Canadian Pacific Railway Co. v. Aikins, MacAulay & Thorvaldson, (1998) 123 Man.R.(2d) 281 (CA)

• Judge: Twaddle, Lyon and Monnin, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: February 10, 1998
• Jurisdiction: Manitoba
• Citations: (1998), 123 Man.R.(2d) 281 (CA);1998 CanLII 5073 (MB CA);157 DLR (4th) 473;[1998] 6 WWR 351;123 Man R (2d) 281;159 WAC 281;23 CPC (4th) 55

CPR v. Aikins, MacAulay (1998), 123 Man.R.(2d) 281 (CA);

    159 W.A.C. 281

MLB headnote and full text

Temp. Cite: [1998] Man.R.(2d) TBEd. FE.051

Canadian Pacific Railway Company (applicant/respondent) v. Aikins, MacAulay & Thorvaldson (respondent/appellant)

Canadian National Railway Company (applicant/respondent) v. Aikins, MacAulay & Thorvaldson (respondent/appellant)

(AI 97-30-03454)

Indexed As: Canadian Pacific Railway Co. v. Aikins, MacAulay & Thorvaldson

Manitoba Court of Appeal

Twaddle, Lyon and Monnin, JJ.A.

February 10, 1998.

Summary:

A law firm represented the Canadian Wheat Board in proceedings before the Canadian Transport Agency against CNR and CPR concerning their statutory service obligations respecting the 1996/97 crop year. A member of the firm (Smith) was previ­ously employed (1983-1994) as regional counsel for CPR and was the senior legal officer for most legal matters in the region. CPR's grain transportation matters were handled by other lawyers who reported directly to other senior legal officers. Smith had, at best, only administrative supervision of those lawyers. CPR and CNR applied to have the firm disqualified on the basis of conflict of interest. The conflict was not raised at the first opportunity.

The Manitoba Court of Queen's Bench determined that there was a conflict and disqualified the firm from representing the Board. The law firm appealed.

The Manitoba Court of Appeal allowed the appeal. CPR failed to discharge the onus of providing information as to the nature of the privileged information Smith allegedly pos­sessed which was relevant to the present legal matter. The court stated that "while the onus on the party alleging the conflict is no higher in the case of in-house counsel, the burden of discharging it does require a more precise and definite evidentiary basis".

Barristers and Solicitors - Topic 1601.1

Relationship with client - Conflict of interest - Delay in complaining of conflict - A law firm represented the Canadian Wheat Board in proceedings before the Canadian Transport Agency against CNR and CPR concerning their statutory service obligations for the 1996/97 crop year - A member of the firm (Smith) was previous­ly employed (1983-1994) as regional counsel for CPR and was the senior legal officer for most legal matters in the region - CPR's grain transportation matters were handled by other lawyers who reported directly to other senior legal officers - Smith was privy to information regarding legal, strategic and operating issues con­cerning CPR, but had, at best, only admin­istrative supervision of the grain transpor­tation lawyers and left CPR well before the 1996/97 crop year - CPR and CNR applied to have the firm disqualified on the basis of conflict of interest - The conflict was not raised at the first opportunity - The Manitoba Court of Appeal stated that it would have found CPR's argument much more persuasive had CPR "cried foul" the very first day it knew of Smith's involve­ment in the application - See paragraph 23.

Barristers and Solicitors - Topic 1601.3

Relationship with client - Conflict of interest - Considerations - Removal liti­gation - The Manitoba Court of Appeal held that it was improper to seek disquali­fication of a law firm for conflict of inter­est to delay the matter or for other stra­tegic purposes (i.e., concept or practice of removal litigation) - The court stated that "it is incumbent to ask if there is genuinely an issue of conflict, or is the issue simply being raised as a strategic tool where it might well advantage the party raising it simply to delay matters or for other posi­tioning purposes. ... One result of removal litigation can be that a party to litigation could achieve a modicum of success sim­ply by ensuring that the matter is not heard expeditiously. That is certainly not the mischief which MacDonald Estate v. Mar­tin intended to remedy. ... Whether the issue of tactical advantage is raised cannot be determinative of the issue. However, the possibility of attempting to gain an unfair advantage through delay or by forcing a party to retain counsel other than counsel of first choice is one of the elements that a court must look at critical­ly in assessing the competing interests to be balanced." - See paragraphs 19 to 20.

Barristers and Solicitors - Topic 1603.1

Relationship with client - Conflict of interest - In-house counsel - The Mani­toba Court of Appeal stated that "the basic principles dealing with positions of conflict are the same whether dealing with in-house corporate counsel or counsel in private practice, but their applicability might be somewhat different because the perception of the reasonable person referred to in MacDonald Estate v. Martin might well be different" - See paragraph 18.

Barristers and Solicitors - Topic 1615

Relationship with client - Conflict of interest - Where lawyer joins opposite party's lawyer's firm - A law firm repre­sented the Canadian Wheat Board in pro­ceedings before the Canadian Transport Agency against CNR and CPR concerning their statutory service obligations for the 1996/97 crop year - A member of the firm (Smith) was previously employed (1983-1994) as regional counsel for CPR and was the senior legal officer for most legal matters in the region - CPR's grain trans­portation matters were handled by other lawyers who reported directly to other senior legal officers - Smith was privy to information regarding legal, strategic and operating issues concerning CPR, but had, at best, only administrative supervision of the grain transportation lawyers and left CPR well before the 1996/97 crop year - CPR and CNR applied to have the firm disqualified on the basis of conflict of interest - The conflict was not raised at the first opportunity - The Manitoba Court of Appeal held that the firm should not have been disqualified - CPR failed to discharge the onus of providing informa­tion as to the nature of the privileged information Smith allegedly possessed which was relevant to the present legal matter - The court stated that "while the onus on the party alleging the conflict is no higher in the case of in-house counsel, the burden of discharging it does require a more precise and definite evidentiary basis".

Cases Noticed:

MacDonald Estate v. Martin and Rossmere Holdings (1970) Ltd., [1990] 3 S.C.R. 1235; 121 N.R. 1; 70 Man.R.(2d) 241; [1991] 1 W.W.R. 705; 77 D.L.R.(4th) 249, appld. [para. 4].

Moffat et al. v. Wetstein et al. (1996), 4 O.T.C. 364; 135 D.L.R.(4th) 298 (Gen. Div.), refd to. [para. 19].

Counsel:

E.W. Olson, Q.C., for the appellant;

D.C.H. McCaffrey, Q.C., R.C. Roy and R.D. Neuman, for CPR;

R.B. McNicol, Q.C., and E.B. Eva, for CNR.

This appeal was heard on November 7, 1997, before Twaddle, Lyon and Monnin, JJ.A., of the Manitoba Court of Appeal.

On February 10, 1998, Monnin, J.A., delivered the following judgment for the Court of Appeal.