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Windsor law firm removed from record in $6.3M wrongful dismissal

|Written By Kendyl Sebesta

A Windsor, Ont. law firm has been removed as solicitors of record in a $6.3-million wrongful dismissal lawsuit launched by former Hôtel-Dieu Grace Hospital spokeswoman Kim Spirou after the Superior Court of Justice found the firm repeatedly ignored several conflicts of interest between one of its lawyers and the hospital’s former CEO, Warren Chant.

Shulgan Martini Marusic LLP was removed despite its argument that Windsor lawyer Gerri Wong was not a member of its firm and never created a conflict of interest, despite being in possession of confidential information resulting from her past work with the hospital and connection to the firm.

Wong was employed by the Hôtel-Dieu Grace Hospital in June 2010 to evaluate and resolve workplace conflicts between employees, including allegations of harassment and workplace violence, particularly in the hospital’s cardiology program. While there, Wong worked closely with several defendants listed in Spirou’s lawsuit, including Chant.

Spirou had issued a statement of claim against the hospital and several of its employees in December 2010, including Chant, arguing her suspension and dismissal was unlawful and cited several disagreements between herself and Chant that eventually led to her dismissal. Spirou identified Myron Shulgan of the Shulgan law firm as her counsel in the claim.

Despite several attempts by Wong to identify the pairing as a conflict of interest to the law firm, Shulgan continued to represent Spirou, arguing no conflict of interest existed because Wong was not an employee of the firm.

But in a Superior Court ruling last month, Justice Bruce Thomas approved the motion to remove the firm and determined he would consider awarding costs against the firm at an unspecified date for failing to act on the conflict.

Finding “there can be no doubt” that Wong was a lawyer at Shulgan and acted for the hospital at the time Spirou retained Shulgan, Thomas wrote that while Wong “acted at all times with integrity and professionalism,” there would be a penalty against the Shulgan law firm for “prolonging the inevitable.”

“. . . Counsel for Ms. Spirou should have recognized their conflict immediately upon it being raised,” wrote Thomas in Spirou. “I can understand the initial reluctance to lose a file like this, and a client like Ms. Spirou, but the position taken was untenable. It was doomed to fail and it did. The penalty for prolonging the inevitable and the related delay in Ms. Spirou’s litigation must be in costs.”

In December 2010, Shulgan had sent a letter to Cassels Brock & Blackwell LLP’s John McGowan, who represented the hospital and several other related defendants in the case, alleging that Wong was assured by the hospital that no conflict issues would be raised.

Despite this, Thomas writes in Spirou, according to Wong, this was not the case, and points out that while the firm may have been “reluctant” to lose the file, steps should have been taken to prevent the conflict from happening.

“Clients cannot consent to conflicts of which they are ignorant. Clients must not be kept in the dark. They must be informed. That duty clearly rests with the lawyer,” writes Thomas, referring to the 2007 Supreme Court of Canada decision Strother v. 3464920 Canada Inc. “In this case as soon as Ms. Wong advised [the hospital] of her conflict that defendant’s counsel raised it and asked Shulgan Martini Marusic to withdraw. Their refusal eventually necessitated this motion. In my view, there has been no waiver or consent to the conflict by HDGH.”

Daniel Pinnington, director of practicePRO and a member of the Canadian Bar Association’s task force on conflicts of interest, says while it is difficult to pinpoint the exact number of conflicts of interest cases practicePRO sees where money is a factor, lawyers would be wise to be aware of their duty in preventing them from cropping up in general.

“In round numbers, conflicts make up roughly six per cent of the claims that LawPRO would see with eight per cent of them involving costs,” says Pinnington. “I think it would be fair to say that money issues are one of the drivers in lawyers not wanting to see a potential conflict of interest. With some of the bigger conflicts, strategically other firms may not want some of the bigger lawyers on the other side, so that may also play a role in when they raise conflict issues.”

Pinnington adds while law firms typically put up “a screen” to prevent other lawyers from inadvertently creating conflicts of interest in cases where money is a factor, sometimes the line between what is and isn’t a conflict becomes difficult to draw, leading to additional problems.

“Typically a screen is put up to protect firms from conflicts of interest,” he adds. “Major law firms often have several thousand screens up to protect themselves.”

Still, Spirou isn’t the only case where a judge has allowed a similar motion after a conflict of interest has cropped up.

In R. v. Corporation of the City of Cornwall, a motion to remove lawyer John Saunders and Hicks Morley Hamilton Stewart Storie LLP as counsel of record for the City of Cornwall because of a conflict of interest that was also brought last year.

In 2008, the City of Cornwall pleaded guilty to reprimanding a city employee after the employee reported an alleged case of elder abuse to provincial authorities. It was fined $15,000 after pleading guilty to a charge under the Homes for the Aged and Rest Homes Act.

According to an agreed statement of facts in the case, Diane Shay, a city health and safety officer, received a copy of a discipline letter that had been sent by Glen Stor Dun Lodge manager Donna Derouchie to an employee who had allegedly been involved in a case of elder abuse at the lodge.

The employee received a five-day suspension for the May 2008 incident under the lodge’s no-abuse policy, but Shay reported the incident to the Ministry of Health. The ministry ultimately found evidence of abuse and determined Derouchie did not report the incident to authorities in time.

Shay was reprimanded for reporting the incident while she was on medical leave and, six months later, was told by the city that her position was being eliminated and her employment was being terminated, according to the agreed statement of facts.

The Ministry of Health and Long-Term Care later brought a motion against the City of Cornwall to prohibit Shay, a Crown witness in the case, from being cross-examined by Saunders and Hicks Morley Hamilton Stewart Storie LLP, and to remove the pair as counsel of record from the City of Cornwall.

Shay had previously relied on the pair during the course of her duties with the city and, in the course of their interactions, had shared confidential information about the case that Saunders was expected to cross-examine her on.

That motion is currently before the court.

Still, Pinnington says, lawyers would be advised to conduct more in-depth analyses to see whether such conflicts exist.

“While it may not be easy to draw the line on conflicts, lawyers have to do more to protect themselves in general to see if there are conflicts and make the appropriate decisions if they do come up.”

Wong and the Hôtel-Dieu Grace Hospital could not be reached for comment.

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