GCT Canada Limited Partnership v. Vancouver Fraser Port Authority

GCT Canada Limited Partnership v. Vancouver Fraser Port Authority
Court (s) Database
Federal Court Decisions
Date
2019-09-06
Neutral citation
2019 FC 1147
File numbers
T-538-19
Decision Content
Date: 20190906
Docket: T-538-19
Citation: 2019 FC 1147
Ottawa, Ontario, September 6, 2019
PRESENT: Mr. Justice Pentney
BETWEEN:
GCT CANADA LIMITED PARTNERSHIP
Applicant
And
VANCOUVER FRASER PORT AUTHORITY and ATTORNEY GENERAL OF CANADA
Respondents
ORDER AND REASONS
I. Introduction
[1] The Applicant, GCT Canada Limited Partnership (GCT), seeks an order removing Lawson Lundell LLP (Lawson) as counsel for the Vancouver Fraser Port Authority (VFPA) in relation to the applications for judicial review GCT has brought challenging several decisions relating to proposed development in the port of Vancouver, as well as in the environmental review process for this project that is currently underway before a Review Panel established by the Canadian Environmental Assessment Agency (CEAA).
[2] GCT was never a client of Lawson. Nevertheless, GCT claims that Lawson is in a conflict of interest because it gained access to confidential information about these matters in the context of its due diligence review for the British Columbia Investment Management Corporation (BCI) relating to the potential acquisition by BCI of a minority stake in GCT. The conflict arises because Lawson represents VFPA in the CEAA Review Panel process as well as the judicial review applications, and the confidential information related to GCT’s position on the projects that lie at the heart of these proceedings.
[3] In this Motion, GCT claims that Lawson obtained confidential information relevant to the dispute between GCT and VFPA in the context of a solicitor-client relationship, and that it did not take adequate or timely measures to prevent that information from being shared within the law firm. This is sufficient to trigger a conflict of interest, and the disqualification of Lawson from these matters.
[4] VFPA argues that this is a purely tactical motion, which GCT has timed to disrupt the current legal processes. VFPA contends that because GCT was never a client of Lawson, the rules must be applied more flexibly. VFPA submits that it was not legally adverse to GCT at any time prior to the commencement of the judicial review proceedings, and that as soon as those were launched Lawson took appropriate measures to deal with any potential conflict. VFPA contends that GCT has failed to meet its onus of proving that confidential information was actually shared with the firm. Moreover, Lawson counsel involved in these matters have sworn affidavits stating that they did not receive any of GCT’s confidential information. Removing Lawson as its counsel now would cause VFPA significant prejudice.
[5] The background for this motion is a dispute between GCT and VFPA and the Attorney General of Canada about a proposed expansion of the container capacity of the port of Vancouver. VFPA plays several roles in relation to the port: it is the landlord of companies that lease facilities, including GCT; it is one of the “regulators” that controls activities in the port; it is also a proponent and developer of the port. As explained below, these proceedings focus on the VFPA’s roles as regulator and proponent.
[6] VFPA is currently seeking approval from the CEAA for its proposed expansion of the port, called the Roberts Bank Terminal Two project (RBT2). GCT opposes this project, and it wants to go forward with its own expansion project. VFPA, in its role as regulator, has denied GCT approval for its proposed expansion of the container facilities at Delta Port, known as the Deltaport 4 Project (DP4). Lawson represents VFPA in the environmental assessment process for RBT2, and advised VFPA in regard to its decision to deny preliminary project approval for GCT’s DP4 project. This is the core of the underlying dispute between GCT and VFPA, and provides the backdrop to the motion before the Court.
[7] GCT’s motion to remove Lawson as counsel for VFPA is grounded on the argument that Lawson obtained confidential information about GCT’s legal strategy relating to RBT2 and DP4 in the context of its due diligence review for BCI. GCT claims that Lawson did not take adequate steps to prevent any sharing of this information with the lawyers who act for VFPA, and therefore it must be removed as counsel.
[8] For the reasons that follow, I am granting this motion in part.
II. Background
[9] VFPA is a port authority that operates pursuant to the provisions of the Canada Marine Act, SC 1998, c 10 and the Port Authorities Operations Regulations, SOR/2000-55, as amended, as well as Letters Patent. These authorize VFPA to act as both regulator and landlord in regard to the port. In the past, VFPA has also been a proponent of large scale infrastructure developments and expansions at the port. GCT operates the Deltaport container terminal located at the Roberts Bank Port Facility, under a lease with VFPA.
[10] VFPA has been a proponent of an expansion of the Roberts Bank Port Facility since 2003. RBT2 did not proceed at that time, but was submitted for approval to the CEAA in September 2013. VFPA retained Lawson with respect to RBT2 on February 6, 2014, and Lawson has acted for it continuously since that time. On June 16, 2015, Lawson established an ethical wall around its work on RBT2, for reasons unrelated to this motion. This was to ensure that only lawyers and other staff working on this project would have access to the electronic file held by Lawson, and that lawyers working on this project would not discuss their work with other counsel in the firm.
[11] The approval process for RBT2 has advanced through various stages and the public hearings of the CEAA Review Panel on this project were held between May 14 and June 24, 2019. Lawson was counsel for VFPA at these hearings. GCT also participated, and opposed the approval of the project. Final submissions were to be presented to the Review Panel by August 16, 2019.
[12] In November 2017, Lawson was retained by BCI to provide tax advice on a potential acquisition by BCI of an interest in GCT (the Transaction). Lawson conducted a conflict check and determined that it could act in regard to this transaction. GCT was not a “client” of Lawson’s and the firm was of the view that GCT was adverse in interest to BCI, or at a minimum that their interests were not aligned.
[13] In early April 2018, BCI contacted Lawson to discuss whether it could conduct a due diligence review in the context of its possible acquisition of an interest in GCT. No new conflict check was undertaken. VFPA describes the perspective of Lawson at the time in the following way:
During its conflict check, Lawson had identified the VFPA as an existing client of Lawson. However, given that the Transaction involved a share transaction relating to a third party who was not a client, and the work itself was far removed from the kind of work being done for the VFPA, it was not expected Lawson would have any need to call on personnel working for VFPA to assist.
[14] Prior to accepting the retainer, David Allard, the lead partner at Lawson dealing with these discussions, raised with BCI the fact that Lawson represented VFPA, and indicated that Lawson had not done any work related to the leases held by GCT, or any other matters relating to the Transaction. Out of an abundance of caution, Mr. Allard advised BCI that Lawson would not use any lawyers doing work for the VFPA on the due diligence review. In addition, BCI was to only communicate with three Lawson counsel about any matter relating to the Transaction. This was done in order to avoid involving any lawyers who worked for VFPA in the due diligence review, and was contrary to the usual practice in prior interactions between BCI and Lawson pursuant to which the BCI lead could contact any Lawson lawyer to ask a question relating to its general retainer.
[15] John Smith, the Chair of Lawson’s Conflicts and Ethics Committee who ran the conflict check, never spoke directly with Bradley Armstrong, the lawyer heading the team working on the VFPA matter. Mr. Smith testified that he was not aware of DP4. The lead counsel on the VFPA matter sent a short reply to an e-mail that was circulated in the firm in the course of the conflict check, stating that he did not think it was a problem for the firm to act for BCI in the Transaction.
[16] Lawson was then retained by BCI to undertake the due diligence review, which commenced on May 10, 2018. A physical data room and a virtual data room were established to hold the materials relating to this review. The virtual data room was administered by a third party that specializes in this sort of work, and a limited number of Lawson counsel were given authorization to access the materials in that facility.
[17] For its part, GCT released its information relating to the due diligence review under the terms of a comprehensive confidentiality agreement that applied to Lawson as well as to others involved in the review. The agreement states that the information is to be used only for the purpose of evaluating, negotiating, or implementing a potential purchase transaction. It provides that disclosure by GCT does not constitute a waiver of any solicitor-client privilege that may attach to any of the information. It also contained an addendum requiring law firms or other professional advisors to acknowledge that the members of the team involved in the Transaction would not provide any other services to the VFPA (among others), and that the law firm would establish “the customary information barriers” in order to prevent disclosure of the confidential information to anyone else in the firm not involved in the due diligence review. This was a pre-condition to providing the confidential and proprietary information that was necessary for the due diligence review. BCI entered into the confidentiality agreement on October 24, 2017.
[18] During the course of the review, it became evident that advice on certain questions relating to Aboriginal issues was required, and the Lawson counsel best equipped to provide that advice was Keith Bergner, who was part of the team working on RBT2 for VFPA. In view of the limited timeframe for the due diligence review, Lawson decided that it was necessary for Mr. Bergner to provide the advice, although this breached its rule of keeping the two teams separate. Mr. Bergner had a conversation with Ms. Wagner of BCI, and he informed her that he might be limited in the nature of the advice he could provide given his work for another client. In the end, Mr. Bergner stated that he was able to provide the advice to BCI relying only on publicly-available information.
[19] The due diligence review was completed by May 30, 2018, and an extensive report was delivered to BCI.
[20] In addition to Lawson’s work for VFPA on RBT2, it was consulted on the decision by VFPA to not proceed with the project and environmental review processes for DP4 being pursued by GCT. Lawson states that it was aware of DP4 as of January 2017. The record is not complete on the question, but there is evidence that GCT had discussions with VFPA about DP4 during that period. GCT submitted a formal Preliminary Project Enquiry to VFPA on February 5, 2019. VFPA replied to that on February 29 [sic], 2019, stating that it would not proceed with its project or environmental review processes. The explanation for that decision includes consideration of several factors which are not relevant to the determination of this Motion. However, it should be noted that in the decision letter, VFPA provides the following rationale for its decision:
We emphasize these points to ensure that you are fully aware that the RBT2 Project is our preferred project for expansion of capacity at Roberts Bank. You must understand that your DP4 proposal, even if it is able to receive the necessary environmental and regulatory approvals, could only be considered as subsequent and incremental to the RBT2 Project.
[21] GCT launched its judicial review applications against VFPA on March 28, 2019. Earlier in March, BCI had contacted Lawson to advise them that GCT was contemplating taking this step, and to seek advice in respect of its position as a shareholder of GCT. Lawson assured BCI that the measures that had been put in place earlier, including the segregation of the legal teams, remained in place.
[22] Once the judicial reviews were launched, Lawson created internal measures to restrict access to the information it held relating to the Transaction, because it was then evident that VFPA and GCT were adverse in interest.
[23] As the procedures relating to the judicial review applications advanced, both BCI and GCT became concerned that Lawson had failed to take adequate and timely steps to protect the confidential information relating to these matters, and as a result, GCT launched this motion.
III. Issues
[24] There are only two issues before the Court:
Has GCT established that Lawson is in a conflict of interest in regard to these matters?
If so, is the remedy of disqualification of Lawson appropriate in the judicial review proceeding, and related to this, should such an Order be issued in regard to the CEAA process as well?
IV. Analysis
A. Has GCT established that Lawson is in a conflict of interest in regard to these matters?
[25] GCT alleges that Lawson is in a conflict of interest because it failed to take adequate measures to protect the confidential information it obtained in the context of a solicitor-client relationship, and this information is relevant to the matters in dispute between GCT and VFPA, which was and remains a client of Lawson.
[26] GCT submits that it has more than met the test to disqualify Lawson for having failed to adequately protect the confidential information it received relating to these matters. It argues that GCT and VFPA were adverse in interest since at least early 2017, long before the launch of the judicial review, and that despite its assurances to BCI, several Lawson counsel working on the VFPA matter did have access to the confidential information from GCT. Moreover, Lawson had not established adequate controls over its paper or electronic files, and therefore any lawyer at the firm could have accessed the confidential information.
[27] GCT argues that a reasonably informed member of the public would be satisfied that Lawson counsel working for VFPA could have had access to confidential information from GCT about the very matters in dispute before the CEAA Review Panel, and in the judicial review proceedings. This is sufficient to establish a disqualifying conflict of interest, and Lawson has not met its heavy burden of establishing that it took timely and effective steps to prevent possible misuse of the confidential information.
[28] VFPA submits that it was not in a legally adverse relationship with GCT prior to the launch of the judicial reviews; before then they were, at most, business competitors. Since GCT was never a client of Lawson, the legal tests must be applied more flexibly. Lawson counsel working on the VFPA matter have sworn that they did not receive any confidential materials from the team working on the Transaction, and once the judicial reviews were launched Lawson took timely and appropriate steps to prevent any access to the confidential information.
[29] The seminal case on lawyers’ conflicts of interest relating to possible misuse of confidential information is MacDonald Estate v Martin, [1990] 3 SCR 1235 [Martin]. The Supreme Court of Canada framed its consideration of the issue as involving three competing values: (i) “the concern to maintain the high standards of the legal profession and the integrity of our system of justice”; (ii) “the countervailing value that a litigant should not be deprived of his or her choice of counsel without good cause”; and (iii) “the desirability of permitting reasonable mobility in the legal profession.” Martin and subsequent cases make clear that the pre-eminent value that must guide consideration of all lawyers’ conflicts cases is the first: the Court must be guided by the desire to maintain the high standards of the legal profession and to seek to maintain the integrity of our system of justice (see, for example: R v Neil, 2002 SCC 70 at para 12 [Neil]; Ontario v Chartis Insurance Company of Canada, 2017 ONCA 59 at para 70 [Chartis]; Chapters Inc v Davies, Ward & Beck LLP, 52 OR (3d) 566 (CA) at para 20 [Chapters Inc.]).
[30] In order to achieve these goals, a number of rules have been established, but many of these do not apply in this case because they involve the situation where a lawyer or law firm represents two clients, or seeks to act against a former client, or when a lawyer moves from one firm to another, or two law firms merge (see Paul M. Perell, Conflicts of Interest in the Legal Profession (Toronto: Butterworths, 1995) for a helpful categorization of the cases). Thus the “bright line” rules established in cases like Neil may provide instructive general guidance, but they have no direct application in this case insofar as they relate to a lawyer’s relationship with a client.
[31] Two more recent Supreme Court decisions provide helpful guidance on the application of the test set out in Martin, as well as its underlying rationale. In Celanese Canada Inc v Murray Demolition Corp, 2006 SCC 36 [Celanese Canada] the issue concerned access to confidential information by lawyers in the context of an Anton Piller order. Justice Binnie described the matter in this way:
2 This appeal thus presents a clash between two competing values – solicitor-client privilege and the right to select counsel of one’s choice. The conflict must be resolved, it seems to me, on the basis that no one has the right to be represented by counsel who has had access to relevant solicitor-client confidences in circumstances where such access ought to have been anticipated and, without great difficulty, avoided and where such counsel has failed to rebut the presumption of a resulting risk of prejudice to the party against whom the Anton Piller order was made.
3 This Court’s decision in MacDonald Estate v Martin, [1990] 3 S.C.R. 1235, makes it clear that prejudice will be presumed to flow from an opponent’s access to relevant solicitor-client confidences…
[32] Justice Binnie provided the following summary of the law regarding the removal of counsel for possession of confidential information:
42 In MacDonald Estate, the Court held, in the context of a moving solicitor, that once the opposing firm of solicitors is shown to have received “confidential information attributable to a solicitor and client relationship relevant to the matter at hand” (p. 1260), the court will infer “that lawyers who work together share confidences” (p. 1262) and that this will result in a risk that such confidences will be used to the prejudice of the client, unless the receiving solicitors can show “that the public represented by the reasonably informed person would be satisfied that no use of confidential information would occur” (p. 1260). Only where there is “clear and convincing evidence” (p. 1262) to the contrary will the presumption be rebutted. Thus “[a] fortiori undertakings and conclusory statements in affidavits without more” (p. 1263) will not suffice to rebut the presumption of dissemination. For the purposes of the present case, it is important to note that Sopinka J. imposed no onus on the moving party to adduce any further evidence as to the nature of the confidential information beyond that which was needed to establish that the receiving lawyer had obtained confidential information attributable to a solicitor and client relationship which was relevant to the matter at hand.
[Emphasis in original.]
[33] The types of prejudice addressed by the conflict of interest rules established in Martin and subsequent decisions were discussed by Chief Justice McLachlin in Canadian National Railway Co v McKercher LLP, 2013 SCC 39 [McKercher]:
(c) Types of Prejudice Addressed by Conflict of Interest Rules
[23] The law of conflicts is mainly concerned with two types of prejudice: prejudice as a result of the lawyer’s misuse of confidential information obtained from a client; and prejudice arising where the lawyer “soft peddles” his representation of a client in order to serve his own interests, those of another client, or those of a third person. As regards these concerns, the law distinguishes between former clients and current clients. The lawyer’s main duty to a former client is to refrain from misusing confidential information. With respect to a current client, for whom representation is ongoing, the lawyer must neither misuse confidential information, nor place himself in a situation that jeopardizes effective representation. I will examine each of these aspects of the conflicts rule in turn.
(d) Confidential Information
[24] The first major concern addressed by the duty to avoid conflicting interests is the misuse of confidential information. The duty to avoid conflicts reinforces the lawyer’s duty of confidentiality – which is a distinct duty – by preventing situations that carry a heightened risk of a breach of confidentiality. A lawyer cannot act in a matter where he may use confidential information obtained from a former or current client to the detriment of that client. A two-part test is applied to determine whether the new matter will place the lawyer in a conflict of interest: (1) Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? (2) Is there a risk that it will be used to the prejudice of that client?: Martin, at p. 1260. If the lawyer’s new retainer is “sufficiently related” to the matters on which he or she worked for the former client, a rebuttable presumption arises that the lawyer possesses confidential information that raises a risk of prejudice: p. 1260.
[34] The determination of whether a conflict exists is largely a factual inquiry, and each case must be examined on its own merits. Given the wide variety of circumstances in which an alleged disqualifying conflict can arise, it is necessary to approach each case by recalling the core rationale of the doctrine and the requirement for a degree of flexibility in its application to the facts of the particular case, considering all of the relevant contextual factors. In the words of Justice Binnie in Neil: “The issue always is to determine what rules are sensible and necessary and how best to achieve an appropriate balance among the competing interests” (at para 15). (See, to the same effect, Strother v 3464920 Canada Inc, 2007 SCC 24 [Strother] at para 51.)
[35] In this case, a number of elements of the doctrine must be assessed, including:
(1) Do the rules apply in a situation where the information originated from a party who is not a client of the firm?
(2) Did Lawson obtain confidential information, and was it in the context of a solicitor-client relationship?
(3) Is the confidential information relevant to the matters in issue?
(4) When did GCT and Lawson become adverse in legal interest? When did this move beyond a situation of competition between business entities?
(5) Did Lawson take timely and effective measures to protect the confidential information, once VFPA became legally adverse to GCT?
(1) Do the rules apply in a situation where the information originated from a party who is not a client of the firm?
[36] Although many of the cases in which the question arises involve a direct solicitor-client relationship between the lawyer or the law firm with a “client”, the test in Martin does not require that such a relationship be established. The question stated is “Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand?”
[37] In Almecon Industries Ltd v Nutron Manufacturing Ltd (1994), 57 CPR (3d) 69, [1994] FCJ No 1209 (QL) (FCA) [Almecon Industries], the Federal Court of Appeal ruled that the conflict of interest rules could apply outside of a strict solicitor-client relationship, and that the primary consideration was whether confidential information was obtained in the context of a solicitor-client relationship, regardless of whether that information originated from the “client”. The Court noted at paragraph 33 that “the overriding policy concern in Martin was that no use of confidential information would occur. Precedence was given to the preservation of confidentiality of information imparted to a solicitor.” If a confidential relationship existed, the conflict rules would apply.
[38] This approach was also taken by the Supreme Court of Canada in Celanese Canada, where Binnie J. found that the Martin decision is the governing authority for removal of counsel for possession of confidential information, and further that the relevant elements of the Martin analysis “do not depend on a pre-existing solicitor-client relationship. The gravamen of the problem here is the possession by opposing solicitors of relevant and confidential information attributable to a solicitor-client relationship to which they have no claim of right whatsoever” (at para 46).
[39] I find that this is consistent with both the underlying policy rationale, and the very specific wording used in the Martin decision. Although in most cases lawyers will obtain confidential information in a solicitor-client relationship only from their client, situations may arise where such information is obtained from other parties. In my view, the goal of maintaining the high standards of the legal profession and public confidence in the integrity of our system of justice requires that the conflict rules should extend to such a situation.
[40] I agree with VFPA that where the confidential information giving rise to the alleged conflict originates from a party who is not a client of the law firm, the rules set out in Martin should be applied with a degree of flexibility. As the Alberta Court of Appeal stated in Dreco Energy Services Ltd v Wenzel Downhole Tools Ltd, 2006 ABCA 39 at paras 7-8:
[7] Though a lawyer (like anyone else) may owe duties of confidentiality to non-clients, that is not the ordinary situation…
[8] Where someone who is not the client gives the lawyer information and expects the lawyer to hold it in confidence, more analysis is necessary. Martin v MacDonald is not a rubber stamp to apply to non-client situations. The result in law or equity may be the same, or may differ, but more evidence and more legal analysis is needed to reach the result.
[41] There is no dispute that GCT was never a “client” of Lawson. In this case, however, I find that the conflict rules do apply to Lawson because GCT imparted confidential information to Lawson in the context of a solicitor-client relationship between Lawson and BCI. Indeed, the very nature of the BCI retainer required Lawson to examine confidential and proprietary information about GCT in order to provide advice to its client. In examining the following elements of the test, I accept that the Martin rules must be considered and applied with a degree of flexibility in view of the fact that this is a situation involving a non-client, but I find they do apply.
(2) Did Lawson obtain confidential information, and was it in the context of a solicitor-client relationship?
[42] In this case, VFPA argues that GCT has not established that any of its confidential information was actually shared. It says that the information is not identified with sufficient precision and there is insufficient evidence that any confidential information was actually provided to Lawson. VFPA submits that the evidentiary requirements must be higher in a situation involving a non-client, and that the inference that confidential information would be shared within a law firm that is drawn where the information came from a client does not apply here.
[43] In Martin, the conundrum facing lawyers and courts in addressing the conflict issue without revealing the very confidences that are in issue was highlighted by Justice Sopinka: “In answering the first question, the court is confronted with a dilemma. In order to explore the matter in any depth may require the very confidential information for which protection is sought to be revealed” (at p 1260). In order to resolve this, Sopinka J. established the following rule:
In my opinion, once it is shown by the client that there existed a previous relationship which is sufficiently related to the retainer from which it is sought to remove the solicitor, the court should infer that confidential information was imparted unless the solicitor satisfies the court that no information was imparted which could be relevant. This will be a difficult burden to discharge. Not only must the court’s degree of satisfaction be such that it would withstand the scrutiny of the reasonably-informed member of the public that no information passed, but the burden must be discharged without revealing the specifics of the privileged communication.
(p 1260)
[44] In Almecon Industries, the inference that confidential information was imparted was extended to situations involving other parties who were “involved in or associated with the client in that matter” (paras 38-39). This was found to be consistent with the rationale for the rules as explained in Martin, in which “[t]he overriding policy concern… was that no use of confidential information would occur. Precedence was given to the preservation of confidentiality of information imparted to a solicitor” (at para 34).
[45] VFPA contends that this rule must be applied with more flexibility in this case, given that GCT was never Lawson’s client. Furthermore, GCT has not met is onus because the records about who had access to which documents in the virtual data room are no longer in existence, and GCT took no steps to preserve that information. Finally, VFPA submits that the information that GCT complains of was not relevant to the due diligence review Lawson conducted for BCI, and Lawson counsel working on the due diligence review have confirmed that they did not share the information with anyone outside of the team. Similarly, Lawson counsel working on the VFPA matter have sworn that they did not receive any confidential information about GCT from any of the lawyers working on the Transaction.
[46] The first question is whether Lawson obtained confidential information. The onus is on GCT to establish this, on the usual civil standard of balance of probabilities. GCT provides the following description of the information it provided to Lawson in the course of the transaction:
a) A confidential discussion paper regarding GCT’s strategy on the competing RBT2 and DP4 projects;
b) Confidential reports and presentations for GCT’s board of directors, prepared with the assistance of counsel, including detailed presentations by GCT’s management regarding its strategy and relevant legal considerations on the competing RBT2 and DP4 projects;
c) GCT’s confidential board minutes, detailing the board’s discussions about the RBT2 and DP4 projects; and
d) Third-party scientific, engineering and environmental reports commissioned by GCT which relate to the RBT2 and DP4 projects.
[47] This description is sufficient to indicate the nature of the confidential information in issue in this motion. The information was provided by GCT to Lawson in the context of the solicitor-client relationship between Lawson and BCI, and it was provided subject to the confidentiality agreement signed by BCI. The terms of that agreement are explicit: the information was to remain confidential, any solicitor-client privilege relating to the information was not waived, the information would be guarded by an “information barrier” preventing any sharing within the firm, and members of any law firm involved in the due diligence review would not provide other legal services to VFPA.
[48] I find that the description of the information, bolstered by the terms of the confidentiality agreement, is sufficient to meet the test set out in the case law: see Celanese Canada, at para 42. In this case, in view of the evidence filed on the question, it is not necessary to infer that confidential information was shared. I find that GCT has met its onus of demonstrating that confidential information was shared. It is not seriously disputed that Lawson received this information in the context of a solicitor and client relationship between it and BCI. The information is described with sufficient detail to support the conclusion that it is confidential and relevant. There is no dispute that it was obtained by BCI and Lawson subject to the terms of an express confidentiality agreement. This is sufficient to meet this element of the analysis.
[49] I am not persuaded by the VFPA argument that GCT was required to provide more evidence that Lawson counsel may have had access to the confidential information, and in particular that the absence of specific records from the virtual data room is fatal to the GCT claim. I find that the inability of GCT to establish, with records from the company that ran the virtual data room, which document was uploaded or when it was accessed does not diminish the weight of the affidavit evidence. These sorts of details are not necessary to demonstrate that confidential information was provided by GCT and was made available to Lawson. In the circumstances of this case, nothing more is required.
[50] This element of the test has been satisfied.
(3) Is the confidential information relevant to the matters in issue?
[51] The law requires that the confidential information be relevant to the matters in dispute between the parties. The point has been expressed in a number of ways. In McKercher the Chief Justice found at paragraph 54 that “[t]he information must be capable of being used against the client in some tangible manner.” In that case the law firm’s awareness of the Canadian National Railway Co.’s (CN) litigation philosophy, and any confidential information it held about real estate, insolvency, and personal injury files, were found to be unrelated to the claim for damages on which the firm was retained.
[52] It is not necessary to engage in a lengthy discussion of this point. The description of the information set out above also makes clear that it included information that is relevant to the matters in issue between GCT and VFPA. Indeed, Lawson obtained confidential information about GCT’s position and legal strategy relating to the very matters in dispute between the parties in the CEAA Review Panel as well as the underlying judicial review.
[53] A key element of the due diligence review conducted by Lawson was to consider any legal issues that would have a material effect on the current financial state and future prospects of GCT. On the limited record before me, I do not have detailed information on the two projects. However, there is sufficient indication in the materials to demonstrate that each of the two projects involved a significant financial investment and a substantial increase in the capacity of the port, which would in turn generate significant ongoing revenue. In light of the size and importance of the respective projects, it is easy to understand why this information was relevant to the review.
[54] Furthermore, it is evident that the information about GCT’s plans and strategies relating to RBT2 and its own DP4 proposal would be relevant to the law firm that is representing VFPA in the environmental assessment process and in relation to its decision regarding approval of the GCT project.
[55] I find that this element of the test has also been met.
(4) When did GCT and Lawson become adverse in legal interest? When did this move beyond a situation of competition between business entities?
[56] The parties are in fundamental disagreement about when they became adverse in legal interest. GCT submits that it was in a legally adverse relationship with VFPA throughout the relevant period, and at least since January 2017. It describes RBT2 and DP4 as “competing” proposals, and points to the inherent conflict of interest in VFPA’s dual roles of regulator and proponent.
[57] I note in passing that neither party has emphasized the role played by VFPA as landlord, and although its approval was required in order for the Transaction to be completed, I find that nothing turns on this. The VFPA role as landlord is a fact, but it is not particularly relevant to this Motion.
[58] VFPA submits that it was, at most, a business competitor with GCT until the moment that GCT launched its applications for judicial review. VFPA points to the jurisprudence which finds that the conflict rules do not apply to constrain a law firm from representing parties who may be opposed in interest from a strategic or business perspective. The rules only apply where a legally adverse relationship exists.
[59] Case-law supports the proposition that the conflict of interest rules only apply where the facts demonstrate that the parties are legally adverse in interest. In Strother the Supreme Court found that the conflict rules will not generally apply to limit a law firm from representing competing businesses, as long as the confidential information of each client is appropriately protected, and the competition does not relate to a unique opportunity: “the conflict of interest principles do not generally preclude a law firm or lawyer from acting concurrently for different clients who are in the same line of business, or who compete with each other for business… The clients’ respective “interests” that require the protection of the duty of loyalty have to do with the practice of law, not commercial prosperity” (at paras 54-55).
[60] This was affirmed by the Supreme Court in McKercher, in which the Chief Justice affirmed both the stringency of the “bright line” rule in regard to the duties of counsel towards their clients, and also the limitations on the application of that rule. The following summary captures these points:
[41] The bright line rule is precisely what its name implies: a bright line rule. It cannot be rebutted or otherwise attenuated. It applies to concurrent representation in both related and unrelated matters. However, the rule is limited in scope. It applies only where the immediate interests of clients are directly adverse in the matters on which the lawyer is acting. It applies only to legal – as opposed to commercial or strategic – interests. It cannot be raised tactically. And it does not apply in circumstances where it is unreasonable for a client to expect that a law firm will not act against it in unrelated matters. If a situation falls outside the scope of the rule, the applicable test is whether there is a substantial risk that the lawyer’s representation of the client would be materially and adversely affected.
[Emphasis in original.]
[61] In the circumstances of this case, I agree with VFPA that the mere fact that it acted as landlord and regulator of GCT did not, in and of itself, give rise to a situation where VFPA was legally adverse in interest to GCT. There is no doubt that once VFPA learned that GCT was about to launch its applications for judicial review, the relationship was one of legal adversity. I do not accept, however, VFPA’s argument that it was only then that it became legally adverse relationship to GCT.
[62] As I have noted previously, on the record before me it is evident that VFPA has been a proponent of RBT2 for many years, and it has been actively pursuing CEAA approval of that project since 2013. The project is of major significance to VFPA, and it has invested time and resources to obtain the necessary approvals. While the procedure before the CEAA may not be i