Federal Court of Appeal Decisions

Date: 20060403

Docket: A-419-05

Citation: 2006 FCA 133

CORAM:        SEXTON J.A.

                        SHARLOW J.A.                    

                        MALONE J.A.

BETWEEN:

CROSS - CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED,

CROSS - CANADAAUTO BODY SUPPLY (WEST) LIMITED

and AT PAC WEST AUTO PARTS ENTERPRISELIMITED

Appellants

and

HYUNDAI AUTO CANADA,

A DIVISION OF HYUNDAI MOTOR AMERICA

Respondents

Heard at Toronto, Ontario, on April 3, 2006.

Judgment delivered from the Bench at Toronto, Ontario, on April 3, 2006.

REASONS FOR JUDGMENT OF THE COURT BY:                                                SEXTON J.A.

Date: 20060403

Docket: A-419-05

Citation: 2006 FCA 133

CORAM:        SEXTON J.A.

                        SHARLOW J.A.                    

                        MALONE J.A.

BETWEEN:

CROSS - CANADAAUTO BODY SUPPLY (WINDSOR) LIMITED,

CROSS - CANADAAUTO BODY SUPPLY (WEST) LIMITED

and AT PAC WEST AUTO PARTS ENTERPRISELIMITED

Appellants

and

HYUNDAI AUTO CANADA,

A DIVISION OF HYUNDAI MOTOR AMERICA

Respondents

REASONS FOR JUDGMENT OF THE COURT

(Delivered from the Bench at Toronto, Ontario, on April 3, 2006)

SEXTON J.A.

[1]                This Appeal concerns an application by the Appellants for expungment of certain trade marks held by the Respondents. The Appellants' solicitors in preparing for that application sent out four employees to investigate some contentious matters relating to the validity of the Respondents' trade marks. These employees included a student who is now a solicitor working in the offices of the Appellants' solicitors, as well as a senior law clerk, a junior law clerk and a summer student.

[2]                The Respondents brought a motion to remove the Appellants' solicitors as Solicitors of Record for the Appellants, or alternatively for an order requiring the Appellants to retain counsel to prepare written submissions for and present oral argument at the Appeal. The Respondents argued that the only evidence relating to the central and contentious issues to be brought before the Court on the expungment application came from these employees of the Appellants' solicitors and therefore they were entitled to the relief sought. The Respondent's motion cited, inter alia, Rule 82 which reads as follows:

[3]                The Motions Judge, relying principally on the decision of Heck v. Royal Bank (1993) 12 O.R. (3d) 111, found that it was an unnecessarily drastic remedy to remove the law firm from the record but ordered that the Appellants appoint new solicitors to prepare written submissions for and present oral argument at the hearing of the application to expunge the trade marks.

[4]                The Appellants argue that Rule 82 is a complete code so that the only restriction upon use of Affidavits by members or employees of law firms is that the affiant is precluded from presenting argument to the Court "based on the Affidavit". We disagree. Rule 82 is specific but it cannot be taken to have eliminated from consideration by the Court all of the case law dealing with the use of affidavit evidence by members or employees of law firms. There can be no hard and fast rule, but it does seem to us that it is not good practice for a law firm to cause its employees to act as investigators for the purpose of having them later give opinion evidence on the most crucial issues in the case. This is especially true where, as in this case, there is no evidence from any non-employee of the firm on these crucial issues. Opinion evidence is meant to be objective. The goal of objectivity is not furthered by having employees of the law firms give crucial opinion evidence. Such employees may be motivated by loyalty to their employer or fear or reprisal or lack of advancement in giving such opinions.

[5]                Counsel for the Appellants argues that this potential lack of objectivity should go only to the weight which should be given to such evidence. In our view, that is not always a complete answer to the problem. In most cases such investigation and opinions can be conducted by objective non-employees. The lawyer who relies on members or employees of the firm to provide such evidence runs a risk that lesser weight may be given to such evidence. A client should not be subjected to this risk unless it is clearly necessary. This is not to say that it never can be done. There will always be exceptions and all of the circumstances in a case must be taken into account. In particular we agree with the conclusions of the Ontario Divisional Court in Essa v. Gueris; Memberg v. Hill (1993) 52 C.P.R. (3d) 372. The Divisional Court articulated the following factors as being worthy of consideration in a situation where a complaint is about made about affidavits being filed by members or employees of the law firm conducting the litigation:

a)                   the state of proceedings;

b)                   the likelihood that the witness will be called;

c)                   the good faith (or otherwise) of the party making the application;

d)                   the significance of the evidence to be led;

e)                   the impact of removing counsel on the party's right to be represented by counsel of choice;

f)                     whether trial is by judge or jury;

g)                   the likelihood of a real conflict arising or that the evidence will be "tainted";

h)                   who will call the witness if, for example there is a probability counsel will be in a position to cross-examine a favourable witness;

i)                     the connection or relationship between counsel, the prospective witness and the parties involved in the litigation.

[6]                In the present case the only evidence from the Appellants on the important contentious issues comes from the affidavits in question. We are of the view that factors a, b, d, g, and i all militate against having the Appellants' solicitors prepare and argue the case.

[7]                We should say, in addition, that in our view it is improper for a solicitor to compromise his independence by acting in a proceeding in which a member of his firm has given affidavit evidence on a point of substance. This general principal is well grounded in the various codes of conduct governing the lawyers of this country, as well as logic. See Canada(Director of Investigation and Research) v. IrvingEquipment, [1988] 1 F.C. 27 at para. 9.

[8]                We are thus not prepared to interfere with the order granted by the Federal Court. While it is true that the Heck case which he relied on was reversed on appeal by the Divisional Court, we are of the view that the reasons of the Divisional Court nevertheless support the reasoning of the Federal Court in the present case.

[9]                We would therefore dismiss this appeal with costs.

"J. Edgar Sexton"

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                               A-419-05

STYLE OF CAUSE:               CROSS CANADA AUTO BODY SUPPLY (WINDSOR)                                                                LTD ET AL.

                                                and

                                                HYUNDAI AUTO CANADA

PLACE OF HEARING:         Toronto, Ontario

DATE OF HEARING:           April 3, 2006

REASONS FOR

JUDGMENT:                        Sexton, J.A.

DATED:                                  April 3, 2006

APPEARANCES:

Mr. Kenneth McKay                                                                FOR THE APPELLANTS

Mr. H. Scott Fairley                                                                  FOR THE RESPONDENTS

Mr. Jeffrey Brown

SOLICITORS OF RECORD:

SIM, LOWMAN, ASHTON & McKAY                                 FOR THE APPELLANTS

Barristers & Solicitors

Toronto, Ontario

THEALL GROUP LLP.                                                            FOR THE RESPONDENTS

Barristers & Solicitors

Toronto, Ontario