Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether Guy Wassom and Marie Claire Djiadeu were properly authorized to retain and instruct counsel for NufiCanada.

• Admissibility of affidavits and evidence, including hearsay, speculation, argument, and privileged documents, was contested and some were struck from the record.

• Existence of conflicts of interest for those instructing counsel, specifically Wassom and Djiadeu, was found to risk impaired representation of NufiCanada.

• The court determined that solicitor-client privilege over the retainer agreement was waived due to its broad distribution to the membership.

• Compliance with the Law Society of Ontario’s Rules of Professional Conduct regarding representation of organizations was examined.

• Costs of the motion, including prior steps, were reserved for the judge who will hear the main application.

Background and facts

This case involves NufiCanada Community Corporation, a not-for-profit corporation, and a dispute brought by Alain Fodjo, a member of the corporation. Fodjo commenced an application under section 310(1) of the Corporations Act, R.S.O. 1990, c. C38, seeking the appointment of an inspector to investigate the financial affairs of NufiCanada. He suspected that director Guy Wassom and treasurer Marie Claire Djiadeu may have misappropriated corporate funds, citing discrepancies between Djiadeu’s monthly reports, the corporation’s bank records, and other financial records, as well as irregular transactions involving cheques payable to Wassom.

The application was issued in 2018 but had not been heard as of the date of this decision due to extensive delays. Early in the proceedings, the court ordered that NufiCanada’s bank accounts be frozen and that no financial transactions could be undertaken without Fodjo’s written consent. NufiCanada did not retain a lawyer by the court-ordered deadline, but Wassom and Djiadeu later retained Alina Sklar as counsel for NufiCanada. Fodjo challenged their authority to do so, arguing that the membership had not authorized them and that they had conflicts of interest due to the allegations against them.

Legal and evidentiary issues

The motion before the court was Fodjo’s request to remove Sklar as solicitor of record for NufiCanada. The court addressed the admissibility of affidavits containing hearsay, speculation, argument, and privileged documents. The court found that the retainer agreement between Sklar and NufiCanada was broadly distributed to the membership, resulting in a waiver of solicitor-client privilege for that document. The court also examined whether Wassom and Djiadeu were properly authorized to instruct counsel and whether their involvement presented a conflict of interest under the Law Society of Ontario’s Rules of Professional Conduct.

Outcome and reasoning

Justice Petersen concluded that Wassom and Djiadeu, who signed the retainer agreement and were instructing Sklar, had conflicts of interest because the application sought an investigation into their alleged financial misconduct. The court found that their involvement as instructing clients created a substantial risk of impaired representation for NufiCanada and compromised the integrity of the administration of justice. The judge rejected the argument that the board or membership had properly authorized these individuals to instruct counsel and found that the arrangement conflicted with the duty of loyalty required by the Rules of Professional Conduct.

The court ordered that Sklar be removed as counsel of record for NufiCanada. The court stated that NufiCanada must retain new counsel and authorize individuals with no conflict of interest to instruct that lawyer. The court declined to appoint Fodjo’s wife as instructing client due to similar conflict concerns. The issue of costs, including prior steps in the proceeding, was reserved for the judge who will hear the application, and no specific amount was ordered at this stage. The successful party on this motion was Alain Fodjo, but the total amount for costs or damages in his favor has not yet been determined.