(S.C.J.); Edwards-MacLeod Properties Ltd. v. 1037661 Ontario Ltd., [2001]
O.J. No. 145 (S.C.J.); and Canadian Arctic Trading House Ltd. v.
Bronstein, [2007] O.J. No. 3278 (S.C.J.).
[30]
The following comments from Mottershead case, at paragraphs 8-10,
(expressly cited with approval by a number of the Ontario authorities noted
above)[10], exemplify the underlying concerns and conflict of interest
rationale for restricting and preventing such joint representation:
In my view, it is clear that Mr Davies and his law firm are in
a conflict of interest. As corporate solicitor and counsel for
the Company, Mr Davies’ duty is to the Company; as
counsel for the three personal defendants, who are also the
majority shareholders, his duty is to those individuals. The
best interests of the Company are not necessarily those of
the majority shareholders and directors. The Company is a
separate legal entity and it is no answer for Mr Davies to say
that his instructions are from the individual majority
shareholders as personal defendants are one and the same
as those instructions which they provide as majority
directors of the Company. The duty of the solicitor for the
Company is to advise all of the directors so that they may
make an informed decision as a board with respect to the
interests of the Company.
In shareholder litigation, there exists a potential conflict of
interest between the personal interests of the individual
parties both plaintiffs and defendants as shareholders and
their fiduciary duties as directors of the Company. A
solicitor acting both for the majority shareholders and for the
Company on the sole basis of the instructions of that same
majority personifies that conflict.
Moreover, a solicitor owes a duty of confidentiality to his or
her client and information received from the majority
shareholders in their capacity as personal defendants would
be privileged. Sure a conflict arises when that solicitor
receives privileged information in his capacity as solicitor for
the majority shareholder defendants and declines to advise
the board of directors which includes the minority
shareholders of that information notwithstanding his role as
corporate solicitor and counsel for the defendant Company.
[Emphasis added.]
[31]
In the same case, the court expressly noted, in paragraph 14, the
following examples of “an actual conflict of interest, and not simply the
appearance of a conflict”, arising from such joint representation: