New Brunswick v. Rothmans Inc. et al., (2009) 352 N.B.R.(2d) 226 (TD)

• Judge: Cyr, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: July 14, 2009
• Jurisdiction: New Brunswick
• Citations: (2009), 352 N.B.R.(2d) 226 (TD);2009 NBQB 198

N.B. v. Rothmans Inc. (2009), 352 N.B.R.(2d) 226 (TD);

    352 R.N.-B.(2e) 226; 907 A.P.R. 226

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Sommaire et texte intégral

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2009] N.B.R.(2d) TBEd. JL.032

Renvoi temp.: [2009] N.B.R.(2d) TBEd. JL.032

Her Majesty the Queen in Right of the Province of New Brunswick (plaintiff) v. Rothmans Inc., Rothmans, Benson & Hedges Inc., Carreras Rothmans Limited, Altria Group, Inc., Philip Morris U.S.A. Inc., Philip Morris International, Inc., JTI-MacDonald Corp., R.J. Reynolds Tobacco Company, R.J. Reynolds Tobacco International Inc., Imperial Tobacco Canada Limited, British American Tobacco P.L.C., B.A.T. Industries P.L.C., British American Tobacco (Investments) Limited, and Canadian Tobacco Manufacturers' Council (defendants)

(F/C/88/08; 2009 NBQB 198; 2009 NBBR 198)

Indexed As: New Brunswick v. Rothmans Inc. et al.

Répertorié: New Brunswick v. Rothmans Inc. et al.

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Fredericton

Cyr, J.

July 14, 2009.

Summary:

Résumé:

New Brunswick commenced an action under the Tobacco Damages and Health Care Costs Recovery Act for the recovery of tobacco-related health care costs against a number of tobacco product manufacturers. New Brunswick filed a motion for case management, requesting a procedural timetable up to the setting down for trial of the action and an order providing for the electronic discovery of documents. The defendants who had attorned to the court's jurisdiction did not oppose case management. However, the defendants filed a motion (the conflict of interest motion) challenging the constitutionality, legality and ethical integrity of an alleged contingency fee agreement (CFA) entered into by New Brunswick with a consortium of lawyers hired to conduct the action. The defendants asserted that this raised a critical threshold question that had to be determined before any other aspect of the litigation.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at (2009), 340 N.B.R.(2d) 313; 871 A.P.R. 313, adjourned New Brunswick's motion pending the court's decision on the conflict of interest motion. In support of the conflict of interest motion, the defendants filed the affidavits of Professor H. Patrick Glenn, attaching his expert report (the Glenn Report) and Professor C. Hazard Jr., attaching his expert report (the Hazard Report). New Brunswick filed a motion asking the court to strike the affidavits or declare the reports inadmissible.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at (2009), 342 N.B.R.(2d) 171; 878 A.P.R. 171, denied the motion regarding the Glenn Report and granted the motion regarding the Hazard Report. Imperial Tobacco Canada Ltd. filed motions, seeking (1) production of redacted portions of the CFA, (2) an order striking references to foreign law contained in an affidavit, (3) leave to cross-examine three affiants, (4) production for inspection of permit applications submitted to the Law Society of New Brunswick and (5) variance of the procedural timetable.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at (2009), 344 N.B.R.(2d) 22; 884 A.P.R. 22, denied motions 1, 2 and 3, granted motion 4 and agreed to modify the timetable, but not to the degree requested in motion 5. The hearing of the conflict of interest motion proceeded.

The New Brunswick Court of Queen's Bench, Trial Division, dismissed the motion.

Actions - Topic 1588

Cause of action - Contracts - Assignment of cause of action - [See fourth Barristers and Solicitors - Topic 3133 ].

Barristers and Solicitors - Topic 421

Admission to practice or as student-at-law - Occasional appearances - Nonresidents - General - [See second Barristers and Solicitors - Topic 3133 ].

Barristers and Solicitors - Topic 1544

Relationship with client - Duty to client - General - Extent or limits of duty - [See first Barristers and Solicitors - Topic 1603.2 ].

Barristers and Solicitors - Topic 1603.2

Relationship with client - Conflict of interest or duties - Acting for Crown - New Brunswick commenced an action under the Tobacco Damages and Health Care Costs Recovery Act for the recovery of tobacco-related health care costs against a number of tobacco product manufacturers - The conduct of the action was contracted to a consortium of U.S., Ontario and New Brunswick lawyers under a contingency fee agreement (CFA) - The defendants sought a declaration that the CFA was void and that the consortium should be removed because, inter alia, the consortium had a disqualifying conflict of interest between its public duties as counsel for the Attorney General and its substantial private financial interests under the CFA - The New Brunswick Court of Queen's Bench, Trial Division, dismissed the motion - The court rejected the defendants' assertion that all government lawyers had a duty, distinct from any duty owed by non-government lawyers, to act impartially - The public interest duties applicable to government lawyers in civil litigation matters were distinct from those applicable to Crown prosecutors - Outside lawyers retained to implement the government's decisions were to conduct themselves as other lawyers engaged in a civil context - There was no reason why the lawyer should act with any less zeal than one representing a non-governmental client - See paragraphs 9 to 34.

Barristers and Solicitors - Topic 1603.2

Relationship with client - Conflict of interest or duties - Acting for Crown - New Brunswick commenced an action under the Tobacco Damages and Health Care Costs Recovery Act for the recovery of tobacco-related health care costs against a number of tobacco product manufacturers - The conduct of the action was contracted to a consortium of U.S., Ontario and New Brunswick lawyers under a contingency fee agreement (CFA) - The defendants sought a declaration that the CFA was void and that the consortium should be removed because, inter alia, the consortium had a disqualifying conflict of interest between its public duties as counsel for the Attorney General and its substantial private financial interests under the CFA - The New Brunswick Court of Queen's Bench, Trial Division, dismissed the motion - The CFA, itself, raised no serious conflict of interest concerns - Authorities from the U.S. indicated that where a government asserted a tort claim, it was appropriate for outside counsel to be retained under such an agreement as long as the government lawyers remained in control of the legal proceedings - Here, the relationship between the consortium and the province greatly exceeded a mere reporting obligation - The province's control of the proceedings was consistent with the public interest obligations owed by the Attorney General to ensure that the province remained accountable for the litigation's conduct - The lawyers representing the province were able to function under the Attorney General's direction - Further, the case was unprecedented and involved one of the largest civil lawsuits ever filed in the province - Similar litigation in British Columbia had cost that province in excess of $12 million - New Brunswick had determined not to expend such large sums of money, choosing instead to use a CFA - See paragraphs 35 to 65.

Barristers and Solicitors - Topic 1609

Relationship with client - Conflict of interest or duties - Resulting from lawyer's self-interest - [See both Barristers and Solicitors - Topic 1603.2 ].

Barristers and Solicitors - Topic 1617

Relationship with client - Conflict of interest or duties - Situations not resulting in a conflict - [See both Barristers and Solicitors - Topic 1603.2 ].

Barristers and Solicitors - Topic 1901

Crown counsel - General (incl. powers) - [See both Barristers and Solicitors - Topic 1603.2 ].

Barristers and Solicitors - Topic 3133

Compensation - Agreements - Contingent fees - Invalid agreements - [See both Barristers and Solicitors - Topic 1603.2 ].

Barristers and Solicitors - Topic 3133

Compensation - Agreements - Contingent fees - Invalid agreements - New Brunswick commenced an action under the Tobacco Damages and Health Care Costs Recovery Act for the recovery of tobacco-related health care costs against a number of tobacco product manufacturers - The conduct of the action was contracted to a consortium of U.S., Ontario and New Brunswick lawyers under a contingency fee agreement (CFA) - The defendants sought a declaration that the CFA was void and that the consortium should be removed because, inter alia, the CFA breached the Law Society Act and the Contingent Fee Rules enacted thereunder - The New Brunswick Court of Queen's Bench, Trial Division, dismissed the motion - The U.S. counsel who were members of the consortium had become members of the Law Society of New Brunswick and had been issued Foreign Legal Consultant permits - There was no evidence that they were doing anything other than what they were permitted to do by virtue of their permits - Further, the fact that the CFA was non-compliant with s. 83(1), s. 83(6) and s. 83(7) of the Law Society Act did not render the CFA void - The CFA had been approved by a reviewing officer and had been filed with the Law Society - Any violation of the Act was not contrary to public policy and did not render the CFA void or otherwise unenforceable - See paragraphs 66 to 105.

Barristers and Solicitors - Topic 3133

Compensation - Agreements - Contingent fees - Invalid agreements - New Brunswick commenced an action under the Tobacco Damages and Health Care Costs Recovery Act for the recovery of tobacco-related health care costs against a number of tobacco product manufacturers - The conduct of the action was contracted to a consortium of U.S., Ontario and New Brunswick lawyers under a contingency fee agreement (CFA) - The defendants sought a declaration that the CFA was void and that the consortium should be removed because, inter alia, the CFA breached the Constitution Act, 1867 and the Financial Administration Act (FAA) and, as such, was ultra vires the Attorney General - The New Brunswick Court of Queen's Bench, Trial Division, dismissed the motion - The court rejected the argument that the CFA involved an appropriation and payment of public money that contravened the Constitution Act, 1867 and the FAA - There was no basis on which the amount of an appropriation could be determined until a settlement or judgment - Further, under s. 38(2) of the FAA, where a settlement or judgment required the payment of public money to lawyers, an appropriation could take place in the fiscal year when the payment was made - See paragraphs 106 to 116.

Barristers and Solicitors - Topic 3133

Compensation - Agreements - Contingent fees - Invalid agreements - New Brunswick commenced an action under the Tobacco Damages and Health Care Costs Recovery Act for the recovery of tobacco-related health care costs against a number of tobacco product manufacturers - The conduct of the action was contracted to a consortium of U.S., Ontario and New Brunswick lawyers under a contingency fee agreement (CFA) - The defendants sought a declaration that the CFA was void and that the consortium should be removed because, inter alia, the CFA breached the Constitution Act, 1867 and the Financial Administration Act (FAA) and, as such, was ultra vires the Attorney General - The New Brunswick Court of Queen's Bench, Trial Division, dismissed the motion - The court rejected the argument that s. 61 of the FAA had been contravened because the CFA involved the assignment of a cause of action, thus involving a transfer of property of the province to the consortium - The CFA was the sole agreement between the province and the consortium - Nothing in the CFA provided for the conveyance of property or disposition of the province's cause of action - The province retained the cause of action and control over the proceedings - See paragraphs 117 to 120.

Contracts - Topic 6531

Illegal contracts - Violations of statute law - Statutes - General - [See second Barristers and Solicitors - Topic 3133 ].

Crown - Topic 1009

Contracts with Crown - General principles - Financial approval (incl. appropriation of funds) - [See third Barristers and Solicitors - Topic 3133 ].

Actions - Cote 1588

Cause d'action - Contrats - Cession de la cause d'action - [Voir Actions - Topic 1588 ].

Avocats et notaires - Cote 421

Admission à la pratique ou au stage - Exercice occasionnel - Non-résidents - Généralités - [Voir Barristers and Solicitors - Topic 421 ].

Avocats et notaires - Cote 1544

Rapports avec le client - Devoir envers le client - Généralités - Étendue ou limite - [Voir Barristers and Solicitors - Topic 1544 ].

Avocats et notaires - Cote 1603.2

Rapports avec le client - Conflits d'intérêts - Représenter la Couronne - [Voir Barristers and Solicitors - Topic 1603.2 ].

Avocats et notaires - Cote 1609

Rapports avec le client - Conflit d'intérêts ou devoirs - Résultant de l'intérêt individuel de l'avocat - [Voir Barristers and Solicitors - Topic 1609 ].

Avocats et notaires - Cote 1617

Rapports avec le client - Conflit d'intérêts ou devoirs - Situations n'engendrant pas de conflit - [Voir Barristers and Solicitors - Topic 1617 ].

Avocats et notaires - Cote 1901

Avocat de la Couronne - Généralités (y compris pouvoirs) - [Voir Barristers and Solicitors - Topic 1901 ].

Avocats et notaires - Cote 3133

Rémunération - Accords d'honoraires conditionnels - Accords invalides - [Voir Barristers and Solicitors - Topic 3133 ].

Contrats - Cote 6531

Contrats illégaux - Infractions à la loi - Lois - Généralités - [Voir Contracts - Topic 6531 ].

Couronne - Cote 1009

Contrats avec la Couronne - Principes généraux - Approbation financière (y compris crédits budgétaires) - [Voir Crown - Topic 1009 ].

Cases Noticed:

R. v. Boucher, [1954] S.C.J. No. 54, refd to. [para. 16].

Krieger et al. v. Law Society of Alberta (2002), 293 N.R. 201; 312 A.R. 275; 281 W.A.C. 275 (S.C.C.), refd to. [para. 17].

Wells v. Newfoundland and Board of Commissioners of Public Utilities (Nfld.) (1999), 245 N.R. 275; 180 Nfld. & P.E.I.R. 269; 548 A.P.R. 269 (S.C.C.), refd to. [para. 23].

McIntyre Estate v. Ontario (Attorney General) (2002), 164 O.A.C. 37 (C.A.), refd to. [para. 34].

Hogan v. Hello et al. (1962), 1 N.B.R.(2d) 306 (Q.B.), refd to. [para. 37].

Mealey v. Godin et al. (1999), 221 N.B.R.(2d) 372; 567 A.P.R. 372 (C.A.), refd to. [para. 39].

People (ex rel. Clancy) v. Superior Court, [1995] Cal. LEXIS 333 (S.C.), refd to. [para. 41].

Santa Clara (County) v. Superior Court, [2008] Cal. App. LEXIS 498, petition for review granted [2008] Cal. LEXIS 9073 (S.C.), refd to. [para. 42].

Morris (Philip) Inc. et al. v. Glendening et al., [1998] Md. LEXIS 316 (C.A.), refd to. [para. 44].

San Francisco (City and County) et al. v. Morris (Philip) Inc. et al., [1997] U.S. Dist. LEXIS 2465 (N.D. Cal.), refd to. [para. 46].

Rhode Island (State) v. Lead Industries Association Inc., [2008] R.I. LEXIS 79 (S.C.), refd to. [para. 47].

San Diego (City) v. United States Court for the Southern District of California, [2008] U.S. App. LEXIS 17352, refd to. [para. 47].

Grass Valley (City) v. Newmont Mining Corp. et al., [2007] U.S. Dist. LEXIS 89187, refd to. [para. 47].

Sherwin-Williams Co. v. Columbus (City), [2007] U.S. Dist. LEXIS 51945, refd to. [para. 47].

R. v. W.R.D. (1994), 92 Man.R.(2d) 276; 61 W.A.C. 276 (C.A.), refd to. [para. 58].

Nova Scotia Union of Public Employees v. Halifax Regional School Board (2001), 195 N.S.R.(2d) 97; 609 A.P.R. 97 (C.A.), refd to. [para. 96].

Still v. Minister of National Revenue (1997), 221 N.R. 127; 154 D.L.R.(4th) 229 (F.C.A.), refd to. [para. 97].

Kingstreet Investments Ltd. et al. v. New Brunswick (Minister of Finance) et al., [2007] 1 S.C.R. 3; 355 N.R. 336; 309 N.B.R.(2d) 255; 799 A.P.R. 255, refd to. [para. 109].

Confédération des syndicats nationaux v. Canada (Attorney General), [2008] 3 S.C.R. 511; 382 N.R. 200, refd to. [para. 109].

Larocque v. Canada (Minister of Fisheries and Oceans) (2006), 352 N.R. 133; 270 D.L.R.(4th) 552 (F.C.A.), dist. [para. 118].

Authors and Works Noticed:

Law Society of New Brunswick, Code of Professional Conduct, c. 8, Commentary, s. 13 [para. 26]; rule 3, Commentary 2, rule 4, Commentary 1, rule 4, Commentary 6, rule 8, Commentary 1, rule 8, Commentary 3(b) [para. 28]; rule 8(b) [para. 27]; rule 20, Commentary 1 [para. 30].

Counsel:

Avocats:

Philippe J. Eddie, Q.C., and Robin Ryan-Bell, for the plaintiff;

David Hachey, Q.C., and Charles D. Whelly, Q.C., for the defendants, Rothmans Inc., Rothmans Benson & Hedges Inc.;

Rodney J. Gillis, Q.C., for the defendants, Altria Group Inc. and Philip Morris U.S.A. Inc;

Robert G. Basque, Q.C., for the defendant, Philip Morris International Inc.;

Thomas G. O'Neil, Q.C., Deborah A. Glendinning and Mahmud Jamal, for the defendant, Imperial Tobacco Canada Limited.

This motion was heard on June 16-18, 2009, by Cyr, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Fredericton, who delivered the following decision on July 14, 2009.