Saint John Shipbuilding Ltd. v. Bow Valley Husky (Bermuda) Ltd. et al.,

• Jurisdiction: New Brunswick
• Judge: Drapeau, Deschênes and Robertson, JJ.A.
• Neutral Citation: 2002 NBCA 41
• Citation: (2002), 251 N.B.R.(2d) 102 (CA),2002 NBCA 41,251 NBR (2d) 102,[2002] NBJ No 205 (QL),18 CPC (5th) 216,251 N.B.R.(2d) 102,(2002), 251 NBR(2d) 102 (CA),251 NBR(2d) 102,[2002] N.B.J. No 205 (QL)
• Date: 17 April 2002
• Court: Court of Appeal (New Brunswick)

St. John Shipbldg. v. Bow Valley (2002), 251 N.B.R.(2d) 102 (CA);

    251 R.N.-B.(2e) 102; 654 A.P.R. 102

MLB headnote and full text

[French language version follows English language version]

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

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Temp. Cite: [2002] N.B.R.(2d) TBEd. JN.035

Saint John Shipbuilding Limited (plaintiff/appellant) v. Bow Valley Husky (Bermuda) Limited, Husky Oil Ltd., Bow Valley Industries Ltd., Bow Drill Three Partnership and 384830 Alberta Inc. (defendants/respondents)

(196/01/CA; 2002 NBCA 41)

Indexed As: Saint John Shipbuilding Ltd. v. Bow Valley Husky (Bermuda) Ltd. et al.

New Brunswick Court of Appeal

Drapeau, Deschênes and Robertson, JJ.A.

June 13, 2002.

Summary:

Saint John Shipbuilding Ltd. (SJSB) ini­tially retained an Ottawa law firm (Gow­lings) to act on its behalf in a contract dis­pute with Bow Valley. However, SJSB decided to have the resulting action com­menced and pursued by another firm. Bow Valley retained Hunter, a partner in the Calgary firm of Code Hunter, to defend the action. Code Hunter merged with Gowlings, and SJSB applied to have Gowlings and Hunter dis­qualified on the ground of conflict of inter­est.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at 247 N.B.R.(2d) 1; 641 A.P.R. 1, dis­missed the application. SJSB appealed.

The New Brunswick Court of Appeal allowed the appeal in part.

Barristers and Solicitors - Topic 1601.1

Relationship with client - Conflict of inter­est - Delay in complaining of conflict - Saint John Shipbuilding Ltd. (SJSB) ini­tially retained an Ottawa law firm (Gowl­ings) to act on its behalf in a con­tract dispute with Bow Valley - However, SJSB had the resulting action commenced and pur­sued by another firm - Bow Valley retained Hunter, a partner in the Calgary firm of Code Hunter, to defend the action - Code Hunter merged with Gowlings - 21 months passed before anyone noticed the potential conflict of interest - SJSB applied to have Gowlings and Hunter disqualified - The motions judge dismissed the applica­tion - SJSB appealed - The New Bruns­wick Court of Appeal allowed the appeal in part and restrained Hunter from being involved in the action where there was no suggestion that SJSB's application was driven by tactical considerations, and no evidence of a waiver by SJSB of its right to object - Further, the court suggested that because Gowlings and Hunter had failed to conduct a conflict of interest search, waiv­er was no longer available to them as a defence against the motion - See para­graphs 71 to 74.

Barristers and Solicitors - Topic 1604

Relationship with client - Conflict of inter­est - Acting for both sides - Saint John Shipbuilding Ltd. (SJSB) initially retained an Ottawa law firm (Gowlings) to act on its behalf in a contract dispute with Bow Valley - However, SJSB had the resulting action commenced and pursued by another firm - Bow Valley retained Hunter, a partner in the Calgary firm of Code Hunt­er, to defend the action - Code Hunter merged with Gowlings, and SJSB applied to have Gowlings and Hunter disqualified - The motions judge dismissed the applica­tion - SJSB appealed - The New Bruns­wick Court of Appeal allowed the appeal in part and restrained Hunter from being involved in the action - Hunter had con­tinued acting for Bow Valley even after learning that his firm had acted, was act­ing, and intended to continue to act for SJSB in connection with its action against Bow Valley - That conduct, in itself, man­dated his dis­qualification - See paragraphs 40 and 41.

Barristers and Solicitors - Topic 1615

Relationship with client - Conflict of inter­est - Where lawyer joins opposite party's lawyer's firm - Saint John Shipbuilding Ltd. (SJSB) initially retained an Ottawa law firm (Gowlings) to act on its behalf in a contract dispute with Bow Valley - How­ever, SJSB had the action commenced and pursued by another firm - Bow Valley retained Hunter, a partner in the Calgary firm of Code Hunter, to defend the action - Code Hunter merged with Gowlings, and SJSB applied to have Gowlings and Hunter disqualified on the ground of conflict of interest - The motions judge dismissed the application - SJSB appealed - The New Brunswick Court of Appeal allowed the appeal in part and restrained Hunter from being involved in the action, where the motions judge had: (1) overlooked Gow­lings' simultaneous representation of SJSB and several of the defendants; (2) disre­garded evidence that confidential informa­tion had been imparted by SJSB to Gow­lings; and (3) failed to give effect to Gow­lings' and Hunter's failure to discharge the burden of proof cast upon them by Mac­Donald Estate v. Martin (S.C.C.).

Barristers and Solicitors - Topic 1619

Relationship with client - Conflict of inter­est - Situations resulting in a conflict - [See Barristers and Solicitors - Topic 1604 and Barristers and Solicitors - Topic 1615 ].

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, consd. [para. 2].

Martin v. Gray - see MacDonald Estate v. Martin and Rossmere Holdings (1970) Ltd.

Eriks v. Denver (1992), 824 P.2d 1207 (Wash. Sup. Ct.), refd to. [para. 26].

Mealey v. Godin et al. (1999), 221 N.B.R.(2d) 372; 567 A.P.R. 372 (C.A.), refd to. [para. 27].

Canadian Broadcasting Corp. v. New Brunswick Broadcasting Co. (2000), 230 N.B.R.(2d) 332; 593 A.P.R. 332 (C.A.), refd to. [para. 28].

Montreal Trust Co. of Canada v. Basin­view Village Ltd. et al. (1995), 142 N.S.R.(2d) 337; 407 A.P.R. 337; 126 D.L.R.(4th) 61 (C.A.), refd to. [para. 34].

Blackwell v. Barroile Pty. Ltd. et al. (1994), 123 A.L.R. 81 (Gen. Div.), refd to. [para. 36].

Triple "A" Electrical Ltd. v. Custom Homes Ltd. (1994), 120 Nfld. & P.E.I.R 18; 373 A.P.R. 18 (Nfld. T.D.), refd to. [para. 38].

Kaburda v. College of Dental Surgeons (B.C.) (1995), 7 B.C.L.R.(3d) 359 (S.C.), refd to. [para. 39].

Szebelledy v. Constitution Insurance Co. of Canada (1985), 11 C.C.L.I. 140; 3 C.P.C.(2d) 170 (Ont. Dist. Ct.), refd to. [para. 39].

Sherwin (R.) Enterprises Ltd. et al. v. Municipal Contracting Services Ltd. et al. (1994), 20 O.R.(3d) 692 (Gen. Div.), refd to. [para. 39].

R. v. McClure (D.E.), [2001] 1 S.C.R. 445; 266 N.R. 275; 142 O.A.C. 201, refd to. [para. 43].

Shell Canada Ltd., Re, [1975] F.C. 184; 7 N.R. 157; 22 C.C.C.(2d) 70 (F.C.A.), refd to. [para. 44].

Solosky v. Canada, [1980] 1 S.C.R. 821; 30 N.R. 380, refd to. [para. 44].

Jones v. Smith, [1999] 1 S.C.R. 455; 236 N.R. 201; 120 B.C.A.C. 161; 196 W.A.C. 161; 132 C.C.C.(3d) 225, refd to. [para. 44].

Rakusen v. Ellis, Munday & Clarke, [1912] 1 Ch. 831 (C.A.), refd to. [para. 49].

Bolkiah v. KPMG, [1999] 2 A.C. 222; 234 N.R. 180 (H.L.), refd to. [para. 49].

Skye Properties Ltd. v. Wu (2001), 57 O.R.(3d) 46 (Sup. Ct.), refd to. [para. 64].

Cartledge v. Brown et al. (1998), 76 O.T.C. 241; 41 O.R.(3d) 376 (Gen. Div.), refd to. [para. 64].

Princess Auto & Machinery Ltd. et al. v. Winnipeg (City) (1991), 73 Man.R.(2d) 311; 3 W.A.C. 311 (C.A.), refd to. [para. 66].

Chippewas of Kettle and Stoney Point v. Ontario (Minister of Indian Affairs), [1994] 2 C.N.L.R. 33 (Ont. Div. Ct.), refd to. [para. 66].

Ford Motor Co. of Canada Ltd. v. Osler, Hoskin & Harcourt (1996), 131 D.L.R.(4th) 419 (Ont. Gen. Div.), refd to. [para. 66].

James et al. v. Vogue Developments (Phase II) Inc. et al., [2000] O.T.C. Uned. A73 (Sup. Ct. Master), refd to. [para. 66].

Inron Contracting Ltd. v. Whitebread et al., [2001] O.T.C. 790; 56 O.R.(3d) 372 (Sup. Ct.), refd to. [para. 69].

Chippewas of Kettle and Stoney Point v. Canada (Attorney General), (1993), 17 C.P.C.(3d) 5 (Ont. Gen. Div.), refd to. [para. 69].

Canadian Pacific Railway Co. v. Aikins, MacAulay & Thorvaldson (1998), 123 Man.R.(2d) 281; 159 W.A.C. 281 (C.A.), refd to. [para. 71].

Moffat et al. v. Wetstein et al. (1996), 4 O.T.C. 364; 135 D.L.R.(4th) 298 (Gen. Div.), refd to. [para. 71].

Manville Canada Inc. v. Ladner Downs (1992), 88 D.L.R.(4th) 208 (B.C.S.C.), refd to. [para. 71].

Rayner v. Enright et al. (1993), 115 Sask.R. 159; 20 C.P.C.(3d) 269 (Q.B.), refd to. [para. 71].

Lafferty v. N.B. Coal Ltd. (1995), 190 N.B.R.(2d) 1; 484 A.P.R. 1 (C.A.), refd to. [para. 77].

Authors and Works Noticed:

Canadian Bar Association, Code of Pro­fessional Conduct, c. 4 [para. 43].

Canadian Bar Association Task Force on Conflict of Interest Report, Conflict of Interest Disqualification: Martin v. Gray and Screening Methods (1993), p. 11 [para. 53].

Chester, Simon, Barristers & Solicitors in Practice (1998) (Looseleaf), c. 10, paras. 10.71, 10.77, 10.99.1 [para. 66]; c. 10, Appendix 10A [para. 58].

Federation of Law Societies of Canada, Rule With Respect to Conflicts of Inter­est Aris­ing as a Result of Transfers Be­tween Law Firms, generally [para. 58].

Law Society of New Brunswick, Pro­fes­sional Conduct Handbook (1999), Part C, para. 9 [para. 26], pp. 8 [para. 27]; 9 [para. 43]; 10 [para. 35].

Law Society of New Brunswick, Code of Professional Conduct, c. 5 [para. 35].

Perell, P.M., Conflicts of Interest in the Legal Profession (1995), p. 44 [para. 38].

Counsel:

Rodney J. Gillis, Q.C., and James M. Barry, for the appellant;

George E. Kalinowski, for the respondents, Bow Valley Husky (Bermuda) Limited, Husky Oil Ltd. and Bow Drill Three Partnership;

No one appeared for the respondents, Bow Valley Industries Ltd. and 384830 Al­berta Inc.

This appeal was heard on April 17, 2002, by Drapeau, Deschênes and Robertson, JJ.A., of the New Brunswick Court of Appeal. Drapeau, J.A., delivered the following deci­sion for the court on June 13, 2002.