Law Times

Law Times • January 19, 2009 NEWS PAGE 3 gument that could have kept lawyers from acting against any client loosely affiliated with a company they work for. Lerners LLP lawyer Jasmine Superior Court clarifies corporate conflicts T BY ROBERT TODD Law Times he Superior Court of Justice has given the red light to a legal ar- Cherniak, says the key issue in the case was "Who is your client? What is the scope of 'client?' "There really wasn't much out there in terms of case law that talked about what sorts of obliga- tions you might owe to a subsi- diary of your client," she says. "It was an interesting ques- Akbarali, who represented the plaintiff in McKenna v. Gammon Gold Inc. with colleague Earl tion, and it had a lot of poten- tial to really revamp or expand the kinds of duties that lawyers would owe, because if you suddenly owe a duty to every Newsletter takes aim at access issues A BY ROBERT TODD Law Times new publication aims to pressure Attorney General Chris Bent- ley to change what journalists and media lawyers say are restric- tive policies that deny them fair access to court materials. "We find it really hard to believe that almost three decades after the Charter we're having to fight for something as basic as access to a court file, or that there are people employed in the court system who don't realize that reporters are permitted to ask for a transcript," says Toronto Star legal affairs reporter Tracey Tyler. The first edition of The Justice Reporter online newsletter includes five pages of journalists' horror stories of the barriers they face in access- ing court materials, a paper by University of Ottawa constitutional and criminal law expert Prof. David Paciocco, and tips from media lawyer Tony Wong for reporters facing barriers. The newsletter is a collaborative effort by reporters from across the province led by Tyler and Wong, who practises with Blake Cassels & Graydon LLP. There are two objectives for the newsletter, says Tyler. The first is to catalogue the problem and inform key players. To that end, the pub- lication has been distributed via e-mail to lawyers' organizations such as the Criminal Lawyers' Association, and copies have been given to each regional senior judge of the Superior Court of Justice, the Ontario Court of Appeal, Attorney General Chris Bentley, and the Ontario cabinet secretary. Tyler notes that some journalists and media lawyers think a legal challenge of the AG's policies is the only way to get greater access to court materials. But she says a simpler solution is at hand. "Maybe its naive, but I can't imagine [the government] wants to waste a lot of public money on a court battle," she says. "So what we're trying to do is just educate people within the legal community about the ex- tent of the problem." Tyler says she was surprised while compiling the newsletter to learn just how many reporters face battles for access. "I think that took us, actually, by surprise. We all run into these problems on a daily basis, but until you start assembling the stories and have them all in front of you, you don't realize how depressing it is." Copies of the newsletter are available by e-mailing Tyler at ttyler@ thestar.ca or Wong at tony.wong@blakes.com. LT member of a corporate family be- cause you have done or are doing work for one member of that fa- mily, where does it end? . . . The potential for expansion of who is your client was incredible." The court agreed with Cher- niak and Akbarali's argument. They said firms should not have to treat an entire corporate family as a client if their relationship is with one company within that entity. "We said they had as much to do with each other as blowing out a candle had to do with putting out a forest fire," says Akbarali. The legal question arose in a securities class action against defendants including Gammon Gold Inc., noted Justice Joan Lax's judgment. The case invol- ves accusations of prospectus misrepresentation and stock op- tions manipulation, and is being prosecuted by Siskinds LLP. Two of Gammon Gold's public share offering underwriting syn- dicates — BMO Nesbitt Burns Inc. and TD Securities Inc. — are among the defendants in the class action. They opposed Siskinds' decision to prosecute the action. The syndicates argued Siskinds was in a conflict of interest as the Bank of Montreal and Toronto Dominion Bank had retained it on unrelated matters. The banks argued the firm should be barred from the case "because it is prose- cuting an action against its own clients, or against entities whose interests are inextricably entwi- ned with its clients in breach of its retainer and of duties owed to them," wrote Lax. The underwriters argued they are clients or 'near-clients,' said Lax, as they are subsidiaries of the banks and the general pu- blic views them as a single entity. They said Siskinds was acting Jasmine Akbarali says there wasn't much case law that 'talked about what sorts of obligations you might owe to a subsidiary of your client.' contrary to its contractual, com- mon law, and professional requi- rements, wrote the judge. But Lax said the motion to oust Siskinds was simply tactical. "The underwriters and the banks are separate and sophisti- cated business and legal entities that are individually governed and autonomous." Nesbitt and TD Securities can't be viewed as the "alter egos" of BMO and TD Bank, wrote the judge, because they do business largely with their own employees and with the gui- dance of different boards of direc- tors. They have created separate legal and business entities for their member companies, said Lax. "They cannot ignore this se- paration when it is convenient or provides tactical advantage, but maintain the separation when it is to their advantage to do this," she wrote. The judge noted the banks told Siskinds it would not be getting any future work from them after refusing to withdraw from the Gammon Gold class action. But, she added, "it is telling that they did not remove their existing files. If the banks had any real concern about Sis- kinds' loyalty to them or the im- pairment of their solicitor-client relationship, they would have terminated the retainers." Lax also cited Justice Ian Bin- nie's rationale in the Supreme Court of Canada's 2007 ruling in Strother v. 3464920 Canada Inc. Binnie objected to the prac- tice of bringing conflict motions for purely tactical reasons. "If a lawyer's duty of loyalty can be challenged in these cir- cumstances, this would have se- rious and unwelcome consequen- ces for access to justice and for the right of a litigant to counsel of his or her choice," wrote Lax. The judge said Siskinds is one of the few firms prosecuting class ac- tions, which she characterized as a "new and developing area of law." Counsel for the defendants declined Law Times' requests for comment on the case. Akbarali notes the Canadian Bar Association is expected to amend its rules of professional conduct next month to adopt recommendations from its task force on conflicts of interest. If Lax's ruling stands, lawyers must now look for courts' opi- nions on where the line will be drawn on this issue, says Akbarali. "Something like Bank of Montreal and BMO Nesbitt Burns is one thing, whereas a mom-and-pop shop and a hol- ding company and an operating company might be entirely dif- ferent," she says. "So it will be interesting to see how that gets fleshed out in the future." LT Senior Litigation Counsel Constitutional Law The Canadian Constitution Foundation seeks part-time or full-time Senior Litigation Counsel for our constitutional litigation and legal research work. The successful candidate can work from any city in Canada, reporting to the Executive Director in Calgary. Senior Litigation Counsel will review and assist with the litigation work and legal research carried out by the Foundation's other in-house counsel, pro bono counsel, and law students. She or he will also assign legal research on constitutional topics to law students and lawyers, and review this work. Further, Senior Litigation Counsel may, if interested, assume direct responsibility for fi les, and appear in court. The ideal candidate will have between 10 and 20 years of litigation experience. Applications from retired or semi-retired litigation counsel, and from retired judges, are welcome. Salary to be negotiated, commensurate with experience and the Foundation's non-profi t status as a registered charity. Resumes with cover letter may be sent, in confi dence, to JCarpay@CanadianConstitutionFoundation.ca. CndConstitution_LT_Jan12_09.indd 1 www.lawtimesnews.com sight_LT_Jan19_09.eps 1 1/16/09 10:29:18 AM 1/6/09 9:12:59 AM

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• What`s A Conflict?
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