Court of Appeal of Quebec

Heafey c. Dormani

March 20, 2018

500-09-026665-174

Marcotte, Schrager, Hogue

Appeal from a judgment of the Superior Court granting a motion to disqualify a law firm. Dismissed.

The trial judge disqualified lawyer Viau and his firm, Gowling WLG LLP, from representing the appellants in a proceeding where the appellants and the impleaded parties are being sued for damages for a fraudulent bankruptcy orchestrated to allow the appellants to acquire the bankrupt’s assets. The suit alleges that the trustee and the trustee’s representative, impleaded party Boyadjian, participated in the scheme. This same lawyer represented Chantal Gingras, initially appointed interim receiver, then the trustee’s mandatary, in the various stages of  the bankruptcy proceeding.

A lawyer’s duty of loyalty goes beyond the duty not to disclose confidential information. The integrity of the judicial system is the paramount consideration due to its fundamental importance for our society. In circumstances where counsel’s continued presence seriously tarnishes the image of the administration of justice, there should be a declaration of disqualification, even in the absence of any risk that confidential information will be disclosed or a specific situation where the lawyer has breached the duty of loyalty. Naturally, any grounds for disqualification must be balanced against the client’s right to be represented by counsel of their choice. Protecting the integrity of the judicial system must prevail, however, when it is not possible to reconcile these competing interests. The primary consideration in this matter is the effect on the image of the administration of justice of allowing a party to the litigation (the appellants) to be represented by counsel or former counsel of a neutral party having participated in the process as the facts evolved. The dispute in the bankruptcy proceeding is the main factor of the dispute in this case and vice versa. Therefore, the trustee, Gingras, and their lawyers have ongoing duties of impartiality, independence, and good faith to the court and to all of the bankrupt’s creditors, including more specifically, the parties to this dispute. The criterion is that of the image of the justice system in the eyes of a public reasonably informed of the facts of the case. Here, the trustee’s neutrality and integrity are seriously attacked in the proceedings. While Gingras is not the subject of such allegations, she acted as the trustee’s mandatary. Therefore, her lawyer should also be considered as the trustee’s lawyer. The fact that six years have passed since Viau’s last apparent act on behalf of Gingras is of no significance given that the two files continue to be closely connected.

*Summary by SOQUIJ
Text of the decision: Http://citoyens.soquij.qc.ca. This link open an external website in a new window.

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