2018 FC, 2018 FC 1000

Date: 20181004 Docket: T-1650-18 Citation: 2018 FC 1000 Edmonton, Alberta, October 4, 2018 PRESENT: The Honourable Mr. Justice Mandamin BETWEEN: DOROTHY MCLEAN, DORIS MARGUERITE CHAMPAGNE-MCKAY, VALERIE MERCREDI-SMITH, LANA MAUDE WANITA MITCHELL AND RENEE HIGA-BROWN Applicants and LOREEN SUHR, ACTING IN HER CAPACITY AS ELECTORAL OFFICER FOR TALLCREE FIRST NATION AND THE CHIEF AND COUNCIL OF THE TALLCREE FIRST NATION AND THE TALLCREE FIRST NATION Respondents ORDER AND REASONS [ 1 ] In response to the Applicants’ application for judicial review, the Respondent asserted that counsel for the Applicants, Mr.

Jeffrey R.W. Rath, was in a conflict of interest and should be barred from acting for the Applicants. [ 2 ] I directed counsel for the Respondent, Ms. Priscilla Kennedy, to file a separate motion on the issue of conflict of interest. The Respondent’s motion on this issue now seeks the removal of Rath and Company as solicitors for the Applicants pursuant to Rule 125 of the Federal Courts Rules. [ 3 ] At the hearing of the conflict of interest motion Mr. Edward H. Molstad appeared on behalf of Rath and Company and Mr.

Rath. [ 4 ] I have concluded the Respondent’s motion succeeds on the basis that Rath and Company, and Jeffrey R.W. Rath, are in a conflict of interest. [ 5 ] My reasons follow. I. Background [ 6 ] In 2012 the Tallcree First Nation filed a Specific Claim which included a claim for the shortfall of its agricultural benefits it was entitled to under the Treaty No. 8. At the time the Tallcree First Nation was represented by an Edmonton law firm.

In October 2015 Tallcree First Nation engaged Rath and Company as its legal counsel for the Agricultural Benefits Claim negotiations with Canada. [ 7 ] In 2017 Canada proposed to settle the Tallcree Agricultural Benefits Claim. This required Tallcree First Nation to approve the settlement by a vote of its members. Rath and Company, and in particular Mr.

Rath, who attended Tallcree First Nation membership meetings, was involved in the organization of the ratification vote on the Agricultural Benefits Settlement Agreement. [ 8 ] Since the Settlement Agreement required approval by Tallcree voters, a Ratification Voters List was prepared and used for the ratification vote. The Settlement Agreement was ratified by the Tallcree voters on June 28, 2017. [ 9 ] Mr. Rath became the Trustee of the Trust Fund that was established as a result of the Agricultural Benefits Agricultural Settlement with Canada.

The Declaration of Trust was entered into on July 21, 2017 between the Tallcree First Nation and Jeffrey R. W. Rath Professional Corporation. [ 10 ] The Trust being administered by Mr. Rath as Trustee is for the benefit of the beneficiaries who were the members of the Tallcree First Nation on June 28, 2017 when the Ratification Vote approved the Settlement Agreement. [ 11 ] On September 14, 2018, in the lead up to the Tallcree First Nation election for chief and council, Mr.

Rath, on behalf of the five Applicants, filed an application for Judicial Review of a decision of the Electoral Officer, the first named Respondent. [ 12 ] Ms. Kennedy, counsel for the Respondent now submits Rath and Company are in a conflict of interest and should be removed from acting on this matter.

II. Submissions A. Respondents, Mover of this Motion for Removal [13] The Respondent notes Rath and Company were legal counsel for the Tallcree First Nation in the negotiation and settlement of theAgricultural Benefits Claim ratified by Tallcree members on June 28, 2017.

The Respondent says the question of Tallcree First Nationmembership did arise during the course of those negotiations. [14] The Respondent submits Rath and Company provided legal advice to the Tallcree First Nation on the issue of Bill S-3, Bill C-3 andBill C-31 persons being added to the people who could obtain benefits from the Tallcree First Nation under the settlement of theAgricultural Benefits Claim with Canada. The foregoing parliamentary bills refer to Bills passed by Parliament amending the Indianstatus provisions of the Indian Act, RSC 1985, c.

I-5 that possibly impact Tallcree First Nation membership. [15] The Respondent specifically notes that Mark Freeman of Rath and Company advised the Tallcree First Nation that they needed tobe concerned about amendments to the Indian Act. The amended changes to the Indian Act were introduced in Bill S-3 in 2017 as a resultof the ruling in Descheneaux v Canada, 2015 QCCS 3555. The Respondent says Rath and Company advised that the changes would"“increase the number of registered Indians”" and "“Tallcree could experience a doubling or more in membership numbers with theseamendments”".

The foregoing quotes were contained in an October 21, 2016 email from Mark Freeman to Mike Cardinal, BandManager for the Tallcree First Nation. [16] The Respondent also submits that Jeffrey Rath, Professional Corporation is the Trustee under the declaration of Trust for all thebeneficiaries entered into as part of the Settlement Agreement between Tallcree First Nation and Canada.

Rath and Company havereceived the Trust Funds and have been acting for the Trustee. [17] The Respondent submits Rath and Company are now acting for five of the beneficiaries against the membership of the TallcreeFirst Nation who are also beneficiaries of the Trust. [18] In result, the Respondent submits Rath and Company should be removed from acting for the Applicants due to conflict of interest. B. Applicants, Opposing this Motion for Removal [19] The Applicants submit that the Respondent Electoral Officer is not, and has not been, a client of Rath and Company.

They submit,while Tallcree First Nation was previously a client of Rath and Company, that retainer is now concluded. [20] The Applicants submit that the Respondent has not identified any prejudicial confidential information in the possession of Rath andCompany that could be misused if they act for the Applicants in this matter. [21] Finally, the Applicants submit the Trustee is a corporation, specifically the Jeffrey R. W.

Rath Professional Corporation, which isrepresented by Parlee McLaws. [22] The Applicants say that Rath and Company acted for the Tallcree First Nation and merely took instructions from Chief andCouncil. The named Respondent is the Electoral Officer, not the Tallcree First Nation or the Chief and Council. [23] The Applicants stress the disqualifying information at risk for misuse must be prejudicial confidential information. In this case thevoters lists referenced in this matter were publicly circulated.

The Applicants submit that at no time during public meetings held withregard to the Agricultural Benefits Settlement Agreement was the issue of voters and membership lists raised by Chief and Council norwas advice sought from Rath and Company.

The Applicants submit that no information was received that is attributable to a solicitor-client relationship; the information in this matter has been available to the public – and certainly to the members of the Tallcree FirstNation, including the Applicants. [24] The Applicants submit, in response to the challenge to the involvement of the Trustee, that the Trustee’s powers are discretionaryand judicial interference should be exercised with restraint. There is nothing here to substantiate an allegation of conflict or acting againstthe best interests of the beneficiaries.

Further, the Court of Queen’s Bench is proper jurisdiction to determine such questions. [25] Finally, the Applicants submit the Respondent’s motion is tactical in nature and that should disentitle the Respondent to the reliefsought. III. Jurisprudence [26] Rule 125 of the Federal Courts Rules, SOR/2004-283, s. 2 provides for a change or removal of a solicitor of record by a party.

However, the Rule has been referred to in jurisprudence involving removal of a lawyer from a proceeding because of a conflict ofinterest. [27] When a lawyer is retained by a client, the solicitor-client relationship involves certain fiduciary responsibilities which include aduty of loyalty. An element of that loyalty is an avoidance of conflicts of interest.

Strother v 3464920 Canada Inc., 2007 SCC 24, [2007] 2 S.C.R. 177. [28] The seminal decision on conflicts of interest is Macdonald Estate v Martin, (SCC), [1990] 3 SCR 1235 where theSupreme Court of Canada held that, in determining whether there is a disqualifying conflict of interest, the court is concerned withbalancing three competing values: the need to maintain a high standard for the legal profession and integrity of the judicial system, the

right of litigant to choice of counsel and the desirability for reasonable mobility in the legal profession. All of these three relate to the confidentiality of information a client may disclose to his or her lawyer. The test to be applied must be that a reasonably informed person would be satisfied that no use of confidential information would occur. To these ends, two questions arise. Did the lawyer receive relevant confidential information attributable to the solicitor-client relationship?

Is there a risk that the confidential information would be used to the prejudice of the client? [ 29 ] The Supreme Court went on in Macdonald Estate to conclude once it is shown by the client that there existed a previous relationship which is sufficiently related to the retainer from it is sought to remove the lawyer, the court should infer that the confidential information was imparted unless the lawyer satisfies the court that no information was imparted which could be relevant. [ 30 ] Further, even though the lawyer no longer represents a former client, the duty of loyalty continues.

A lawyer may not represent another party in a proceeding against a former client in a matter arising out of or closely related to the initial retainer. Robbins &Myers Canada v Torque Control Systems Ltd., [2007] F.C.J. No. 1257 . IV. Analysis [ 31 ] The issue in the Application has to do with changes in the Tallcree election voters’ list that excluded the Applicants and others notwithstanding they had been included in previous Tallcree election voters’ lists. They are entitled to pursue their Application.

However, the issue in this motion is whether Rath and Company, and in particular Jeffrey Rath, is in a conflict of interest in acting as the Applicants’ counsel in this Application. [ 32 ] The Tallcree First Nation retained Rath and Company to negotiate its Treaty 8 Agricultural Benefits Claim with Canada. The retainer provided the legal work to be conducted by Rath and Company in respect to Tallcree First Nation legal claims for agricultural benefits promised in Treaty No. 8 included legal research, review of documents, drafting legal opinions and legal options.

The October 23, 2017 Band Council Resolution provided that " “Rath and Company Barrister’s and Solicitor’s [sic] are retained to act for Tallcree First Nation in pursuit of any and all claims and any matter incidental thereto or that may arise in the pursuit of such Claims pursuant to the terms contemplated in the retainer agreement.” " [ 33 ] The negotiations included steps taken for the approval of the 2017 Settlement Agreement by the Tallcree Nation.

This approval would involve providing advice to the Chief and Council and the First Nation membership on the content of the Settlement Agreement and the process by which the membership would vote to approve the negotiated Settlement Agreement. [ 34 ] On October 21, 2016 Mark Freemen, a lawyer with Rath and Company, sent email correspondence to Mike Cardinal, Tallcree Band Manager. Mr. Freeman wrote: One of the issues that has come up during negotiations of the Agricultural Benefits claim for Tallcree First Nation is changes to the Indian Act that will come into force this spring (2017).

The changes to the Act will increase Band membership for Tallcree. And because the forthcoming Settlement Offer for Agricultural Benefits will be based on the number of Band members, the changes to the Act will impact the Settlement amount. [ 35 ] Mr. Freeman discussed court decisions related to this question and information he had received from Mike Cardinal and concluded writing " “In the meantime we will be cognizant of the significant impact on your membership numbers.” " Mr. Freeman copied this email to Mr.

Rath. [ 36 ] Rath and Company was well aware of the implications of the Indian Act amendments contained in Bill S-3. Mike Cardinal, the Band Manager, states in his affidavit: “On February 13, 2018, a meeting was held with Jeffrey Rath in Edmonton as at that time, for the very first time, he stated that the distribution to adults of Tallcree First Nation would occur in two distributions and that this was the result of Bill S-3 being given Royal Assent.

Jeffrey Rath stated that he was going to seek advice and direction from the Court but in the meantime he was going to hold back 10% of the funds from the Agricultural Benefits Settlement. No application has been made by Rath & Company.” [ 37 ] The Tallcree First Nation election for Chief and Council was initially scheduled to be held in May 2018 but was postponed until September 2018.

In April the Chief and Council issued a notice which read in part: As a result of a recent number of enquiries and the passage of Bill S-3 by the Parliament of Canada, the Chief and Council have today voted to delay the 2018 election until September 2018.

The following matters will be considered by the Chief and Council prior to the election: i . the effect of Bill S-3 on the list of voters; ii the membership list for the Tallcree First Nation; [ 38 ] The issues arising in the underlying Application relate to Bill S-3 and earlier legislative amendments to the Indian Act and their impact on the Tallcree First Nation membership which may consequently affect the election voters list. [ 39 ] There is no question that Mr. Rath has previously acted as legal counsel for the Tallcree Chief and Council and the Tallcree First Nation.

In that capacity his legal involvement included questions of the impact of legislative changes to the Indian Act on Tallcree membership. [ 40 ] I find that this Application involves a matter that was relevant to his previous retainer by the Tallcree First Nation, namely who are

the individuals who are entitled to vote in Tallcree First Nation matters. To put it another way, the question is whether or not voters in the acceptance of the 2017 Settlement Agreement can vote in the 2018 Tallcree First Nation election. [ 41 ] Mr. Rath submits that the Application is for judicial review of a decision of the Electoral Officer with whom he did not have a solicitor-client relationship. Accordingly, he could not have any conflict of interest.

I think this illustrates the kind of problem that can arise with conflicts of interest. [ 42 ] In my ruling on the Applicants’ motion for injunctive relief in 2018 FC 962 , I found the role of the Electoral Officer in the preparation of the election voters list was inextricably intertwined with the role of the Tallcree membership clerk or the Tallcree administrator who would produce the membership list upon which the Electoral Officer would prepare the election voters list. [ 43 ] The Electoral Officer could not decide which individuals were entitled to vote without the confirmation by the membership clerk or the Tallcree administrator that those individuals were members.

Since the last two where under the direction of Chief and Council, I directed the Chief and Council and the Tallcree First Nation be added as Respondents. Mr. Rath, in structuring the Application to avoid the appearance of a conflict of interest, failed in his duty to the Applicants to name proper parties. [ 44 ] Moreover, since I found the Chief and Council and the Tallcree First Nation to be necessary parties and ordered they be added as Respondents, the limiting of the Application to naming the Electoral Officer as the only Respondent no longer applies. [ 45 ] Mr.

Rath does not avoid a conflict of interest with the Tallcree First Nation. I am to infer that confidential information was imparted unless the lawyer satisfies me that no information was imparted that could be relevant. Macdonald Estate By his professional personal involvement and his law firm’s involvement in questions of Tallcree membership and entitlement to vote, Mr. Rath was in possession of information obtained in a solicitor-client relationship. [ 46 ] Mr. Freeman’s email makes it clear that relevant information concerning Tallcree membership was exchanged between him and the Tallcree Band Manager.

I also infer relevant membership information was acquired or exchanged because Mr. Rath was present at Tallcree membership meetings in briefing of the members who were to vote on the proposed Settlement Agreement. [ 47 ] Mr. Rath argues that the information he made use of is not confidential given that the information was available in public meetings with the Tallcree First Nation members. I do not find this information was public for two reasons. First, while the members of the Tallcree First Nation may include a significant number of individuals, the members taken altogether are not the the public.

Second, the purpose of the meeting with the membership was to review a substantial proposed settlement offered by Canada. Such a meeting is hardly likely to be a meeting open to the public. While lists of voters may have been subsequently published, discussions or information shared in the preparation of the lists would not have been public. [ 48 ] Mr. Rath submits the information must be prejudicial confidential information. That is not what the Supreme Court of Canada stated in Canadian National Railway Co. v McKercher LLP , 2013 SCC 39 .

It stated " “The information must be capable of being used against the client in some tangible manner.” " Here Rath and Company are using the information gained from the previous solicitor- client relationship in the Application against the Chief and Council, the Tallcree First Nation and its appointed Electoral Officer. [ 49 ] In result, I am not satisfied by Mr. Rath’s submissions that no relevant confidential information was imparted and used in this Application. [ 50 ] The Respondent states Jeffrey R. W.

Rath Professional Corporation is the Trustee under the Declaration of Trust for all the beneficiaries of the Agricultural Benefits Settlement Agreement with Canada. Rath and Company have received Trust Funds and have been acting for the Trustee. [ 51 ] The Respondent submits that Rath and Company are acting for five of the beneficiaries against the Tallcree First Nation whose members are also beneficiaries of the trust in this Application contrary to the Trustee’s obligations to all beneficiaries. [ 52 ] Mr. Rath makes a distinction, to wit, that the Trustee is Jeffrey R. W.

Rath Professional Corporation and presumably not himself personally or as a lawyer. I find this distinction to be fallacious. A lawyer’s professional corporation does not relieve or excuse a lawyer from professional obligations. [ 53 ] As to a trustee’s obligations, such matters are governed by the laws of Alberta. Indeed, the Declaration of Trust specifies that the Courts of Alberta shall have exclusive jurisdiction with any disputes arising in respect of the Trust. [ 54 ] Consequently, I will not address this line of argument. [ 55 ] Finally, the Applicants submit the Respondent’s motion is tactical in nature.

I do not agree. The Respondent raised the issue in its first response, not late in the proceedings. Further I have found there is clear evidence of overlap in the Rath and Company’s legal role in the organization of the Settlement Agreement ratification vote and the challenge to the Tallcree election vote. Having a basis for raising the issue, the Respondents are not disentitled to the relief sought. V. Conclusion [ 56 ] I conclude that Rath and Company, including Mr. Jeffrey R. W. Rath, are in a conflict of interest in this Application. ORDER in T-1650-18

THIS COURT ORDERS that : 1 . The Respondent’s motion is granted. 2 . Rath and Company, including Mr. Jeffrey R. W. Rath, is hereby disqualified from acting for the Applicants in Court File No. T- 1650-18 by reason of a conflict of interest. 3 . Costs in motion are awarded in favour of the Respondent, the Moving Party in this Motion. 4 . The proceedings are stayed pending the expiry of the appeal period, and if an appeal is filed by the Applicants, until the final resolution of all appeals. "Leonard S.

Mandamin" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-1650-18 STYLE OF CAUSE: MCLEAN v SHUR PLACE OF HEARING: Edmonton, Alberta DATE OF HEARING: SEPTEMBER 26, 2018 ORDER AND REASONS: MANDAMIN J. DATED: October 4, 2018 APPEARANCES : Jeffrey Rath Edward Molstad For The Applicants Priscilla Kennedy For The RespondentS SOLICITORS OF RECORD : Rath & Company Barristers and Solicitors Priddis, Alberta For The Applicants DLA Piper (Canada) LLP Barristers and Solicitors Edmonton, Alberta For The RespondentS