Centennial Tire Ltd. - v. -, 2012 SKPC 130

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2012 SKPC 130 Date: August 10, 2012 File: 17-11 Location: Moose Jaw _____________________________________________________________________________ Between: Centennial Tire Ltd. - and - Derrick Anderson & Royal Lepage Landmart R. Fielding for Centennial Tire & K. Cornea For the Plaintiff D. Chow For the Defendant / Applicant ______________________________________________________________________________ DECISION ON APPLICATION TO EXCLUDE COUNSEL D. J. KOVATCH , J ______________________________________________________________________________ I.

BACKGROUND [ 1 ] In the spring of 2010 Derrick Anderson executed an Offer to Purchase Commercial Land from the Plaintiff, Centennial Tire Ltd. Both parties were represented and assisted by Mr. Mike Walz of Royal Lepage Landmart in the negotiation and execution of the Offer to Purchase. At the time of the execution of the Offer to Purchase, Derrick Anderson tendered a deposit of $10,000.00. Very shortly after execution of the Offer to Purchase, Mr. Walz had discussions with each of the parties and with the Grayson and Company law firm in Moose Jaw. After some further discussions regarding the retirement of Mr.

Cooper, it was agreed that both parties would be represented, for the real estate transaction, by Mr. Ken Cornea, of Grayson and Company. [ 2 ] The transaction did not proceed. When it became apparent that the real estate transaction would not proceed, Centennial Tire

[ 2 ] The transaction did not proceed. When it became apparent that the real estate transaction would not proceed, Centennial Tire asked that the $10,000.00 deposit be released to it. Royal Lepage Landmart advised that it would release the trust funds in accordance with the directions from the Court. The Plaintiff instructed its solicitor, Mr. Ken Cornea, to commence the present action. The Defendant, Derrick Anderson, then retained his present solicitor, Mr. David Chow, to conduct the civil trial. [ 3 ] Mr. Anderson brought a motion before this Court asking the Court to disqualify Mr.

Cornea as counsel for Centennial Tire, and asking that Centennial Tire be required to retain independent counsel from a new law firm. A special date was set for the hearing of this motion. On that date, the parties led viva voce evidence and made argument. I reserved and later issued this decision. II. THE JURISDICTION OF THE COURT [ 4 ] In earlier discussions between counsel and the Court, Mr. Chow advised that he would bring this application before a Queen’s Bench Judge. At that time, Mr.

Cornea took the position that this Court is the master of its own proceedings, and as a result this Court could decide the motion. The date was then set for the presentation of viva voce evidence and the argument of the motion. There was no further debate as to whether this Court had jurisdiction. In the case of MacDonald Estate v. Martin , at para. 18 , the Court stated: [1] The Courts, which have inherent jurisdiction to remove from the record solicitors who have a conflict of interest, are not bound to apply a code of ethics.

Their jurisdiction stems from the fact that lawyers are officers of the Court and their conduct in legal proceedings which may affect the administration of justice is subject to this supervisory jurisdiction. [ 5 ] I am satisfied that, as master of its own procedure, the Court has jurisdiction to decide the motion. III. THE EVIDENCE [ 6 ] The first witness called was Mr. Donald Brian Walz, a principal in the Defendant realty company. He testified that he acted for both parties, in “putting the deal together”. This involved the preparation and execution of the Offer to Purchase.

At the same time, he also asked each of the parties as to whom their solicitor would be to handle closure of the matter and registration of documents with Land Titles. He was advised that the seller’s solicitor would be Mr. Ken Cornea of Grayson and Company in Moose Jaw. He was also advised that the buyer’s solicitor would be Mr. Jack Cooper, who at that time was also a senior member with Grayson and Company. He then sent the normal package of information to the parties’ respective solicitors.

He also indicated that “collapse” was written on his file, meaning that the transaction did not close. [ 7 ] Under cross-examination by Mr. Fielding, Mr. Walz testified that he only acts as a realtor, and he is not an agent for the lawyers, and does not retain any lawyer. The clients simply advise as to whom their solicitor will be and he is then in touch with the respective solicitor. I immediately made a note to the effect that the clients were free to retain any solicitor of their choosing. [ 8 ] The Defendant, Derrick Anderson, testified.

He indicated that he dealt with Landmart Realty, and working with them, struck the deal by executing an Offer to Purchase for this property. After this time, he advised that his solicitor would be Mr. Jack Cooper, from Grayson and Company. He indicated that Mr. Cooper had been a long-time solicitor for his family, and over the years, had handled various matters for himself and other family members. Because of this past relationship, he simply indicated to Mr. Walz that Mr. Cooper would act on this matter and instructed that the appropriate documents be forwarded to Mr. Cooper. Mr.

Anderson testified that shortly thereafter, he was advised that Mr. Cooper had retired, and that Mr. Cornea with the Grayson office would act on his behalf. [ 9 ] Mr. Anderson said that he was arranging his financing through Conexus Credit Union, and was attempting to make these arrangements through Mr. Rick Oakes. [ 10 ] Mr. Anderson testified that some time later he received a telephone call from a receptionist or secretary employed at the Grayson office. He believed this call came during the last two weeks of June 2010. At this time, the lady advised that all of the proper paperwork was at Grayson and Company.

Mr. Anderson indicated that he advised her there was an environmental issue that was being dealt with at the bank. He suggested to the lady that she “set the matter aside for now”. At this time there was no discussion of him using any other solicitor. [ 11 ] After this time, there was an environmental assessment and a report prepared. On August 5, 2010, Mr. Cornea wrote to Mr. Anderson. A copy of that letter was entered as Exhibit D-2. In the letter, Mr. Cornea instructed Mr. Anderson to meet with Mr. Walz to amend the Offer, extending the possession date, and to meet with Mr.

Oakes: “In order to sign their loan documentation, so that they could issue mortgage instructions”. Mr. Cornea then added: “If there is any assistance you require from our office, please contact the writer.” [ 12 ] Mr. Anderson testified that the transaction did not close. On September 29, 2010, he received another letter from Mr. Cornea. This letter is Exhibit D-3. In this letter, Mr. Cornea asked him to make arrangements to have the air compressor “purchased from the vendor” removed from the building before October 1, 2010.

He then added that if there were any questions please contact the writer. [ 13 ] Under cross-examination by Mr. Fielding, Mr. Anderson agreed that through the real estate agent, there was the original Offer, and then a Counter-Offer. The deal was subject to some conditions, including an environmental study, to be concluded by April 30 th . These conditions were not met by April 30 th , and there was an agreed upon extension to May 10 th to remove the conditions. On May 10, 2010, there was an agreement reached to waive these conditions, and to proceed with the transaction. [ 14 ] Mr. Anderson agreed with Mr.

Fielding that he did not call anyone at Grayson and Company for advice prior to making the

Offer. He did not call them respecting amendment of the Offer. He had no contact with anyone at Grayson and Company prior to the May 10 th agreement to waive the conditions. He also agreed that he had no contact with a lawyer from Grayson and Company after May 10, 2010. His only contact with that firm was the above mentioned phone call from a receptionist or secretary. [ 15 ] Mr. Anderson advised that the deal collapsed in August 2010. At that time, the bank wanted a second environmental study and more collateral. On collapse of the deal, he did not go to Grayson and Company for any advice.

He testified that he expected to receive a bill from Grayson and Company, however, one was never sent. Nor was there any discussion regarding the scope of services or the charges to be made. [ 16 ] Grayson and Company called Ms. April Scheller as a witness. She testified that she has been employed as a real estate secretary with Grayson and Company for approximately five years. At the time she was one of three real estate secretaries employed by the firm. Real estate files were assigned to each of the three secretaries as they came in. She was responsible for doing work on the files assigned to her.

The Centennial Tire to Anderson matter was one of the files assigned to her. She recalled that Mr. Cooper was retiring at about that time, and they would advise individuals that Mr. Cooper was not taking new files. She could not recall any contact with Mr. Derrick Anderson. On cross-examination, Ms. Scheller advised that in the earliest stages of a matter, she would normally contact the clients to get relevant information, including how they would be described on Title, and details regarding financing, including which mortgage company was involved.

She agreed that while she could not recall a telephone conversation with Mr. Anderson, it was possible that she did have such a conversation with him to obtain this preliminary information. She testified that she did prepare the Transfer document in favour of Mr. Anderson, which appears to be dated and executed by Centennial Tire on June 29, 2010. [ 17 ] Ms. Scheller testified that she assumes that Mr. Cornea was acting for both parties. She indicated that she would normally call the buyer about where mortgage instructions would be coming from, and get other private information from the purchaser.

She also agreed that she prepared the originals of Exhibits D-2 and D-3 for Mr. Cornea’s signature. [ 18 ] Mr. Cornea also testified. Mr. Cornea testified that he was admitted to the Saskatchewan Bar in June 1982, is presently a member in good standing, and for many years has practiced with Grayson and Company . He testified that he was consulted by Centennial Tire prior to acceptance of the Offer. He advised that Mr. Bullied, the president of Centennial Tire, was in contact with him to advise that Centennial Tire was negotiating regarding the sale of its property. Mr.

Cornea agreed to act regarding that transaction. Mr. Cornea also provided some advice and had conversations with Mr. Walz at Landmart Realty, regarding the tenants that leased the property and the notices that would be required to be served upon the tenants before closure of the real estate transaction. [ 19 ] Mr. Cornea also testified that there was some soil contamination as a result of an oil spill. He indicated that he may have spoken to an engineer from Saskatchewan Environment about this. Further, that he did deal with the City of Moose Jaw regarding disposal of the soil.

He indicated that this work was done for Centennial Tire. [ 20 ] Mr. Cornea indicated that he had no contact from Mr. Derrick Anderson. Further that Mr. Cornea attempted to call Mr. Anderson on the phone but was unable to reach him. Mr. Cornea testified that the closing date came and went and there was no indication that the purchaser would close. He did agree that he sent some letters to Mr. Anderson. When asked if he had been retained by Mr. Derrick Anderson, Mr. Cornea stated that he didn’t think so. Mr.

Cornea testified that the Law Society was concerned about lawyers acting for both parties in real estate transactions. Lawyers are supposed to advise both parties, when acting for both parties, that if a dispute arises, they will not be able to act for either. Further, it was the practice of Mr. Cornea and his firm to obtain a written authorization from both parties indicating that they had been advised that the firm would act for both parties and have both parties execute their consent. Mr. Cornea testified that on this matter, he had the blank authorization form prepared, but it was never executed by Mr.

Derrick Anderson. Mr. Cornea indicated that he would normally have this document executed by the client, at the same time that they met to execute documents and pay the balance to close. In this case, the Grayson and Company law firm never received mortgage instructions or prepared mortgage documents for execution. They didn ’ t arrange an appointment with Mr. Anderson for execution of the mortgage and as a result, never met to execute the authorization form. Mr. Cornea stated that he never received any advice from Mr. Anderson as to why the transaction did not proceed. [ 21 ] Mr.

Cornea was asked about Exhibits D-2 and D-3. He stated that he didn’t think he was acting for Mr. Anderson by sending these letters. He regarded the letters as simply factual in nature. [ 22 ] Mr. Cornea could not recall if he had ever spoken to Mr. Rick Oakes at Conexus about mortgage instructions. He did agree that he may have advised Conexus of certain matters that they required for the mortgage. [ 23 ] With respect to Exhibit D-3, dated September 22, 2010, Mr. Cornea advised that by this time Centennial had instructed there would be no further extensions granted.

In a side deal to the real estate transaction, Derrick Anderson had agreed to purchase a compressor, and I assume, had paid for that compressor. As a result, Mr. Cornea wrote to Mr. Anderson asking him to pick it up and remove it from the property. [ 24 ] Mr. Cornea testified that he was prepared to act for Mr. Anderson if the sale went ahead. However, the solicitor/client relationship was never established. Mr. Cornea testified that Mr. Anderson advised Mr. Walz at Landmart Realty that Mr. Cornea would act, and that Mr. Cornea was fine with that. Mr.

Cornea reiterated that had he been acting, he would have had Mr. Anderson execute the authorization mentioned above. At this time he would have gone into some detail respecting the need to share information with both parties. He said that there can be no requirement upon a client to execute such an authorization. He advised he recalled one situation where the client did not execute the authorization, and advised they would go elsewhere for legal advice. Had this occurred here he would not have continued to act for both sides. Mr. Cornea could not confirm, but believed it likely that Centennial Tire had executed

the authorization during an earlier appointment. [ 25 ] Under cross-examination by Mr. Chow, Mr. Cornea acknowledged that he received the instructions from the realtor, indicating that Grayson and Company would act for both parties. However, Mr. Cornea indicated that this sheet did not establish a solicitor/client relationship. Mr. Cornea did agree that one file was opened for both sides, and that all documents respecting the transaction would be included in that file. Mr.

Cornea also agreed that the authorization form, respecting the firm ’ s ability to act for both sides, is not executed by his first meeting with the clients. He agreed that it is not unusual that this first meeting does not occur until the actual mortgage documents are executed. [ 26 ] Mr. Cornea agreed that the Transfer Authorization was executed by Centennial Tire on June 29 th , for the July 1 st possession date. He agreed that his usual practice would be to have Centennial Tire execute the authorization form at the time the Transfer Authorization was executed.

As a result, it is probable that Centennial Tire executed the authorization on June 29 th . He also agreed that at that time, being June 29 th , it was still anticipated that he would be acting for both sides. He was simply awaiting mortgage instructions. No one had advised him by that time that Grayson and Company would not be acting to conclude the sale. Mr. Cornea also agreed that he had earlier advised the real estate agents that he would handle the matter for Mr. Cooper, and the agents indicated that would be acceptable. [ 27 ] Mr.

Cornea advised that had he received mortgage instructions from Conexus, he would have prepared the mortgage documents. He indicated it was fairly common for a solicitor to act on behalf of the purchaser and mortgage company at the same time. [ 28 ] Mr. Chow cross-examined Mr. Cornea regarding Exhibit D-2. Mr. Cornea said he didn’t know what Mr. Anderson was going to do with the transaction. Further, that he was pointing out to Mr. Anderson what steps Mr. Anderson had to take for the transaction to close. He indicated that he was advising Mr. Anderson that Centennial was still prepared to proceed. Mr.

Cornea denied that he was providing any advice to Mr. Anderson as to what steps were required. Mr. Cornea stated that he was simply indicating the factual steps that Mr. Anderson would be required to take. [ 29 ] Mr. Cornea did agree that he had a number of conversations with Mr. Oakes, perhaps as many as three, in an attempt to provide information to Mr. Oakes, and iron out problems so that mortgage instructions could be issued. [ 30 ] Mr. Cornea was also asked about the environmental report. He indicated that he believed that the environmental report was paid for by Mr. Anderson. Mr.

Cornea agreed that he received some reports from Clifton and Associates and from the City of Moose Jaw regarding the environmental assessment and the disposal of soil. [ 31 ] Mr. Chow asked about Exhibit D-3. Mr. Cornea agreed that he did not indicate he was no longer acting for Mr. Anderson. He did not ask that Mr. Anderson’s lawyer be in touch with him, but asked Mr. Anderson to contact him. [ 32 ] Mr. Cornea also agreed with Mr. Chow that clients have varying degrees of understanding regarding conflicts of interest and the authorization form.

Many don’t understand this until they actually meet with the solicitor and have the issue and the authorization explained to them. [ 33 ] Mr. Cornea also agreed that a solicitor/client relationship can be created in various ways. He stated however, that the law firm did not agree to act until the acknowledgment form had been executed, and it was only at this time that the solicitor/client relationship would be created. In response to my question, Mr. Cornea agreed that he would never have written a letter directly to Mr. Anderson, if he had any indication that Mr.

Anderson had another solicitor. [ 34 ] In re-examination, Mr. Cornea indicated that on behalf of Centennial Tire, he wrote to Landmart Realty, advising that Centennial Tire was claiming the deposit. He said he sent a copy of this letter to Mr. Anderson. Centennial Tire then instructed that this action be commenced. Mr. Cornea indicated that Centennial Tire wanted him to continue to act. Further, Mr. Cornea believed there was no conflict of interest. Mr.

Cornea agreed that he had information from Clifton and Associates regarding remediation of the environmental problem, but he did not feel this was confidential information. [ 35 ] Mr. Chow was then allowed further cross-examination on this last mentioned point. Mr. Cornea agreed that, by letter dated April 21, 2011, he forwarded the contents of his file and all relevant material to Mr. Chow. This included the report of Clifton and Associates to Mr. Anderson. Mr. Cornea agreed that this report referred to a previous report of Clifton and Associates dated May 10, 2010.

He agreed that the previous report was marked “confidential”. Mr. Cornea testified that he did not think the May report was actually appended to the final report. IV. THE ARGUMENTS [ 36 ] Mr. Chow argued that Grayson and Company was acting for Mr. Anderson. No one from Grayson ever indicated that they weren’t acting. Mr. Chow argued that the execution of the authorization or conflict document did not create the solicitor/client relationship, but simply acknowledged the conflict. He stated that by Mr. Cornea’s admission, the solicitor/client relationship could be established in various ways.

Further, that on June 29, 2010, everyone, including Mr. Cornea, believed he was continuing to act for both sides. Mr. Chow argued that thereafter, Mr. Cornea indicated that Mr. Anderson did not provide him with instructions. But in Mr. Chow’s words: “The lack of instructions or failure to provide instructions did not mean that the solicitor/client relationship did not exist.” Mr. Chow then pointed to Exhibits D-2 and D-3, and argued that clearly Mr. Cornea was providing advice to Mr. Anderson. He stated that any objective viewer from the public would believe that Mr.

Cornea was acting and that there was a conflict.

[ 37 ] Mr. Fielding argued that Grayson and Company had earlier acted for Mr. Anderson, but there was no on-going relationship with the firm. Further, that at no time in June of 2010, was there a retainer agreement or a solicitor/client relationship. He pointed out that Mr. Anderson agreed that he had instructed the secretary to put the transaction to the side. According to Mr. Fielding, this was not an indication of a retainer, but instructions that no one was to act. Mr. Fielding argued that all of Mr. Cornea’s actions were consistent with him acting for the seller. At no time did Mr.

Cornea have a conversation with Mr. Anderson as to whether the transaction should proceed. Further, that there was no indication that Mr. Anderson was relying upon Grayson and Company for anything. Rather, Mr. Anderson was acting on his own. Mr. Cornea was merely attempting to complete the transaction and get the money to his client, the seller. Alternatively, counsel for Mr. Cornea argued that Mr. Cornea did not receive any confidential information that could be used to the prejudice of Mr. Anderson in this matter. As a result the Court should decline to make an order. V. ANALYSIS 1.

Was there a solicitor/client relationship between Mr. Cornea and Mr. Anderson with respect to the real estate transaction? [ 38 ] There are some judicial statements which would appear, on their face, to support the proposition that there must be a formal retention of the lawyer before that lawyer could acquire confidential information, and later be barred from acting. For example, in the case of Wallace v.

Canadian National Railway , [2] the Court stated: [66] Using the test stated in MacDonald Estate , the questions on this part of the analysis are what was the confidential information, if any, and is there a risk that it could be used to the prejudice of CN. CN cannot seek to disqualify McKercher from the new representation simply by asserting that confidential information was imparted.

The onus is on CN to show that either the two retainers are sufficiently related , thereby engaging the presumption that confidential information has been imparted and that there is likely some prejudice, or that specific confidential information was imparted and that there is a risk that such specific information could be used to CN’s prejudice. (Emphasis added) [ 39 ] However, the facts in Wallace v. Canadian National Railway are very much different from the present case. In the Wallace case, the McKercher firm had two specifically worded retainer agreements.

I believe the Court of Appeal found it easy and convenient to refer to “the two retainers”, and the Court of Appeal did not intend to indicate that there must be a formal retainer agreement pursuant to which the lawyer acquires confidential information. [ 40 ] It is significant to note that in the Wallace case, the Court of Appeal carefully reviewed the case law, and paid particular attention to MacDonald Estate v. Martin , R. v.

Neil , and Strothers v. 3464920 Canada Inc . [3] In MacDonald Estate , at para. 46 , the Court stated: [4] In my opinion, once it is shown by the client that there existed a previous relationship which is sufficiently related to the retainer from which it is sought to remove the solicitor, the Court should infer that confidential information was imparted unless the solicitor satisfies the Court that no information was imparted which could be relevant. [ 41 ] This portion is referred to in the subsequent decisions referred to above.

In the Strother case, at para. 34 , the Court stated: [5] When a lawyer is retained by a client, the scope of the retainer is governed by contract. It is for the parties to determine how many, or how few, services the lawyer is to perform, and other contractual terms of the engagement. The solicitor/client relationship thus created is however overlaid with certain fiduciary responsibilities, which are imposed as a matter of law...Not every breach of the contract of retainer is a breach of a fiduciary duty.

On the other hand, fiduciary duties provide a framework within which the lawyer performs the work and may include obligations that go beyond what the parties expressly bargained for. [ 42 ] In the Neil case, at paragraph 22 , the Supreme Court referred to the Code of Professional Conduct established by the Law Society of Alberta and quoted its definition of “client” as follows: [6] "client" generally means a person on whose behalf the lawyer renders professional services and with whom the lawyer has a current or ongoing lawyer/client relationship, but may also include a person who reasonably believes that a lawyer/client relationship exists although one or more of the customary indicia of such a relationship are absent. [ 43 ] In his written brief, Mr.

Chow advised of the new Code of Conduct, adopted by the Law Society of Saskatchewan in February of this year, which became effective on July 1, 2012. It is clear that this Code of Conduct was several years in the making, and was a joint project of the various provincial Law Societies across the country. It is also clear that this Code is not a massive revision or alteration of the professional standards applied to lawyers. Rather, it is a consideration of prior Codes of Conduct, together with decisions interpreting and applying those Codes.

The present Code attempts to codify and update past Codes and rulings in a more comprehensive and readable format. As a result, in my view, it is appropriate that I refer to provisions and commentary in the new Code, in reaching this decision. Saskatchewan ’ s new Code of Conduct defines “ client ” as follows:

“ client ” means a person who: (

a) consults a lawyer and on whose behalf the lawyer renders or agrees to render legal services; or (

b) having consulted the lawyer, reasonably concludes that the lawyer has agreed to render legal services on his or her behalf. [ 44 ] The commentary beneath that definition, states as follows: A lawyer-client relationship may be established without formality. ...

For greater clarity, a client does not include a near-client, such as an affiliated entity, director, shareholder, employee or family member, unless there is objective evidence to demonstrate that such an individual had a reasonable expectation that a lawyer-client relationship would be established. [Emphasis added] [ 45 ] The same Code of Professional Conduct also contains s. 2.04(5), dealing with joint retainers. It provides that a lawyer may act for more than one client with respect to the same matter or transaction.

However, the lawyer must advise each of the clients that he has been asked to act for both of them; must advise that no information received in connection with the matter from one client can be treated as confidential insofar as the other is concerned; and must advise that if a conflict develops that cannot be resolved, the lawyer cannot continue to act for both or all of them, and may have to withdraw completely. I will return to discuss the significance of this provision in just a moment. [ 46 ] On the basis of the above quotations from the cases, and these

definitions of “client”, I can conclude that the retainer agreement and the existence of the solicitor/client relationship are not the same and may or may not be entirely coexistent. Further, in terms of this analysis, the relevant question is not whether a formal retainer agreement has been entered into, but whether the solicitor/client relationship has been entered into. I would also conclude that in this case a solicitor/client relationship was entered into.

The definition of “client” in the Code of Professional Conduct includes the situation where a person “consults” a lawyer and the lawyer renders or agrees to render legal services. On the facts, it seems clear to me that Mr. Walz, the real estate agent, made the initial consultation and Mr. Cornea agreed to act. Further, there was a consultation between Ms. Scheller, the secretary and representative of the lawyer, with the client, and Mr. Cornea and his firm not only agreed to render, but did render a number of legal services with respect to this matter.

The definition of “client” also includes a person who has consulted a lawyer and “Reasonably concludes that the lawyer has agreed to render legal services on his or her behalf.” Above, I referred to s. 2.04(5) of the Code, dealing with joint retainers. Mr. Cornea testified as to the practice that he and his firm follow when acting for both parties to a real estate transaction. It is clear that this practice has been arrived at to comply with this very provision of the Code. Mr.

Cornea testified that he would have advised the principals in Centennial Tire that he had been requested to act for both parties, and would have had them sign their consent and authorization at the time they executed the Land Titles Transfer Authorization. He had prepared the same advice and consent and authorization form for execution by Mr. Anderson. I go through this to make this important point. Mr. Cornea took these steps because he had the very reasonable expectation that he was acting on behalf of both parties, and he wanted to act properly and within the bounds of Professional Conduct. Given that Mr.

Cornea had this very reasonable expectation, it seems to me to be a reasonable and proper conclusion that Mr. Anderson had consulted with the lawyer, or his representative, and that Mr. Anderson had the same reasonable expectation that legal services would be rendered on his behalf. [ 47 ] It is my conclusion on this point that the existence of a retainer agreement and the question of whether Mr. Cornea had been formally retained is not the most relevant question. The most relevant question is whether a solicitor/client relationship existed between Mr.

Cornea and Centennial Tire and a solicitor/client relationship existed between Mr. Cornea and Mr. Anderson. I am satisfied that a solicitor/client relationship existed between Mr. Cornea and both Centennial Tire and Derrick Anderson. I am also satisfied that Mr. Cornea provided legal services to both individuals. 2. Did Mr. Cornea acquire confidential information from Mr Anderson? [48] This issue is canvassed most thoroughly by the Supreme Court in the MacDonald Estate case.

At paragraph 44, the Court posed the question: “Is there a disqualifying conflict of interest?” In paragraphs 45 to 47, the Court then stated as follows: [7] Typically, these cases require two questions to be answered:

(1) Did the lawyer receive confidential 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? In answering the first question, the Court is confronted with a dilemma. In order to explore the matter in depth may require the very confidential information for which protection is sought to be revealed. This would have the effect of defeating the whole purpose of the application. American courts have solved this dilemma by means of the "substantial relationship" test. Once a "substantial relationship" is shown, there is an irrebuttable presumption that confidential information was imparted to the lawyer.

In my opinion, this test is too rigid. There may be cases in which it is established beyond any reasonable doubt that no confidential information relevant to the current matter was disclosed. One example is where the applicant client admits on cross-examination that this is the case. This would not avail in the face of an irrebuttable presumption.

In my opinion, once it is shown by the client that there existed a previous relationship which is sufficiently related to the retainer from which it is sought to remove the solicitor, the Court should infer that confidential information was imparted unless the solicitor satisfies the Court that no information was imparted which could be relevant. This will be a difficult burden to discharge.

Not only must the court's degree of satisfaction be such that it would withstand the scrutiny of the reasonably informed member of the public that no such information passed, but the burden must be discharged without revealing the specifics of the

privileged communication. Nonetheless, I am of the opinion that the door should not be shut completely on a solicitor who wishes todischarge this heavy burden. The second question is whether the confidential information will be misused. A lawyer who has relevant confidential informationcannot act against his client or former client. In such a case the disqualification is automatic. No assurances or undertakings not to usethe information will avail. [49] In the present case, I have already determined that there was a solicitor/client relationship between Mr Cornea and Mr.Derrick Anderson.

That relationship is directly related to the subject matter of this litigation. As a result, I am required to infer thatconfidential information was imparted to Mr. Cornea, unless I can be satisfied that no such information was imparted. I must be satisfiedto the point that no reasonably informed member of the public would believe that confidential information was imparted. I cannot be sosatisfied in this case. The letters that Mr. Cornea wrote to Mr. Anderson, Exhibits D-2 and D-3, appear to be giving advice. I must inferthat Mr. Anderson provided sufficient information to Mr.

Cornea to enable him to give that advice. In the evidence of Mr. Cornea andMr. Anderson, they discussed Mr. Cornea receiving an environmental assessment on the property from Clifton and Associates, and thatthis assessment was marked confidential. Mr. Cornea also agreed that he may have had discussions with Mr. Oakes at Conexus CreditUnion, attempting to iron out problems respecting Mr. Anderson’s financing for the purchase. Lastly, it seems to me that even if MrCornea asked questions about whether and when Mr. Anderson attempted to contact him, that might be in breach of the solicitor/clientprivilege.

The new Law Society of Saskatchewan Code of Conduct, s. 2.04(1) contains the standard statement that a lawyer must not actor continue to act where there is a conflict of interest. The commentary under this

section states as follows: A lawyer should examine whether a conflict of interest exists not only from the outset but throughout the duration of a retainer becausenew circumstances or information may establish or reveal a conflict of interest. [50] When I think about Mr. Cornea running this trial, it seems to me he might be very tempted, or even required by CentennialTire to suggest that Mr. Anderson did not contact him because he had no interest, or had lost all interest, in closing the transaction. In myview, that would involve Mr.

Cornea using confidential information obtained from the solicitor/client relationship against Mr. Anderson. The conflict of interest would then be actualized. [51] When all is said and done, I cannot be satisfied that Mr. Cornea has not received confidential information that he could useagainst Mr. Anderson in the conduct of this trial. That being said, in the words I quoted from MacDonald Estate, “The disqualification is automatic”.

I would add that in the Wallace decision, at paragraph 55, the Court of Appeal stated as follows:[8] [55] A legacy of Neil is that, in conflict analysis, primacy was given to the integrity of both the legal profession and the administrationof justice over the other two competing values enunciated in MacDonald Estate, i.e. the client’s choice of lawyer and lawyer mobility. [52] In my view, the decision to disqualify Mr.

Cornea is the cautious approach that protects the integrity of the legal professionand the administration of justice, and is consistent with the various decisions of the appellate courts. [53] I specifically mention this to say that in no way is this decision intended to be an indictment of the ethics or integrity of Mr.Cornea or any member of his firm. I have not the slightest basis to question either the integrity or ethics of Mr. Cornea or any member ofthat firm. This decision is entirely aimed at ensuring a fair trial in this matter. VII. CONCLUSION [54] There will be an order disqualifying Mr.

Cornea from acting as a counsel for the Plaintiff at the trial of this matter. I reserveon the question of Costs, until the conclusion of the trial in this matter. As soon as the Plaintiff has retained independent counsel, andthat counsel feels he or she is able to do so, they may speak to the clerk to set a new trial date. [55] Dated at the City of Moose Jaw, in the Province of Saskatchewan this 10th day of August, A. D. 2012. ______________________ D. J. KOVATCH, J [1] MacDonald Estate v. Martin, (SCC), [1990] 3 S.C.R. 1235, para. 18. [2] Wallace v.

Canadian National Railway, 2011 SKCA 108, para. 66. [3] MacDonald Estate v. Martin, supra; R. v. Neil, 2002 SCC 70 , [2002] S.C.J. No. 72; and Strothers v. 3464920 Canada Inc.,2007 SCC 24 , [2007] S.C.J. No. 24. [4] MacDonald Estate v. Martin, supra, para. 46.

[5] R. v. Strother , supra , para. 34. [6] R. v. Neil , supra , para. 22 . [7] Macdonald Estate v. Martin, supra , paras. 45-47. [8] Wallace v. Canadian National Railway , supra, para. 55 .