Law Times

PAGE 10 FOCUS November 28, 2011 • Law Times Firms warned to close files BY MICHAEL McKIERNAN Law Times major conflicts case in Saskatchewan shows law- yers should worry about closing files just as much as they do about opening them, accord- ing to an expert in the area. In Wallace v. Canadian Pacific A Railway, McKercher LLP was al- lowed to continue acting for the plaintiffs in a class action against former clients Canadian National Railway and a number of other defendants despite reservations from the bench of the Court of Appeal for Saskatchewan about the way the firm severed its rela- tionship with CN. "What Wallace says is there are dangers about having a cli- ent who is in that grey zone of not being terribly active but not being closed either," says Simon Chester, a partner at Heenan Blaikie LLP who was also a member of the Canadian Bar As- sociation's task force on conflicts. "It reminds firms they should be as attentive to closing files as they are to opening them." McKercher had been acting for CN on various matters for almost a decade in 2008 when representative plaintiff Gordon Wallace approached the firm to commence a multibillion-dollar class action on behalf of western farmers who claimed the rail- ways had overcharged them for grain transportation. When the class action began in 2008, four of those files remained open. Over the next few months, the firm unilaterally withdrew from three files and attempted to continue work on another. CN, however, didn't agree. Although Appeal Court Justice Ralph Ottenbreit's deci- sion allowed McKercher to con- tinue acting for Wallace after overturning a lower court ruling, the judge found "McKercher did breach its duty of loyalty" by "dumping" CN the way it did and said the firm may have left it- self exposed to a law society com- plaint by the railway giant. The open files included a dor- mant case that had been going on since 1999. The lawyer on the file claimed he attempted un- successfully to discuss with CN how to proceed before sending a notice of withdrawal in Decem- ber 2008, efforts Ottenbreit de- scribed as "feeble at best." Another lawyer at McKerch- er had acted for CN in proceed- ings related to the receivership of a pulp mill. That lawyer told the receiver's counsel that he was no longer acting for CN in January 2009 but failed to no- tify the company, which only found out two months later. Another case involved two lawyers who were registered as powers of attorney for CN. They wrote in January 2009 to inform CN that they would cease to per- form that function because the class action meant "it would be inappropriate to continue." The fourth case involved a real estate purchase in Saska- toon. The McKercher lawyer on the file asked CN for per- mission to continue in Febru- ary 2009 but was refused. "McKercher's peremptory termination of all of its retainers with CN but one is surely a lack of commitment to the client's cause and a breach of the duty of loyalty to CN on those matters. It was incumbent on McKercher to continue to act where it could as Wallace 'reminds firms they should be as attentive to clos- ing files as they are to opening them,' says Simon Chester. long as CN wanted it to do so, or at least to explore the possibility of doing so," Ottenbreit wrote in his Sept. 28 judgment on behalf See Follow up, page 11 POWERFUL GUIDANCE ON ALL ASPECTS OF COMMERCIAL LEASING SHOPPING CENTRE LEASES, SECOND EDITION EDITOR-IN-CHIEF: HARVEY M. HABER, Q.C., LSM WITH NUMEROUS LEADING EXPERTS AS CONTRIBUTORS Shopping Centre Leases has been considered the definitive resource on the subject since its inception in 1976. Updated with new and timely chapters and precedents, the revised second edition brings you powerful guidance today. Take advantage of the expertise of 51 of Canada's top commercial leasing practitioners with Shopping Centre Leases, Second Edition. PRACTICAL HANDS-ON SOLUTIONS TO COMPLEX ISSUES This comprehensive source of articles and precedents covers all aspects of commercial leasing: • Technology and telecommunications concerns • Pandemic preparedness for building owners and managers • Insurance for shopping centres • Leasing aspects of the franchise relationship • Transfers of lease, assigning, subletting, and change of control • Operating costs and other additional rents in a commercial lease from a landlord's and tenant's perspective • Agreements to lease, letters of intent, and term sheets ORDER # 804477-61350 $192 Hardcover approx. 1100 pages December 2008 978-0-88804-477-8 Shopping Centre Leases, Second Edition includes numerous precedents to help you draft your own agreements and a table of cases to help you locate the decisions you need. AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.canadalawbook.ca Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. CANADA LAW BOOK® www.lawtimesnews.com

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