The Court in Wallace v. Canadian Pacific Railway clarified the duty of loyalty that lawyers owe to their clients in situations where there are conflicting interests. It was also found that the remedy of disqualification should not be used for punishment but to protect the public’s confidence in the legal profession and the administration of justice.
In this case, the respondent had its former counsel, the appellant, disqualified from acting as counsel for the representative plaintiff of an upcoming class action that the appellant had begun acting for while still working on unrelated matters for the respondent. In adjudicating the case, the Court applied the test from R. v. Neil concerning the "Professional Litigant Exception" and the "bright line" rule disallowing a lawyer simultaneously representing two clients whose interests are adverse. The Court held that the "Professional Litigant Exception" does not only apply to minor or non-contentious unrelated matters, and advocated a more flexible approach to the Neil test looking at all the circumstances.
Relevant factors for this analysis included: the size and sophistication of the former client; dependency on the solicitor; the type of cases worked on by the solicitor; the danger of confidential information being abused; vulnerability of the former client; and whether or not the solicitor’s actions would diminish the public’s confidence in the profession. In looking for a suitable remedy, it was found that even though the appellant had breached its duty of candour, disqualification would not be appropriate. Instead, the Court held that where there is no further relationship between the solicitor and former client to protect; where there is no risk of prejudicial use of confidential information; where disqualification would be unnecessarily costly to the parties; and where other remedies are available to the former client disqualification should not be used.
September 28, 2011
Link to Decision
Liam Oster
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