Wallace v. Canadian Pacific Railway et al., (2013) 423 Sask.R. 1 (SCC)

JudgeMcLachlin, C.J.C., LeBel, Fish, Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.
CourtSupreme Court (Canada)
Case DateJanuary 24, 2013
JurisdictionCanada (Federal)
Citations(2013), 423 Sask.R. 1 (SCC);2013 SCC 39;360 DLR (4th) 389;[2013] ACS no 39;AZ-50983088;[2013] 2 SCR 649;[2013] SCJ No 39 (QL)

Wallace v. CPR (2013), 423 Sask.R. 1 (SCC);

    588 W.A.C. 1

MLB headnote and full text

[French language version follows English language version]

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

.........................

Temp. Cite: [2013] Sask.R. TBEd. JL.026

Canadian National Railway Company (appellant) v. McKercher LLP and Gordon Wallace (respondents) and Canadian Bar Association and Federation of Law Societies of Canada (interveners)

(34545; 2013 SCC 39; 2013 CSC 39)

Indexed As: Wallace v. Canadian Pacific Railway et al.

Supreme Court of Canada

McLachlin, C.J.C., LeBel, Fish, Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.

July 5, 2013.

Summary:

McKercher LLP (McKercher) had been representing CN for 10 years. Wallace hired McKercher to sue CN and others in a proposed class action. CN applied for an order removing McKercher as solicitors of record for Wallace due to an alleged conflict of interest. In support of its application, CN filed an affidavit of Chouc, its Assistant Vice-President, General Counsel and Managing Partner. McKercher opposed CN's application to have it removed and applied for leave to cross-examine Chouc on his affidavit.

The Saskatchewan Court of Queen's Bench, in a decision reported at 338 Sask.R. 174, allowed the application for leave to cross-examine.

The Saskatchewan Court of Queen's Bench, in a decision reported at 344 Sask.R. 3, ordered that McKercher be disqualified from acting further in the action against CN. McKercher appealed. CN filed a notice of motion to quash McKercher's appeal on the basis that it was not a party in the Wallace action and had no standing to appeal. Wallace filed a notice of motion to extend the time for him to bring an appeal, on grounds identical to those set out in McKercher's notice of appeal.

The Saskatchewan Court of Appeal, per Smith, J.A., allowed the application. See 350 Sask.R. 249; 487 W.A.C. 249.

The Saskatchewan Court of Appeal, in a decision reported at 375 Sask.R. 218; 525 W.A.C. 218, allowed the appeals. McKercher had not gained, as a result of acting for CN, any confidential information which could prejudice CN if McKercher continued to act on the Wallace claim. However, McKercher had breached its duty of loyalty to CN: (1) respecting its commitment to CN respecting its CN files; and (2) respecting its duty of candour about taking on the Wallace claim. That said, while CN might have a basis to complain to the Law Society, McKercher should not be disqualified from acting on the Wallace claim. CN appealed.

The Supreme Court of Canada allowed the appeal, holding that McKercher was in a conflict of interest. The court remitted the matter of remedy to the Queen's Bench for consideration in accordance with its reasons.

Barristers and Solicitors - Topic 787

Duty to court - Disqualification of counsel - When available - Grounds - The Supreme Court of Canada discussed the role of the courts in resolving conflicts issues - The court stated, inter alia, that "Courts of inherent jurisdiction have supervisory power over litigation brought before them. Lawyers are officers of the court and are bound to conduct their business as the court directs. When issues arise as to whether a lawyer may act for a particular client in litigation, it falls to the court to resolve those issues. ... Both the courts and law societies are involved in resolving issues relating to conflicts of interest - the courts from the perspective of the proper administration of justice, the law societies from the perspective of good governance of the profession ..." - See paragraphs 13 to 18.

Barristers and Solicitors - Topic 1545

Relationship with client - Duty to client - General - Obligation of loyalty - The Supreme Court of Canada reiterated that "A lawyer, and by extension a law firm, owes a duty of loyalty to clients. This duty has three salient dimensions: (1) a duty to avoid conflicting interests; (2) a duty of commitment to the client's cause; and (3) a duty of candour" - See paragraph 19 - The court discussed these duties - See paragraphs 20 to 47.

Barristers and Solicitors - Topic 1610

Relationship with client - Conflict of interest or duties - Conduct of action against client - The Supreme Court of Canada discussed the "bright line rule" in conflict of interest cases - In summary, the court stated that "The bright line rule is precisely what its name implies: a bright line rule. It cannot be rebutted or otherwise attenuated. It applies to concurrent representation in both related and unrelated matters. However, the rule is limited in scope. It applies only where the immediate interests of clients are directly adverse in the matters on which the lawyer is acting. It applies only to legal - as opposed to commercial or strategic - interests. It cannot be raised tactically. And it does not apply in circumstances where it is unreasonable for a client to expect that a law firm will not act against it in unrelated matters. If a situation falls outside the scope of the rule, the applicable test is whether there is a substantial risk that the lawyer's representation of the client would be materially and adversely affected." - See paragraphs 27 to 41.

Barristers and Solicitors - Topic 1610

Relationship with client - Conflict of interest or duties - Conduct of action against client - The plaintiff (Wallace) commenced a proposed class action against the Canadian National Railway (CN) and others - CN applied for an order removing McKercher LLP (McKercher) as solicitors of record for Wallace due to an alleged conflict of interest - McKercher had acted for CN for over a decade - The chamber judge granted the order - McKercher and Wallace appealed - CN submitted that the "bright line rule" from Neil (2002 SCC) was an absolute prohibition and, absent express informed consent of both clients, McKercher could not represent Wallace, whose interests were directly adverse to its immediate interests, even if the two matters were unrelated - The Saskatchewan Court of Appeal allowed the appeal - Wallace appealed - The Supreme Court of Canada allowed Wallace's appeal - McKercher's concurrent representation of CN and Wallace fell squarely within the scope of the bright line rule - CN and Wallace were adverse in legal interests; CN had not attempted to tactically abuse the bright line rule; and it was reasonable in the circumstances for CN to expect that McKercher would not concurrently represent a party suing it for $1.75 billion - McKercher failed to obtain CN's consent to the concurrent representation of Wallace, and consequently breached the bright line rule when it accepted the Wallace retainer - In addition to its duty to avoid conflicts of interest, a law firm was under a duty of commitment to the client's cause which prevented it from summarily and unexpectedly dropping a client in order to circumvent conflict of interest rules, and a duty of candour which required the law firm to advise its existing client of all matters relevant to the retainer - McKercher's termination of its existing retainers with CN breached its duty of commitment to its client's cause, and its failure to advise CN of its intention to accept the Wallace retainer breached its duty of candour to its client - However, McKercher possessed no relevant confidential information that could be used to prejudice CN - Regarding the appropriate remedy, the only concern that would warrant disqualification in this case was protection of the repute of the administration of justice - A breach of the bright line rule normally resulted in disqualification - This remained true even if the lawyer-client relationship was terminated after the breach - However, certain factors might militate against disqualification and they had to be taken into consideration - The court remitted the matter of remedy to the Queen's Bench for consideration in accordance with its reasons - See paragraphs 48 to 67.

Barristers and Solicitors - Topic 1617

Relationship with client - Conflict of interest or duties - Situations not resulting in a conflict - The Supreme Court of Canada stated that "In recent years the Canadian Bar Association and the Federation of Law Societies of Canada have worked toward common conflict rules applicable across Canada. However, they have been unable to agree on their precise form ... That debate was transported into the proceedings before us, each of these interveners asking this Court to endorse their approach. While the court is properly informed by views put forward, the role of this Court is not to mediate the debate. Ours is the more modest task of determining which principles should apply in a case such as this, from the perspective of what is required for the proper administration of justice." - See paragraph 17.

Barristers and Solicitors - Topic 1619

Relationship with client - Conflict of interest or duties - Situations resulting in a conflict - [See second Barristers and Solicitors - Topic 1610 and Barristers and Solicitors - Topic 1617 ].

Cases Noticed:

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. 8].

MacDonald Estate v. Martin and Rossmere Holdings (1970) Ltd., [1990] 3 S.C.R. 1235; 121 N.R. 1; 70 Man.R.(2d) 241, refd to. [para. 15].

Cunningham v. Lilles et al., [2010] 1 S.C.R. 331; 399 N.R. 326; 283 B.C.A.C. 280; 480 W.A.C. 280; 2010 SCC 10, refd to. [para. 16].

R. v. Cunningham - see Cunningham v. Lilles et al.

Cholmondeley v. Clinton (1815), 19 Ves. Jun. 261; 34 E.R. 515, refd to. [para. 20].

Bricheno v. Thorp (1821), 37 E.R. 864, refd to. [para. 20].

Taylor v. Blacklow (1836), 3 Bing (N.C.) 235; 132 E.R. 401, refd to. [para. 20].

Rakusen v. Ellis, [1912] 1 Ch. 831, refd to. [para. 20].

3464920 Canada Inc. v. Strother et al., [2007] 2 S.C.R. 177; 363 N.R. 123; 241 B.C.A.C. 108; 399 W.A.C. 108; 2007 SCC 24, refd to. [para. 29].

Bolkiah v. KPMG., [1999] 2 A.C. 222; 234 N.R. 180 (H.L.), refd to. [para. 31].

Moffat v. Wetstein (1996), 4 O.T.C. 364; 29 O.R.(3d) 371 (Gen. Div.), refd to. [para. 54].

Canadian Pacific Railway Co. v. Aikins, MacAulay & Thorvaldson (1998), 123 Man.R.(2d) 281; 159 W.A.C. 281; 23 C.P.C.(4th) 55 (C.A.), refd to. [para. 54].

De Beers Canada Inc. v. Shore Gold Inc. et al. (2006), 278 Sask.R. 171; 2006 SKQB 101, refd to. [para. 55].

Toddglen Construction Ltd. v. Concord Adex Developments Corp., [2004] O.T.C. 371; 34 C.L.R.(3d) 111 (Master), refd to. [para. 55].

Authors and Works Noticed:

American Law Institute, Restatement of the Law (Third), The Law Governing Lawyers (2000), vol. 2, p. 339, § 128(2) [para. 28].

Dodek, Adam, Conflicted Identities: The Battle over the Duty of Loyalty in Canada (2011), 14 Legal Ethics 193, generally [para. 17].

Law Society of Alberta, Code of Conduct (2013), http://www.lawsocietyalberta.com, rule 2.01(2) [para. 44].

Law Society of Saskatchewan, Code of Professional Conduct (1991), http://www.lawsociety.sk.ca, c. XII, p. 47 [para. 56].

Law Society of Upper Canada, Rules of Professional Conduct (2013), http://www.lsuc.on.ca, rules 2.02(6.1), 2.02(6.2) [para. 44].

Nightingale, J., Report of the Proceedings before the House of Lords, on a Bill of Pains and Penalties against Her Majesty, Caroline Amelia Elizabeth, Queen of Great Britain and Consort of King George the Fourth (1821), vol. II, Part I, p. 8 [para. 25].

Nova Scotia Barristers' Society, Code of Professional Conduct (2013), http://nsbs.org, rules 3.2-1A; 7.2-6A [para. 44].

Waters, Donovan W.M., Gillen, Mark R. and Smith, Lionel D., Waters' Law of Trusts in Canada (4th Ed. 2012), p. 968 [paras. 25, 38].

Counsel:

Douglas C. Hodson, Q.C., Vanessa Monar Enweani and C. Ryan Lepage, for the appellant;

Gavin MacKenzie and Lauren Wihak, for the respondents;

Malcolm M. Mercer, Eric S. Block and Brendan Brammall, for the intervener, the Canadian Bar Association;

John J.L. Hunter, Q.C., and Stanley Martin, for the intervener, the Federation of Law Societies of Canada.

Solicitors of Record:

MacPherson Leslie & Tyerman, Saskatoon, Saskatchewan, for the appellant;

Heenan Blaikie, Toronto, Ontario, for the respondents;

McCarthy Tétrault, Toronto, Ontario, for the intervener, the Canadian Bar Association;

Hunter Litigation Chambers, Vancouver, British Columbia; Fasken Martineau DuMoulin, Vancouver, British Columbia, for the intervener, the Federation of Law Societies of Canada.

This appeal was heard at Ottawa, Ontario, on January 24, 2013, by McLachlin, C.J.C., LeBel, Fish, Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ., of the Supreme Court of Canada. McLachlin, C.J.C. (LeBel, Fish, Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ., concurring) delivered the following decision for the court, in both official languages, on July 5, 2013.

To continue reading

Request your trial
170 practice notes
  • Malton v. Attia et al., 2015 ABQB 135
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • May 6, 2013
    ...Co. v. McKercher LLP - see Wallace v. Canadian Pacific Railway et al. Wallace v. Canadian Pacific Railway et al. (2013), 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 2013 SCC 39, refd to. [para. 700, footnote Cunningham v. Lilles et al. (2010), 399 N.R. 326; 283 B.C.A.C. 280; 480 W.A.C. 280; 20......
  • R. v. L.L., (2013) 570 A.R. 287 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • May 31, 2013
    ...refd to. [para. 23]. R. v. Cunningham - see Cunningham v. Lilles et al. Wallace v. Canadian Pacific Railway et al. (2013), 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 2013 SCC 39, refd to. [para. Wallace v. McKercher LLP - see Wallace v. Canadian Pacific Railway et al. Doncaster v. Chignecto-C......
  • Green v. Law Society of Manitoba, 2017 SCC 20
    • Canada
    • Supreme Court (Canada)
    • March 30, 2017
    ...1 S.C.R. 485; Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247; Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] 2 S.C.R. 649; ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140; Culligan v. Miller, J......
  • Malton v. Attia,
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • May 6, 2013
    ...50; 162 C.C.C.(3d) 298; 2002 SCC 26, refd to. [para. 159, footnote 69]. Wallace v. Canadian Pacific Railway et al. (2013), 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 360 D.L.R.(4th) 389; 2013 SCC 39, refd to. [para. 166, footnote 70]. Canadian National Railway Co. v. McKercher LLP - see Walla......
  • Request a trial to view additional results
136 cases
  • Malton v. Attia et al., 2015 ABQB 135
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • May 6, 2013
    ...Co. v. McKercher LLP - see Wallace v. Canadian Pacific Railway et al. Wallace v. Canadian Pacific Railway et al. (2013), 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 2013 SCC 39, refd to. [para. 700, footnote Cunningham v. Lilles et al. (2010), 399 N.R. 326; 283 B.C.A.C. 280; 480 W.A.C. 280; 20......
  • R. v. L.L., (2013) 570 A.R. 287 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • May 31, 2013
    ...refd to. [para. 23]. R. v. Cunningham - see Cunningham v. Lilles et al. Wallace v. Canadian Pacific Railway et al. (2013), 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 2013 SCC 39, refd to. [para. Wallace v. McKercher LLP - see Wallace v. Canadian Pacific Railway et al. Doncaster v. Chignecto-C......
  • Malton v. Attia,
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • May 6, 2013
    ...50; 162 C.C.C.(3d) 298; 2002 SCC 26, refd to. [para. 159, footnote 69]. Wallace v. Canadian Pacific Railway et al. (2013), 446 N.R. 1; 423 Sask.R. 1; 588 W.A.C. 1; 360 D.L.R.(4th) 389; 2013 SCC 39, refd to. [para. 166, footnote 70]. Canadian National Railway Co. v. McKercher LLP - see Walla......
  • Green v. Law Society of Manitoba, 2017 SCC 20
    • Canada
    • Supreme Court (Canada)
    • March 30, 2017
    ...1 S.C.R. 485; Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247; Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] 2 S.C.R. 649; ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140; Culligan v. Miller, J......
  • Request a trial to view additional results
15 firm's commentaries
  • Hail To The Chief: McLachlin C.J.C. Becomes Canada’s Longest-Serving Chief Justice
    • Canada
    • Mondaq Canada
    • September 23, 2013
    ...of contenders. Some particularly notable judgments that were not included in our list are: Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, which unanimously revisted the "bright line" conflicts rule for lawyers and their clients; Grant v. Torstar Corp., [2009] 3 S.C.R. 640, whi......
  • Ontario Court Of Appeal Summaries – July 4 – July 7, 2017
    • Canada
    • Mondaq Canada
    • July 19, 2017
    ...for adverse clients unless both parties provide their informed consent. Similarly, in Canadian National Railway Co. v. McKercher LLP, [2013] 2 SCR 649, the Supreme Court of Canada outlined principles for determining whether a conflict of interest can be said to have arisen outside the scope......
  • The Dispute Resolution Review - 9th Edition
    • Canada
    • Mondaq Canada
    • June 29, 2017
    ...31 See for example, Law Society of Upper Canada, Rules of Professional Conduct, Section 3.4. 32 2013 SCC 39 at para. 33 R v. Neil [2002] 3 SCR 631 at para. 29. 34 SC 2000, c 17. 35 Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7 at para. 79. 36 British Columbi......
  • Court Of Appeal Summaries (January 30 – February 3, 2017)
    • Canada
    • Mondaq Canada
    • February 15, 2017
    ...and the respondents Keywords: Conflict of Interest, Duty to Defend, Bright Line Rule, Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, R v. Neil, 2002 SCC 70, Indemnity In the early 1990s, an area of land on the western edge of downtown Toronto was being assembled for developmen......
  • Request a trial to view additional results
15 books & journal articles
  • Private international law implications in conflicts of interest for lawyers licensed in multiple countries.
    • Canada
    • McGill Law Journal Vol. 60 No. 3, March - March 2015
    • March 1, 2015
    ...for Bay Street: Change or Die", Financial Post (8 February 2014), online: . (7) See e.g. Canadian National Railway Co v McKercher LLP, 2013 SCC 39, [2013] 2 SCR 649 (8) This is because of the unitary court structure of Canada, the ethical rules articulated by the Supreme Court of Canada, an......
  • Table of cases
    • Canada
    • Irwin Books Ethics and Criminal Law. Second Edition
    • June 19, 2015
    ...Canadian Blood Services v Freeman, 2010 ONSC 4885 .................................... 243 Canadian National Railway Co v McKercher LLP, 2013 SCC 39.........................................................................................6, 23, 44, 118, 164, 177, 214, 264, 266, 269, 274, 275......
  • Defending the Guilty
    • Canada
    • Irwin Books Ethics and Criminal Law. Second Edition
    • June 19, 2015
    ...conflict of interest rules, see Neil , above note 29 at paras 12–13, 16–17, and 19(ii); Canadian National Railway Co v McKercher LLP , 2013 SCC 39 at paras 25–26 [ McKercher ]; R v MQ , 2012 ONCA 224 at para 30. 38 Joanisse , above note 29 at 57 [paras 63–64]; R v GDB , 2000 SCC 22 at paras......
  • Confidentiality
    • Canada
    • Irwin Books Ethics and Criminal Law. Second Edition
    • June 19, 2015
    ...Estate ]; Galambos v Perez , 2009 SCC 48 at para 29; Cunningham , above note 1 at para 38; Canadian National Railway Co v McKercher LLP , 2013 SCC 39 at para 16 [ McKercher ]. 31 See Chapter 1, Section D. 32 Most obviously, s 10(b) of the Canadian Charter of Rights and Freedoms , Part I of ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT