2013 ONSC 2894, 2013 ONSC 2894

CITATION : 1298781 Ontario Inc. et al. v. Levine et al., 2013 ONSC 2894 COURT FILE NO.: CV-09-00374814 MOTION HEARD: 20130501 SUPERIOR COURT OF JUSTICE - ONTARIO RE: 1298781 Ontario Inc. and Enzo Barrasso, Plaintiffs AND: Larry J. Levine and Levin, Sherkin, Boussidan, Defendants BEFORE: Master B. McAfee COUNSEL: Demetrios Yiokaris and Kalev Annico, articling student, for the Moving Parties, the Defendants Leroy A. Bleta, for the Responding Parties, the Plaintiffs HEARD: May 1, 2013 REASONS FOR DECISION Nature of the Motion [ 1 ] This is a motion brought by the defendants for an order removing Leroy A.

Bleta as lawyer of record for the plaintiffs. [ 2 ] The plaintiffs oppose the motion. [ 3 ] For the reasons that follow, the motion is granted. Preliminary Issue [ 4 ] The plaintiffs raised a preliminary issue. The plaintiffs sought an order striking exhibit 1 from the brief of exhibits to the cross-examination of Roslyn Brown. Without admitting that the exhibit is in any way improper, the defendants did not oppose the request. Accordingly, exhibit 1 is struck.

The Action and Underlying Action [ 5 ] In this action the plaintiffs seek $525,000.00 in damages for alleged professional negligence against their former lawyer, Larry Levine regarding his role as counsel in Jelco Construction Ltd. v. 1298781 Ontario Inc. et al., court file no.

CV-05-CV291311- 0000 (the underlying action). [ 6 ] In the underlying action, Jelco Construction Ltd. (Jelco) claimed against 1298781 Ontario Inc. (129 Inc.) for the balance owing in relation to a contract for a parking garage restoration. 129 Inc. counterclaimed for various deficiencies, delay and damages resulting from Jelco’s work. [ 7 ] Mr. Levine was the second of three lawyers of record in the underlying action. By order dated May 22, 2007, Mr. Levine’s request for leave to withdraw as lawyer of record in the underlying action was granted. [ 8 ] Mr.

Bleta was the third lawyer of record in the underlying action. Mr. Bleta conducted the trial of the underlying action. Mr. Bleta also acted for 129 Inc. in 129 Inc.’s appeal from the trial decision. [ 9 ] The plaintiffs bring the within action alleging negligence against Mr. Levine in the underlying action. The plaintiffs allege that their ability to properly defend the underlying action and prosecute the counterclaim in the underlying action was prejudiced as a result of Mr. Levine’s alleged negligence. The Issue [ 10 ] Should Mr. Bleta be removed as lawyer of record for the plaintiffs?

Summary of the Positions of the Parties [ 11 ] The moving parties, the defendants argue that Mr. Bleta ought to be removed from the record on the basis of a conflict of interest. The defendants argue that Mr. Bleta is a necessary and material witness at the trial of this action. [ 12 ] The responding parties, the plaintiffs argue that the motion is brought in bad faith, that Mr. Bleta is not a necessary or material witness and that it would be unfair, costly and prejudicial for the plaintiffs to retain a new lawyer. The Law and Analysis

[13] The principal issue on these types of motions is the balancing of three competing values. As stated by Sopinka J. inMacDonald Estate v. Martin, (SCC), [1990] 3 S.C.R. 1235 (S.C.C.) at para. 13, the competing values are: 1) themaintenance of high standards of the legal profession and the integrity of our system of justice; 2) the right of a litigant to its choice ofcounsel, which he or she should not be deprived of without good cause; and, 3) the desirability to permit mobility in the legal profession(see also Puhl v. Katz Group Canada Ltd., [2006] O.J.

No. 4596 (S.C.J.) at para. 17). [14] The third competing value is not an issue in this case. [15] The most important and compelling value is the integrity of our system of justice (see MacDonald Estate at para. 58 and Puhlat para. 19). [16] It is extremely undesirable for a litigant’s lawyer to appear as a witness. In Urquhart v. Allen Estate, [1999] O.J. No. 4816(S.C.J.) Justice Gillese states as follows: “When counsel appears as a witness on a contentious matter, it causes two problems. First, it may result in a conflict of interest betweencounsel and his client.

That conflict may be waived by the client, as indeed, was done in this case. The second problem relates to theadministration of justice. The dual roles serve to create a conflict between counsel’s obligations of objectivity and detachment, which areowed to the court, and his obligations to his client to present evidence in as favourable a light as possible. This is a conflict that cannot bewaived by the client as the conflict is between counsel and the court/justice system” (see Urquhart at paras. 27 and 28 and see Karas v.Ontario, 2011 ONSC 5181 , [2011] O.J.

No. 3932 (Master) at para. 27). [17] The Law Society of Upper Canada and the Canadian Bar Association have addressed the issue of a lawyer appearing as awitness. “The lawyer who is a necessary witness should testify and entrust the conduct of the case to another lawyer” (see Law Societyof Upper Canada Rules of Professional Conduct, Rule 4.02(1) and (2), Commentary and see Canadian Bar Association Code ofProfessional Conduct,

Chapter IX, Commentary 5 and see Puhl at paras. 24-26 and Karas at paras. 28, 29). [18] When considering the removal of a lawyer from the record on the basis that the lawyer will also be a witness, the court adoptsa flexible approach and considers each case on its merits. In Essa (Township) v. Guergis, (ON SCDC), [1993] O.J.No. 2581 (Div.Ct.) at para. 48, the Divisional Court set out a number of factors to be considered on a motion to remove a lawyer fromthe record on the ground that the lawyer will also be a witness at trial. I will now address these factors.

Stage of the proceedings [19] This action has not proceeded beyond the delivery of pleadings and the exchange of productions. Examinations for discoveryhave not taken place. An action need not proceed beyond the pleadings stage before it may be appropriate to grant an order removing alawyer from the record on the basis that there is more than a real likelihood that the lawyer will be a witness (see Karas at para. 32,George S. Szeto Investments Ltd. (c.o.b. Ruby King) v. Ott, (ON SC), [2006] O.J. No. 1174 (Master) at paras. 11-14).

Likelihood that the witness will be called [20] Although the plaintiffs undertake not to call Mr. Bleta as a witness and intend to resist any attempt by the defendants to callMr. Bleta as a witness (see affidavit of Roslyn Brown at para. 51), this does not end the matter. The defendants intend to call Mr. Bletaas a witness at trial and will seek to examine Mr. Bleta for discovery as a non-party (see affidavit of Mr. Levine sworn September 27,2012 (Levine affidavit) at paras. 42, 43b, 43c). Certainty that Mr. Bleta will be called as a witness at trial is not required (see Karas atpara. 34).

Good faith of party bringing the motion [21] I am satisfied that this motion is brought in good faith. The evidence before me does not support a finding that there is any badfaith on the part of the defendants. This motion is brought at the earliest opportunity. [22] The plaintiffs argue that 129 Inc. has brought other actions against the defendants and that motions to remove Mr. Bleta aslawyer of record in those actions may be brought. No motion(

s) to remove Mr. Bleta from the record in those actions have been brought.If brought, the motion(

s) would have to be considered on the basis of the facts of the particular case. The fact that other motions in otheractions may be brought does not, in my view, affect the just result in this matter. Significance of the evidence to be led [23] Mr. Bleta’s evidence is relevant with respect to mitigation and what damages flow from the alleged acts of negligence. Inparticular, as set out in the Levine affidavit at para. 43b and affidavit of Mr. Levine sworn December 14, 2012 (Levine reply affidavit) atparas. 62, 76 and 80, Mr.

Bleta’s evidence is relevant to: -how the alleged poor drafting of the statement of defence and counterclaim affected Mr. Bleta’s ability to conduct the trial (seestatement of claim at last line of para. 18); -which of the allegations in the request to admit are untrue and how the alleged failure to respond to the request to admit or failure to seekto set aside the deemed admissions caused any damage or affected Mr.

Bleta’s conduct of the trial (see statement of claim at paras. 23,26); -how the alleged allowance of an unauthorized examination for discovery in substance resulted in damages (see statement of claim atpara. 20); -how the alleged failure to produce any exhibits to establish and support the plaintiff’s defence and counterclaim resulted in anydamages, including which documents were not produced and how this affected the conduct of the trial and the outcome (see statement of

claim at paras. 24-26); -how the alleged failure to require an affidavit of documents/productions by Jelco to support the work performed by Jelco, including Jelco’s time sheets and other payroll records resulted in any damages or affected the trial and outcome (see statement of claim at para. 24); -how the alleged failure to address Jelco’s March 21, 2007 correspondence, which allegedly expressed that there was a pre-trial order precluding any plaintiff documents from being produced subsequent to March 13, 2007 and why Mr.

Bleta did not discover that there was no such order (see statement of claim at paras. 25, 26); -if and why Mr. Bleta believes that the plaintiffs did not receive the entire file from Mr. Levine and why the plaintiffs believe there was documentary support for the lost rental income and why if such documentation existed Mr. Bleta did not tender such evidence including calling two individuals responsible for leasing the apartments (see statement of claim at para. 29); -if the plaintiffs believe that Mr.

Levine acted negligently by failing to prepare the file for trial, or prepare a trial factum or book of authorities, why Mr. Bleta could not have prepared same (see statement of claim at para. 30). [ 24 ] In addition, Mr. Bleta will be able to provide evidence concerning tactical decisions at trial in the underlying action including the following: - why no evidence was called to establish Jelco’s liability (see Levine affidavit at para. 43b); -why a motion to set aside the request to admit was not brought although Mr.

Bleta indicated prior to trial that he would do so and had instructions to do so (see Levine affidavit at para. 43b and Levine reply affidavit at paras. 79, 80); -why Mr. Bleta failed to obtain the documentation that Mr. Levine allegedly failed to obtain (see Levine reply affidavit at para. 62); -regarding allegations that Mr. Levine inappropriately waived mandatory mediation and prepared a deficient pre-trial memo, what efforts were taken by Mr. Bleta to explore settlement (see Levine reply affidavit at paras. 81, 86); -regarding allegations that Mr.

Levine failed to prepare the payment certifier as a trial witness, what efforts were made by Mr. Bleta to do so (see Levine reply affidavit at para. 82); -regarding allegations that Mr. Levine did not prepare 129 Inc.’s representative, Enzo Barrasso as a witness what efforts were made by Mr. Bleta to do so (see Levine reply affidavit at paras. 83-85); -why two full time rental agents were not called to testify (see Levine affidavit at para. 43b, Levine reply affidavit at para. 61a and Reasons for Judgment at para. 25); -why Mr.

Bleta did not call any evidence to establish liability on the delay counterclaim (see Levine affidavit at para. 43b, Levine reply affidavit at para. 61b and Reasons for Judgment at paras. 25, 26); -why Mr. Bleta did not call any evidence to establish 129 Inc.’s quantum of damages on the delay counterclaim (see Levine affidavit at para. 43b, Levine reply affidavit at para. 61c, 62 and Reasons for Judgment at para. 29); -why Mr.

Bleta did not seek leave to produce or introduce documentary evidence in support of the counterclaim for lost rental income or seek an adjournment (see Levine reply affidavit at para. 62, Judgment of Divisional Court at para. 6); -why Mr. Bleta did not call evidence showing condition of the stand pipe prior to work done by Jelco (see Levine affidavit at para. 43b and Reasons for Judgment at para. 38); -why Mr.

Bleta did not produce logs showing maintenance of the sprinkler system prior to the commencement of work done pursuant to the contract (see Levine affidavit at para. 43b and Reasons for Judgment at para. 35); -why Mr. Bleta did not substantiate the Hart Pump Service Invoice (see Levine affidavit at para. 43b and Reasons for Judgment at para. 40). [ 25 ] I am satisfied that the Mr. Bleta has significant first-hand knowledge regarding the alleged issues in dispute (see paras. 23, 24 above and see also Brown transcript at questions 165-168, 265, 271-278, 388, 390-393, 395, 397, 421-428).

Impact of removing counsel on the party’s right to be represented by counsel of choice [ 26 ] The plaintiffs argue that it would be unfair, costly and prejudicial if Mr. Bleta is removed from the record in part because he has been their lawyer for the past five years in these matters and he has insight, familiarity and appreciation of the matters previously handled by Mr. Levine (see Brown affidavit at para. 19). In my view this is part of the concern with Mr. Bleta remaining on the record. He has relevant and material evidence as a result of his involvement in the underlying action. Removing Mr.

Bleta at an early stage in the proceedings will minimize any financial impact. [ 27 ] In any event, the freedom to choose a lawyer “…is not an absolute right. The right to be represented by counsel of choice can be outweighed when the administration of justice would be detrimentally affected” (see Karas at para. 45 and George S. Szeto Investments Ltd. at para. 21 ). Whether trial is by judge and jury [ 28 ] A jury notice has not been served in this action.

Likelihood of real conflict arising or that evidence will be tainted [ 29 ] Mr. Bleta’s role as advocate cannot be reconciled with his role as witness. His dual roles will give rise to a conflict and taint his evidence (see George S. Szeto Investments Ltd. at para. 23 ). Given Mr. Bleta’s involvement in the underlying action, any question posed by him is unfair to a witness and carries with it the appearance of an unsworn offer of the lawyer’s version of the facts. Questions put in cross-examination by Mr.

Bleta would create the uneasy feeling that the measure of credibility could be based not on the evidence but the unsworn declaration of Mr. Bleta. Mr. Bleta will be left in a difficult position if his memory of the events differs from the evidence in chief of the plaintiffs’ witnesses (see Karas at para. 48 and George S. Szeto Investments Ltd. at para. 24 ) Connection or relationship between counsel, the prospective witness and the parties involved in the litigation [ 30 ] As Mr.

Bleta is the lawyer for the plaintiffs and a witness for the defendants, it is in the interest of justice to prevent this conflict from arising (see George S. Szeto Investments Ltd. at para. 25 and Karas at para. 49). [ 31 ] Having regard to the factors set forth in Essa , I am satisfied that they weigh in favour of removing Mr.

Bleta as lawyer of record for the plaintiffs. [ 32 ] In opposition to the motion the plaintiffs rely in part on a number of decisions concerning the quashing of a subpoena/summons served on an opposite party’s lawyer (see R. v. 1504413 Ontario Ltd ., 2008 CarswellOnt 1883 (C.A.) , Ocean v. Economical Mutual Insurance Co. , 2010 CarswellNS 16 (N.S.S.C.) and Maesbury Homes Inc. v. 1539006 Ontario Inc. , 2011 CarswellOnt 3057 (S.C.J.) ). In my view these authorities are not applicable in the circumstances of this motion. They do not concern a motion to remove a lawyer from the record due to a conflict of interest.

In addition, these authorities address an attempt to procure evidence from the lawyer of record regarding the same action as the one to which the subpoena relates. In this case the defendants intend to examine Mr. Bleta with respect to the underlying action and the factual circumstances therein. [ 33 ] If I am wrong and the authorities concerning the quashing of a subpoena/summons are applicable, then the threshold test as set forth in these authorities has been met. Solicitor and client privilege with respect to the underlying action has been waived (see Froates v. Spears , [1999] O.J.

No. 77 (Gen.Div.) and Bank Leu AG v. Gaming Lottery Corp ., [1999] O.J. No. 3949 (S.C.J.) , affirmed [2000] O.J. No. 1137 (Div.Ct.) , Norhal Quarries & Holidings Ltd. v. Ross & McBride , [2000] O.J. NO. 1082 (S.C.J.) and Gowlings Lafleur Henderson LLP v. Meredith , 2011 ONSC 2686 (Master)). Mr. Bleta’s evidence is highly material and necessary and much of Mr. Bleta’s evidence cannot be obtained from other witnesses (see paras. 23-25 above). [ 34 ] For the above reasons, the motion is granted. Mr.

Bleta is removed as lawyer of record for the plaintiffs. [ 35 ] Any formal order taken out shall comply with the provisions of Rule 15.04(4). Costs [ 36 ] If any party seeks costs and if the parties are unable to agree on costs any party seeking costs shall serve and file brief written submissions on costs of 3 pages or less in length together with a costs outline on or before June 18, 2013. Any responding submissions shall also be 3 pages or less in length and served and filed on or before July 2, 2013. Any reply submissions shall be 1 page or less in length and served and filed on or before July 9, 2013.

The submissions shall be filed in accordance with these deadlines directly with assistant trial coordinator Conrad Diamante, 6 th floor, 393 University Avenue and shall be accompanied by an affidavit of service. Master Barbara McAfee Date: May 21, 2013