Tom Jarmyn

State of Mind and Privilege

This decision from the BC Supreme Court in the matter of Canadian Community Reading v. Ewanchyna et al., canvasses two issues: 1) can there be a partial waiver of privilege; and, 2) what happens when a party puts its legal state of mind in play.

Ewanchyna was a member of the Board of the Canadian Community Reading Plan (CCRP).  CCRP was attempting to decide whether to negotiate the sale of a portion of its business to a competitor.  Ewanchyna was unhappy with this and consulted counsel.  That counsel commenced a petition alleging oppression which was discontinued three weeks later.  CCRP commenced an action against Ewanchyna alleging that he had disclosed confidential information, violated his fiduciary duty as a director and adversely affected the sale prospects of CCRP.  Ewanchyna defended on the grounds that the petition was filed by mistake and without his instruction.

CCRP sought production of a number of document and communications between Ewanchyna and his solicitors.  Ewanchyna disclosed some documents in redacted form but, in general, resisted the application.  One of the interesting things to note is that Ewanchyna appears to have been represented in this application by the same solicitors who are alleged to have mistakenly filed the position.  Given that is their advice, actions and evidence that are at the heart of the matter I am surprised that they tried to stay on the record.

In responding to the application Ewanchyna did not file an affidavit testifying that he did not give instructions to file the petition.  

The court concluded two things: 1) it is not possible to partially waive privilege.  Once it is waived it is gone; and, 2) when a party puts their legal state of mind into issue then all of the advice that goes into the making up of that legal state of mind is in play.  

New Cdn Bar Association Report on Conflict of Interests

I am just in the process of digesting the report of the CBA Task Force on Conflicts of Interest.  But my first gut reaction is that the CBA, having had their submissions largely ignored by the Supreme Court of Canada in Neil and Strother, is trying to put the genie back in the bottle.  It seems that they have done some good work on duties after termination of a retainer which was really undefined.  But I am afraid that they have really undone that good work by trying to assert the proposition that lawyers can act against current clients.

At p. v of the report the task force falls for an amendment to law society rules that would:

4.   provide that a lawyer may act in a matter which is adverse to the interests of a current client provided that:
     a. the matter is unrelated to any matter in which the lawyer is acting for the current
client and
     b.  no conflicting interest is present;

This is unreasonable.  Lawyers should not be permitted to act against the interests of present clients.  Simply by virtue of that representation a lawyer gains personal information about his/her client.  S/he learns about frailties and sensitivities.  S/he also cannnot be certain that the matters will not be related at some time in the future. 

I could understand a rule that attempted to deal with a situation where it was not apparent that the interests were adverse and therefore a benchmark needed to be established as to how and when a lawyer would be required to terminate a relationship or carry on.  But establishing a broad rule that permits a lawyer to act against a current client is over the top.  I presume then, that if a lawyer acts against a current client on the grounds that there is not conflict of interest and that lawyer turns out to be wrong, that the lawyer will be prepared to reimburse all of the fees paid and be responsible for the damages flowing from their misjudgment.

The other part of the discussion about engagement letters was essentially - really good idea but we are not certain that it would be convenient for lawyers.  Funny, I used engagement letters for all of my clients.

Conflict of Interest

Lubs v Ahmad is a decision of the Saskatchewan Queens Bench on the issue of conflict of interest.  The plaintiff Lubs was married to Marc Baltzan until 1980 when they separated and entered into a detailed separation agreement.  Baltzan then married the defendant Ahmad.  The plaintiff alleges that before Baltzan died Ahmad induced him to breach the separation agreement and that she received a benefit as a result of those breaches.

The detailed separation agreement was drafted by Tom Gauley.  The Plaintiffs retained the firm of MacDougall Gauley to represent her in the litigation.  MacDougall Gauley put in place practices to ensure that Tom Gauley received no information and the evidence was clear that all of the files with respect to the drafting of the agreement had been destroyed.

MacDougall Gauley received notice of the alleged conflict and went to the Law Society's ethics committee to get an advisory opinion on this.  A majority of the committee was of the opinion there was no conflict and the plaintiffs choice of counsel should be deferred to.

I find this conclusion astonishing.  The practical reality is that the terms of the agreement were going to be in play in the litigation.  The fact that Baltzan had died meant that one of the only sources of information with respect to Baltzan's state of mind when he entered into the agreement was Gauley.  This is the best evidence of the understanding of the agreement.  The other issue is that it is plain that Gauley would have confidential information about Baltzan's assets and affairs.

Ahmad made an application to Court to disqualify MacDougall Gauley.  The court concluded there was a conflict and that this condition could not persist.  The court agreed that chinese walls were a useful tool but they were a tool to be used to ameliorate a conflict that had arisen and not something that should be used to create a situation where a conflict could exist.

Why must a lawyer keep information confidential?

An individual is charged with a crime.  A lawyer's client tells him/her a piece of information prior to trial.  That information will establish the guilt of the client.  The lawyer is not permitted to disclose this information to anyone.  Why not?

The Crown calls a witness who testifies to the critical event.  The client directs the lawyer to impeach the witness even though he knows that the witnesses testimony is correct.  Should the lawyer proceed to impeach the witness?

I am going to try and work through these issues over the next few days.