Wallace v. Canadian Pacific Railway et al. 2013 SCC 39
Barristers and Solicitors - Relationship with client - Conflict of interest or duties - Conduct of action against client
McKercher LLP (McKercher) had been representing CN for 10 years. Wallace hired McKercher to sue CN and others in a proposed class action. CN applied for an order removing McKercher as solicitors of record for Wallace due to an alleged conflict of interest. In support of its application, CN filed an affidavit of Chouc, its Assistant Vice-President, General Counsel and Managing Partner. McKercher opposed CN’s application to have it removed and applied for leave to cross-examine Chouc on his affidavit.
The Saskatchewan Court of Queen’s Bench, in a decision reported at 338 Sask.R. 174, allowed the application for leave to cross-examine.
The Saskatchewan Court of Queen’s Bench, in a decision reported at 344 Sask.R. 3, ordered that McKercher be disqualified from acting further in the action against CN. McKercher appealed. CN filed a notice of motion to quash McKercher’s appeal on the basis that it was not a party in the Wallace action and had no standing to appeal. Wallace filed a notice of motion to extend the time for him to bring an appeal, on grounds identical to those set out in McKercher’s notice of appeal.
The Saskatchewan Court of Appeal, per Smith, J.A., allowed the application. See 350 Sask.R. 249; 487 W.A.C. 249.
The Saskatchewan Court of Appeal, in a decision reported at 375 Sask.R. 218; 525 W.A.C. 218, allowed the appeals. McKercher had not gained, as a result of acting for CN, any confidential information which could prejudice CN if McKercher continued to act on the Wallace claim. However, McKercher had breached its duty of loyalty to CN: (1) respecting its commitment to CN respecting its CN files; and (2) respecting its duty of candour about taking on the Wallace claim. That said, while CN might have a basis to complain to the Law Society, McKercher should not be disqualified from acting on the Wallace claim. CN appealed.
The Supreme Court of Canada allowed the appeal, holding that McKercher was in a conflict of interest. The court remitted the matter of remedy to the Queen’s Bench for consideration in accordance with its reasons.