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| By Emma Lambert |
In the latest judgment resulting from the legal saga of Trackcom Systems Inc. v. Trackcom Systems International Inc., 2016 QCCS 4389, the Honourable Michel A. Pinsonnault, J.S.C., confronted the issues of the disqualification of an attorney and the abuse of procedure.
In this case, the defendants’ application
in disqualification was directed against the plaintiffs’ attorneys,
specifically Me
Ari Y. Sorek, as well as other members of his law firm Dentons Canada s.e.n.r.l,
after Me Sorek had signed a sworn declaration in support of the
plaintiffs’ application to homologate a transaction which had been filed
following the rupture in protracted settlement negotiations between the parties.
In their application, the defendants alleged that Me Sorek’s testimony
was essential to the determination and adjudication of the application to
homologate the transaction and that they had the “absolute right”[1] to
examine him. In response, the plaintiffs countered by requesting that the court
declare the application in disqualification to be abusive pursuant to article
51 of the Code of Civil Procedure (“CCP”).
In
his judgment, Justice Pinsonnault applied the relevant
legislative provisions governing applications in disqualification, specifically
section 76 of the Code of Professional
Conduct of Lawyers[2]
and article 193 CCP[3]
and recalled that
the mere right to examine a lawyer acting for the opposing party, even if it is
an “absolute right”, does not justify their disqualification in and of itself. Dismissing the defendants’ application in disqualification, Justice Pinsonnault stated the following:
[55] Sorek cannot
be disqualified simply on the basis that he will undoubtedly be called as an
essential witness given his personal involvement in the transaction that is the
object of the Motion to homologate. Such an involvement would trigger a
multitude of disqualifications, as more often than not, such transactions are
concluded directly between lawyers acting for their respective clients. Given
such a direct involvement of lawyers, it is not surprising that they would
execute sworn declarations in support of motions to homologate such
transactions. Again, the “absolute right” to examine them on their sworn
declarations does not automatically entail their disqualification without the
other criteria being met as well.
[56] Although the
lawyers for the Defendants claimed that Sorek could not avail himself of one of
the exceptions of section 76 of the Code of conduct, the mere fact that one
party may wish to examine the lawyer of the opposing party is not sufficient in
itself to warrant a disqualification.
[57] One must
bear in mind that Article 193 C.p.c. stipulates that a lawyer may only be
declared disqualified for serious cause if he is called to testify in
the proceeding on essential facts. [Emphasis added]
[58] With all due
respect, the lawyers for the Defendants failed to convince the Court that any
of the various criteria developed by the jurisprudence to disqualify a lawyer
find application in the present instance.
[59] Firstly, the
jurisprudence on disqualification of lawyers shows that in such circumstances,
the facts of each case are important and must be assessed by the Court. “En matière de déclaration d’inhabilité, les
faits importent. Chaque cas est un cas d’espèce.[4]”
[…]
[61] Although the
notion of the appearance of a conflict of interest must always be the first and
foremost part of the Court’s preoccupations, the Court called upon to
disqualify a lawyer, especially when based on his or her upcoming testimony at
or before trial, must be guided, inter alia, by the right of a litigant to choose
his or her counsel and that fundamental right must not be overridden except
for serious and compelling reasons[5].
[Emphasis added]
[…]
[63] Based on the
foregoing principles, the Defendants also failed to make a probable case that
the testimony of Sorek is necessary and essential in order that they be able to
present a full defence to the Motion to homologate.
[64] Moreover, of
particular importance in the present case, the Defendants, via their lawyers,
had a “duty to try to arrive at an accommodation that would avoid the need for
such testimony”, if it was at all possible. They never even attempted to do so.
Furthermore,
with respect to the plaintiffs’ request to declare the application in
disqualification to be abusive, Justice Pinsonnault determined that there
was “no doubt in [the Court’s] opinion” that the application in disqualification
was abusive under article
51 CPC. Justice Pinsonnault outlined that:
[92] Given the
nature of the issues at stake in the Motion to homologate, the Motion to
disqualify was not warranted at all. Again, a frank and courteous discussion
between the opposing lawyers would have easily established the nature of the
evidence to be adduced on each side with respect to the Motion to homologate
and the absence of necessity to examine Sorek at this juncture of the
proceedings.
[93] The Motion
to homologate could have already been pleaded and disposed of within less time
that it took for the present motions.
[94] Based on the
evidence available to the Court, it can conclude that in all likelihood, the
Motion to disqualify prepared while the lawyers were negotiating and in the
absence of any prior warnings and discussions, served one purpose for the
Defendants, retaliate against the Plaintiffs who refused their proposed terms
and conditions of settlement and delay as much as possible the presentation of
the Motion to homologate and by the same token the entire legal proceedings.
[95] But that was
not all; the Court file also reveals that from the outset, the Plaintiffs have
claimed to be at a significant financial disadvantage vis-à-vis the Defendants’
economic power.
[96] The Court
emphatically agrees with Sorek that the other goal likely sought by the
Defendants with their Motion to disqualify was to force the Plaintiffs to
abandon the present proceedings for lack of financial resources in the event
that Sorek and Dentons were disqualified. Under such a scenario, the Plaintiffs
having lost their lawyers would have found themselves in the obligation to find
new counsel. The current state of the proceedings that so far have lasted four
years without an end in sight and with already four presences before the Court
of appeal, without mentioning the complexity of the commercial issues raised in
the context of the present oppression remedy case, would have rendered
prohibitive the cost of bringing a new lawyer up to speed. In all
probabilities, it would have indeed forced the Plaintiffs to abandon their case
without ever having submitted the same to a judge on its merits.
[97] Had they
succeeded in their ploy, the Defendants would have been able to defeat the ends
of justice.
Consequently,
Justice Pinsonnault sanctioned the defendants and ordered them
to pay the plaintiffs extrajudicial fees in the amount of $10,000 and reserved their right
to claim punitive damages if the abusive conduct of the defendants continued to
persist in the conduct of the proceedings.
[1] Translation of “le droit strict”.
[2] 76. A lawyer must not personally act in a dispute if he knows or
should know that he will be called upon as a witness.
However, he may act:
(1) if the fact of not acting is of a nature to
cause serious prejudice to the client; or
(2) if his testimony only refers to:
(a) an uncontested matter;
(b) a question of form and there is no reason to
believe that serious proof will be offered to contradict such testimony; or
(c) the nature or value of the professional
services rendered by him to the client or, as the case may be, by another
professional who engages in his activities within the same firm.
[3] 193. On a party’s application, a lawyer may be declared
disqualified to act in a proceeding, as when the lawyer is in a conflict of
interest situation and does not take steps to remedy it, has disclosed or is
likely to disclose confidential information to another party or a third person,
or is called to testify in the proceeding on essential facts. In the latter
case, the lawyer may only be declared disqualified for serious cause.
[4] Cogismaq International inc. v.
Lafontaine, 2008 QCCA 2044, par. 26.
[5] Cinar Corporation v. Weinberg, 2006 QCCS 4601, par. 10.
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