The premier weekly newspaper for the legal profession in Ontario
Issue link: https://digital.lawtimesnews.com/i/50255
PAGE 4 NEWS Dealers had 6 days to decide Continued from page 1 partners, is rocking the legal world and could, eventually, rock the political world as well. "It is the largest conflict of interest case in Canadian his- tory," says Chester, who knows the issue well. He can name and describe by heart the four major Supreme Court of Canada cases that have fleshed out conflict of interest law for lawyers and law firms in Canada. Cassels Brock, the firm the statement of claim alleges rep- resented the dealers at the same time it was working for the fed- eral government during the bailout negotiations, wouldn't comment last week. The government didn't respond to questions by press time while GM, too, declined to comment. The two Cassels Brock lawyers named in the lawsuit are Peter Harris, who allegedly con- sulted the dealers in a last-minute conference call two days before the deadline for their decision on the GM compensation offer; and Michael Weinczok, who later published his role in the GM bailout on his firm's web site. According to Chester, Supreme Court deci- sions on conflicts of interest have established a doctrine that stipulates the knowledge of one partner in a firm will be "imputed" to the other partners regardless of their location in Canada or abroad. The entire firm must avoid conflicts that would arise when different partners represent cli- ents whose interests compete. David Sterns, a lawyer at Sotos LLP, which is representing the dealers along with WeirFoulds LLP, says legislative protection offered by the Arthur Wishart Act and similar franchise legisla- tion in Alberta and Prince Edward Island is crucial to the case along with the information and advice the plaintiffs allege Cassels Brock failed to give them as the deadline neared. The 36-page statement of claim is available on the Sotos web site at sotosllp.com/ class-actions/gm-dealers-claim. It claims Cassels Brock failed to advise the dealers of the protection offered by the fran- chise legislation. Among other things, the franchisor must give franchisees a "complete and truthful" disclosure document 14 days before any deadline to sign a new agreement, the state- ment of claim asserts. Simon Chester The GM letter giving the dealers six days to decide on the wind-down agreement was sent on May 20 last year, the Wednesday before the Victoria Day long weekend, the statement of claim says. "Facing intense pressure," 90 per cent of the dealers signed the agreement before the 6 p.m. deadline on May 26, the plaintiffs say. Near the end, despite the retainer that had been arranged by the dealership association, Cassels Brock advised the dealers they should each obtain independent legal advice from their local lawyers, the statement of claim alleges. At the same time, while still on retainer from the dealership association, the firm gave advice to and took instructions from a "steering committee" of dealers who had not been asked to give up their dealerships, the claim says. The association's "own interests lay with its continuing dealerships, which would support it in the future," the statement of claim goes on to say. Two days after the deadline, the auto dealers association acknowledged there was a conflict of interest between the continuing dealers and those who were losing their businesses. It was only at that time that it selected a separate law firm for the affected dealers, the statement of claim says. "It was an all-systems failure, and we're going to get to the root causes through this lawsuit," says Sterns. "The clients lived it." LT Subscribe to Law Times Why pay extra for your legal news? Cutting-edge legal affairs, news and commentary for just 37¢ a day! Make the time for Law Times and keep up with all the developments in Ontario's legal scene. Subscribe today and receive: • Unlimited access to the Law Times digital editions and to our digital edition archives...FREE • Canadian Legal Newswire, a weekly e-newsletter from the editors of Law Times and Canadian Lawyer...FREE together we have all the tools. TitlePLUS title insurance and you, TitlePLUS title insurance and you, together we have all the tools www.mckellar.com www.mckellar.com 1-800-265-8381 $3.55 • Vol. 20, No. 13 Covering Ontario's Legal Scene Cosgrove says 'life goes on' after the bench 'Shock and disappointment' BY ROBERT TODD Law Times F ormer Ontario Superior Court justice Paul Cosgrove has spo- ken out on the Canadian Ju- dicial Council's decision to call for his ouster, saying he was compelled to resign due to his pending retire- ment, despite finding aspects of the council's report "troublesome." Cosgrove tells Law Times in an interview that once the CJC issued its recommendation to the justice minister, "My options were pretty narrow." While he believes he could have committee appealed an earlier report at resigned inquiry the Federal Court, he says a decision was un- likely before his mandatory retire- ment took hold in December. Cosgrove earlier this month after the CJC issued a final re- port stating that his actions in a late- 1990s murder trial led to the conclusion that he "failed in the execution of the duties of his judi- cial office and that public confidence in his abil- ity to discharge those duties in future has been irrevocably lost." The decision made him only the second federal judge to meet such a fate. But the former judge says parts of the CJC's final report could have been challenged. The council did not use a set of 32 letters of support written by judges and retired judges, law- yers, and members of the public when coming to its decision, saying they were irrelevant, he notes. "Personally, I found that difficult because, for example, there were my supervising judges, Former Superior Court justice Paul Cosgrove tells Law Times that his pending mandatory retirement compelled him to resign from the bench rather than battle a call for his ouster. the senior regional judges in Ottawa since I've been here for the last 24 years, all wrote very positive recommendations, and they also were aware of the trial," says Cosgrove. "So to say that these letters, the people had no knowledge of what was going on was not accurate." Cosgrove also suggests the council should have used the letters from community mem- bers when considering whether he had lost the public's confidence. "It would seem to me that it's logical to test what the public's demeanour is; you ask people who are knowledgeable in the public," he says. "And there were a number of letters from people in public office, and they were given little weight, according to the decision." Cosgrove's final criticism is the CJC's determination that the issue of public confidence was central to its decision. He suggests that it remains unclear what evidence is required to make such a determination. "So, all of those issues may have given rise for us to challenge," he says. "The problem with that is, of course I'm retired — manda- tory retirement in December of this year. And the process, for ex- ample, dealing with the constitu- tional issue, took three years." He says he did not want to gamble and let the matter play out before Parliament, where an un- precedented joint resolution would have been required to finalize his ouster. Doing so may have proved cumbersome, suggests Cosgrove, with 20,000 pages of evidence likely put forth. The 74-year-old former judge, who will collect an annual pension of about $170,000, says that before the decision he was reason- ably confident that the council would not call for his dismissal. Independent counsel Earl Cherniak, a partner at Lerners LLP, had previ- ously told the council such a stern punishment was not necessary. "It was shock and disappointment," Cos- grove says of his reaction to the final decision. He says he has been dealing with the fall- out by responding to media inquiries, and See Cosgrove, page 4 Future uncertain for McCarthys' Ottawa office BY TIM NAUMETZ For Law Times OTTAWA — The possible closure of McCarthy Tétrault LLP's high- profile office in the nation's capital is unrelated to dire economic cir- cumstances that have hit home for some Canadian law firms, a senior McCarthys partner says. "Yeah, I guess, like any organi- zation we review our business plans on an ongoing basis," Boake tells Law Times when asked of the Ot- tawa office closure possibility. She adds the firm wants to meet the needs of its clients, and that each of its offices have a practice and focus which aligns with McCarthys' over- all strategy. "So it's in that context staff, remains undecided. "It's really just a question of the fact that we are in discussion with lawyers there as part of an overall strategic review," she tells Law Times. "These discussions have been going on for a while and are not related to the economy," she says. "I would call it a strategic review. Our firm really focuses on integrat- The financial crisis that has hit directly New York and London, being financial centres of the world, and the financial institutions based there, has not hit to the same degree in Canada, primarily because of the strength of the financial institutions in Canada. Consideration of the future of McCarthys' Ottawa contingent is a "strategic review" based on the firm's national business plan, and the role played by all of its six loca- tions across Canada, says Barbara Boake, national leader, profession- als, at McCarthy Tétrault. that we're currently reviewing the Ottawa office, but no decision has been made to close it," she says. Boake would not divulge fur- ther details and said the fate of the office, along with the employ- ment of its seven partners, two associates, and 11 administrative ed practices; we have offices right across the country. We have a very diversified practice geographically and our overall strategy is to inte- grate those practices and develop client teams on a firm-wide basis." Boake, however, confirmed Mc- Carthys has taken "difficult staffing decisions" because of a drop in busi- ness due to the economy, letting go less than 20 of its 650 lawyers across the country. She would not give the specific number or other details. Gowling Lafleur Henderson LLP also confirmed to Law Times the firm released staff last week. But Gowlings chairman and CEO Scott Jolliffe said the shakeup did not involve partners or associ- ates. Jolliffe says the firm is shifting toward a "pod" model where law- yers and associates share a smaller number of secretaries, but he would not say how many were affected. The move not only economizes, but also creates a team atmosphere among secretaries that is useful for mentoring and sharing workloads. Sources in the legal community say McCarthy Tétrault's Ottawa re- view may be related to a management See Ottawa, page 4 WHICH DIRECTION IS BEST FOR YOU? RainMaker Group 110 Yonge Street, Suite 1101 Toronto, Ontario M5C 1T4 Tel: 416-863-9543 Fax: 416-863-9757 www.rainmakergroup.ca www.lawtimesnews.com Ontario Lawyer's Phone Book 2010 q Send me 1 year of Law Times for only $135.00 (Total with GST: $141.75) Name: __________________________________________________________________________ Company: _______________________________________________________________________ Address: ________________________________________________________________________ City: ____________________________ Prov: _______________ Postal Code: __________________ Tel: ( ) _______________________ Fax: ( ) ______________________ Email: ____________________________________________________________________________ q Payment enclosed q Charge my: q Visa q Mastercard q American Express Card #: __________________________________ Expiry Date: ___ / ___ (mm/yy) Signature (required): ________________________________________________ Date: ________________ 240 Edward St. Aurora, ON. L4G 3S9 Tel: (905) 727-0077 Fax: (905) 841-4357 Mail or fax this form to Law Times For a 30-day, no-risk evaluation call: 1.800.565.6967 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com LT_1-4sub.indd 1 12/16/09 11:04:45 AM OLPB_2010 (LT 1-8x2).indd 1 1/20/10 9:47:14 AM Your most complete directory of Ontario lawyers, law firms, judges and courts With more than 1,400 pages of essential legal references, Ontario Lawyer's Phone Book is your best connection to legal services in Ontario. Subscribers can depend on the credibility, accuracy and currency of this directory year after year. More detail and a wider scope of legal contact information for Ontario than any other source: • More than 26,000 lawyers • More than 9,300 law firms and corporate offices • Fax and telephone numbers, e-mail addresses, office locations and postal codes and more Perfectbound • December 2009 • On subscription $64 P/C 0514140999 • One time purchase $67•P/C 0514010999 ISSN 0845-4832 • Financial Matters 9 Focus On ADR/ Mediation Quote of the week "It is now incumbent on sports federations in selection disputes to show they had the proper criteria set up and that it was properly applied . . . The onus is now on the organiza- tion not the athlete. It wasn't quite as clear a few years ago." Fight Over Fees 6 April 20, 2009 Inside This Issue 3 FEBRUARY 1, 2010 / LAW TIMES Suit not about money Continued from page 1 hurt us." She claimed general damages of $500,000 but says the action wasn't about money. "It was about making sure that lawyers know this is not OK." Kinney's lawyer, Antonin Pribetic, says two of the four posters have been identified and a fresh lawsuit will be in the works once the names of the remaining two are verified. "It highlights how the right to anonymity is not absolute," he says. In initiating the original claim, Pribetic explains that identifying Lawbuzz's owner proved to be a challenge. According to an AdviceScene factum, Law Buzz Canada Ltd., "in an effort to maintain its web site's anonymity, is intentionally or unintentionally misleading the public regarding its true cor- porate identity." The corporate profile search lists the web site's president and sole director as Karen Hannaford. At the same time, its registered address is within the same University Avenue suite as ZSA. But Christopher Sweeney, ZSA president, says the recruit- ment company owned Lawbuzz "years ago" but no longer. However, the company acted on behalf of Lawbuzz in negotiating a settlement, says Leach. "This was just a charitable act. We used to advertise on the site," Leach says, noting ZSA has since cut off its limited support to Lawbuzz. According to Alan Shanoff, a lawyer who teaches media law at Humber College, compelling a web site's owners, rather than Internet service providers, to provide the identities of anony- mous users is nothing new. "You go after the weakest link. And in this case, they correctly saw what the weakest link was," Shanoff says. The illusion of online ano- nymity pervades, Shanoff adds, even among lawyers. As to the postings themselves, he draws an important distinc- tion between opinion and fact. "Criticism has to be based on something. You can't have an opinion based on mere specula- tion," Shanoff explains. "Some of that doesn't sound like opinion to me. It sounds like an assertion of fact," he adds, noting the available defences for assertions of fact aren't the same as those for opinions. Quoted in the statement of claim, however, are opinions by Lawdog that don't even refer to the plaintiff, Howe says. "Somehow, they came to the conclusion I was talking about them," he says. "I wasn't." In the comment, Howe allegedly wrote: "Anonymous legal advice is a crock. If you really want to give legal advice and are qualified to do so, put your money where your mouth is. Too many cowards on the Internet as it is." But AdviceScene's legal information isn't anonymous as lawyers on the site attach their names to what they say, Howe notes, adding he has drafted a statement of defence and looks forward to hearing AdviceScene explain how it suffered damages. None of the allegations in the cases have been proven in court. In the meantime, by all accounts, Lawbuzz, at least in its prior form, has been shut down with only its apology remaining at the web address. But Kinney says it was never her intention to bring Lawbuzz down. "I don't believe in just shut- ting down forums for voicing their opinions," she says. "But they have to know where to draw the line." LT www .lawtimesnews.com Includes a FREE digital edition! Multiple copy discounts available