case engages very strongly the public interest in the administration of justice which requires the confidence of every litigantthat their legal advisers will not later attack their honour in matters closely related to their confidential retainers. [140] There is a strong public interest in ensuring that the legal representation of the First Nations remains untainted by any breach ofconfidence or any actual or apparent conflict of interest between Blakes and its former First Nations client. [141] The public interest element of this case transcends the private interest of MFN or any other band or any political organization suchas COO or any financial corporation such as MFNLP.

This case involves the honour of the government in its dealings with First Nationsand the honour of First Nations governments in dealing with each other. [136] In Con-Drain, supra, Armstrong, J. referred to Côté and Ontario Chiefs in para. 66 where he said: 66 It is settled law that courts must consider the public interest and the need for public confidence in the administration of criminaljustice, even where there is a valid waiver or consent.

A valid, fully-informed waiver may be overridden by the public interest inprotecting the integrity and fairness of the criminal justice system, particularly the reliability of verdicts. Counsel may be removed if thepublic interest in the administration of justice creates a legitimate concern about the appearance of impropriety arising from a conflict:see Cote v. Rancourt, 2004 SCC 58 , [2004] 3 S.C.R. 248, [2004] S.C.J. No. 37 at para. 11 (S.C.C.), R. v. Robillard, supra,Proulx and Layton, op. cit., at 333-334 and Chiefs of Ontario v. Ontario, (ON SC), [2003] O.J.

No. 580 (S.C.J.). [137] The Crown says there is an appearance of impropriety. In its brief at para. 37 it says:

37. ...Additionally there is an appearance of impropriety implicit in allowing a parent to represent one party, the child representing the other, where the two parties’ interests are adverse, especially where the conflicting interests may impact a criminal prosecution.

Compounding the appearance of impropriety is the conflict between the parent’s client and the other co-accused, whose interests are adverse to both the child’s and the parent’s clients. [ 138 ] The test is whether a reasonably informed person would be satisfied there is no conflict of interest or potential conflict of interest. [ 139 ] In my view, a reasonable person would be told: - there was civil litigation involving NBFL in which James Hodgson represented NBFL from 2005 on until the trial concluded with written submissions by NBFL dated in May 2012; - BLG had represented Colpitts in the civil litigation until he settled with NBFL in May 2009; - Tyler Hodgson did not join BLG until March 2009 and he was not involved in the NBFL litigation; - BLG and Tyler Hodgson, in the summer of 2011, began to represent Colpitts in the criminal proceeding which was commenced with the preferring of an indictment in March 2011; - NBFL and Colpitts are respectively the clients of James Hodgson and Tyler Hodgson who are father and son but do not reside together and have not for some twenty years; - NBFL is not a party in the criminal proceeding; - NBFL is not a former client of Tyler Hodgson or BLG; - there is no presumption a lawyer will breach his duty of confidentiality. [ 140 ] A reasonable person would not, in my view, perceive any impropriety in these circumstances.

Nor, I conclude, would that reasonable person, given the facts which are not in dispute, find there to be a disqualifying conflict of interest. BALANCING AGAINST THE RIGHT TO COUNSEL OF CHOICE [ 141 ] Balanced against the interests involved in conflicts of interest is the right of an accused person to counsel of choice. This is a right by implication enshrined in the Charter of Rights , s. 10(b). According to Proulx and Layton, Ethics and Canadian Criminal Law (Toronto: Irwin Law 2001) this right “ ... most likely is among the principles of fundamental justice protected by s. 7 of the Charte r ” (p. 291).

The authors continue at p. 292: An appreciation of the interplay between the constitutional rights to the effective assistance of counsel and the choice of counsel is necessary when approaching any conflict-of-interest problem. ... [ 142 ] In Speid , supra , Dubin, J.A. said at para. 5: 5 The right of an accused to retain counsel of his choice has long been recognized at common law as a fundamental right.

It has been carried forth as a singular feature of the Legal Aid Plan in this province and has been inferentially entrenched in the Charter of Rights which guarantees everyone upon arrest or detention the right to retain and instruct counsel without delay [ s. 10(b) ]. However, although it is a fundamental right and one to be zealously protected by the court, it is not an absolute right and is subject to reasonable limitations.

It was hoped that these limitations would be well known to the bar, but if not honoured, the court has jurisdiction to remove a solicitor from the record and restrain him from acting. [ 143 ] In R. v. Parsons , supra , Marshall, J.A. said with respect to the right to counsel (at page 3 of 6):

... This basic right has always been recognised as a very important tenet of our law and today is entrenched as one of the country’sfundamental individual rights in s. 10(

b) of the Charter. This right to counsel of one’s choice assumes very serious proportions whereone is charged, as is the accused in this case, with first degree murder which ranks amongst the most serious of criminal offences. [144] In R. v. McCallen, (ON CA), [1999] O.J. No. 202 [C.A.], O’Connor, J.A. referred to Speid, supra, and theimportance of the right to counsel of choice. In R. v. Desmond, supra, Wilson, J. also cited Speid, supra, with respect to an accusedperson’s right to counsel of choice (para. 30). [145] Although in a different context, Sopinka, J. In Martin v.

Gray said, with respect to balancing of competing interests, in para.51: 51 These standards will, in my opinion, strike the appropriate balance among the three interests to which I have referred. In givingprecedence to the preservation of the confidentiality of information imparted to a solicitor, the confidence of the public in the integrity ofthe profession and in the administration of justice will be maintained and strengthened.

On the other hand, reflecting the interest of amember of the public in retaining counsel of her choice and the interest of the profession in permitting lawyers to move from one firm toanother, the standards are sufficiently flexible to permit a solicitor to act against a former client provided that a reasonable member of thepublic who is in possession of the facts would conclude that no unauthorized disclosure of confidential information had occurred orwould occur. [146] In Speid, supra, Dubin, J.A. said at para. 6: 6 In assessing the merits of a disqualification order, the court must balance the individual’s right to select counsel of his own choice,public policy and the public interest in the administration of justice and basic principles of fundamental fairness.

Such an order shouldnot be made unless there are compelling reasons. ... [147] In Parsons, supra, Marshall, J.A. said at p. 3 of 6: A potential disqualifying conflict of interest obviously must first be established before it can be weighed against the fundamental right tocounsel. [148] In Chiefs of Ontario, supra, Campbell, J. referred to the consequences of removal of counsel. He said at para. 102: [102] This motion, if successful, like any other motion to remove counsel of record, has serious consequences.

Removal has adverseconsequences for Blakes’ pecuniary interest in its lucrative retainer to attack its former client. Removal has adverse consequences forBlakes’ present clients who have a prima facie right to be represented by counsel of their choice and a prima facie right not to be saddledwith the delay and expense associated with Blakes’ removal. Removal has adverse consequences for the public interest in the speedyand cheap resolution of litigation and for all parties to this action because of the delay and expense.

Because of these seriousconsequences, removal cannot be lightly undertaken. [149] In Neil, supra, Binnie, J., in para. 14, referred to Parsons, supra, saying: 14 ... The Crown sought to remove defence counsel on the basis that he had previously acted for the father of the accused in anunrelated matrimonial matter, and might in future have to cross-examine the father at the son’s trial for murder. The accused and hisfather both obtained independent legal advice, after full disclosure of the relevant facts, and waived any conflict. The father also waivedsolicitor-client privilege.

The court was satisfied there was no issue of confidential information. On these facts, the court concluded that‘public confidence in the criminal justice system might well be undermined by interfering with the accused’s selection of the counsel ofhis choice.

[ 150 ] In Chiefs of Ontario , supra , A. Campbell, J. Said in paras. 117 and 118: [117] This First Nations litigation involves the honour of the Crown.

It engages the public interest in ensuring full access by First Nations litigants to independent legal advice free from conflict and free from attacks by former confidential legal advisers who enjoyed access to confidential information of their former clients on matters connected with the subject matter proceedings. [118] On the other hand there is a general public interest in the expedition of legal proceedings which will be delayed if Blakes is removed and a general public interest in the right of Blakes’ present clients to be represented by the lawyers of their choice which will be defeated if the motion is successful.

SUMMARY AND CONCLUSION [ 151 ] Blois Colpitts ’ right to counsel of choice is protected by the Charter . Although not absolute, it should not be inte

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