Law Firm Restrained from Acting Against Their Client in Another Suit

In a decision released last month, Mr. Justice Hinkson restrained the law firm of Owen Bird in Vancouver from acting for the named executors of the will of Jack Lawrence Cewe.

In Cewe Estate v. Mide-Wilson, 2009 BCSC 975, the plaintiffs are seeking to prove a will and alter-ego trust, under which they are substantial beneficiaries as well as executors and trustees. They are opposed by Mr. Jack Cewe’s granddaughter, Kirsten Mide-Wilson, and by her father (Mr. Cewe’s son-in-law), Carsten Mide, who allege that the will and alter-ego trust are invalid, having been procured by undue influence. Ms. Mide-Wilson will receive a substantial portion of her grandfather’s $100 million estate under an earlier will if the later wills and the trust are found to be invalid. The main issues have not gone to trial yet.

Ms. Mide-Wilson and her father, Carsten Mide asked the court to remove Owen Bird, for the following reasons:

1. The law firm is acting for Mr. Mide and a related company in another matter in Alberta;
2. Mr. Mide and his late wife had consulted with a lawyer at Owen Bird years ago on estate planning matters that included some discussion of Mr. Cewe’s estate;
3. One of the lawyers at Owen Bird had drafted Mr. Cewe’s previous will, and might be called as a witness.

The plaintiffs argued that Owen Bird were not in a conflict. They took the following positions:

1. There is no real issue in dispute between the plaintiffs and Mr. Mide. Although they were required to name him as a defendant because he is a beneficiary of the disputed will, they did not have an interest adverse to his. He is really opposing the claim in support of his daughter.
2. The lawsuit in Alberta is not related to the estate dispute. Furthermore, the law firm set up internal ethical walls, pursuant to which the lawyers handing the Alberta dispute were not allowed to discuss their file with the lawyers acting for the plaintiffs.
3. The consultation Mr. Mide and his wife had with Owen Bird regarding estate planning took place before the disputed will and trust documents were signed and did not give rise to a conflict.
4. With respect to the lawyer who drew up the earlier will, the plaintiffs agreed that they would call him as their witness, so that other lawyers in his firm would not cross examine him.

Mr. Justice Hinkson rejected the plaintiffs’ arguments. After considering the leading Canadian cases as well as the Law Society of British Columbia Profession Conduct Handbook and the Canadian Bar Association Code of Professional Conduct found that Owen Bird’s representation of the plaintiffs breached their duty of loyalty to Mr. Mide. He wrote at paragraphs 89 and 90:

[89] I am unable to accept that Owen Bird can or have fulfilled their duty of loyalty to their client Mr. Mide. He has been and remains a client of the firm in significant litigation matters, and he and his company have paid significant fees to the firm. Even if the requirements placed upon members of the Law Society of British Columbia are not binding upon me, the provisions of the Handbook, and of Chapter IX, Commentary 5 of the Code of Professional Conduct of the Canadian Bar Association, are some indication of what a reasonable person is entitled to expect from their lawyer.
[90] In my view a reasonable member of the public, informed of Mr. Mide’s relationship with Owen Bird, would not accept that Owen Bird’s duty of loyalty to him could permit them to act against him in even unrelated litigation.

The ethical walls were insufficient. Mr. Justice Hinkson wrote at paragraph 94,

There is no evidence that Owen Bird appointed independent counsel to review the situation so as to set up appropriate screening measures. Mr. Mide also was neither informed by Owen Bird of their decision to address the “conflict issues” nor afforded any opportunity to address them before the firm made its decision to accept the retainer in this case.

Mr. Justice Hinkson did not decide whether the potential for one of Owen Bird’s lawyers to be called as a witness would also have been grounds to disqualify the firm from acting for the plaintiffs.