2011 QCCS 1989, 2011 QCCS 1989

World Assurance Inc. c. Al Imam 2011 QCCS 1989 SUPERIOR COURT CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL No: 500-17-061527-100 DATE: April 29 th , 2011 ______________________________________________________________________ PRESIDING THE HONOURABLE MICHELINE PERRAULT, J.S.C. ______________________________________________________________________ WORLD ASSURANCE INC. Plaintiff v. YOUSEF AL IMAM Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ 1.

INTRODUCTION [ 1 ] The Court is seized of a Motion by Defendant Yousef Al Imam (" Al Imam ") to declare the firm Heenan Blaikie ineligible to act as attorneys for Plaintiff World Assurance Inc. (" WAI ") in the present case (the " Motion "). 2. RELEVANT FACTS [ 2 ] Al Imam was the President and CEO of WAI, which is a company he started with Hassan Hanano (" Hanano ") in 2004.

Al Imam and Hanano had little money and needed a major investment to get WAI started, which they got from Fouad Alghamin and Sons Co. (" Alghamin "), who became a shareholder with Al Imam and Hanano. [ 3 ] On May 11, 2010, Al Imam's employment with WAI was terminated. [ 4 ] In October 2010, WAI, represented by Heenan Blaikie, instituted proceedings against Al Imam for a Provisional, Interlocutory and Permanent Injunction (the " Proceedings ").

One of the main issues in the Proceedings is the alleged breach of a non-competition clause (the " Clause ") included in a Unanimous Shareholder Agreement, dated April 1, 2004, signed by Hanano, Al Imam and Alghamin (the " USA "). The Clause reads as follows: « 10. CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION 10.1 Undertakings.

For good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto further covenants and agrees that he: 10.1.1. shall not, while he remains a Shareholder of the Corporation and for a period of three (3) years after the latter ceasing to be a Shareholder, either alone or in conjunction with any other person, as principal, agent, or shareholder or in any manner whatsoever, directly or indirectly, carry on or be interested or advise, lend money to, or guarantee the obligations of any business competing with or otherwise similar to the Activities or the business being carried on at that time by the Corporation, the whole within the territory of USA, Canada, European Union countries, United Kingdom, Japan, China, Mexico, Brazil, Argentina, Israel, Singapore, Malaysia, Australian continent, India and South Africa; 10.1.2 shall not, while he remains a Shareholder of the Corporation and for a period of two (2) years after the latter of ceasing to be a Shareholder, employ or try to employ any person who, at such moment, is employed by the Corporation or try, directly or indirectly, to entice such person to quit his employment without the prior written approval of the other Shareholders thereto; 10.1.3 shall not, while he remains a Shareholder of the Corporation and for a period of (2) years after the latter of ceasing to be a Shareholder, try, directly or indirectly, to solicit any of the suppliers or customers of the Corporation for the purposes of competing with

the Corporation; and 10.1.4 shall not, for an unlimited period of time, divulge or use for his benefit or for the benefit or for the benefit of any person, firm, partner, subsidiary, association, Corporation or other entity, any confidential or proprietary information concerning the Activities and business of the Corporation which may have been communicated to any of the Shareholders for the purpose of carrying out the terms of this Agreement of otherwise.» [ 5 ] Al Imam alleges his primary means of defence is that the Clause is illegal, abusive, unjustified and therefore, null and invalid; 3.

DISCUSSION [ 6 ] The parties have indicated that this is not a situation where Al Imam fears that confidential information might be transmitted to WAI by Heenan Blaikie. The grounds are, rather, the following:

A) Heenan Blaikie is in a conflict of interest since it acted for WAI, Hanano and Al Imam in the preparation of the USA and moreover, the validity and the

interpretation of the Clause is one of the main issues of the present case;

B) Subsidiarily, Al Imam indicates his intention of calling members of Heenan Blaikie to testify.

A) Conflict of interest [ 7 ] Mtre Bélanger of Heenan Blaikie acknowledges that he drafted the USA containing the Clause but alleges that at all times he was acting exclusively for WAI. For his part, Al Imam alleges that Mtre Bélanger also acted for him in that work. [ 8 ] Hanano testifies that when he and Al Imam decided to start a company in 2004, they needed an attorney to structure the company and prepare corporate documents, etc. but that they wanted to do a lot of the «legwork» themselves in order to minimize costs. [ 9 ] Hanano was referred to Mtre.

Carl Bélanger of Heenan Blaikie and met with him in February 2004 to discuss the project. Mtre. Bélanger testified that he received a mandate to represent WAI exclusively and that the legal work consisted of preparing the corporate documents, transferring the intellectual property to WAI, etc. [ 10 ] Hanano and Al Imam agree that at all times Hanano was the main contact with Mtre. Bélanger and that Al Imam never spoke to or met with him without Hanano being present. Mtre. Bélanger testified that, in fact, he only met Al Imam once after his work for WAI was completed in April 2004.

However, Al Imam testified that he also met Mtre. Bélanger with Hanano at the beginning of 2004. [ 11 ] According to Hanano, it was clear from the beginning that Heenan Blaikie represented WAI exclusively and that neither Al Imam nor he were represented by attorney concerning the USA. However, at page 125 of his discovery of November 12, 2010, Hanano, in answering a question from his own attorney, confirms that Heenan Blaikie represented not only WAI but also represented himself and Al Imam: « ME CLAUDE PELLETIER: Q. So you're going to have to go to the Shareholders Agreement… ME NATHALIE BÉDARD: R. No, I don't.

ME CLAUDE PELLETIER: Q. … and you're going to have to ask him. Plus I am not raising the issue of solicitor privilege here because I believe Maître Bélanger acted for the company, right ? THE WITNESS: A. Yes. ME CLAUDE PELLETIER: Q. And he acted for Yousef as much as you, right ? A. Correct.» [1] [ 12 ] Hanano testified that his answer needed to be put into context.

The Court notes that at page 125, the question to Hanano followed an exchange between the two attorneys over an objection, whereas at page 122, Hanano, in answering a question from the attorney for Al Imam, stated that the USA was prepared by the attorneys for WAI:

«Q. Okay. Let's go to the Shareholders Agreement. I would like to know who prepared this. It's P-1. A. It was by lawyers of World Assurance, Heenan Blaikie.»[2] [13] In light of this answer, the Court cannot conclude on the basis of the other statement alone that Al Imam was represented byHeenan Blaikie for the preparation of the USA and the Clause. [14] Furthermore, Hanano and Al Imam testified that in 2003, they met with an attorney who was a friend of Hanano to discuss anon-competition clause Al Imam had signed with a former employer.

That lawyer provided not only information about the clause inquestion but also gave them detailed information with respect to non-competition clauses in general. [15] This becomes relevant because, on February 11, 2004, Mtre. Bélanger provided Hanano and Al Imam with a model USA, attheir request. According to Hanano the specifics of the Clause, such as territory, time period, etc., were discussed between Al Imam andhimself with no input from Mtre. Bélanger. In fact, Hanano stated that most of the input came from Al Imam. Once the two agreed onthe content of the Clause, it was transmitted to Mtre.

Bélanger to be incorporated into the USA. [16] The relevant provisions of the Code of ethics of advocates[3] ("Code of ethics") are the following: 3.06.01 An advocate shall not use, for his benefit, for the benefit of the partnership or joint-stock company within which he engages inhis professional activities or for the benefit of a person other than the client, confidential information obtained while he engages in hisprofessional activities. 3.06.02 An advocate shall not agree to perform professional services if doing so entails or may entail the communication or use ofconfidential information or documents obtained from another client without the latter's consent, unless required by law. 3.06.05 An advocate shall safeguard his professional independence regardless of the circumstances in which he engages in hisprofessional activities.

In particular, he must not let his professional judgment be subject to pressure exerted on him by anyonewhomsoever. 3.06.06 An advocate shall avoid any situation of conflict of interest. 3.06.07 An advocate is in a conflict of interest where, in particular: 1) he represents conflicting interests; 2) the interests he represents are such that he might tend to favour certain among them or that his judgment and loyalty may beunfavourably affected; […] [17] In order to decide questions concerning the existence of a conflict of interest we must refer to

article 3.06.08: 3.06.08 To decide any question relating to a conflict of interest, consideration must be given to the higher interests of justice, theexplicit or implicit consent of the parties, the extent of prejudice for each of the parties, the time elapsed since the origin of the situationthat could give rise to the conflict, as well as the good faith of the parties. [18] Our Supreme Court in the decision Succession MacDonald v. Martin[4], specified the criteria to consider in order todetermine if there is a conflict of interest that justifies an attorney to be declared ineligible: 1.

Le souci de préserver les normes exigeantes de la profession d'avocat et l'intégrité de notre système judiciaire; 2. En contre poids, le droit du justiciable de ne pas être privé sans raison valable de son droit de retenir les services de l'avocat de sonchoix et ; 3. La mobilité raisonnable qu'il est souhaitable de permettre au sein de la profession. [19] Al Imam testified that he was represented by Heenan Blaikie but he provides no evidence of the counsel he would havereceived from Mtre.

Bélanger, or anyone else at Heenan Blaikie, whether with respect to the preparation of the USA, in general, or theconditions set out in the Clause, in particular. [20] Consequently, the Court prefers the testimony of Hanano and Mtre.

Bélanger when they say that Heenan Blaikie was actingexclusively for WAI and that Mtre Bélanger did not provide any advice or opinion concerning the Clause to any of WAI's shareholders,including Al Imam. [21] As for the fact that Heenan Blaikie drafted the USA, the Court refers to this excerpt from the decision Intersuivi Inc. v.Logiciels Teamcoordination Inc. et al.: «Le fait que Me Quesnel ait rédigé, à la demande de son client, la convention dont l'une des clauses est l'objet du litige, ne lui fait pasperdre son indépendance professionnelle, de la même manière qu'un avocat ne devient pas inhabile pour avoir donné une opinionjuridique désormais

partie d'un litige, Fédération des médecins spécialistes du Québec c. Association des médecins hématologistes-oncologistes du Québec, (QC CA), [1988] R.J.Q.2067 (C.A.).[5] [22] According to the case law provided by both parties, in matters such as these, the facts are important and each case is «un cas

d'espèce». [ 23 ] Consequently, the fact that Heenan Blaikie drafted the USA is not sufficient to disqualify them as attorneys for WAI in the present case.

B) Probable testimonies of members of Heenan Blaikie [ 24 ] Al Imam also stated that Heenan Blaikie should be declared ineligible because two of their attorneys, Mtre. Bélanger and Mtre. Véronique Bastien might be called upon to testify in relation to:

i) to the

interpretation of the USA; and ii) the termination of Al Imam's employment, more particularly as to what was said during the meeting of directors of May 11, 2010, during which Al Imam was asked to leave his employment with WAI. [ 25 ]

Article 3.05.06 of the Code of ethics establishes the guidelines for when an attorney ad litem will be called upon to testify at the trial: 3.05.06 An advocate shall not personally act in a dispute if he knows or if it is evident that he will be called upon as witness. However, he may accept or continue to act if the fact of not doing so is of a nature to cause serious and irreparable harm to the client, or if his testimony only refers to:

a) an uncontested matter;

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

c) the nature and value of the professional services he or another person engaging in his activities within the same partnership or joint- stock company have rendered to the client. [ 26 ] Thus, it is not sufficient simply to announce one's intention to have an attorney testify in order to have him declared ineligible. Proof must be made that his testimony is necessary: «[48] Par contre, il ne suffit pas à une

partie de dire qu'elle entend faire témoigner un avocat pour que celui-ci soit déclaré inhabile. La nécessité du témoignage doit être démontrée et être motivée de façon sérieuse, sans reposer sur des considérations futiles ou mêmes vexatoires. Tel que la Cour d'appel l'écrit dans l'arrêt Fédération des médecins spécialistes du Québec, «encore faut-il que ce soit pour des raisons graves et contraignantes.» [6] [ 27 ] That proof is missing here. The

interpretation of the USA is essentially a question of law for the

interpretation of the Court, Moreover, the Court believes Mtre. Bélanger and Hanano when they say that the content of the Clause was negotiated by Al Imam and Hanano themselves and all that Mtre. Bélanger did was to incorporate it into the USA. [ 28 ] WAI is entitled to be represented by the attorney of its choice. Before denying them that right, the Court must evaluate whether the testimony of Mtre. Bélanger and Mtre. Bastien is truly useful or necessary. «L'assignation d'un procureur ad litem comme témoin par la

partie adverse, ne doit être permise que lorsque vraiment utile ou nécessaire et le Tribunal doit s'assurer qu'il ne s'agit pas d'une tactique de la

partie ayant des intérêts opposés à ceux du client dudit avocat, de le priver de l'avocat de son choix.» [7] [ 29 ] Therefore, the reasons invoked by Al Imam to disqualify Heenan Blaikie have to be "serious and compelling" («graves et contraignantes»): «S'il n'existe pas un droit absolu au libre choix de l'avocat au mépris de toutes les autres règles déontologiques, il faut établir des raisons graves, contraignantes, «compelling» dans le langage de la Cour d'appel de l'Ontario, pour justifier l'exclusion de l'avocat librement choisi par une partie. (…).» [8] [ 30 ] Al Imam has not convinced the Court that the testimony of Mtre.

Bélanger and Mtre. Bastien would be truly useful or necessary to establish what was said at the meeting of directors of May 11, 2010. There were other participants at that meeting who can do that just as well. [ 31 ] The Court is also not convinced that the testimony of Mtre. Bélanger would be useful or necessary with respect to the

interpretation of the Clause. Its content was negotiated by Hanano and Al Imam themselves, with little or no input from Mtre. Bélanger and, in any event, it is a question of law for the Court to decide. [ 32 ] Consequently, the Court will dismiss the present motion, with costs. FOR THESE REASONS, THE COURT: DISMISSES Defendant's Motion to declare Heenan Blaikie ineligible to act as attorneys for Plaintiff; WITH COSTS.

________________________________ MICHELINE PERRAULT, J.S.C. Me Claude PelletierHEENAN BLAIKIEAttorneys for Plaintiff Me Nathalie BédardDONATI MAISONNEUVEAttorneys for Defendant Dates of hearing: March 10th and 11th, 2011 [6] Paul Gendron c. J.E. Gendron Automobiles Ltée et al., September 25, 2003, CS,AZ-50193949. [7] Supra, note 5. [8] Fédération des médecins spécialistes du Québec c. Association des médecins hématologistes-oncologistes du Québec, (QC CA), [1988] R.J.Q.2067 (C.A.), page 2075.