Alderwood Estate v. Retirement Centre Ltd., 2019 NLSC 87

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Alderwood Estate and Retirement Centre Ltd. v. Regular , 2019 NLSC 87 Date : April 23, 2019 Docket : 201601G6883 Between: Alderwood Estate and Retirement Centre Ltd. First Plaintiff And: Deborah Dunne Second Plaintiff/ defendant by counterclaim And: Patrick Dunne Third Plaintiff And: Robert Regular First Defendant/ first plaintiff by counterclaim And: Robert R. Regular PLC Inc. Second Defendant/ second plaintiff by counterclaim And: Gerald Kirby Third Defendant/ third plaintiff by counterclaim And: Retirement Home Specialists Inc.

Fourth Defendant Before: Justice Sandra R. Chaytor Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: April 12, 2019

Summary: The Third Defendant brought this application to have the solicitors for the Plaintiffs removed as being in conflict of interest in havingrepresented him in previous retainers. Although the Court found that there had been a previous solicitor-client relationship, it found thatthat the applicant had failed to prove that the prior retainers were sufficiently related to the current action so that relevant confidentialinformation acquired in the course of the former retainers would be at risk for use in this action.

In the absence of such risk, theapplicant had further failed to prove that the solicitors acting for the Plaintiffs would constitute an attack of the legal work previouslyprovided to him or undermine his position on a matter that was central to the prior retainer. Overall, the evidence put before the court by the applicant fell short of what would be expected to ground an application of this nature.No conflict of interest had been established that would prohibit the solicitors from continuing to act for the Plaintiffs. Held: Application was dismissed with party-party costs awarded to the Plaintiffs.

Appearances: Christopher Gill Appearing on behalf of the Plaintiffs Sarah J. Clarke Appearing on behalf of the Defendants Authorities Cited: CASES CONSIDERED: MacDonald Estate v. Martin, [1990] 3. S.C.R. 1235; International Capital Corp v. Schafer, (SK KB), [1997] 5 W.W.R. 80, [1996] S.J. No. 799 (Sask. Q.B.); Chapters Inc. v. Davies, Ward & BeckL.L.P., (ON CA), [2001] O.J. 206, 52 O.R. (3d) 566 (Ont. C.A.); Brookville Carriers Flatbed GP Inc. v. BlackjackTransport Ltd., 2008 NSCA 22; Moffat v. Wetstein (1996), (ON SC), 135 D.L.R. (4th) 298, 29 O.R. (3d) 371 (Ont.Gen. Div.).

STATUTES CONSIDERED: Law Society Act, 1999 SNL c. L-9.1.

RULES CONSIDERED: Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D . TEXTS CONSIDERED: David Laton, Ethics and Canadian Criminal Law (Toronto: Irwin Law, 2001).

REASONS FOR JUDGMENT Chaytor, J. : INTRODUCTION [ 1 ] This is an application by Gerald Kirby (“Kirby”) seeking an order to have the solicitors for Alderwood Estate and Retirement Centre Ltd. (“Alderwood”), Deborah Dunne, and Patrick Dunne (collectively “the Plaintiffs”) removed from acting in this action on the ground that they are in a conflict of interest in that they have represented Kirby in other matters in the past. [ 2 ] The Statement of Claim in the within matter was issued November 24, 2016. The action concerns the sale of the assets of Alderwood on March 5, 2008.

At the time of the transaction, the Second Plaintiff and Third Plaintiff were directors and shareholders of Alderwood. It is alleged that the Plaintiffs understood throughout the transaction that the assets of Alderwood were being sold to NPR Health Property General Partner Ltd. (“NPR”) [1] for the sum of $3.125 million.

They claim to have been unaware that the transaction was in fact to the Fourth Defendant, Retirement Home Specialists Inc. (“RHSI”), and that the same day RHSI sold the assets of Alderwood to NPR for $3.675 million. [ 3 ] The allegations against Kirby include that he negligently or fraudulently misrepresented to the Plaintiffs the terms of the sale of the assets of Alderwood. Paragraphs 18, 19 and 20 of the Statement of Claim assert: [18] The Plaintiffs… state that the Third Defendant negligently or fraudulently misrepresented the terms of the sale of the assets of Alderwood to the Plaintiffs.

The Third Defendant incorrectly advised the Plaintiffs that the highest price offered by NPR for the assets of Alderwood was $3,125,000.00.

The Third Defendant did not inform the Plaintiffs that RHSI would purchase the assets of Alderwood for $3,125,000.00 and sell the same assets on the same day to NPR for $3,675,000.00. [19] Neither the First Defendant nor the Third Defendant advised the Plaintiffs as to whether the First Defendant and/or the Third Defendant owned any shares in RHSI. [20] The Fourth Defendant, RHSI, under the direction of the First Defendant and/or the Third Defendant, acquired the assets of Alderwood for $3,125,000.00 and sold the same assets on the same day.

RHSI did not disclose to the Plaintiffs its intention to sell the assets of Alderwood to NPR for $3,675,000.00 on the same day. [ 4 ] By way of Defence, Kirby denies that he negligently or fraudulently misrepresented the terms of the sale.

He states that the Plaintiffs were aware that RHSI would be selling the assets of Alderwood to NPR for an increased purchase price and that the sale to NPR was contingent upon the vendor entering a leaseback agreement, an arrangement in which the Second Plaintiff and Third Plaintiff refused to participate. [ 5 ] With respect to this application, Kirby states that he was previously represented regarding matters both related and unrelated to this action by the solicitors for the Plaintiffs, French & Associates (“the Firm”) and in particular, J. Vernon French, Q.C. (“French, Q.C.”) and Christopher E. Gill (“Gill”).

It is acknowledged that Kirby has not consented to the Firm representing the Plaintiffs in this action. The application is supported by an attached affidavit of Kirby confirming its contents as well as a supplementary affidavit of Kirby. [ 6 ] In response to the application, French, Q.C. has filed an affidavit in which he admits the Firm acted for Kirby in the past but denies any previous retainer related to this action or in which relevant confidential information could have been obtained by the Firm that could prejudice Kirby’s position in this action.

French, Q.C. further denies the extent and number of retainers alleged by Kirby. [ 7 ] Neither of the deponents were cross-examined on the affidavits. Issue [ 8 ] The issue to be determined is whether the Firm is in a conflict of interest so as to not be able to continue to represent the Plaintiffs in this action. Analysis The law and relevant authorities

[9] The freedom of parties in litigation to be represented by counsel of their choice is an important principle of our judicialsystem but it must be balanced against other principles designed to prevent lawyers from acting in matters that could give rise to aconflict of interest, or the perception of a conflict of interest. [10] MacDonald Estate v. Martin, [1990] 3. S.C.R. 1235 set out the test to be applied in determining whether a lawyer is to bedisqualified from continuing to act due to a conflict of interest.

At paragraph 16, Sopinka, J., wrote of the legal ethics and policyconsiderations involved: In resolving this issue, the Court is concerned with at least three competing values. There is first of all the concern to maintain the highstandards of the legal profession and the integrity of our system of justice. Furthermore, there is the countervailing value that a litigantshould not be deprived of his or her choice of counsel without good cause. Finally, there is the desirability of permitting reasonablemobility in the legal profession. [11] Section 18(2)(

a) of the Law Society Act, 1999 SNL c. L-9.1, authorizes the Law Society of Newfoundland and Labrador (the“Law Society”) to make rules for the exercise of the powers, privileges and rights of the Law Society. In exercise of this authority, theBenchers of the Law Society adopted the Law Society Rules. Rule 8.02(2) states that every member shall be bound by and adhere to suchCode of Professional Conduct as may be adopted by the Benchers. The current Code of Professional Conduct, adopted effective January1, 2013, with subsequent amendments, (the “Code”), provides guidance to its members to assist in achieving an appropriate balance ofthe competing interests referred to in MacDonald Estate. [12]

Section 3.4 of the Code governs conflicts of interests.

Section 3.4-1 states: A lawyer must not act or continue to act for a client where there is a conflict of interest, except as permitted under this Code. [13] As defined in the Code, a conflict of interest exists when there is a substantial risk that a lawyer’s loyalty to, or representationof, a client would be materially and adversely affected by, inter alia, the lawyer’s duties to another client or a former client. Thecommentary provided with respect to

section 3.4-1 refers to the nature of the solicitor-client relationship as a fiduciary one founded in theduty of loyalty, and states: Arising from the duty of loyalty are other duties such as a duty to commit to the client’s case, the duty of confidentiality, the duty ofcandour and the duty to avoid conflicting interests. [14] The commentary also provides that: The lawyer’s duty of confidentiality is owed to both current and former clients, with the related duty not to attack the legal work doneduring a retainer or to undermine the former client’s position on a matter that was central to the retainer. [15]

Section 3.4-10 deals with situations such as the case in this action in which lawyers act against a former client: 3.14-10 Unless the former client consents, a lawyer must not act against a former client in: (

a) the same matter; (

b) any related matter; or (

c) any other matter if the lawyer has relevant confidential information arising from the representation that may prejudice that client. [16] The Commentary included for this

section includes the following: This rule guards against the misuse of confidential information from a previous retainer and ensures that a lawyer does not attack thelegal work done during a previous retainer, or undermine the client’s position on a matter that was central to a previous retainer. It is notimproper for a lawyer to act against a former client in a fresh and independent matter wholly unrelated to any work the lawyer haspreviously done for that client if previously obtained confidential information is irrelevant to that matter. [17] In MacDonald Estate, the Supreme Court of Canada prescribed a two-question test to be asked to determine if a conflict ofinterest exists:

(1) Did the lawyer receive confidential information attributable to the solicitor and client relationship relevant to the matter at hand? and,if so,

(2) Is there a risk that it will be used to the prejudice of the client? [18] In International Capital Corp v. Schafer, (SK KB), [1997] 5 W.W.R. 80, [1996] S.J. No. 799 (Sask. Q.B.),at paragraph 22, the court noted three factors to be established by the applicant before the first question posed pursuant to theMacDonald Estate test can be answered in the affirmative: 1. that there was a solicitor and client relationship between the applicant and the lawyer;

2. that the previous relationship is sufficiently related to the retainer from which it is sought to remove the solicitor; and 3. that the lawyer received confidential information through the previous relationship. [19] The applicant must prove the first and second factors on the balance of probabilities. Once the applicant has shown that thereexisted a previous solicitor-client 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.

The onus then shifts to the solicitor to satisfy the court that noinformation was imparted which could be relevant to the current matter in which the solicitor seeks to act. In other words, proof of thethird factor is presumed by means of a rebuttable presumption that relevant confidential information was in fact imparted.

As articulatedby the Supreme Court of Canada in MacDonald Estate this is a heavy burden for the lawyer to discharge because it must be done withoutrevealing the specifics of the privileged communication. [20] With respect to the second question posed in the MacDonald Estate test, the Supreme Court of Canada made clear that theexistence of relevant confidential information is such as to render the lawyer’s disqualification to be automatic. [21] What does it mean for matters to be sufficiently related?

MacDonald Estate focused on the situation where risk exists thatconfidential information obtained in the prior retainer could be disclosed or utilized in the new retainer. In Chapters Inc. v. Davies,Ward & Beck L.L.P., (ON CA), [2001] O.J. 206, 52 O.R. (3d) 566 (Ont. C.A.) at paragraph 30, the court stated that: In the end, the client must demonstrate that the possibility of relevant confidential information having been acquired is realistic not justtheoretical.

For the court to find that the retainers are sufficiently related it must conclude that in all the circumstances it is reasonablypossible that the lawyer acquired confidential information pursuant to the first retainer that could be relevant to the current matter. [22] As noted, however, in the Code, the solicitor-client relationship is a fiduciary relationship and, as such, the lawyer has a duty ofloyalty to the client which is broader and extends beyond the duty of confidentiality.

This concept was articulated by David Laton in thetext, Ethics and Canadian Criminal Law (Toronto: Irwin Law 2001) at p. 306, where he noted that apart from the duty of confidentiality: Counsel owes a broader duty of loyalty to a former client… [A] former client has a legitimate claim to expect counsel’s loyalty to persistwith respect to the subject matter of a retainer, even after the client relationship has ended and even if there is little or no possibility thatconfidential information can be misused. [23] Brookville Carriers Flatbed GP Inc. v.

Blackjack Transport Ltd., 2008 NSCA 22 dealt with a situation where two retainerswere found to be related but no confidential information was at risk. At paragraphs 50-52, the court addressed the approach to be taken insuch a situation: 50. Whether two retainers are related must be considered in light of the underlying purpose of the inquiry. In the MacDonald Estateanalysis, the focus is on the protection of the client's information. 51. Under the principle relevant here, that concerning acting against a former client in a related matter, the focus is different.

As thecases and commentators show, the scope of this duty is very limited absent confidential information being at risk. This broadercontinuing duty of loyalty to former clients is based on the need to protect and to promote public confidence in the legal profession andthe administration of justice. What is of concern is the spectre of a lawyer attacking or undermining in a subsequent retainer the legalwork which the lawyer did for the former client or of a lawyer effectively changing sides by taking an adversarial position against aformer client with respect to a matter that was central to the previous matter….

In either case the relationship between the two retainersmust be very close so that the lawyer in the new retainer is attacking or undermining the value of the legal work provided to the formerclient or effectively changing sides in a matter that was central to the previous retainer. 52. It is important, in my view, that this principle not be applied too broadly.

One must not lose sight of the important right of partiesto retain and instruct the counsel of their choice or of lawyers to earn a living free of undue restriction... [24] In other words, even if no confidential information is at risk, a lawyer is not to act against a former client if it could reasonablybe perceived that the lawyer was attacking or undermining the work previously performed on behalf of the client or, in essence,changing sides with respect to a key issue in the previous retainer. [25] Finally, with respect to situations where the court finds the prior retainer and the current retainer are not related,

section 3.4-10(

c) of the Code also prohibits a lawyer from acting in the unrelated matter if the lawyer has relevant confidential information from theprevious retainer. Applying the law to the facts of this case [26] I turn now to the application of the law to the facts of this case. [27] Kirby contends that he was represented by the Firm with respect to five prior retainers: 1. A matter in which services were rendered between June 17, 2011 and July 11 2011 pertaining to RetirementHome Specialists Inc. and Robert Regular (“the RHSI File”);

2. A matter in 2011 regarding the purchase of personal care homes in New Brunswick (“the New Brunswick File”); 3. A matter in October 2011 regarding Meadow Creek Retirement Centre Inc. (“the Meadow Creek File”); 4. The acquisition of Twin Town Manor Retirement Home in 2013 (“The Twin Town Manor File”); and 5. A matter in 2006-2007 in which Dawe’s Investment Limited provided financing for the expansion of Alderwood (“The Dawe File”). [ 28 ] The Firm denies the extent and number of retainers alleged by Kirby.

It claims that it had a solicitor-client relationship with Kirby only with respect to the first and third matters enumerated above. [ 29 ] For the reasons that follow, I find that a solicitor-client relationship existed between Kirby and the Firm with respect to 3 retainers: the two acknowledged by the Firm as well as the second matter enumerated above.

Therefore, the Firm most recently acted for Kirby over 5 years prior to the commencement of this action. [ 30 ] In order to determine if the prior retainers are sufficiently related to this action so as to give rise to a conflict of interest, it is necessary to examine the nature of this action and that of the prior retainers. [ 31 ] This action is based upon events that transpired in 2007 and 2008 and in particular, transactions that occurred on March 5, 2008 whereby the Plaintiffs allege that RHSI purchased the assets of Alderwood for $3.125 million and sold them the same day to NPR for $3.675.

The allegations against Kirby include that he negligently or fraudulently misrepresented to the Plaintiffs the terms of the sale including the involvement of RHSI as a purchaser. [ 32 ] For the reasons that follow, I conclude that Kirby has failed to meet the requisite test of establishing that the retainers (or alleged retainers) were sufficiently related to this action to constitute a risk of disclosure of confidential information, or that the Firm, in acting for the Plaintiffs, would constitute a breach of its loyalty to Kirby as a former client.

In so concluding I have also considered the cumulative effect of all the retainers and the time period over which services were rendered to Kirby by the Firm. [ 33 ] Having found that prior retainers were unrelated to this action, I continued the analysis pursuant to

section 3.4-10(

c) to determine whether the Firm nonetheless has relevant confidential information arising from its representation of Kirby on the unrelated matters that may prejudice him. The parties agree that in the situation of unrelated matters, Kirby bore the onus of proving that the Firm has such information. French, Q.C. attested that no confidential information was obtained that would prejudice Kirby in the current action. Kirby made a blanket statement in the application that he believes he may be seriously prejudiced from relevant confidential information the Firm may have arising from the previous retainers.

He provided no evidence as to the nature of that information with respect to any of the retainers to substantiate the basis for this belief. For example, he does not allege that during any of the retainers he confided in the Firm the circumstances surrounding the Alderwood sale or his involvement in the transaction. Therefore, I conclude that Kirby has failed to prove the firm has in its possession any relevant confidential information arising from these unrelated retainers that could cause him prejudice in this action.

The First matter: The RHSI File Existence of previous solicitor- client relationship [ 34 ] It is acknowledged by the Firm that there was a solicitor-client relationship between Kirby and the Firm with respect to the RHSI File. Is the former solicitor-client relationship sufficiently related to the current action? [ 35 ] Kirby adduced an invoice dated July 8, 2011 from the Firm for services rendered between June 17, 2011 and July 7, 2011 related to the RHSI File. The invoice indicates that the file number is VF 11058 04.

He argues that this prior retainer is sufficiently related to this action and in support of this contention, points to the fact that three of the parties named in this action were also involved in the RHSI File: Gerald Kirby, Robert Regular (“Regular”), and RHSI. The within action involves allegations that RHSI purchased the assets of Alderwood and sold them on the same day to NPR for an additional $550,000. As such, Kirby submits that the previous relationship between him and the Firm is sufficiently related to this action so as to meet the test prescribed in MacDonald Estate .

He does not, however, elaborate on this to state the nature or subject matter of the RHSI File and how, other than the commonality of some of the parties, it may relate to this action. [ 36 ] On the other hand, French, Q.C. attests that the RHSI File related to a dispute between Kirby and Regular in relation to their ownership of the shares of RHSI and denies that it relates to the current dispute between the Plaintiffs and Kirby. The description of the

services rendered on the invoice is in keeping with the retainer as described by French, Q.C. as being a shareholder dispute betweenKirby and Regular in that there are references to meetings and discussions with Robert Regular and his solicitor. I accept that the subjectmatter of the RHSI File was a shareholder dispute regarding RHSI.

On the other hand, this action is for damages arising from the allegedactions of Kirby, Regular and RHSI with respect to the Alderwood sale in 2008, including the allegation of failure to disclose to thePlaintiffs RHSI’s involvement in the transaction. [37] I fail to see, based on the evidence before me, how a shareholder dispute, arising between Kirby and Regular some 3 years afterthe Alderwood sale, is sufficiently related to this action (even allowing for the fact that the shareholdings in question were with respect toRHSI).

For example, Kirby has not put forward that he had any discussion with the Firm or received advice during the course of theRHSI File as to the terms and conditions of the Alderwood sale, or that he otherwise confided anything to the Firm pertaining to hisshareholdings in RHSI at the time of the sale that could be relevant to this action. [38] In Moffat v. Wetstein (1996), (ON SC), 135 D.L.R. (4th) 298, 29 O.R. (3d) 371 (Ont. Gen.

Div.), atparagraph 102, the court stated: A party does not meet its onus of establishing that the prior relationship is sufficiently related to the present retainer merely by making abald assertion that the past relationship has provided the solicitor with access to insurance policies, partnership agreements, and litigationphilosophy. At the very least, in order to discharge its onus, the client should describe how the solicitor gained that information, and whyit is related to the matter at hand. [39] In support of the application, Kirby has submitted less than was before the court in Moffatt.

Not only has he made a baldassertion, he has not identified any type of confidential information or documentation that could have been made available to the Firmthrough the prior relationship and how that information relates to this action. For example, there is no allegation that during the RHSIFile he disclosed information to the Firm related to the Alderwood sale or that he received any advice from the Firm related to theallegations that he is now being called upon to answer in this action.

Counsel for Kirby, in oral submissions, raised that there was aleaseback arrangement between RHSI and Alderwood which may mean at the time of the RHSI File, Kirby had a “vested” interest in theAlderwood sale and that this may have been discussed by Kirby with the Firm during the RHSI File.

No reference to this is made byKirby in his affidavits and as such, there is no evidence of this before the Court. [40] It is not enough for Kirby to simply adduce an invoice and state that it shows he received professional services ‘in connectionwith the matter of Retirement Home Specialists Inc. and Robert Regular.’ Simply showing evidence of a retainer, involving three of thesame parties involved in this action, does not meet the test. The same parties can have different disputes amongst themselves on varyingissues.

It is not improper for the Firm to act against Kirby, as a former client, in a fresh and independent matter that is wholly unrelated tothe previous retainer. [41] It was incumbent on Kirby to connect the dots to establish how the RHSI File was sufficiently related to this action so as tomeet the test in MacDonald Estate. This meant that Kirby bore the onus of showing it was reasonably possible that the Firm acquiredconfidential information during the RHSI File that could be relevant to this action.

As per Chapters Inc., the possibility of relevantconfidential information having been acquired by the Firm must be realistic, not just theoretical. Kirby has failed to meet this onus.

Hadhe done so, the Firm would then have had the difficult task of rebutting the presumption that confidential information, relevant to thisaction, had been imparted to it during the retainer. [42] Having failed to show that the matters are sufficiently related in the sense of a risk of confidential information having beendisclosed, I must nonetheless ask, in the absence of that risk, whether the duty of loyalty owed to Kirby as a former client of the Firm isotherwise undermined as contemplated in Brookville.

In such a situation, the relationship between the two retainers must be very close sothat the Firm in its current retainer would be seen as attacking or undermining the value of the legal work provided to Kirby in the RHSIFile, or effectively changing sides in a matter that was central to that retainer. [43] Kirby has provided no evidence as to the nature of the Firm’s representation of him with respect to the RHSI File or how theFirm’s work for him on that retainer would be undermined or attacked through the Firm acting in this action for the Plaintiffs.

The Courtis unable to conclude, based on the paucity of evidence before it, that the work of providing advice on a shareholder dispute (albeit thecompany involved being one of the defendants in this action) would be attacked or undermined by representing the Plaintiffs in thisaction which involves allegations of negligence and fraud against Kirby. [44] Overall, I conclude that the current retainer and the RHSI File are not related so as to constitute a conflict of interest that wouldprevent the Firm from acting for the Plaintiffs.

The Second Matter: The New Brunswick File Existence of solicitor-client relationship [45] It is agreed by the parties that this retainer involved the review by the Firm of a purchase and sale agreement with respect tothe acquisition of retirement homes in New Brunswick. Kirby produced an invoice to show that he was invoiced for professional servicesin connection with this matter.

He attests that “attached … is a copy of two invoices issued by French & Associates dated July 2011 forprofessional services rendered to me.” One of those invoices relates to the New Brunswick File (the other is with respect to the RHSIFile).

The invoice with respect to the New Brunswick File is addressed to Kirby and his son, Michael Kirby. [46] French, Q.C. denies that Kirby was the client in the New Brunswick file and contends that Michael Kirby was the sole client.He states that Kirby was incorrectly identified as a client on the invoice along with Michael Kirby and points out that this file has adifferent client number than that assigned to the RHSI File (in which it is acknowledged that Kirby was the client). [47] The invoice, in addition to being addressed to both Gerald Kirby and Michael Kirby, contains a listing of itemized servicesrendered which is prefaced with the words, “To professional services rendered on your behalf” [emphasis added].

The complete list ofitemized services on the invoice are as follows:

• Reviewing draft Agreement on June 1, 2011 • Consultation with Gerald Kirby and Michael Kirby with regard to issues in the draft Agreement of Purchase and Sale • General Professional Services throughout. [ 48 ] It is noted that French, Q.C.’s affidavit simply states that Kirby is incorrectly identified as a client on the invoice. He does not go so far as to deny that legal advice may have been rendered to Kirby in the course of the New Brunswick File.

Although I accept French, Q.C.’s evidence insofar as the primary client on this matter was Michael Kirby, the invoice describes consultations with Gerald Kirby and Michael Kirby with regard to issues in the draft agreement. This is the very crux of the retainer. French, Q.C. does not deny these consultations occurred or comment upon why Kirby would be included in the consultation. Kirby has stated in his affidavit that in his accounting business, he became known in the personal care home industry as the “go to” person for services related to the sale of personal care homes.

It may be that this was the capacity in which he was consulted in relation to this matter particularly given his son’s involvement. This, however, would be speculation as there is no evidence before the Court to that effect. [ 49 ] Having weighed all the evidence, I am satisfied that on the balance of probabilities, Kirby has established the existence of a solicitor-client relationship with respect to the New Brunswick File.

Is the former solicitor-client relationship sufficiently related to the current action? [ 50 ] The evidence put before the Court by Kirby to establish that the New Brunswick File is sufficiently related to this action is even more remote than that addressed above with respect to the RHSI File. [ 51 ] As noted previously, the allegations against Kirby in this action include that he negligently or fraudulently misrepresented to the Plaintiffs the terms of the Alderwood sale.

Kirby does not allege that his consultations with the Firm on the New Brunswick File, or any advice potentially received through those consultations, had anything to do with the Alderwood sale (which took place some three years prior to the New Brunswick File). Nor has he put forward any evidence as to how these two matters might otherwise be related. The only commonality that can be gleaned between the two matters is that the allegations forming the basis of this action arise from the sale of a personal care home and the New Brunswick File pertained to the potential purchase of personal care homes.

This commonality falls far short of what is expected in terms of relatedness to establish a conflict that would be sufficient to remove a solicitor from a retainer. [ 52 ] Therefore, Kirby has failed to establish that the two retainers are sufficiently related so as to conclude that it was reasonably possible that the Firm acquired confidential information pursuant to the New Brunswick File relevant to this action.

I am also unable to conclude, in the absence of a risk of disclosure of confidential information, that these retainers are so close that the Firm acting in this action (based in allegations of negligence and fraud) would be tantamount to attacking or undermining the legal work done on Kirby’s behalf during the New Brunswick File (which involved advising on a purchase and sale agreement). [ 53 ] Overall I conclude that the current retainer and the New Brunswick File are not related so as to constitute a conflict of interest that would prevent the Firm from acting for the Plaintiffs.

The Third Matter: The Meadow Creek File Existence of solicitor-client relationship [ 54 ] The Firm acknowledges the existence of a solicitor-client relationship with Kirby in the Meadow Creek File . Is the former solicitor-client relationship sufficiently related to the current action? [ 55 ] To support that this retainer was sufficiently related to this action, Kirby attached to the application a copy of an email dated October 18, 2011 from Gill to solicitor, Denis Barry.

He states in the application that this email is with respect to his representation by the Firm “in a matter involving another one of his retirement Homes, Meadow Creek Retirement Inc.” In the email, Gill requested on behalf of the Firm’s clients, Meadow Creek, Gerald Kirby and Michael Kirby that any future notices or demands be forwarded to the Firm. He also requested copies of any relevant leases. This is the extent of the evidence put before the court by Kirby to establish how the Meadow Creek File is related to this action. The identity of Mr.

Barry’s client or the nature of the notices or demands in question is not clear from the evidence adduced by Kirby. [ 56 ] The remainder of the information pertaining to the Meadow Creek File was put before the court through the affidavit of French, Q.C. He attests that at the instruction of Kirby, the Firm requested that future correspondence on behalf of Mr. Barry’s client, NPR, be forwarded to the Firm. French, Q.C. produced a copy of an email dated October 11, 2011, from Kirby to Gill in which Kirby advised that default notices had been received on taxes and instructed Gill to contact Mr.

Barry to request copies of notices and leases. Attachments to this email included correspondence from Mr. Barry to Kirby and Michael Kirby advising of default of taxes with respect to two properties: the Meadow Creek Retirement Centre and Retirement Home Investments Inc. [ 57 ] It is clear that the Meadow Creek File related to taxes owing with respect to two personal care home properties, neither of which are related to this action. Any issue regarding the payment of taxes with respect to these properties is wholly unrelated to this action.

Kirby has again failed to articulate or put before the court any evidence as to how the Meadow Creek File could relate to this action.

[ 58 ] Although, not put forward by Kirby, one commonality that could possibly be gleaned is that it shows another connection to the Firm by Kirby in the course of his personal home care business dealings. The only other connection to this action is the reference to NPR - the same company which the Plaintiffs allege in the Statement of Claim they understood to be the purchaser of the assets of Alderwood. Again, this has not been put forward by Kirby and, in any event, NPR was the client of Mr. Barry.

There is no evidence to show that it was reasonably possible that in the course of the Meadow Creek File, the Firm acquired any confidential information relevant to this action because of any issue related to NPR, or otherwise.

Again, Kirby has fallen far short of what is required to establish that the retainers are sufficiently related. [ 59 ] Furthermore, based on the limited evidence adduced, the Court is unable to conclude that the work of the Firm in providing advice and services to Kirby related to tax issues of unrelated companies and properties, would be attacked or undermined the Firm by representing the Plaintiffs in this action which involves allegations of negligence and fraud against Kirby. [ 60 ] Overall I conclude that the current retainer and the Meadow Creek File are not related so as to constitute a conflict of interest that would prevent the Firm from acting for the Plaintiffs.

The Fourth matter – Twin Town Manor File Existence of solicitor-client relationship [ 61 ] In his supplementary affidavit, Kirby attaches an email dated March 13, 2013 which he attests is “indicative of French & Associates’ prior representation of himself and Deborah Dunne in the acquisition of Twin Town Manor retirement home in 2013.” The email is from Gill to Debbie Dunne and Gerry Kirby and it forwards invoices dated November 15, 2011 and February 28, 2013 regarding Twin Town Manor.

The invoices themselves are addressed to “Twin Town Manor Inc.” [ 62 ] In his affidavit, French, Q.C. describes this retainer as being in relation to the purchase of a personal care home in Grand Falls- Windsor known as Twin Town Manor. He denies that Kirby was a client of the Firm with respect to this transaction and states that the Firm represented Deborah Dunne and Allison Kirby, the daughter of Kirby. He states that the file was opened in 2011 and bears a different file number than that assigned to Kirby (as referenced in the RHSI File).

French, Q.C. attests that Kirby was the accountant for Twin Town Manor Inc. at the time and not an owner or director of the company. [ 63 ] A review of the invoices show that on one date there are two separate entries: “Telephone conversation with Debbie Dunne”; and “Telephone conversation with Gerry Kirby.” Neither are described as being the client in these entries. Allison Kirby’s name does not appear on the invoices. [ 64 ] The two invoices contain several references to communications with “client” or “clients”, including emails between the client(

s) and Firm. The client(

s) are not specifically named in those entries. With respect to these entries, Kirby did not attest that he was the client being represented, nor did he otherwise adduce evidence to substantiate this to be the case.

For example, he did not produce copies of the email (with any necessary redactions to protect solicitor-client privileged information) showing his name, dates and subject matter which could be cross-referenced to the invoices and thereby help substantiate his claim to be the client with respect to the Twin Town Manor File. [ 65 ] The onus was on Kirby to prove on the balance of probabilities that a solicitor-client relationship existed between him and the Firm with respect to this matter. Unlike the New Brunswick File, these invoices are not addressed to Kirby but are addressed to Twin Town Manor Inc.

Simply adducing an email in which he along with Deborah Dunne was forwarded the invoices for services rendered is not sufficient to establish a solicitor-client relationship. Nor is it sufficient that his name appears on one occasion on an entry on one of the invoices on the same date that a separate entry references Deborah Dunne, (who is acknowledged by the Firm to be a client with respect to the Twin Town Manor File).

This is particularly so given the uncontradicted evidence of French, Q.C. that Kirby was the accountant for Twin Town Manor Inc. at the time. [ 66 ] The evidence that has been put forward by Kirby is not sufficient to establish a solicitor-client relationship existed between him and the Firm with respect to the Twin Town Manor File. [ 67 ] In the event that I am wrong in my conclusion regarding the existence of a solicitor-client relationship, I will continue the analysis to determine if Kirby has established that the retainers are sufficiently related.

Is the former solicitor-client relationship sufficiently related to the current action? [ 68 ] Kirby takes the position that the Firm’s representation of Deborah Dunne in this action in which her interest is adverse to his, will result in a breach of the Firm’s duty of loyalty to him. The Twin Manor File involved the acquisition of a personal care home. Although the factual background of this action is rooted in a transaction regarding another personal care home, the allegations against Kirby are based in negligence and fraud with respect to his actions surrounding the transaction.

It was incumbent on Kirby to show that the two retainers are sufficiently related so that it was reasonably possible that the Firm acquired confidential information pursuant to the Twin Town Manor File that could be relevant to this action.

He has again failed to meet this onus. [ 69 ] Having failed to show that the matters are sufficiently related in the sense of a risk of confidential information having been disclosed, I must nonetheless ask, in the absence of that risk, whether the duty of loyalty owed to Kirby as a former client of the Firm would otherwise be undermined by the Firm acting in this action against him. As I understand the argument being advanced by Kirby, it is that by now acting for Dunne, the Firm is favouring one client over the other and in essence, thereby choosing sides between former clients.

[ 70 ] There is no doubt that even the appearance of a conflict of interest is to be avoided ( Macdonald Estate paragraph 42). A lawyer is not prevented, however, from acting against a former client or taking an adversarial role against that client even if, in so doing, he or she acts for another party who had also been a client in the same prior retainer.

The onus remains with Kirby to establish the basis for the actual, or perceived, conflict of interest. [ 71 ] In the absence of risk of confidential information being imparted, the relationship between the two retainers must be very close so that the Firm could be seen to be attacking or undermining the value of the work provided or, effectively, changing sides in a matter central to the previous retainer. Kirby has not provided any evidence to establish how this would be the case.

Assuming the Firm had acted for both Kirby and Dunne with respect to the Twin Town Manor File, this means they acted for them with respect to the acquisition of a property unrelated to this action. The two retainers cannot be said to be so close as to meet the requisite burden. [ 72 ] Overall I conclude that the current retainer and the Twin Town Manor File are not related so as to constitute a conflict of interest that would prevent the Firm from acting for the Plaintiffs.

The Fifth Matter: The Dawe File Existence of solicitor-client relationship [ 73 ] Kirby describes in his supplementary affidavit a relationship involving himself, French, Q.C., and Dawe’s Investments Limited (“Dawe’s”), a long-time client of the Firm, through which Kirby claims he would assist personal care home entities to obtain financing from Dawe’s. He states that around 2007, he was approached by Deborah Dunne to assist in selling Alderwood and to expand the home. He attests that he contacted Dawe’s to get financing and arranged for French, Q.C. to do the legal work.

In doing this, he claims that he had a “close relationship” with French, Q.C. and considered him to be his lawyer along with the lawyer for the others involved. [ 74 ] In the brief filed on behalf of Kirby, there appears to be some concession on the point as to whether the Firm was acting in a solicitor-client relationship with Kirby during the Dawe File. At paragraph 40 of the brief, it is stated, “…although [the Firm] may not have been technically acting as solicitors for Mr. Kirby at the time, Mr.

Kirby believes… that the Firm would have had knowledge of the [NPR] transaction by their involvement with the matter from 2006 up until the assets of Alderwood was [sic] sold in or about 2008.” [ 75 ] French, Q.C. denies representing Kirby with respect to any financing transactions involving his client, Dawe’s. Specifically with respect to the financing for Alderwood, he states that the Firm opened the Dawe File in 2006. The file involved a loan from Dawe’s to Alderwood for the expansion of the personal care home.

Gerlinde Van Driel, a solicitor independent of the Firm, represented Alderwood and the Dunnes with respect to the matter. French, Q.C. attests that he acted solely for Dawe’s. [ 76 ] It is noted that no evidence such as an invoice for professional services rendered or correspondences referencing the retainer was adduced by Kirby to assist in substantiating the existence of a solicitor-client relationship between him and the Firm with respect to the Dawe File.

It is also noted that there appears to be a vacillating of Kirby’s position on this issue in terms of how the relationship is categorized in the brief filed on his behalf. [ 77 ] A “close” relationship in business transactions does not equate to a solicitor-client relationship, the latter of which attracts privileged communications between the client and the lawyer.

As per the first question in MacDonald Estates , any confidential information alleged to have been received, must be attributable to a solicitor-client relationship. [ 78 ] Having weighed the evidence before me on this issue, I accept the evidence of French, Q.C. that he did not represent the Dunnes or Kirby on the expansion loan transaction for Alderwood.

Kirby has failed to establish a solicitor-client relationship existed between him and the Firm with respect to the Dawe File. [ 79 ] In the event that I am wrong in my conclusion regarding the existence of a solicitor-client relationship, I will continue the analysis to determine if Kirby has established that the retainers are sufficiently related.

Is the former solicitor-client relationship sufficiently related to the current action? [ 80 ] Kirby’s argument is that the financing sought by the Plaintiffs from Dawe’s was for the expansion of Alderwood to ready it for sale and that through the Firm’s involvement in the financing, it would have become aware of the transactions that ultimately transpired in March 2008. In his supplementary affidavit, Kirby attests, “I am confident that the needs and aspirations of Mr. and Mrs.

Dunne were made known to [French, Q.C.] including the eventual sale of Alderwood to RHSI and then to [NPR].” Kirby does not state the source of this information or that it was the subject matter of confidential discussions between him and French, Q.C. [ 81 ] For his part, French, Q.C., denies any confidential information was acquired while working on this financing that would prejudice Kirby in this action. I accept that he did not represent the Dunnes and that they were represented by separate legal counsel.

French, Q.C. attests that at the time of the Dawe File he had no way to know the “needs and aspirations” of Deborah Dunne in relation to

Alderwood and that he first learned of the “flip” from RHSI to NPR while acting for her on a separate transaction in March 2015. Prior to that he, “had no knowledge whatsoever in relation to Deborah Dunne’s sale of Alderwood to RHSI and the flip to NPR”. [ 82 ] French, Q.C. is specific in his denial of having received any relevant confidential information during the Dawe File and as to the timing of when he first became aware of the March 2008 transactions.

On the other hand, Kirby does not state how or why he is “confident” that French, Q.C. would have known during the Dawe File about the eventual Alderwood sale and the two impugned transactions.

Overall, I accept the evidence of French, Q.C. that no relevant confidential information was acquired during the Dawe File. [ 83 ] In the absence of risk of confidential information having been imparted, the relationship between the two retainers must be very close so that the Firm could be seen to be attacking or undermining the value of the work provided or effectively changing sides in a matter central to the previous retainer. Kirby has not provided any evidence to establish how this would be the case.

In fact, based on the limited information put before the Court by Kirby, it remains unclear as to the nature of the work alleged to have been completed on his behalf by the Firm with respect to the Dawe File. As such, the two retainers cannot be said to be very close so as to meet the requisite burden. [ 84 ] Overall I conclude that the current retainer and the Dawe File are not related so as to constitute a conflict of interest that would prevent the Firm from acting for the Plaintiffs.

summary and Disposition [ 85 ] I am unable to conclude on the basis of the evidence before me that a conflict of interest exists that should prevent French & Associates from continuing to act for the Plaintiffs in this matter. [ 86 ] Therefore the application is dismissed. The Plaintiffs, as the successful parties, are entitled to party-party costs in accordance with Column 3 of Rule 55 of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D . __________________________ SANDRA R. CHAYTOR Justice