MediaTube Corp. v. Bell Canada

MediaTube Corp. v. Bell Canada
Court (s) Database
Federal Court Decisions
Date
2014-04-04
Neutral citation
2014 FC 237
File numbers
T-705-13
Decision Content
Date: 20140404
Docket:
T-705-13
Citation: 2014 FC 237
Ottawa, Ontario, April 4, 2014
PRESENT: The Honourable Madam Justice Kane
BETWEEN:
MEDIATUBE CORP. and NORTHVU INC.
Plaintiffs
and
BELL CANADA and BELL ALIANT
REGIONAL COMMUNICATIONS,
LIMITED PARTNERS
Defendants
PUBLIC REASONS FOR ORDER AND ORDER
(Confidential Reasons for Order and Order Issued March 11, 2014)
[1] This motion arises in the context of an action by the plaintiffs, MediaTube Inc (“MediaTube”) and NorthVu Inc. (“NorthVu”) which claims patent infringement by the defendants, Bell Canada and Bell Aliant Regional Communications, Limited Partnership (“Bell Aliant”, collectively the “applicants” in this motion with respect to Canadian Patent No. 2,399,477 (the “477 Patent”). In the action, MediaTube and NorthVu are seeking various remedies, including an injunction and damages or an accounting of the defendants’ profits. MediaTube is represented by Bereskin and Parr (“B&P” or the “respondent” in this motion).
[2] In this motion, Bell Canada and Bell Aliant are seeking, inter alia, an order removing B&P as solicitors of record for MediaTube on the basis that, due to their past and current relationship as a client of B&P, there is a conflict of interest and B&P must, therefore, be disqualified from representing MediaTube in the main action.
[3] The applicants request that this Court grant their motion, ordering that B&P be removed as solicitors of record for MediaTube in this action, and more specifically:
(a) an order declaring that B&P has obtained confidential information from Bell which is sufficiently related to this action;
(b) an order declaring that B&P is in a position of conflict of interest, and has breached its duty of loyalty to Bell in representing MediaTube in this action;
(c) an order immediately removing B&P as solicitors of record for MediaTube in this action;
(d) an order prohibiting B&P from revealing confidential information obtained from Bell to anyone, including: MediaTube (any employees, directors or affiliates thereof); new counsel for MediaTube; and counsel for NorthVu;
(e) an order requiring B&P to provide an undertaking to the Court that no confidential information obtained from Bell has been communicated to MediaTube, NorthVu or their solicitors;
(f) an order requiring counsel for NorthVu to provide an undertaking to the Court that no information related to any allegations of infringement of the 477 Patent, except that which could be obtained from public sources, was communicated to them by B&P;
(g) costs of this motion;
(h) such further and other relief as this Honourable Court deems just.
[4] At the outset it is helpful to understand the corporate relationships of the applicants.
[5] BCE Inc. [“BCE”] could be described as the parent company or big umbrella for several other separate corporations. Bell Canada is a subsidiary of BCE. Several other companies are direct or indirect subsidiaries of Bell Canada, including Bell Mobility Inc (“Bell Mobility”), Bell Media Inc (“Bell Media”, formerly CTVglobemedia Inc), Bell ExpressVu Limited Partnership (“Bell ExpressVu”) and Bell Aliant Inc (the parent of Bell Aliant).
[6] The applicants have referred to these companies as the “Bell group/family of companies” or simply as “Bell”, but the key issue for this motion is whether being one big family, if that is indeed the case given that all are large businesses in their own right, means that if a law firm acts for one member of that family, then it acts for all. In other words, whether BCE, Bell Canada, and all that fall under the corporate umbrella, is one client. The applicants submit that the Bell family of companies is one client. B&P submits that each company is a separate legal entity and that B&P had retainers with some of those specific entities at various times.
[7] I note that both parties have casually referred to “Bell” in their submissions, affidavit evidence, transcripts of cross-examinations, and e-mail exhibits to refer to both the whole group or family and to specific entities under the corporate umbrella. The terminology used is not indicative of who the client is or was.
[8] For the reasons that follow, the motion is dismissed. The Bell family of companies as a whole was not the current or former client of B&P. While there may be some circumstances where related companies could be considered as one entity and one client, the circumstances in the present case do not lead to that conclusion.
The Background
[9] The applicants and respondent have slightly differing versions of the relevant facts.
The Applicants’ Chronology
[10] On April 23, 2013, MediaTube and NorthVu served a Statement of Claim on the applicants, alleging that their Fibe TV systems infringed the 477 Patent. B&P represented MediaTube.
[11] The applicants note that there is one legal department for Bell. As of October 2011, Richard Sabbagh, Director of Trade-marks at Bell Canada who is part of the Bell legal department, worked directly with B&P. Mr Sabbagh served as instructing counsel to B&P on trade-mark matters. Jay Howard, General Counsel for Bell Media, also had a relationship with B&P dating from 2004, although he had no active files with B&P at the time.
[12] Between January and March 2013, MediaTube retained B&P in the present patent infringement claim.
[13] The applicants submit that at that time, B&P was engaged in nine files for Bell, including a sensitive and confidential project – “Project [Redacted] – [Redacted].
[14] The applicants provided the following account of B&P terminating their relationship:
• On January 14 and 15, 2013, Brigitte Chan, a trade-mark partner at B&P, advised Mr Sabbagh of a potential conflict of interest with MediaTube.
• On January 17, 2013, Mr Sabbagh called Ms Chan indicating his refusal to waive the conflict.
• On January 18, 2013, Mr Howard received a courtesy call from Victor Krichker, a partner at B&P, to advise that B&P’s Executive Committee had decided to take on the MediaTube retainer.
• On February 25, 2013, Ms Chan sent Mr Sabbagh an e-mail, insisting that he close out his remaining files with B&P. Mr Sabbagh replied that any actions taken by Bell thereafter did not constitute its consent to waive the conflict of interest.
• On February 26, 2013, Adam Bobker, another partner at B&P, e-mailed Mr Sabbagh to request that Bell waive the conflict of interest. Mr Bobker insisted that the MediaTube retainer was unrelated to any work that B&P had done for Bell. He also noted that the short notice was due to the risk that MediaTube would move on to another firm unless the issue was resolved.
• On March 1, 2013, Mr Sabbagh responded, expressing regret at being forced to retain new counsel for Bell’s files.
• On March 1, 2013, over Bell’s objection, B&P terminated all of Bell’s retainers.
The Respondent’s Chronology
[15] B&P notes that: Bell is one of Canada’s largest corporate enterprises; each subsidiary is an independent corporation with thousands of employees, millions of dollars in assets and revenue, and publicly-traded debt securities; Bell Canada and Bell Aliant have retained other law firms for intellectual property, litigation, and other matters over the years; and while B&P has acted for individual corporate entities in Bell, it never acted for the “Bell group/family of companies.”
[16] B&P notes that it had the following retainers with the individual entities of Bell:
• In 2005, Bell Canada retained B&P to comment on the availability of [Redacted] and [Redacted] as corporate names for an unaffiliated corporation. In June 2012, Bell Canada retained B&P for advice about its right to send a cease and desist letter to a third party concerning the [Redacted] trade name, which retainer was performed and concluded in June 2012.
• In October 2003, Bell ExpressVu retained B&P to provide advice regarding [Redacted]. B&P advised Bell ExpressVu on its potential risk of third party patent infringement. This is referred to as the “[Redacted] Patent Retainer”.
• Between November 2006 and September 2010, CTVglobemedia Inc, a predecessor to Bell Media, retained B&P on various trade-mark matters and a copyright matter.
• In 2011, Bell Media was the client in a retainer concerning a trade-mark. Bell Media also retained B&P for Project [Redacted], [Redacted]. In October 2012, Bell Media also retained B&P regarding a potential trade-mark infringement over the use of [Redacted]. In January 2012, Bell Media also retained B&P regarding compliance of a trade-mark [Redacted].
• In April 2012, Bell Mobility retained B&P.
[17] B&P also had the following retainers against Bell Canada and Bell Media:
• In 2004, B&P acted against Bell Canada. B&P asked the Registrar of Trade-Marks to send a s 45 notice to Bell Canada, requiring it to show whether its OPERAC trade-mark had been used in the last three years.
• In 2005, B&P acted against Bell Canada for XM Satellite Radio Inc. B&P filed an opposition with respect to Bell Canada’s application to register a trade-mark. The opposition was later removed.
• In 2006, B&P acted against Bell Canada for Pointts Advisory Limited. B&P sent a demand letter to Bell Canada to complain about unauthorized use of the POINTTS trade-mark and other trade-marks.
• In 2009, B&P acted against Bell Canada. B&P asked the Registrar of Trade-marks to send a s 45 notice to Bell Canada, requiring it to show whether its GT NET trade-mark had been used in the last three years.
• In 2010, Bell Canada brought a copyright infringement action in the Federal Court against 411 Local Search Corp (Court File: T-111-10). B&P acted for the defendant of the action, which was settled in May 2010.
• In January 2012, a lawyer joined B&P as a partner and brought with him several trade-mark oppositions by Star Television Productions Limited against Bell Media. Bell Media knew about this and did not object.
[18] B&P notes that Bell Aliant has never been its client.
[19] With respect to the MediaTube retainer, B&P describes the termination of the relationship with Bell as follows:
• In December 2012, MediaTube contacted Robert MacFarlane, a partner at B&P, seeking to retain B&P to bring an action for patent infringement with respect to the 477 Patent against Bell Canada and Bell Aliant.
• B&P wished to accept the MediaTube retainer. On January 14 and 15, 2013, Ms Chan advised Mr Sabbagh and asked if he would waive any potential conflict of interest. Mr Sabbagh replied that he would need to discuss the matter internally and that he was sorry he had not sent much work to B&P.
• On January 16, 2013, Mr Sabbagh advised Ms Chan that if B&P accepted the retainer, it would not get future work from Bell. They then discussed transferring the two current Bell Media retainers to another firm.
• On January 18, Mr Krichker, a partner at B&P, called Mr Howard at Bell Media as a courtesy, advising that B&P had decided to accept the MediaTube retainer.
• On February 18, 2013, Ms Chan followed up with Mr Sabbagh to discuss transferring the Project [Redacted] trade-mark applications to another law firm. Mr Sabbagh was receptive to Ms Chan’s suggestions. They exchanged further e-mails on February 25, 2013, at which point the dispute between the parties crystallized. Mr Bobker, a partner at B&P, responded on February 26, 2013.
• On March 5, 2013, B&P entered into a retainer agreement with MediaTube.
• On March 6, 2013, B&P established a confidentiality screen.
The Issues
[20] The issues identified by the parties have been consolidated as follows:
(1) Did B&P receive confidential information from its solicitor-client relationship with “Bell” or the “Bell group or family of companies” that is relevant to the matter at hand and that can be used to prejudice the applicants?
• Are the [Redacted] Patent Retainer (2003) or Project [Redacted] (2012) sufficiently related to the MediaTube retainer to give rise to a presumption that relevant confidential information was imparted by Bell Canada?
• Have the applicants discharged the onus of showing that actual confidential information relevant to the MediaTube retainer was imparted by Bell Canada to B&P in 2003, 2005 or 2012?
(2) Did B&P owe the applicants a duty of loyalty?
• Was Bell Aliant ever its client?
• Was Bell Canada a current client when MediaTube sought a retainer with it?
• Are the applicants professional litigants for the purposes of determining the scope of the duty of loyalty owed to them?
3) Did B&P breach the duty of loyalty owed to the applicants?
4) If so, what is the appropriate remedy?
The relevant legal principles
[21] Both parties referred to extensive jurisprudence, including the recent decision of the Supreme Court of Canada in Canadian National Railway Co v McKercher LLP, 2013 SCC 39, 360 DLR (4th) 389 [McKercher], which reviewed the relevant jurisprudence and which provides clear and current guidance. The legal principles are not in dispute; the dispute is about how these principles apply to the present circumstances. The applicants rely on McKercher to argue that B&P must be disqualified. B&P relies on McKercher to argue that the bright line rule is not engaged, and that there is no basis to resort to disqualification of B&P.
[22] At the outset, it is helpful to set out the principles that guide the Court in determining when counsel should be disqualified due to conflict of interest in order to provide the framework for the parties’ submissions.
The duty owed
[23] In McKercher, supra at para 19, the Supreme Court examined the lawyer’s duty of loyalty to his client and the duty on the lawyer to avoid conflicts of interest:
[19] A lawyer, and by extension a law firm, owes a duty of loyalty to clients. This duty has three salient dimensions: (1) a duty to avoid conflicting interests; (2) a duty of commitment to the client’s cause; and (3) a duty of candour: Neil, at para. 19.
[24] This motion focuses on the duty to avoid conflicting interests.
Former v Current client
[25] The legal framework varies depending on the status of the party alleging a conflict of interest on the part of the law firm. If the moving party is a former client of the law firm, then the analysis focuses on whether or not the law firm misused confidential information imparted by the moving party. If the moving party is a current client of the law firm, in addition to the question of whether the law firm misused confidential information, a “bright line rule” analysis is also engaged. The distinction between a former and current client has been confirmed by the Supreme Court in McKercher, supra at para 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.
Misuse of Confidential Information
[26] To determine whether the misuse of confidential information would place the law firm in a conflict of interest, a two-part test is employed: first, did the law firm receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? Second, is there a risk that it will be used to the prejudice of that client? (MacDonald Estate v Martin, [1990] 3 SCR 1235 at 1260, [1990] SCJ No 41 at para 45 [Martin]).
[27] The first part of the test may be met two ways. The moving party may adduce evidence that confidential information was in fact imparted during the solicitor-client relationship. Or, if the law firm’s new retainer is “sufficiently related” to the matters on which it worked for the first client, a rebuttable presumption arises that the law firm possesses confidential information which raises a risk of prejudice (Martin, supra at 1260-61, para 46).
[28] Where the presumption is established, the burden is on the law firm to satisfy the Court that it would withstand the scrutiny of the reasonably informed member of the public that no such information has been divulged; this burden must be discharged without revealing the specifics of the privileged communication. As the Supreme Court articulated in Martin, supra at 1260-61, paras 46-47:
46 In answering the first question, the court is confronted with a dilemma. In order to explore the matter in depth may require the very confidential information for which protection is sought to be revealed. This would have the effect of defeating the whole purpose of the application. American courts have solved this dilemma by means of the "substantial relationship" test. Once a "substantial relationship" is shown, there is an irrebuttable presumption that confidential information was imparted to the lawyer. In my opinion, this test is too rigid. There may be cases in which it is established beyond any reasonable doubt that no confidential information relevant to the current matter was disclosed. One example is where the applicant client admits on cross-examination that this is the case. This would not avail in the face of an irrebuttable presumption. 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 such information passed, but the burden must be discharged without revealing the specifics of the privileged communication. Nonetheless, I am of the opinion that the door should not be shut completely on a solicitor who wishes to discharge this heavy burden.
47 The second question is whether the confidential information will be misused. A lawyer who has relevant confidential information cannot act against his client or former client. In such a case the disqualification is automatic. No assurances or undertakings not to use the information will avail. The lawyer cannot compartmentalize his or her mind so as to screen out what has been gleaned from the client and what was acquired elsewhere. Furthermore, there would be a danger that the lawyer would avoid use of information acquired legitimately because it might be perceived to have come from the client. This would prevent the lawyer from adequately representing the new client. Moreover, the former client would feel at a disadvantage. Questions put in cross-examination about personal matters, for example, would create the uneasy feeling that they had their genesis in the previous relationship.
The Bright Line Rule
[29] The bright line rule is a prohibition against concurrent representation of two clients who have directly adverse interests. The rule was first articulated by the Supreme Court in R v Neil, 2002 SCC 70, [2002] 3 SCR 631 at para 29 [Neil]:
The bright line is provided by the general rule that a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client — even if the two mandates are unrelated — unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other. [Emphasis in original.]
[30] In McKercher, supra at paras 31-37, the Supreme Court clarified that the rule, where applicable, prohibits concurrent representation, but that it is not a rule of unlimited application:
[31] The bright line rule holds that a law firm cannot act for a client whose interests are adverse to those of another existing client, unless both clients consent. It applies regardless of whether the client matters are related or unrelated. The rule is based on “the inescapable conflict of interest which is inherent” in some situations of concurrent representation: Bolkiah v. KPMG, [1999] 2 A.C. 222 (H.L.), at p. 235, cited in Neil, at para. 27. It reflects the essence of the fiduciary’s duty of loyalty: “. . . a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position”: Bolkiah, at p. 234.
[32] However, Neil and Strother make it clear that the scope of the rule is not unlimited. The rule applies where the immediate legal interests of clients are directly adverse. It does not apply to condone tactical abuses. And it does not apply in circumstances where it is unreasonable to expect that the lawyer will not concurrently represent adverse parties in unrelated legal matters. […]
[33] First, the bright line rule applies only where the immediate interests of clients are directly adverse in the matters on which the lawyer is acting. […]
[…]
[35] Second, the bright line rule applies only when clients are adverse in legal interest. The main area of application of the bright line rule is in civil and criminal proceedings. Neil and Strother illustrate this limitation. The interests in Neil were not legal, but rather strategic. In Strother, they were commercial:
. . . 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. Here the alleged “adversity” between concurrent clients related to business matters. [paras. 54-55, per Binnie J.]
[36] Third, the bright line rule cannot be successfully raised by a party who seeks to abuse it. In some circumstances, a party may seek to rely on the bright line rule in a manner that is “tactical rather than principled”: Neil, at para. 28. The possibility of tactical abuse is especially high in the case of institutional clients dealing with large national law firms. Indeed, institutional clients have the resources to retain a significant number of firms, and the retention of a single partner in any Canadian city can disqualify all other lawyers within the firm nation-wide from acting against that client. As Binnie J. remarked,
In an era of national firms and a rising turnover of lawyers, especially at the less senior levels, the imposition of exaggerated and unnecessary client loyalty demands, spread across many offices and lawyers who in fact have no knowledge whatsoever of the client or its particular affairs, may promote form at the expense of substance, and tactical advantage instead of legitimate protection.
(Neil, at para. 15)
Thus, clients who intentionally create situations that will engage the bright line rule, as a means of depriving adversaries of their choice of counsel, forfeit the benefit of the rule. Indeed, institutional clients should not spread their retainers among scores of leading law firms in a purposeful attempt to create potential conflicts.
[37] Finally, the bright line rule does not apply in circumstances where it is unreasonable for a client to expect that its law firm will not act against it in unrelated matters. In Neil, Binnie J. gave the example of “professional litigants” whose consent to concurrent representation of adverse legal interests can be inferred:
In exceptional cases, consent of the client may be inferred. For example, governments generally accept that private practitioners who do their civil or criminal work will act against them in unrelated matters, and a contrary position in a particular case may, depending on the circumstances, be seen as tactical rather than principled. Chartered banks and entities that could be described as professional litigants may have a similarly broad-minded attitude where the matters are sufficiently unrelated that there is no danger of confidential information being abused. These exceptional cases are explained by the notion of informed consent, express or implied. [para. 28]
In some cases, it is simply not reasonable for a client to claim that it expected a law firm to owe it exclusive loyalty and to refrain from acting against it in unrelated matters. As Binnie J. stated in Neil, these cases are the exception, rather than the norm. Factors such as the nature of the relationship between the law firm and the client, the terms of the retainer, as well as the types of matters involved, may be relevant to consider when determining whether there was a reasonable expectation that the law firm would not act against the client in unrelated matters. Ultimately, courts must conduct a case-by-case assessment, and set aside the bright line rule when it appears that a client could not reasonably expect its application. [Italics and underline in original, bold is mine.]
[31] In other words, the scope of the bright line rule may be narrowed if the circumstances require.
Where the bright line rule does not apply, the substantial risk test applies
[32] When a situation falls outside the scope of the bright line rule for any of the reasons listed above, for example, where the client is not a current client, or where the immediate legal interests are not directly adverse, the question becomes whether the concurrent representation of clients creates a substantial risk that the law firm’s representation of the client would be materially and adversely affected. In McKercher, supra at para 38, the Supreme Court outlined the analysis as follows:
[…] The determination of whether there exists a conflict becomes more contextual, and looks to whether the situation is “liable to create conflicting pressures on judgment” as a result of “the presence of factors which may reasonably be perceived as affecting judgment”: Waters, Gillen and Smith [Waters’ Law of Trusts in Canada, 4th ed (Toronto: Carswell, 2012)], at p. 968. In addition, the onus falls upon the client to establish, on a balance of probabilities, the existence of a conflict — there is only a deemed conflict of interest if the bright line rule applies.
Determining the Appropriate Remedy
[33] As the Supreme Court stated in McKercher, supra at para 61, even if a conflict of interest is found, either because confidential information is misused or the situation falls within the scope of the bright line rule, disqualification of the law firm is not the only remedy and is not automatic, but may be required in some circumstances:
[61] As discussed, the courts in the exercise of their supervisory jurisdiction over the administration of justice in the courts have inherent jurisdiction to remove law firms from pending litigation. Disqualification may be required: (1) to avoid the risk of improper use of confidential information; (2) to avoid the risk of impaired representation; and/or (3) to maintain the repute of the administration of justice.
[34] The Supreme Court noted that the termination of the client’s retainers with the law firm may not remove all the concerns that the law firm’s conduct has harmed the repute of the administration of justice (McKercher, supra at para 64-65). If disqualification is sought only on the grounds of maintaining the repute of the administration of justice, all the relevant circumstances must be considered, including those that point away from disqualifaction (McKercher, supra at para 65):
64 In assessing whether disqualification is required on this ground alone, all relevant circumstances should be considered. On the one hand, acting for a client in breach of the bright line rule is always a serious matter that on its face supports disqualification. The termination of the client retainers -- whether through lawyer withdrawal or through a client firing his lawyer after learning of a breach -- does not necessarily suffice to remove all concerns that the lawyer's conduct has harmed the repute of the administration of justice.
65 On the other hand, it must be acknowledged that in circumstances where the lawyer-client relationship has been terminated and there is no risk of misuse of confidential information, there is generally no longer a concern of ongoing prejudice to the complaining party. In light of this reality, courts faced with a motion for disqualification on this third ground should consider certain factors that may point the other way. Such factors may include: (i) behaviour disentitling the complaining party from seeking the removal of counsel, such as delay in bringing the motion for disqualification; (ii) significant prejudice to the new client’s interest in retaining its counsel of choice, and that party’s ability to retain new counsel; and (iii) the fact that the law firm accepted the conflicting retainer in good faith, reasonably believing that the concurrent representation fell beyond the scope of the bright line rule and applicable law society restrictions.
The Overall Positions of the Parties
The applicants
[35] The applicants’ position is that B&P acted for the Bell family of companies and owed a duty of loyalty to the family as a whole. The applicants argue that the tests established in McKercher have been satisfied and, as a result, B&P must be disqualified from acting as counsel of record for MediaTube.
[36] The applicants assert that BCE and the Bell family of companies were current clients of B&P on Project [Redacted] and a former client on the other retainers.
[37] The applicants rely on the fact that BCE had a single legal department which provide services to all the Bell entities, whose lawyers acted as instructing counsel to B&P, and on the relationships between the various entities, as evidenced by invoices sent to BCE for work done on retainers with Bell ExpressVu. In addition, the applicants submit that it presented itself to B&P as a related corporation.
[38] The applicants also argue that the e-mails from B&P support the position that the law firm regarded the Bell family of companies as its client.
[39] For example, the applicant acknowledges that the retainer for Project [Redacted] was for Bell ExpressVu but notes that the invoices were sent to BCE. [Redacted] as further support for the position that BCE speaks on behalf of all the entities, as the corporate parent of the Bell family of companies. The applicants also point to an e-mail from Ms Chan that referred to the client as “Bell, BCE and related Bell companies.”
[40] The applicants assert that in the context of the 2003 [Redacted] Patent Retainer, Mr Bereskin provided strategic advice to Bell Canada and gained knowledge of Bell’s risk tolerance in the context of [Redacted] patents.
[41] The applicants also assert that Bell Canada had a general retainer with B&P in 2012, although no work was done on it.
[42] The applicants submit that confidential information was shared in both the Project [Redacted] and the [Redacted] Patent Retainer. With respect to Project [Redacted], the applicants acknowledge that the trade-mark work was done for Bell Media but the opinions and reports were sent to BCE. The applicants also acknowledge that the [Redacted] Patent Retainer dealt with different technology and that no technical information was shared. However, the applicants reiterate that information was shared regarding the applicants’ tolerance for risk. In addition, this confidential information was misused.
[43] Further, even if the bright line rule is not applicable, the applicants submit that concurrent representation would create a substantial risk of impaired representation and would create conflicting pressures on judgment. The applicants submit that the chain of e-mails from B&P with respect to terminating them as clients support the view that B&P acknowledged the conflict.
[44] The applicants further submit that B&P did not accept the MediaTube retainer in good faith. Although B&P regarded Bell as a current client, it put financial motives first and fired Bell in order to pursue a more lucrative retainer.
The respondent
[45] B&P submits that Bell Aliant was never its client and Bell Canada was not its client at the time of the MediaTube retainer. Moreover, the notion that all the related companies are one family and one client is a fiction given that each is a corporation in its own right with separate legal personalities.
[46] B&P responds to the applicants’ arguments noting that although invoices may have been sent to an address shared by BCE, the invoices clearly noted that they were submitted for work done for Bell Media. The e-mail from Ms Chan that referred to BCE, Bell and related companies was in the context of a conflict search which requires a wider scope and is not evidence of who the client was. [Redacted].
[47] B&P submits that it attempted to preserve a business relationship with its clients. This included offering to continue to do the trade-mark work for Bell Media; accordingly, B&P sought the consent of Mr Sabbagh, the instructing counsel with Bell’s legal department.
[48] B&P notes that only two retainers are at issue and neither was with Bell Canada. The [Redacted] Patent Retainer was with Bell ExpressVu. The Project [Redacted] retainer was with Bell Media. The applicant has failed to show that any confidential information was imparted or that these retainers are sufficiently related to the retainer with MediaTube.
[49] B&P submits that there is no support for the applicant’s assertions that confidential information regarding the applicants’ tolerance for risk was provided to it in the course of the [Redacted] Patent Retainer. In addition, no confidential information regarding Project [Redacted] was provided.
[50] B&P submits that based on the application of the test in McKercher, there is no basis to disqualify it as counsel for MediaTube.
Did B&P receive confidential information from its solicitor client relationship with Bell that is relevant and that can be used to prejudice the applicants?
The applicants’ position
[51] The applicants submit that the tests set out in McKercher and Martin apply: B&P received confidential information attributable to its solicitor-client relationship with Bell that is relevant to the matter at hand; and, there is a risk that the information will be used to prejudice them.
Presumption that relevant confidential information has been imparted
[52] The applicants submit that if the law firm’s new retainer is “sufficiently related” to the matters on which it worked for Bell, a rebuttable presumption arises that the law firm possesses confidential information that raises a risk of prejudice (McKercher, supra at para 24). The applicants note that, once established, the onus to rebut the presumption is on B&P and requires clear and convincing evidence to demonstrate that “the public represented by the reasonably informed person would be satisfied that no use of confidential information would occur” (Celanese Canada Inc v Murray Demolition Corp, 2006 SCC 36, [2006] 2 SCR 189 at para 42).
[53] The applicants note that to avoid the strong inference that lawyers who work together share confidences, B&P must satisfy the Court that all reasonable measures have been taken to ensure that no disclosure of the relevant confidential information will occur (Martin, supra at 1261-62, paras 48-49).
[54] The applicants submit that B&P provided an opinion in connection with the [Redacted] Patent Retainer knowing their corporate structure and although the opinion was provided to Bell ExpressVu, B&P became aware of the overall tolerance for risk of the family of companies.
Relevant confidential information has actually been imparted
[55] The applicants submit that B&P in fact received confidential information through its solicitor-client relationship with Bell.
[56] First, B&P allegedly gained knowledge of Bell’s approach to strategic decisions, as well as their risk tolerance with new technology in the course of its solicitor-client relationship, particularly through its performance of the [Redacted] Patent Retainer, [Redacted]. The applicants submit that B&P has used such information because in its submissions on behalf of MediaTube on the motion for case management, B&P commented that the defendants had knowledge of the invention and the patent prior to launching their Fibe TV system and that it is “incredible” that they did so without assessing their potential liability.
[57] The applicants submit that Mr Bereskin provided the advice on the [Redacted] Patent Retainer to Mr Derbyshire at Bell Canada and that the time dockets produced for 2003, establish that confidential information was shared in this retainer.
[58] Second, B&P allegedly obtained confidential information from its involvement in Project [Redacted]. The applicants submit that, through B&P, MediaTube now has access to confidential information about [Redacted].
Inadequacy of the confidentiality screen
[59] The applicants dispute B&P’s claim that a confidentiality screen was put in place on March 6, 2013, and submit that the cross-examinations revealed that the confidentiality screen was only put in place sometime in August 2013, well after the conflict of interest arose. The applicants argue that the absence of an effective confidentiality screen leads to an inference of misuse of confidential information.
The Respondent’s Position
[60] B&P submits that: the applicants cannot rely on a presumption that relevant confidential information was provided during a previous retainer; and, the applicants did not in fact provide B&P with relevant confidential information.
No presumption that relevant confidential information has been imparted
[61] B&P submits that the applicants did not provide clear, cogent, and compelling evidence that its previous retainers and the MediaTube retainers were sufficiently related and the threshold for establishing the presumption is high given the drastic consequences of a disqualification. In particular, B&P submits that the applicants are required to show that the possibility of relevant confidential information being acquired is realistic, not just theoretical (Remus v Remus, (2002), 61 OR (3d) 680 at paras 13-15, [2002] OJ No 4242 (SCJ) [Remus]).
[62] B&P submits that the Court must carefully evaluate whether or not the previous Bell retainers were sufficiently related to the MediaTube retainer. It further submits that the test to be applied is whether any alleged confidential information obtained by B&P under previous retainers could be used to the detriment of Bell Canada in the execution of the MediaTube retainer (Chapters Inc v Davies, Ward & Beck LLP, [2000] OJ No 4973 at para 36, 10 BLR (3d) 91 (SCJ) aff’d [2001] OJ No 206, 52 OR (3d) 566 (CA) [Chapters]; Trizec Properties Ltd v Husky Oil Ltd (1996), 4 CPC (4th) 83, 46 Alta LR (3d) 252 (QB) aff’d (1997), 148 DLR (4th) 300, 56 Alta LR (3d) 380 (CA) [Trizec]).
[63] B&P submits that the retainers it had with the separate Bell corporate entities were unrelated to the MediaTube retainer:
• The 2005 retainer with Bell Canada concerning [Redacted] trade name and [Redacted] trade-mark, as well as the 2012 retainer regarding the [Redacted] trade name were specific and limited. They had nothing to do with patents.
• The [Redacted] Patent Retainer was unrelated to the MediaTube retainer. Moreover, Bell ExpressVu never disclosed to B&P any techn