Thoma-Lovell v. Lovell, 2011 ONCJ 384

Brampton Registry No. 825/10 DATE: 2011·VI·28 CITATION: Thoma-Lovell v. Lovell , 2011 ONCJ 384 ONTARIO COURT OF JUSTICE BETWEEN: LAURA JANE THOMA-LOVELL, Applicant (responding party), — AND — BRIAN LOVELL, Respondent (moving party). Before Justice Patrick W.

Dunn Heard on 8 June 2011 Reasons for Judgment released on 28 June 2011 PROFESSIONS — Lawyers — Conflict of interest and duty — Lawyer’s law firm had formerly acted for opposite party — Mother made motion to vary child support provisions of domestic contract made 6½ years ago — Contract did not require either parent to make ongoing income disclosure, but mother claimed that father’s income had increased substantially in intervening years — Mother’s lawyer was sole litigation lawyer (with family law specialty) at law firm that focussed on corporate commercial field — Father now made motion seeking removal of mother’s lawyer from case on grounds of conflict of interest and duty because corporate commercial side of law firm had done work for father’s corporations through which father derived all of his employment income — Motion judge reviewed following concerns and drew these conclusions:

(1) Nature of work that law firm did for father’s companies: Motion judge found that this consisted of real estate transactions, liens and debt collections, all of which was unconnected and unrelated to lawyer’s mandate to mother in family law case;

(2) Extent of knowledge that corporate commercial lawyers had about father’s companies and his affairs that could help mother’s lawyer in pursuing claim against father in family law case: Motion judge found that any confidential information that corporate commercial lawyers had about current collection matters and dated real estate transactions was not at all helpful to mother’s lawyer in pursuit of mother motion to vary child support.

(3) Whether reasonable person would conclude that information that corporate commercial lawyers had could be beneficial to mother’s lawyer in enhancing mother’s case: Motion judge concluded that impartial and objective observer would recognize difference between: • nature of real estate and collection work that law firm did for father and his companies (which did not include overall and comprehensive knowledge of father’s income and his companies’ income); and • type of personal and corporate financial disclosure that mother’s lawyer needed to represent mother in her case, which was not in law firm’s records.

Any confidential information that mother’s lawyer got about father’s circumstances came from other sources — And any facts that he might have gotten from law firm’s files would be old news and totality of information from corporate collection files would not advance mother’s case because she would need to know much more than relatively small sums that father’s companies got from collections. Motion judge dismissed father’s motion to remove mother’s lawyer from case. STATUTES AND REGULATIONS CITED Law Society of Upper Canada: Rules of Professional Conduct , subrule 2.04(4). CASES CITED MacDonald Estate v.

Martin , [1990] 3 S.C.R. 1235, 121 N.R. 1, 70 Man. R. (2d) 241, 285 W.A.C. 241, [1991] 1 W.W.R. 705, 77 D.L.R.

(4th) 249, 48 C.P.C. (2d) 113, , [1990] S.C.J. No. 41, 1990 Cars​well​Man 233. The Queen v. Neil, 2002 SCC 70, [2002] 3 S.C.R. 631, 294 N.R. 201, 317 A.R. 73, 6 Alta. L.R. (4th) 1, 284 W.A.C. 73, [2003] 2W.W.R. 591, 218 D.L.R. (4th) 671, 168 C.C.C. (3d) 321, 6 C.R. (6th) 1, [2002] S.C.J. No. 72, 2002 Cars​well​Alta 1301. Racey v. Racey, , 161 A.C.W.S. (3d) 808, [2007] O.J. No. 4331, 2007 Cars​well​Ont 7232 (Ont. S.C.). Peter M. Callahan ......................................................................... counsel for the applicant mother James R.

Smith ................................................................................. counsel for Peter M. Callahan Michelle M. Abel .......................................................................... counsel for the respondent father JUSTICE P.W. DUNN:— 1: INTRODUCTION [1] This was a motion by Brian Lovell to have Peter M. Callahan, and the law firm of Racioppo, Zuber, Coetzee, DionneLLP (RZCD), removed as counsel of record for Laura Jane Thoma-Lovell. The motion was opposed by Mr. Smith. [2] Ms.

Thoma-Lovell, as applicant, brought a motion to change, dated 3 June 2010 (in volume 1, tab 1 of the continuingrecord), against Mr. Lovell, as respondent, to alter the child support provisions in a domestic contract dated 22 December 2004. Itprovided that, inter alia, Mr. Lovell would pay child support of $2,832 a month from 1 February 2005 for the support of two children,based on an attributed income of $253,000 per year. The respondent’s last payment was made 1 August 2010. The quantum of Mr.Lovell’s income had not been adjusted since the signing of the domestic contract.

It did not provide for any ongoing income disclosureby either party to the other. It was the applicant’s position in her motion to change that Mr. Lovell’s income increased substantially sincethe domestic contract was signed. That, of course, remains to be established. [3] The motion before the court was brought by Mr. Lovell as respondent, but as the moving party. Ms. Thoma-Lovell wasthe applicant, but the responding party in this motion. The lawyers at RZCD that will be mentioned in this ruling are Peter M. Callahan,Eric D. Dionne, James R. Smith, and Joseph W. Ziemba. Mr.

Callahan’s practice is in civil litigation, with emphasis on family law. Mr.Dionne’s area of interest is corporate commercial law. Mr. Smith does construction lien work. Mr. Ziemba handled collection mattersfor Mr. Lovell’s companies. [4] Mr. Lovell is the sole officer, director and shareholder of B.L. Security Locksmith and Design Ltd. and PollockLocksmith Company Limited (a company or the companies). All of Mr. Lovell’s employment income was obtained through his work atthese companies. It is acknowledged that RZCD did legal work for them.

At issue in this motion is: (1) the nature of the work that RZCD did for the companies and for Mr. Lovell; (2) the extent of the knowledge of the RZCD lawyers about the companies and Mr. Lovell’s affairs that could help Mr.Callahan in pursuing a claim against the respondent in the family law matter; and (3) whether a reasonable person would conclude that the RZCD lawyers’ knowledge could be beneficial to Mr. Callahan inenhancing the applicant’s case. [5] The evidence revealed that the involvement of the RZCD lawyers with the companies and Mr. Lovell over fourteenyears was as follows: (

A) In May 1995, Mr. Lovell consulted Mr. Dionne about a right of way issue.(

B) In 1996, Mr. Dionne was retained to buy a commercial building on behalf of a company.(

C) In 1996, Mr. Dionne acted for the parties on the sale of their Oakville home and a purchase of a residence in Caledon.(

D) From May to October 1997, Mr. Smith handled a construction lien matter for a company.(

E) In December 2000, Mr. Dionne was asked by a company to assist with a small claims collection matter. Mr. Dionnereferred it to a clerk at RZCD.(

F) From 2004, Ms. Thoma-Lovell began part time employment at RZCD. She advised the respondent of this when shestarted to work. She had a flexible

schedule and was paid by the hour.(

G) Between 2003 and 2010, Mr. Ziemba acted on minor debt collection matters for one of the companies. He commenced hisdemand letters on the letterhead of the RZCD firm with, “Please be advised that we are the solicitors for B.L. SecurityLocksmith and Design Ltd. with respect to the above mentioned matter. . . .” The details of RZCD’s involvement in debtcollection are as follows. (There could have been more collection files than mentioned here.) (

i) April 2003 — Mr. Ziemba wrote a demand letter in a debt collection matter, to which he did not receive a reply. He then drafted a claim for Small Claims Court and returned the file to the company to pursue on its own. (ii) April 2004 — Mr. Ziemba wrote a demand letter in a debt collection matter. (iii) February 2007 — Mr. Ziemba wrote a demand letter in a debt collection matter and did not receive a reply. Hedrafted a claim for Small Claims Court and returned the file to a company. (iv) In December 2009 and in July 2010 and October 2010 — Mr. Ziemba took the same action as he did in theFebruary 2007 claim. (

v) December 2010 — Mr. Ziemba filed a request with a court that a particular case be set for trial in January 2011. [6] It appears that Mr. Ziemba had no further involvement in the collection files after he either wrote demand letters, ordrafted a claim or filed a notice to request a trial date, or a similar preliminary step to the trial itself.

[7] However, in paragraph 7 of the respondent’s supplementary factum, there was this statement: At the time that the within [family law] proceedings were commenced, B.L. Security was clearly anexisting client of the applicant law firm, with the two existing client files proceeding through the SmallClaims Court system, with both files listing the applicant law firm as the solicitor of record.

And at paragraph 8: The respondent submits that, in an improper attempt to avoid removing the applicant law firm assolicitor of record in this family law proceeding, the applicant law firm unilaterally and wrongfully senta letter to B.L. Security advising that it was closing out both existing client files. The termination ofthese retainers was sent approximately one month before one existing client file was to proceed to trial. B.L. Security has not accepted the termination of either retainer. I have no difficulty accepting that the companies were clients of RZCD when the family law proceedings began.

The attemptedtermination of retainers does not affect the issues at the heart of this case. [8] To set a course for where this analysis of the parties’ positions proceeds, their respective views were as follows. Ms.Thoma-Lovell believed that her family law case was fresh and independent from RZCD’s work for Mr. Lovell and the companies. Thatwork entailed real estate transactions, liens and collections. Mr. Smith argued that any knowledge of Mr. Lovell and the companies heldby the RZCD lawyers was irrelevant to the family law issues. The applicant’s brief stated that she has confidence in Mr.

Callahan’sabilities, and she would be prejudiced if she had to change counsel months after she launched her motion to change. It was also clear thatMr. Callahan had already spent time in analyzing the respondent’s and his companies’ income tax returns. [9] Ms. Abel argued that:

(1) RZCD acted for the respondent and his companies in thirteen separate matters since 1996;

(2) RZCD had regular and ongoing communication with Mr. Lovell and his accounting manager, Leon D. Jaimangal;

(3) RZCD possessed confidential information about Mr. Lovell and his companies.

(4) The affidavits of Mr. Dionne and Mr. Callahan minimized RZCD’s involvement with Mr. Lovell and hiscompanies. The conundrum to be decided is whether the matrimonial issues are fresh and independent from the work that RZCD did for Mr. Lovelland the companies. [10] In MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, 121 N.R. 1, 70 Man. R. (2d) 241, 285 W.A.C. 241, [1991] 1W.W.R. 705, 77 D.L.R. (4th) 249, 48 C.P.C. (2d) 113, , [1990] S.C.J. No. 41, 1990 Cars​well​Man 233, Justice JohnSopinka wrote at paragraph [48] [S.C.J.] in the judgment: [48] Typically, these cases require two questions to be answered:

(1) Did the lawyer receiveconfidential information attributable to a solicitor-and-client relationship relevant to the matter at hand?

(2) Is there a risk that it will be used to the prejudice of the client? At paragraph [49]: [49] . . . once it is shown by the client that there existed a previous relationship which issufficiently related to the retainer from which it is sought to remove the solicitor, the court should inferthat confidential information was imparted unless the solicitor satisfies the court that no informationwas imparted which could be relevant. This will be a difficult burden to discharge. . . . [11] Turning now to what Mr. Callahan and Mr. Dionne in their affidavits said about the knowledge that they and Mr. Smithand Mr. Ziemba had about Mr. Lovell and the companies (see applicant’s factum):

(1) Mr. Ziemba denied knowledge of the inner workings of B.L. Security (although he would have seen company documentsrelated to the collection matters).

(2) Mr. Ziemba never possessed corporate documentation that was confidential to B.L. Security or Mr. Lovell. He was notapprised of inner workings of the companies. He did not see their corporate records or financial statements.

(3) Mr. Callahan’s only contact with Mr. Lovell was in the course of the family proceedings. He did not receive anyconfidential information belonging to the respondent.

(4) RZCD was not corporate counsel for the companies, nor personal counsel to Mr. Lovell. No file had ever been opened inMr. Lovell’s name.

(5) Mr. Dionne in his affidavit swore that he had not spoken to Mr. Lovell since about 2002. (On 29 July 2010, Mr. Lovell lefta voice message for Mr. Dionne to complain about Mr. Callahan’s acting for Ms. Thoma-Lovell but, on 30 July 2010, Mr.Dionne e-mailed Mr. Lovell to say he could not talk to him.) [12] Mr. Lovell’s reasons for arguing that RZCD had confidential information about his companies and himself were as statedin his affidavit: (

a) RZCD is his law firm, instructed by him for himself and his business(es) B.L. Security and Pollock — “in real estatetransactions, in litigation and account’s [sic] receivable collections”; (

b) Eric Dionne and Mr. Lovell go back fourteen years in a solicitor-and-client relationship; (

c) RZCD has been corporate counsel to B.L. Security and Pollock since 1996; (

d) RZCD was provided with B.L. corporate documents — such as detailed company invoices, work order and customerinformation;

(

e) RZCD is privy to B.L. Security’s significant sales information, including pricing, customer detail and general business activity; (

f) RZCD knows B.L. Security has had significant business orders arising in 2008 from the national bank cross-country contact; (

g) Mr. Lovell stated in his affidavit “there is no way that the lawyers in the firm RZCD Law Firm LLP are not in possession of confidential information — they know the way I think. They know the way I settle cases or litigate cases; they know who I am.” [ 13 ] The respondent’s counsel’s office examined the records of RZCD pertaining to the companies and documents that could relate to Mr. Lovell. Most of the documents referred to collection issues on behalf of a company. There were detailed billings, which referenced real estate and planning matters.

I did not see documents showing the companies’ value or anything pertaining to Mr. Lovell’s personal worth that could be helpful to Mr. Callahan to use against Mr. Lovell in family proceedings. [ 14 ] In volume 2, tab 9(D), there was a letter dated 3 May 2010 from Tom Little C.A. to Teplitsky Colson. In it, there was reference to Mr. Callahan’s having received the following financial disclosure: (

a) Mr. Lovell’s personal income tax returns for 2006 and 2007; (

b) Mr. Lovell’s notices of assessment for 2007 and 2008; (

c) financial statements for Pollock Locksmith Company Limited for the years ended 30 September 2006 and 30 September 2008; (

d) corporate tax returns for Pollock Locksmith Company Limited for the tax years ended 30 September 2006, 30 September 2007 and 30 September 2008; (

e) financial statements for B.L. Security Locksmith and Design Ltd. for the years ended 30 September 2006, 30 September 2007 and 30 September 2008; and (

f) corporate tax returns for B.L. Security Locksmith and Design Ltd. for the tax years ended 30 September 2006, 30 September 2007 and 30 September 2008. This was the kind of disclosure that one would expect a lawyer for Ms. Thoma-Lovell to want in pursuing a motion to change. The information appears to have been provided by the respondent’s accountant. It was not in the records of RZCD that Ms. Moore uncovered. [ 15 ] Returning to Mr. Lovell’s reasoning that RZCD is in a conflict of interest, I refer seriatim to the points raised in paragraph [12] herein: (

a) It is true that RZCD acted for the respondent in real estate and collection matters several years ago. Much of the direct communication on small claim matters was between Mr. Ziemba and Mr. Jaimangal. It is not accurate to say that RZCD is Mr. Lovell’s firm; the firm only acted on certain specific files. Teplitsky Colson acted for Mr. Lovell on some personal matters. (

b) Mr. Lovell’s affidavit did not establish that his solicitor-and-client relationship with Mr. Dionne was on a continuing basis for fourteen years. Their contact with each other was only over specific real estate matters and at the wedding of the parties in 1991. (

c) The respondent did not give evidence that RZCD was corporate counsel to B.L. Security and Pollock since 1996. (

d) RZCD was provided with some B.L. Security corporate documents (company invoices, work orders and customer information). It was for the limited purpose, on a file-by-file basis, of assisting in small claim collections. I do not see how anyone could estimate an overall value for the respondent’s companies based on a several small claims collections. (e) & (

f) Mr. Lovell believed that RZCD was privy to B.L. Security’s significant sales information, including pricing, customer detail and general business activity. Also that RZCD knew B.L. Security had significant business orders arising in 2008 from the national bank cross-country contract. Ms. Crystal Moore on behalf of Teplitsky Colson examined the records of RZCD with the goal of trying to locate information that would show the depth of RZCD’s knowledge of Mr. Lovell’s personal and business affairs. Ms. Moore produced copies of what she found in her affidavits filed in this proceeding.

The records did indicate that RZCD received some information about pricing and customer detail. This would have been in connection with the limited number of collections that RZCD made. I cannot find that any knowledge by RZCD of the respondent’s general business activity would have been of a confidential nature. It related to collections and prior real estate transactions. I did not note any reference to the national bank cross-country contract. Even if RZCD had knowledge of 2008 business orders, the respondent did not establish in the RZCD records that Ms.

Moore examined, that it was a significant part of his business operations. (

g) It was acknowledged by RZCD that Mr. Lovell’s company engaged Mr. Ziemba in bad debt collections, but not from the time of Mr. Lovell’s first engagement with RZCD in 1996. Mr. Ziemba was not called to the bar until 2001. (

h) Finally, Mr. Lovell averred that the lawyers at RZCD had confidential information about himself and the companies. That has not been proven. RZCD, but especially Mr. Ziemba, could observe how Mr. Lovell might settle the collection cases. They would not know Mr. Lovell’s thinking in such an important matter as the applicant’s motion to change. They would also have little knowledge about Mr. Lovell’s nature nor his overall thinking process. [ 16 ] Consideration will now be given to two important cases relied upon by Ms. Abel. The first was The Queen v.

Neil , 2002 SCC 70 , [2002] 3 S.C.R. 631, 294 N.R. 201, 317 A.R. 73, 6 Alta. L.R. (4th) 1, 284 W.A.C. 73, [2003] 2 W.W.R. 591, 218 D.L.R. (4th) 671, 168 C.C.C. (3d) 321, 6 C.R. (6th) 1, [2002] S.C.J. No. 72, 2002 Cars​well​Alta 1301. In The Queen v. Neil , the court uttered compelling statements about a lawyer’s duty to a client. In paragraph [29], Justice Ian Binnie stated (emphasis in the original):

[29] . . . Nevertheless, it is the firm not just the individual lawyer, that owes a fiduciary duty to its clients, and a bright line is required. The bright line is provided by the general rule that a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client — even if the two mandates are unrelated — unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other. Ms.

Abel advocated the case of The Queen v. Neil as authority for the proposition that RZCD should not represent Ms. Thoma-Lovell because it did and was doing legal work for Mr. Lovell’s companies. To paraphrase Justice Binnie’s words in paragraph [29]: Mr. Callahan may not represent Ms. Thoma-Lovell whose interests are directly adverse to the immediate interests of B.L. Security and Pollock Locksmith, even if the two mandates are unrelated ( i.e. , Mr. Callahan’s and RZCD’s representing Ms. Thoma-Lovell in her family law matter and RZCD’s acting for Mr. Lovell’s companies).

I believe that this proposition gathers its strength from the strong facts in the case of The Queen v. Neil . Caution must always be used in the application of a principle that is meaningful in one case, to the circumstances in another case. If the facts in another case are substantially different, the principle may not have the same application. [ 17 ] In The Queen v. Neil , supra , it is fair to say there was an egregious abuse of solicitor-and-client privilege. The facts were complicated, involving both criminal and civil proceedings. David Neil was a paralegal who referred cases to a lawyer, Mr.

Venkatraman, who has a clear solicitor-and-client relationship with Mr. Neil. Gregory Lazin was a lawyer found by the court to be a member of the Venkatraman law firm. Mr. Lazin acted for one Helen Lambert in divorce proceedings and she was a business associate of Mr. Neil. Mr. Neil was criminally charged in a 92-count indictment involving fraudulent mortgages (the Canada Trust indictment). Prior to Ms. Lambert’s also being criminally charged in the Canada Trust indictment, Mr. Venkatraman acted for Mr. Neil in these criminal proceedings and Mr. Lazin represented Ms.

Lambert in the divorce case, at a time when the firm ought to have known that Ms. Lambert would also be criminally charged. Her position was not the same as Mr. Neil’s, so the firm was in a very clear position of conflict in acting for both parties. The court found that, when Mr. Neil was in pre-trial custody, Mr. Lazin attended upon him to collect information that he could use in defence of Ms. Lambert in her criminal proceedings. Mr. Lazin then, as Ms. Lambert’s criminal lawyer, offered the Crown a deal whereby Ms. Lambert would testify against Mr.

Neil if the charges against her would be dropped. [ 18 ] In addition to the lack of loyalty that Mr. Lazin showed to Mr. Neil in the Canada Trust charges, this lawyer became ensnared in another conflict. One Darren Doblanko was a complainant in a separate case who alleged that Mr. Neil forged his signature on an important document. Mr. Doblanko consulted Mr. Lazin for advice and the lawyer did not tell Mr. Doblanko that the Venkatraman firm acted for Mr. Neil. Mr. Lazin’s advice to Mr. Doblanko was to report his complaint about Mr.

Neil to the police and then “steered” him to the same police constable charging Mr. Neil in the Canada Trust case. It was Mr. Neil’s belief that Mr. Lazin’s strategy was to multiply the allegations of dishonesty against himself in order to strengthen the position of Ms. Lambert in the Canada Trust proceeding. In the result, police laid further charges against Mr. Neil over the Doblanko matter. [ 19 ] This case represents very clear conflicts of interest. Mr. Lazin: (1) deliberately obtained damning information from Mr. Neil that would be useful in protecting the interests of Ms. Lambert; and

(2) Mr. Doblanko’s disclosure to the police, prompted by Mr. Lazin’s suggestion, increased the number of charges that Mr. Neil had to face. [ 20 ] In The Queen v. Neil , supra , the Canada Trust mortgage fraud, the divorce of Ms. Lambert, and the Doblanko charge were seemingly separate. This may have lead to Justice Binnie’s statement in paragraph [29] of the judgment that a lawyer may not represent a client whose interests are adverse to those of another client even if the mandates are unrelated . However, in a real sense, on the facts of that case, there was one mandate — Mr. Lazin’s duty to be loyal to Mr.

Neil. This lawyer’s representing Ms. Lambert and assisting Mr. Doblanko was a breach of his fiduciary duty to Mr. Neil. [ 21 ] I find that, in the case at bar, Mr. Callahan’s mandate to Ms. Thoma-Lovell is entirely separate from that of the RZCD firm to Mr. Lovell because the family case is unrelated to the corporate work that RZCD did for Mr. Lovell and the companies. I cannot concur with the following statement in the respondent’s factum in paragraph 21 after citing The Queen v.

Neil as an authority (emphasis added): In situations of an existing solicitor-client relationship, that solicitor cannot act against an existing client, regardless of whether the new matter is related to a previous matter that the solicitor acted upon. In my opinion, that statement carried the authority in The Queen v.

Neil to a point beyond which its ratio was intended. [ 22 ] Also the commentary under subrule 2.04(4) of the Law Society of Upper Canada, Rules of Professional Conduct , must be considered: Commentary It is not improper for the lawyer to act against a client in a fresh and independent matter wholly unrelated to any work the lawyer has previously done for that person and where previously obtained confidential information is irrelevant to that matter. The parties disagree on whether the matrimonial proceedings in this case are fresh and independent from RZCD’s knowledge of the

respondent’s companies, but I believe they are. Also the confidential information that RZCD obtained about current collection mattersand dated real estate transactions is not helpful to Mr. Callahan in furthering the applicant’s motion to change. [23] Ms. Abel relied on Racey v. Racey, , 161 A.C.W.S. (3d) 808, [2007] O.J. No. 4331, 2007 Cars​well​Ont7232 (Ont. S.C.), as an authority for Mr. Callahan to be removed as counsel for Ms. Thoma-Lovell, because of a finding in the case thatthere was a real conflict of interest and that the moving party on the motion had a valid perception of that conflict.

Nancy Racey andRussell Racey married in 1987. In 2000, they caused Racey Innovations Inc. to be incorporated (Racey company). Mr. Racey held 51per cent of the shares; Ms. Racey, 49 per cent. They were the only directors and officers. Ms. Racey was hired by the Racey Companyas a bookkeeper with a salary of $24,000 a year. Andrew Watson was the corporate lawyer for the Racey company and he caused it tobe incorporated. The incorporation was a simple procedure; Mr. Watson prepared routine shareholders’ minutes and he did little else forthe Racey company. [24] Mr. Racey and Ms.

Racey separated in 2005 and she engaged Lee Villar, a lawyer in the same firm with Mr. Watson, torepresent her in the matrimonial matter. Mr. Racey brought a motion to have Mr. Villar removed as counsel for Ms. Racey on the basisof there being a conflict of interest, with Mr. Villar’s allegedly knowing a great deal about his interest in the Racey company, and withthe possibility of Mr. Villar’s acquiring confidential information about the finances of the Racey company from Mr. Watson. The Raceycompany was a major matrimonial asset. It was Mr. Racey’s concern that Mr.

Villar could have known about the Racey company’svalue on the date of separation and its current value, and the conduct of Mr. and Ms. Racey as officers and shareholders, both before andafter separation. A lot of activity went on in the Racey company. Mr. Racey fired Ms. Racey as bookkeeper and he charged that sheimproperly withdraw $50,000 from the Racey company, putting it in jeopardy. If Mr. Villar had this information, it could put him in avery knowledgeable position to be able to assist Ms. Racey in her claims against Mr. Racey. [25] Mr.

Watson’s affidavit stated that: (1) he did no work for the Racey company, other than to prepare shareholders’ minutes; (2) he was not aware of any confidential information imparted to him by either Mr. or Ms. Racey; and (3) he would undertake not to discuss any knowledge or information about the Racey company or Mr. Racey with anymember of his firm. [26] On the face of it, Mr. Watson may not have had confidential information about the Racey company that may or may nothave been communicated to Mr. Villar. However the court found that Mr. Racey’s perception of conflict for Mr.

Villar was justified,and he was removed as counsel for Ms. Racey in the matrimonial matter. Justice Robert D. Reilly stated in paragraph [12]: [12] . . . it is not necessary for the court to find in fact a conflict of interest or potential conflict ofinterest but whether in the circumstances there would be a perception of such conflict of interest, orpotential conflict of interest, on the part of a reasonable person . . . The court made a very important finding that Mr. Watson would have had significant communication with both Ms. Racey and Mr.Racey, but in particular with Mr.

Racey as the “controlling mind” of the company. [27] There are similarities between Racey v. Racey and the case at bar. RZCD did legal work for Mr. Lovell’s companies andMr. Callahan was a principal of RZCD. As in Racey v. Racey, lawyers at RZCD affirmed they did not have confidential informationabout Mr. Lovell’s companies, nor about his personal finances (other than the work that they acknowledged doing for the companies andfor Ms. Thoma-Lovell and Mr. Lovell). [28] Unfortunately, the judge in Racey v. Racey did not set out many facts about what Mr. Watson or Mr. Villar knew aboutthe Racey company.

However, the following points were made:

(1) It was clear that Mr. Villar’s firm was corporate counsel for the Racey company for several years.

(2) Justice Reilly stated in paragraph [34] of the decision, “I am quite satisfied that Mr. Watson and by inference, Mr. Villar isindeed in possession of confidential information which might well become relevant in the litigation and used to theprejudice of the respondent”. [29] In my opinion, this case is not a strong authority for Mr. Lovell because the learned judge in Racey v. Racey did not giveclear reasons why he believed Mr. Villar had confidential information. The conclusion seems to be drawn from inference, rather thanfrom factual findings.

In the case at bar, it is replete with the respondent’s records as they were known to RZCD, and it is possible forthis court to weigh the significance or the lack thereof of those records in the applicant’s pursuit of a family claim. [30] In paragraph [22] of MacDonald Estate v. Martin, supra, Justice Sopinka noted that justice must manifestly be seen to bedone. The situation must be regarded objectively by an independent fair minded person. Mr. Lovell firmly believed that Mr. Callahanwas in a position of conflict.

I am sure the respondent is a fair minded person, but he cannot be expected to have taken an independentlook at the facts because he is too closely involved. I believe that an independent person would appreciate the distinction between thenature of the real estate and collection work that RZCD did for Mr. Lovell and the companies (which did not include overall andcomprehensive knowledge of the income of Mr. Lovell and the companies) and the type of personal and corporate financial disclosurethat Mr.

Callahan requires (and has been obtaining) to represent the applicant in her family matter, which was not in the RZCD records. [31] I believe that paragraph 56 in the applicant’s factum is supportive of her position.

It stated: The fact that the respondent had been notified that RZCD had been retained by the applicant to addressvarious issues pertaining to child support in April 2010, and no serious objections were raised withrespect to RZCD’s retainer until August 2010, supports the view that no confidential information wasprovided by the respondent in a forum which could work to his prejudice. [32] In conclusion, I do not find that Mr. Callahan received confidential information about Mr. Lovell nor his companies. Any

facts that he learned about Pollock Locksmith’s acquisition of a commercial building or the parties’ sale and purchase of a residence was stale news. Even if Mr. Ziemba had told Mr. Callahan all the details of the collection files, that would not enhance the applicant’s case, because she would want to know much more than the relatively small amounts a company obtained through collections. [ 33 ] Finally, mention must be made of Ms. Thoma-Lovell’s right to the counsel of her choice. Mr. Callahan has been working on her behalf for at least several months.

The cost of retaining and instructing new counsel would be prejudicial, and the only income for the applicant mentioned in the documents was an hourly salary that she earned on a part-time basis at RZCD. [ 34 ] The respondent’s motion dated 23 August 2010 (in volume 2, tab 8) to remove Mr. Callahan as counsel of record for the applicant is dismissed. [ 35 ] I thank all counsel involved for their very thorough preparations and presentations. [ 36 ] Any request for costs must be served and filed by 22 July 2011. (All filing at the court will be done by faxing documents to Ms.

Ruth Evans, Judicial Secretary at 905-456-4829.) [ 37 ] An answer to a request for costs must be served and filed by 12 August 2011. [ 38 ] A reply to an answer must be served and filed by 2 September 2011.