Brookville Carriers Flatbed GP Inc. v. Blackjack Transport Ltd.

Brookville Carriers Flatbed GP Inc. v. Blackjack Transport Ltd. Court Court of Appeal Date 2008-03-19 Citation 2008 NSCA 22 Docket CA 284041 Judge/Registrar/Adjudicator Roscoe, Elizabeth A. (Honourable Justice) (CA); Saunders, Jamie W. S. (Honourable Justice) (CA); Cromwell, Thomas A. (Honourable Justice) Document Type Decision Decision Content NOVA SCOTIA COURT OF APPEAL Citation: Brookville Carriers Flatbed GP Inc. v. Blackjack Transport Ltd., 2008 NSCA 22 Date: 20080319 Docket: CA 284041 Registry: Halifax Between: Brookville Carriers Flatbed GP Inc. Appellant v. Blackjack Transport Limited, 4157371 Canada Inc., Canadian American Specialized (C.A.S.) Inc., Canadian American Specialized (C.A.S.) Nova Scotia Ltd., Dimensionally Specialized Carriers Inc., Transport Logistics & Leasing Ltd., Wayne Jenkins, Jason Jenkins, and Davis Bradley MacDonald Respondents Judges: Roscoe, Cromwell and Saunders, JJ.A. Appeal Heard: February 1, 2008, in Halifax, Nova Scotia Additional Written Submissions Completed: February 29, 2008 Held: Leave to appeal is granted but the appeal is dismissed per reasons for judgment of Cromwell, J.A.; Roscoe and Saunders, JJ.A. concurring. Counsel: S. Bruce Outhouse, Q.C. and Adrienne M. Bowers, for the appellant Christopher C. Robinson, Q.C. and Jennifer J. Biernaskie, for the respondents Wayne Jenkins and Blackjack Transport Ltd. Richard A. Bureau, for the respondent Jason Jenkins Reasons for judgment: I. INTRODUCTION: [1] A judge disqualified the appellant’s lawyers from continuing to act in a law suit against the respondents who had formerly been clients of the same law firm. The legal principle which the judge applied was that a lawyer should not act against a former client in a matter related to the prior retainer. On the facts, the judge found that this principle applied: at the centre of both the former and the present litigation was the honesty and integrity of the former clients, the respondents, in relation to their employment with the appellant during overlapping time periods. [2] On appeal, the issue is whether the judge was mistaken about the legal principle or erred in applying it to the facts. In my view he did not err in either respect. I would dismiss the appeal. II. OVERVIEW OF FACTS AND ISSUES: [3] In a previous law suit, Stewart McKelvey Stirling Scales jointly represented the appellant, Brookville and the respondents, Wayne and Jason Jenkins, who were all defendants in that action. It was dismissed in July of 2004. (The Jenkins used to work for the appellant Brookville, Wayne until June of 2004 and Jason until March of 2003.) [4] The firm is now acting for Brookville in a law suit it has brought against the Jenkins, their company, Blackjack Transport Limited, and others. (Wayne and Jason Jenkins are father and son. They had an ownership interest in Blackjack Transport Limited, although the evidence is that Wayne has given his interest to Jason.) The Jenkins maintain that the firm, having represented them in the earlier suit, should not now be acting against them in this one. [5] To understand what is in issue, it is necessary to have some background about the two law suits and the proceedings in Supreme Court chambers that resulted in the order under appeal. A. The Charabi Action: [6] In the summer of 2002, the Jenkins were working for Brookville. The Jenkins, Brookville and others were sued by a Mr. Charabi and his company. Brookville and the Jenkins were defended by Ms. Nancy I. Murray, Q.C., assisted by Mr. Colin Piercey and Ms. Karen Bennett-Clayton, all of the Stewart McKelvey firm. The action did not proceed to discovery and was eventually dismissed on consent in July of 2004. [7] The essence of the allegations in the Charabi action was that the Jenkins (and other employees of Brookville) for their own benefit forced Charabi to pay bribes by threatening to reduce the amount of work he would be assigned for Brookville if he failed to pay. Brookville was alleged to have known about this and to have wrongfully terminated Charabi’s contract when he complained. The allegations covered the time period of roughly 1997 to 2002. [8] The firm filed a common defence denying that bribes had been demanded or paid. It also pleaded that Brookville had no knowledge of the allegations until Charabi complained. [9] In short, the Charabi action accused the Jenkins of dishonesty in the course of carrying out their employment duties with Brookville between 1997 and 2002. The defence pleaded that no such dishonest activity had taken place. B. The Brookville Action: [10] In February of 2005, roughly six months after the Charabi action was dismissed, Brookville sued a number of defendants, including the two Jenkins and Blackjack. Brookville is represented in the action by Mr. William L. Ryan, Q.C., assisted by Mr. Colin Piercey, both of the Stewart McKelvey firm. [11] Brookville alleges that the Jenkins: (i.) were involved in a conspiracy against it in which they defrauded Brookville of its profit; (ii.) charged unauthorized commissions and other unauthorized charges in connection with certain over-sized trucking loads; and (iii.) diverted corporate opportunities away from Brookville to the various corporate defendants which were owned and controlled by the individual defendants, including the Jenkins. This conspiracy allegedly began in about 1998, while both Jenkins were employed with Brookville. (Recall that the Charabi allegations spanned 1997 to 2002.) In addition to conspiracy, the statement of claim pleads fraud, unlawful interference with Brookville’s economic interests and breach of fiduciary duty. [12] In short, the Brookville action alleges that the Jenkins conspired against, defrauded, stole from and breached their fiduciary duties to Brookville during a time that overlapped with the allegations in the Charabi action. The mechanisms used to accomplish these alleged depredations were not related to the specific allegations made against the Jenkins in the Charabi action. However, both actions are grounded in acts of dishonesty by the Jenkins in relation to Brookville, their employer (or former employer) during overlapping time periods. C. The Proceedings in Chambers: [13] The Jenkins and Blackjack brought an application in Supreme Court chambers to have the firm removed as Brookville’s solicitor in the present action. As mentioned, their contention was that the firm’s representation of the Jenkins in the Charabi action disqualifies it from representing Brookville in its present action against them and Blackjack. [14] The chambers judge granted the application, making three key findings. First, he found that the firm was not in breach of its duty of confidentiality to its former clients. Second, he found that a law firm will be in breach of its residual duty of loyalty to its former clients if it acts against them in a related matter, even if no confidential information is at risk. Third, the judge concluded that the two proceedings were sufficiently related to engage this principle because at the root of both was the honesty and integrity of the Jenkins in relation to their employment with Brookville during overlapping periods of time. D. The Issues and Standard of Review: [15] The main questions to be decided are these: 1. Did the judge err in finding that a lawyer may be disqualified from acting against a former client in a related matter even if no confidential information is at risk? 2. If not, did he err in finding that these two matters were sufficiently related to engage this principle? [16] The first issue is a pure question of law. It concerns whether the judge stated or applied the wrong legal principle. On appeal, we review legal questions for correctness. The second issue, however, is mainly concerned with how the judge applied the law to the facts. That issue is reviewed for palpable and overriding (clear and determinative) error unless there is an extricable legal error in the judge’s reasoning in which case it is reviewed for correctness. III. ANALYSIS: [17] In my view, putting aside issues of informed consent, lawyers have a duty not to act against a former client in a related matter whether or not confidential information is at risk. A matter is “related” for this purpose if the new retainer involves the lawyer taking an adversarial position against the former client with respect to the legal work which the lawyer performed for the former client or a matter central to the earlier retainer. Here, although the causes of action pleaded in the two law suits were different, the judge found that they were related because in the Brookville action, the law firm was attacking the honesty of the Jenkins in their employment with Brookville during an overlapping time period in which the firm had previously defended their honesty in the course of the same employment. While this is perhaps at the outer limits of what could be considered “related” retainers, the judge correctly understood the legal principles and he did not make any clear or determinative error in applying them to the facts. [18] There is no suggestion that the former clients ever gave their consent to the firm acting against them and so I do not need to consider that aspect. [19] My analysis will follow three steps. I will first set out why, in my view, the judge was right to conclude that there is a duty not to act against a former client in a related matter even if no confidential information is put at risk by doing so. Next, I will detail my understanding of the principles governing whether the retainers are related for the purposes of this principle. Finally, I will explain why, in my view, the judge did not make any clear and determinative error in applying the law to the facts of this case. A. The Duty Not to Act Against a Former Client in a Related Matter: [20] A lawyer has a duty to both current and former clients to keep their confidences: MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235. Consequently, a lawyer must not act in any matter which puts that obligation in conflict with the duties owed to current clients. To current clients, the lawyer also owes a broader duty of loyalty which goes beyond the duty to keep their confidences. This duty includes avoiding conflicting interests, providing zealous representation and being candid: R. v. Neil, [2002] 3 S.C.R. 631 at para. 19. [21] This appeal is not governed by either of these clearly settled principles: it concerns acting against a former, not a current, client and the new retainer does not put the former clients’ confidences at risk. The appeal, therefore, raises a threshold question of whether, as the judge found, a lawyer may be disqualified from acting against a former client on the same or a related matter even though by doing so, the lawyer will not place the former client’s confidential information at risk. [22] I agree with the chambers judge that the answer to this question is yes. There is binding authority to this effect in Nova Scotia. Other courts of appeal have either taken the same position or at least kept the door open to this principle. The recent jurisprudence from the Supreme Court of Canada on the duty of loyalty to current clients does not, in my view, place this view in doubt and many decisions of other courts and text writers have adopted it. 1. Binding authority from this Court: [23] There is binding authority in Nova Scotia that a lawyer has a duty not to act against a former client in the same or a related matter. This is so even though there is no risk of breaching the lawyer’s duty to protect the former client’s confidentiality. [24] The governing Nova Scotia authority is Montreal Trust Co. of Canada v. Basinview Village Ltd. (1995), 142 N.S.R. (2d) 337, [1995] N.S.J. No. 295(Q.L.) (C.A.). Our Court held that MacDonald Estate does not exhaust the situations in which a lawyer may have a disqualifying conflict of interest in acting against a former client: para. 41. [25] The circumstances in Montreal Trust were these. Montreal Trust provided refinancing for two of Basinview’s properties. In connection with the refinancing, Montreal Trust, Basinview and its principal, Mr. Al-Hamwi, were all represented (with their consent) by a solicitor with Murrant Brown Law, Mr. D. William MacDonald. He prepared mortgages and other documents. Roughly five years later, Montreal Trust sued for a declaration clarifying its powers under those mortgages and, somewhat later, commenced foreclosure proceedings. Mr. Murrant, a partner in the Murrant Brown firm at the time of the refinancing, defended Basinview and Mr. Al-Hamwi in those proceedings. The defences included a challenge to the validity of the mortgages. Montreal Trust applied to prohibit Mr. Murrant from acting. The chambers judge dismissed the application, but the decision was reversed on appeal to this Court and Mr. Murrant was removed as counsel. [26] Bateman, J.A., for the Court, held that while the case could be resolved within the principles established by MacDonald Estate, it was not necessary to resort to them. She wrote, at para. 25, that “[t]he law in this area is well established.” She referred to the publication, Legal Ethics and Professional Conduct: A Handbook for Lawyers in Nova Scotia, (Halifax: Nova Scotia Barristers’ Society, 1990), noting that it provides that “A lawyer or any associate of the lawyer who has acted for a person in a matter has a duty not to act against that person in the same or a related matter.” She reasoned that these pronouncements by the profession, while not binding on the court, should not be lightly disregarded, taking care not to apply them too rigidly and having due regard to the right of a litigant to retain counsel of choice: para. 34. [27] An important consideration in Montreal Trust was that the validity of the mortgages drawn by Mr. Murrant’s former associate was in issue. As Bateman, J.A. said at para. 40: “It is likely that Mr. MacDonald will be a witness on this issue. Should that occur, it is untenable that Mr. Murrant would be examining his former associate on the quality of his work in placing the security, which services were rendered at a time when Mr. Murrant and Mr. MacDonald were members of the same law firm.” Bateman, J.A. concluded: [41] In summary, then, while Martin v. Gray provides useful guidance, the existence of a conflict here is not dependent upon the imputation of confidential information to Mr. Murrant. There is a clear 'disqualifying conflict of interest' within the principles outlined above. [28] In my view, Montreal Trust is binding authority for the proposition that a lawyer may be disqualified from acting against a former client in the same or a related matter even if there is no risk of the former client’s confidential information being revealed in the new matter. In Montreal Trust, the second retainer put Mr. Murrant in an adversarial position with his firm’s former client with respect to the very legal work his firm had done in the course of the earlier retainer. 2. Other appellate authority: [29] The Saskatchewan Court of Appeal, in G. H. Coulter v. Jens, [1992] S.J. No. 321 (Q.L.) (C.A.) took an approach similar to that of our Court in Montreal Trust. In Coulter, the Court removed a firm from acting in proceedings related to a mortgage when it had acted for both the mortgagee and mortgagor at the time the mortgage was given. Jackson, J.A. for the Court said at p. 3: We agree that the Martin case has replaced the courts' preoccupation with the old tests, i.e., possibility or probability of mischief, but we do not accept counsel's contention that the Martin case requires a finding that there is a risk of a breach of confidentiality before a court will restrain a law firm from acting in this type of case. ... (Emphasis added) [30] Both Basinview and Coulter refer to the judgment of the Ontario Court of Appeal in Re Regina and Speid (1983), 8 C.C.C. (3d) 18. Although that case involved disclosure of the former client’s confidences, the Court relied on a broader principle in upholding an order removing counsel. Dubin, J.A. (as he then was) said at 22: “A client has every right to be confident that the solicitor retained will not subsequently take an adversarial position against the client with respect to the same subject-matter that he was retained on. That fiduciary duty, as I have noted, is not terminated when the services rendered have been completed.” (Emphasis added) [31] I do not understand the same Court to have said anything inconsistent with Speid in its later decision in Chapters Inc v. Davies, Ward & Beck LLP (2001), 52 O.R. (3d) 566 (C.A.). The argument in that case was directed solely to the issue of confidentiality and there is nothing controversial, in my view, about Justice Goudge’s suggestion at para. 21 that there is no general duty not to act against a former client. There is no such general duty. The duty described in Speid, and not discussed in Chapters, is a duty not to act against a former client on the same or a related matter. [32] In Bow Valley Energy Inc. v. San Diego Gas & Electric Co. (1996), 38 Alta. L.R. (3d) 116 (C.A.), the Court upheld an order removing counsel on the ground that “... to allow a law firm to act for both parties and then elect to act for one party against another in ... the same matter ... is to create at least an appearance of unfairness and impropriety which is unacceptable.”: para. 12. [33] In two other cases, appellate judgments have at least left the door open to a duty of loyalty to former clients that goes beyond the duty to keep the client’s confidences. In Gainers Inc. v. Pocklington (1995), 125 D.L.R. (4th) 50 (Alta. C.A.), the issue was whether a law firm could act for one long-standing client against another (see p. 51). The Alberta Court of Appeal suggested a series of factors that must be considered, only one of which was the duty of confidentiality. In Greater Vancouver Regional District v. Melville, [2007] B.C.J. No. 1750 (Q.L.) (C.A.); leave to appeal refused [2007] SCCA No. 561, the Court noted that the principles from MacDonald Estate “... must be applied in the context of a continuing duty of loyalty between a lawyer and a former client.” (para. 14) The Court considered it “well-settled that a lawyer may owe a former client a continuing fiduciary duty of loyalty”(para. 17). 3. Supreme Court of Canada jurisprudence: [34] The authority of Montreal Trust and these other cases is not diminished by the Supreme Court of Canada’s recent jurisprudence on the duty of loyalty owed to current clients. In Strother v. 3464920 Canada Inc., [2007] 2 S.C.R. 177, Binnie, J., writing for the majority, was careful to distinguish between the duties owed to existing, as opposed to former, clients. He emphasized that the duty of loyalty as described in Neil, supra, relates to current clients, noting that the Strother case itself was “... not a case where a former client alleges breach of the duty of loyalty ....”: para. 53. [35] It is true, as the appellant argues, that in the second last sentence of para. 53 of Strother, Binnie, J. said that: “The issue of loyalty to a former client was dealt with in MacDonald Estate v. Martin (not Neil), and raises complex issues not relevant here.” However, I cannot read this passage as supporting the view that MacDonald Estate dealt exhaustively with the duty to former clients which could require disqualification from acting against them in a subsequent retainer. Rather, this passage simply distinguishes the two situations by noting that MacDonald Estate, but not Neil, dealt with duties to former clients. More significantly, in the same passage, Binnie, J. points out that the issue of a lawyer’s duty to a former client raises complex issues not relevant in Strother. I doubt that Binnie, J. would have described the duty to a former client in this way if that duty had previously been exhaustively defined in MacDonald Estate. [36] Strother made clear that the focus of the duty of loyalty is “the lawyer’s ability to provide proper client representation”: para. 56. It also made clear, however, that the duty of loyalty is not fully exhausted by the obligation to avoid conflicts of interest among current clients: para. 56. Referring to the way in which “conflict of interest” had been defined in Neil, Binnie, J. noted that conflicting interests might arise because of duties to former, as well as to current, clients: para. 56. I note that Montreal Trust was cited with apparent approval by Binnie, J. in his reasons in the earlier decision in Neil. 4. Other cases and texts: [37] There are several other cases and texts which support the view that a lawyer has a duty not to act against a former client in the same or a related matter even though no relevant confidential information is in play. I will briefly review some of these authorities. [38] Binnie, J. at para. 53 of Strother cited with apparent approval (and certainly without disapproval) three cases in which courts had found a duty of loyalty to former clients beyond the duty to keep their confidences. [39] In Stewart v. Canadian Broadcasting Corporation, (1997), 150 D.L.R. (4th) 24 (Ont. Gen. Div.) the solicitor had represented Mr. Stewart some thirteen years earlier at the sentencing and appeal from his conviction for criminal negligence causing death. The solicitor then appeared on a television program in which the crime and court proceedings were reviewed. The solicitor acted as the host and narrator of the program. At issue was whether the solicitor was liable in damages for breach of fiduciary duty. The Court found that he was. [40] In the Court’s view, there is an ongoing duty of loyalty after the retainer comes to an end. This finding was made even though there had been no breach of the duty of confidentiality owed to the former client: see e.g. pp. 64-66 and pp. 126-127. At p. 160, the Court stated: ... It was when he acted as Mr. Stewart’s counsel that a fiduciary duty attached to [the solicitor] in respect of Mr. Stewart and his case. That duty was alive but inoperative through the years that [the solicitor] and Mr. Stewart were independent of each other. [The solicitor] brought himself within the sphere of that duty when, in 1991, he chose to involve himself again in the public aspects of Mr. Stewart’s case. Involving himself again in the subject-matter of his concluded retainer triggered the fiduciary obligation of loyalty. [Emphasis added] [41] The solicitor had acted disloyally in matters related to the retainer in three ways: by placing his own financial interests over the interests of his former client; by putting his own self promotion ahead of his former client’s interests; and, by publicizing again the facts of the former client’s case thereby undercutting the benefits and protections provided by his services while retained: p. 160 and p. 163. [42] As the appellant points out, this is not a case about disqualification from acting in litigation against a former client. It is, however, authority for the proposition that a former client is owed a broader duty of loyalty in addition to the duty relating to confidentiality. It is also consistent with the reasoning in Montreal Trust that the lawyer must not attack or undermine the legal work provided to the former client. [43] In Credit Suisse First Boston Canada Inc. Re (2004), 2 B.L.R. (4th) 109 (Ont. Sec. Comm.), the Market Regulation Services commenced an investigation of Credit Suisse. Credit Suisse in turn retained the firm of Stikeman Elliott to represent it in the course of the investigation. This firm had previously been involved with the Toronto Stock Exchange and some of its work involved the establishment of the Market Regulation Services. In the course of representing Credit Suisse, Stikeman Elliott had raised various defences that directly attacked the work and advice that the firm had provided to the Toronto Stock Exchange under the prior retainer. [44] In confirming the decision of the Hearing Panel that the firm could no longer act for Credit Suisse, the Commission said: 134. The Hearing Panel held, based on the particular and unique circumstances of this case, that Stikeman Elliott owed and was in breach of its duty of loyalty to RS. This was due to the nature of certain of the allegations in Part V of the Reply which were so fundamental to RS and to the legal advice previously provided in relation to those issues. ... 136. A lawyer acting for a new client against a former client does not necessarily offend a duty of loyalty. In fact, in this case, RS did not object to Stikeman Elliott’s retainer with CSFB for the five months prior to the time that the impugned Part V allegations were raised. The Hearing Panel did not find that Stikeman Elliott was prevented from acting against RS in general. Rather, it found that Stikeman Elliott could not, in acting for CSFB, attack the very legal advice it had provided to the TSE and, by extension, RS, in the Retainer. We agree with the conclusions of the Hearing Panel in this regard. [Emphasis added] [45] In Chiefs of Ontario v. Ontario (2003), 63 O.R. (3d) 335 (Ont. Sup. Ct. J.). the Blakes law firm had acted for a First Nation with respect to casino revenue matters. The retainer was concluded and the First Nation consented to Blakes continuing to act on behalf of the Chiefs of Ontario with respect to the same casino revenue issues. Thereafter, in the course of the retainer with the Chiefs, Blakes made various allegations against the First Nation including deception and bribe-taking in relation to matters about which Blakes had previously advised the First Nation. While the case involved disclosure or use of confidential information, the Court also referred to a broader duty of loyalty. At paras. 112 and 146, the Court said: [112] The public interest in the administration of justice requires the confidence of every litigant that their legal advisers will not later attack their honour in matters closely related to their confidential retainers. . . . [146] There are some things that a law firm simply cannot do. A law firm cannot act for a client under a million dollar, five-year confidential retainer as general counsel and then, without explicit consent, attack the client for alleged breach of fiduciary duty, deception and bribe-taking in respect of closely related matters. (Emphasis added) [46] There are other authorities to the same effect. In R. v. Burkinshaw (1967), 60 D.L.R. (2d) 748 (Alta. S.C.), it was important, as it had been in Montreal Trust, that the solicitor was now attacking the validity of the mortgage security that his firm had put in place for its former client. In Flynn Development Ltd. v. Central Trust Co. (1985), 51 O.R. (2d) 57 (Ont. H.C.J.), the same principle was applied even though the validity of the security was not directly in issue. In Harris v. Reichardt, [2001] B.C.J. No. 2835 (Q.L.)(S.C.), counsel who had defended Harris, a municipal councillor, on a charge of breaching municipal conflict of interest orders, subsequently acted for Reichardt in a defamation action brought by Harris concerning Reichardt’s claim that Harris had forged documents. While the court found that relevant confidential information had been exchanged in the course of the earlier retainer, it also found that the integrity and reputation of the former client was “integral” to both retainers: para. 5. I refer as well to Miller v. Dartmouth Dodge Chrysler (1991) Inc. (1999), 177 N.S.R. (2d) 117, [1999] N.S.J. No. 227 (Q.L.) (S.C.) and TransCanada Pipelines Ltd. v. Nova Scotia (Attorney General) (1999), 180 N.S.R. (2d) 355; [1999] N.S.J. No. 409 (Q.L.) (S.C.). [47] The authors of three influential Canadian texts also support the existence of a wider duty of this nature to former clients. [48] Gavin MacKenzie, in his text Lawyers and Ethics: Professional Responsibility and Discipline (looseleaf)(Scarborough, Ont.: Carswell, 1993) at 5-19 states that “it is clear in Canada that the rule that lawyers must not act against former clients in related matters ... is designed to protect clients not only against breaches by lawyers of their duty of confidentiality, but also against breach by lawyers of their duty of loyalty.” (Emphasis added) Similarly, Michel Proulx and David Layton in their text, Ethics and Canadian Criminal Law, (Toronto: Irwin Law, 2001) at p. 306 state 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 persist with respect to the subject matter of a retainer, even after the client-lawyer relationship has ended and even if there is little or no possibility that confidential information can be misused.” To the same effect, Paul Perell (now Perell, J.) wrote in his text Conflicts of Interest in the Legal Profession, (Toronto, Butterworths:1995): ... while there is no general duty against acting against a former client, the factor of confidentiality will ground disqualification. However, confidentiality is not the exclusive criterion for disqualification; a particular duty of loyalty may create a disqualifying conflict of interest. ... It is true that confidential information may be involved, but the emphasis of these cases is different. The dominant element for this class of case is not confidential information, but disloyalty and the emphasis is on the need to foster and maintain public confidence in the integrity of the legal profession and in the administration of justice. (Emphasis added) 5. Conclusion: [49] In my view, lawyers have a duty not to act against a former client in the same or a related matter and this duty may be enforced by the courts. Although in general, the focus of the analysis will be on whether, by acting, the lawyer is placing at risk the former client’s confidential information, the duty is not limited to situations in which that is the case. The chambers judge was right not to limit the duty in that way. B. When are Retainers “Related”? 1. Legal principles: [50] Whether two retainers are related must be considered in light of the underlying purpose of the inquiry. In the MacDonald Estate analysis, the focus is on protection of the client’s confidential information. In that context, two matters will be sufficiently related to trigger the principle if, as Goudge, J.A. put it in Chapters at para. 30, “... it is reasonably possible that the lawyer acquired confidential information pursuant to the first retainer that could be relevant to the current matter.” The issue is not so much whether the subject-matter of the two retainers is the same, but whether confidential information learned in one would be relevant to the other. Ultimately, the “overriding policy” must be “that the reasonably informed person would be satisfied that no use of confidential information would occur.”: MacDonald Estate, p. 1260. [51] Under the principle relevant here, that concerning acting against a former client in a related matter, the focus is different. As the cases and commentators show, the scope of this duty is very limited absent confidential information being at risk. This broader continuing duty of loyalty to former clients is based on the need to protect and to promote public confidence in the legal profession and the administration of justice. What is of concern is the spectre of a lawyer attacking or undermining in a subsequent retainer the legal work which the lawyer did for the former client or of a lawyer effectively changing sides by taking an adversarial position against a former client with respect to a matter that was central to the previous retainer. Basinview is an example of the former: the new retainer involved the lawyer attacking or attempting to undermine the very legal services provided to the former client. Harris and Chiefs of Ontario are examples of the latter: the new retainer involved attacks on the honesty and integrity of the former client in relation to exactly the same sort of matters as the lawyer acted to defend in the previous retainer. In either type of case, the relationship between the two retainers must be very close so that the lawyer in the new retainer is attacking or undermining the value of the legal work provided to the former client 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 parties to retain and instruct the counsel of their choice or of lawyers to earn a living free of undue restriction. Moreover, one must not ignore the possible strategic use of applications to disqualify counsel. As Binnie, J. pointed out in Neil at para. 14, “[i]f a litigant could achieve an undeserved tactical advantage ... by ... using ‘the integrity of the administration of justice’ merely as a flag of convenience, fairness of the process would be undermined.” [53] It is also important that the scope of these duties be as clear as possible. To be avoided is an approach “... on a case-by-case basis through a general balancing of interests, the outcome of which would be difficult to predict in advance.”: Strother at para. 51. This sort of uncertainty intrudes unduly into the rights of parties to retain counsel of choice, nourishes misuse of the principles for tactical purposes and generally undermines rather than reinforces public confidence in the legal profession and the administration of justice. [54] The appellant submits that to extend the Basinview analysis to related, as opposed to the same, matters would be in conflict with MacDonald Estate. It is argued that the sole focus of inquiry would become whether two retainers are sufficiently related and disqualification would be automatic if they were. This, the appellant contends, would be contrary to MacDonald Estate because that case makes clear that the fact that two retainers are related does not result in automatic disqualification, but rather merely gives rise to a rebuttable presumption that relevant, confidential information was imparted to the lawyer. The appellant concludes from this that to adopt the Basinview approach to related retainers would substantially truncate the analytical framework set out in MacDonald Estate for determining whether a disqualifying conflict of interest exists. [55] I cannot accept this argument. As I have attempted to explain, the approach to the question of whether two matters are related is entirely different in a MacDonald Estate situation than it is in the case of an alleged disqualifying conflict of interest where confidential information is not at risk. The purpose of assessing the relationship between the two retainers in MacDonald Estate is to determine whether an inference should be drawn that confidential information obtained in the course of the first retainer is relevant to the second. When, as here, confidential information is not at risk, the relationship between the two retainers is considered in order to identify whether the second retainer involves the lawyer attacking the legal work done during the first retainer or amounts, in effect, to the lawyer changing sides on a matter central to the earlier retainer. The concept of relatedness for this purpose is much narrower and has an entirely different focus than the concept as applied in the MacDonald Estate analysis. [56] I should add that in this case, no argument was addressed to how far the duty goes beyond the lawyers who actually acted for the former client. One of the lawyers, Mr. Piercey, has acted in both matters and all of the lawyers involved function in the same office of the firm. C. Did the Judge Err in Finding the Retainers Were Related? [57] This issue is essentially one of fact. The judge correctly stated the legal principle that a lawyer should not act against a former client on a related matter. It is apparent that he looked for whether in these two retainers, the law firm was, in effect, changing sides by taking an adversarial position against its former clients with respect to a matter that was central to the prior retainer. The issue, therefore, concerns the judge’s application of the facts to the legal principles. Absent some extricable legal error in the judge’s description or application of the legal principle, we should not intervene unless persuaded that there was some palpable and overriding error in his analysis. I find none. 1. The judge’s reasons: [58] The basis of the judge’s decision is that the two retainers were closely related because the subject-matter of both was the Jenkins’ honesty in carrying out their employment duties with Brookville during overlapping time periods: [23] The allegations of dishonesty in business are closely tied together. One action alleged solicitation of bribes by both Jenkinses, and the other alleges fraudulent diversion of profits by both Jenkinses. Both allege the Jenkinses did all of the following: (a) acted against the interests of their employer, Brookville; (b) took financial advantages for themselves; (c) did so in the same workplaces; (d) did so while holding the same positions of General Manager and Manager of Operations; (e) did so in overlapping periods (Charabi: September 1997 to late 2001; Brookville: 1998 to 2004). ... [25] Another important fact in assessing the relationship is the timing of the two claims. The allegations of dishonesty in the Brookville action came on the heels of the settlement of the allegations of dishonesty in the Charabi action. [59] The judge concluded: It seems to me a breach of the residual duty of loyalty [for the law firm] to prosecute the Jenkinses on a claim they committed fraud in the course of their management of local Brookville operations shortly after having defended them against a claim they took bribes in the course of that same management.” (Reasons para. 42) 2. The appellant’s position: [60] The appellant submits that the judge was wrong to find that the current action had a close relationship to the previous one. While I agree with the appellant that some aspects of the judge’s reasons are problematic, I do not find reversible error. [61] For example, I think, respectfully, that there is some inconsistency in the judge’s reasoning. He found that there was no confidential information as between the Jenkins on one hand and Brookville on the other. He also found, however, that disqualification was justified on the basis that the firm’s knowledge of the Jenkins’ litigation behaviour could be used against them unfairly. This seems to me to be another way of saying that confidential information was at risk, a proposition clearly rejected by the judge earlier in his reasons. I also think that the judge engaged in speculation when he commented that “[i]t is hard to credit that what Brookville learned in the joint defence of the Charabi action played no part in its assessment of its own claims against the other defendants...”. (Reasons, para. 25). This seems to be related to use of confidential information even though the judge had clearly ruled there was none in these circumstances. Moreover, there was no evidence that the second law suit resulted from what was discovered in the first. The appellant is also on firm ground, in my view, in complaining that the judge overstated the facts by saying that the firm had “vigorously” defended the Jenkins’ character in the Charabi action. That suit was dismissed on consent before discoveries had been held. The “vigorous” defence consisted of taking instructions, filing a pleading denying any wrong-doing and pressing for particulars. [62] None of this, however, takes away from the judge’s critical finding: the two retainers were closely related because Brookville’s lawyers in this action were attacking the Jenkins’ honesty and integrity in carrying out their employment duties with Brookville. That matter was at the core of the lawyers’ previous retainer by the Jenkins. The facts that the firm had previously acted for both Brookville and the Jenkins, that the alleged dishonesty took place during an overlapping period of time and that the new action “came on the heels” of the prior retainer all tended to reinforce the judge’s conclusion that the lawyers had, in effect, changed sides. [63] The judge stated and applied the proper legal principles. His critical findings of fact and the key inferences he drew are supported by the record. His application of the principles to the facts does not reveal any extricable legal error and the result he reached is not clearly wrong. IV. DISPOSITION: [64] In my view, the judge made no reviewable error in holding that the firm should not continue to act. [65] I would grant leave to appeal, but dismiss the appeal. The costs of the appeal, fixed at $2000.00 plus disbursements in relation to the respondent Jason Jenkins and in the same amount jointly in relation to the respondents Wayne Jenkins and Blackjack Transport Limited shall be costs in the cause of the main action. Cromwell, J.A. Concurred in: Roscoe, J.A. Saunders, J.A.