MTM Commercial Trust et al. v. Statesman Riverside Quays Ltd. et al., 2015 ABCA 142

• Judge: Berger, Veldhuis and Wakeling, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: February 10, 2015
• Citations: 2015 ABCA 142;(2015), 600 A.R. 118

MTM Com. Trust v. Statesman Riverside Quays Ltd. (2015), 600 A.R. 118; 645 W.A.C. 118 (CA)

MLB headnote and full text

Temp. Cite: [2015] A.R. TBEd. AP.087

MTM Commercial Trust (not a party to the appeal)

(plaintiff/respondent) v. Statesman Riverside Quays Ltd. and Riverside Quays Limited Partnership (not parties to the appeal)

(defendants/applicants) and Statesman Master Builders Inc. (respondent)

(defendant/applicant) and Matco Investments Ltd. (intervenor)

(plaintiff/respondent)

M. Garth Mann, Karen H. Mann, the Statesman Group of Companies Ltd., and Statesman Master Builders Inc. (respondents)

(plaintiffs/applicants) v. MTM Income Trust, Ronald P. Mathison in his capacity as a Trustee of MTM Income Trust, David M. McGoey in his capacity as a Trustee of MTM Income Trust, E. Craig Elford in his capacity as a Trustee of MTM Income Trust, MTM Commercial Trust, D. Alan Ross in his capacity as a Trustee of MTM Commercial Trust, Darryl Coates in his capacity as a Trustee of MTM Commercial Trust, Ronald Mathison, Herbert Meiner, Brenher Properties Ltd. doing business as Wicklow Properties Ltd., and Brenda Meiner (not parties to the appeal)

(defendants/respondents) and Bennett Jones LLP (appellant)

(defendant/respondent) and Matco Investments Ltd. (intervenor)

(defendant/respondent)

(1401-0054-AC; 2015 ABCA 142)

Indexed As: MTM Commercial Trust et al. v. Statesman Riverside Quays Ltd. et al.

Alberta Court of Appeal

Berger, Veldhuis and Wakeling, JJ.A.

April 21, 2015.

Summary:

The Statesman Group and the Matco Group entered into a joint venture, structured as a limited partnership, to develop a large condominium project. The initial general partner was Statesman Riverside Quays Ltd. (SRQL). Statesman and Matco each owned 50% of SRQL. A lien was filed against the project. Statesman and Matco agreed that Matco's long-time legal counsel, Bennett Jones LLP, would represent SRQL. Bennett Jones sent an email to Statesman purporting to preserve its right to act for Matco in any disagreement with Statesman, notwithstanding the acceptance of the SRQL retainer. Subsequently, Matco initiated an oppression action against Statesman. Statesman applied for an order prohibiting Bennett Jones from acting for any of the parties in the litigation. Bennett Jones relied on Statesman's advance consent during the lien dispute to the conflict of interest situation.

The Alberta Court of Queen's Bench, in a decision reported at (2014), 581 A.R. 264, allowed the application. The waiver did not contemplate and could not be understood by the parties to contemplate this situation. The only remedy was to declare Bennett Jones disqualified from acting for any party in this matter. Bennett Jones appealed.

The Alberta Court of Appeal allowed the appeal. Bennett Jones had not breached its duty of loyalty to Statesman and was not disqualified from acting for any party in this matter.

Editor's Note: For a decision related to these parties, see [2010] A.R. Uned. 715.

Barristers and Solicitors - Topic 1545

Relationship with client - Duty to client - General - Obligation of loyalty - [See Barristers and Solicitors - Topic 1554 and both Barristers and Solicitors - Topic 1610 ].

Barristers and Solicitors - Topic 1554

Relationship with client - Duty to client - General - Duty to inform or advise client - The Statesman Group and the Matco Group entered into a joint venture, structured as a limited partnership, to develop a large condominium project - The initial general partner was Statesman Riverside Quays Ltd. (SRQL) - Statesman and Matco each owned 50% of SRQL - A lien was filed against the project - Statesman and Matco agreed that Matco's long-time legal counsel, Bennett Jones LLP, would represent SRQL - Bennett Jones sent an email to Statesman purporting to preserve its right to act for Matco in any disagreement with Statesman, notwithstanding the acceptance of the SRQL retainer - Subsequently, Matco initiated an oppression action against Statesman - Asserting a conflict of interest, Statesman obtained an order prohibiting Bennett Jones from acting for any of the parties in the litigation - The Alberta Court of Appeal allowed Bennett Jones' appeal, finding no breach of the duty of candour - The court below appeared to find a breach of the duty of candour based in Bennett Jones' failure to advise Statesman in advance that it was acting for Matco in the oppression action - However, from the time Bennett Jones was retained to act in the lien matter, Statesman knew that Bennett Jones continued to represent Matco on the joint venture and that it would act for Matco in any dispute between the parties - Statesman's express consent to this covered the situation that arose - See paragraphs 29 and 30.

Barristers and Solicitors - Topic 1601.1

Relationship with client - Conflict of interest - Delay in complaining of conflict - [See Barristers and Solicitors - Topic 1618 ].

Barristers and Solicitors - Topic 1601.2

Relationship with client - Conflict of interest or duties - Waiver - [See first Barristers and Solicitors - Topic 1610 ].

Barristers and Solicitors - Topic 1610

Relationship with client - Conflict of interest or duties - Conduct of action against client (incl. ''near'' client) - The Statesman Group and the Matco Group entered into a joint venture, structured as a limited partnership, to develop a large condominium project - The initial general partner was Statesman Riverside Quays Ltd. (SRQL) - Statesman and Matco each owned 50% of SRQL - A lien was filed against the project - Statesman and Matco agreed that Matco's long-time legal counsel, Bennett Jones LLP, would represent SRQL - Bennett Jones sent an email to Statesman purporting to preserve its right to act for Matco in any disagreement with Statesman, notwithstanding the acceptance of the SRQL retainer - Subsequently, Matco initiated an oppression action against Statesman - Asserting a conflict of interest, Statesman obtained an order prohibiting Bennett Jones from acting for any of the parties in the litigation - The Alberta Court of Appeal allowed Bennett Jones' appeal, finding no breach of the duty of loyalty - The court below failed to analyze the factors set out in Wallace v. Canadian Pacific Railway et al. (2013 S.C.C.), including the long-standing relationship between Bennett Jones and Matco; the limited terms of the retainer with SRQL, which was accepted by Bennett Jones only on the express condition that it would not be prevented from acting for its continuing client, Matco, in any future disputes between the parties; and the fact that Bennett Jones was retained only to deal with the lien matter - In light of those factors and Statesman's consent to Bennett Jones continuing to act for Matco in any future dispute, it was not reasonable for Statesman to claim that it expected Bennett Jones to owe it an exclusive duty of loyalty - The bright line rule did not apply - There was no evidence that Bennett Jones' representation of Statesman on the lien matter was materially and adversely affected before Statesman had terminated the limited retainer - There was no breach of the duty to avoid conflicting interests - See paragraphs 19 to 27.

Barristers and Solicitors - Topic 1610

Relationship with client - Conflict of interest or duties - Conduct of action against client (incl. ''near'' client) - The Statesman Group and the Matco Group entered into a joint venture, structured as a limited partnership, to develop a large condominium project - The initial general partner was Statesman Riverside Quays Ltd. (SRQL) - Statesman and Matco each owned 50% of SRQL - A lien was filed against the project - Statesman and Matco agreed that Matco's long-time legal counsel, Bennett Jones LLP, would represent SRQL - Bennett Jones sent an email to Statesman purporting to preserve its right to act for Matco in any disagreement with Statesman, notwithstanding the acceptance of the SRQL retainer - Subsequently, Matco initiated an oppression action against Statesman - Asserting a conflict of interest, Statesman obtained an order prohibiting Bennett Jones from acting for any of the parties in the litigation - The Alberta Court of Appeal allowed Bennett Jones' appeal, finding no breach of the duty of commitment to the client's cause - The duty of commitment was concerned with ensuring that a "divided loyalty does not cause the lawyer to 'soft peddle' his or her [representation] of a client out of concern for another client" - This duty prevented the lawyer from undermining the lawyer-client relationship and from summarily dropping a client in order to avoid conflicts of interest with future or existing clients - Here, Bennett Jones had not dropped Statesman as a client - Statesman terminated its limited retainer with Bennett Jones on its own volition - Nor was there any allegation that Bennett Jones had not adequately represented Statesman's interests while it was still a client - See paragraph 28.

Barristers and Solicitors - Topic 1614

Relationship with client - Conflict of interest or duties - Acting for several parties - [See second Barristers and Solicitors - Topic 1610 ].

Barristers and Solicitors - Topic 1617

Relationship with client - Conflict of interest or duties - Situations not resulting in a conflict - [See first Barristers and Solicitors - Topic 1610 ].

Barristers and Solicitors - Topic 1618

Relationship with client - Conflict of interest or duties - Remedies (incl. procedure for) - The Statesman Group and the Matco Group entered into a joint venture, structured as a limited partnership, to develop a large condominium project - The initial general partner was Statesman Riverside Quays Ltd. (SRQL) - Statesman and Matco each owned 50% of SRQL - A lien was filed against the project - Statesman and Matco agreed that Matco's long-time legal counsel, Bennett Jones LLP, would represent SRQL - Bennett Jones sent an email to Statesman purporting to preserve its right to act for Matco in any disagreement with Statesman, notwithstanding the acceptance of the SRQL retainer - Subsequently, Matco initiated an oppression action against Statesman - Asserting a conflict of interest, Statesman obtained an order prohibiting Bennett Jones from acting for any of the parties in the litigation - The Alberta Court of Appeal allowed Bennett Jones' appeal, finding no breach of any of the components of Bennett Jones' duty of loyalty - Although it was not necessary to discuss the remedy, the court noted that this was not a case in which disqualification would have been required - Statesman had delayed over a year in bringing its disqualification application - Matco would be deprived of its long-standing (25 years) counsel of choice - Bennett Jones believed in good faith that its continued representation of Matco did not contravene any duty of loyalty - Disqualification was not necessary to protect the integrity and repute of the administration of justice - See paragraphs 31 to 34.

Barristers and Solicitors - Topic 1620.4

Relationship with client - Conflict of interest or duties - Disclosure of potential conflicts - [See Barristers and Solicitors - Topic 1554 ].

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 16].

Canadian National Railway Co. v. McKercher LLP - see Wallace v. Canadian Pacific Railway et al.

Wallace v. Canadian Pacific Railway et al., [2013] 2 S.C.R. 649; 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 2013 SCC 39, refd to. [para. 17].

R. v. Neil (D.L.), [2002] 3 S.C.R. 631; 294 N.R. 201; 317 A.R. 73; 284 W.A.C. 73; 2002 SCC 70, refd to. [para. 18].

Alberta Union of Provincial Employees v. United Nurses of Alberta, Local 168 et al. (2009), 448 A.R. 101; 447 W.A.C. 101; 2009 ABCA 33, leave to appeal denied (2009), 398 N.R. 389; 477 A.R. 400; 483 W.A.C. 400 (S.C.C.), refd to. [para. 24].

Counsel:

B.Y. Minuk and M. Tingle, for the respondent (defendant/applicant), Statesman Master Builders Ltd.;

P.A. Smith, for the appellant (defendant/respondent), Bennett Jones LLP;

E.W. Halt, Q.C., for the intervenor, Matco Investments Ltd.

This appeal was heard at Calgary, Alberta, on February 10, 2015, by Berger, Veldhuis and Wakeling, JJ.A., of the Alberta Court of Appeal. On April 21, 2015, the court filed the following memorandum of judgment.