Executive Summary: Key Legal and Evidentiary Issues

• Court applied the MacDonald Estate v. Martin test to determine whether prior firm involvement created a disqualifying conflict for plaintiffs’ counsel.
• Evidence focused on whether Ms. Biglou actually received or had access to any confidential information about Breakaway’s defence while a non-equity partner at its former defence firm.
• The presumption that lawyers in the same firm share confidences was rebutted by detailed, uncontradicted affidavit evidence about remote work, lack of discussions, and non-involvement with the file.
• Consideration was given to the Law Society of Ontario’s conflict of interest rules and their distinction between duties of the individual transferring lawyer and the new firm.
• The court assessed the perspective of a reasonably informed person when evaluating the risk of misuse of confidential information and the appearance of impropriety.
• Breakaway’s motion to disqualify the plaintiffs’ law firm was dismissed, with costs left to written submissions if counsel could not agree and no specific amount fixed in this decision.

Factual background and origins of the dispute

Walter and Susan Mozek owned a cottage that was damaged by fire on May 21, 2020. Their property insurer, Chubb Insurance Company, responded to the loss and then pursued a subrogated claim in the names of its insureds, Walter and Susan Mozek. Chubb retained the law firm McCague Borlack to advance this claim on or about June 18, 2020. A Statement of Claim was issued on March 10, 2022, naming Campa Construction Sudbury Ltd. and John Doe operating as Breakaway Painting, among others, as defendants in relation to the fire damage. The underlying action is thus a fire-loss/property damage claim with an insurance subrogation overlay, in which the plaintiffs seek to recover their losses allegedly caused by the defendants’ acts or omissions.

Breakaway Painting’s insurer is Gore Mutual Insurance Company. After the action was commenced, Gore Mutual retained the law firm Mason, Caplan Roti (MCR), in particular lawyers Talia Feder and Mark Mason, to defend Breakaway. This retainer began on or about March 31, 2022. At that time, another lawyer, Ms. Biglou, was at MCR. She had joined the firm in 2014 and had become a non-equity partner in February 2021. She did not have carriage of Breakaway’s defence file but was part of the same firm.

In April 2023, Ms. Biglou left MCR and joined McCague Borlack, the firm already acting for the plaintiffs in the subrogated action. After she joined McCague Borlack, she was assigned carriage of the Mozeks’ claim against Breakaway. The litigation was proceeding toward examinations for discovery when Breakaway raised the issue that gave rise to this motion—whether McCague Borlack, and implicitly Ms. Biglou, should be disqualified from acting for the plaintiffs because of her earlier association with Breakaway’s defence firm.

Nature of the motion and the alleged conflict

Breakaway brought a motion asking the Ontario Superior Court of Justice to disqualify McCague Borlack from representing the plaintiffs. Its position was that a conflict of interest existed because a lawyer now acting for the plaintiffs had been a partner at the firm that previously defended Breakaway in the same action. The concern was that confidential information related to Breakaway’s defence might have been received by Ms. Biglou while she was at MCR and could now be used, directly or indirectly, to Breakaway’s prejudice.

The court identified the controlling authority as the Supreme Court of Canada’s decision in MacDonald Estate v. Martin. That case sets out a two-part test for whether a conflict of interest requires disqualification where a lawyer moves from one firm to another. First, it must be shown that the moving lawyer received confidential information attributable to a solicitor-client relationship that is relevant to the matter. Second, there must be a risk that the information will be used to the former client’s prejudice. MacDonald Estate further holds that once a client shows a previous relationship sufficiently related to the new retainer, the court will infer that confidential information was imparted, unless the lawyer can satisfy the court that no such relevant information was received.

Applying this framework, the court broke the first issue into three questions: whether there was a prior solicitor-client relationship; whether that relationship was sufficiently related to the current retainer; and if so, whether the lawyer had satisfied the court that no relevant confidential information was imparted.

Prior relationship and its connection to the current retainer

The court first addressed whether there was a previous solicitor-client relationship. It found that such a relationship existed. Although Ms. Biglou did not personally have carriage of Breakaway’s defence, she had been a partner at MCR at the time MCR was defending Breakaway. As a partner, she was bound by the firm’s solicitor-client relationship with Breakaway. That was enough to establish that she and Breakaway had a prior solicitor-client relationship for the purposes of the conflict analysis.

The next question was whether that prior relationship was sufficiently related to the current retainer. Here, the relationship was as close as possible: it concerned the same cause of action. While at MCR, Ms. Biglou was at the firm that defended Breakaway in this very action; at McCague Borlack, she had carriage of the same action, now prosecuting it on behalf of the plaintiffs. The court had no difficulty concluding that the prior relationship was sufficiently related to the present retainer to trigger the inferential presumption that confidential information was received.

Evidence about confidential information and the rebuttal of the presumption

With the presumption engaged, the key question became whether Ms. Biglou could satisfy the court that she had not received confidential information relevant to the action. The court recognized that the lawyer’s burden is a heavy one. Even if a client never directly communicates with a particular lawyer, there is a strong inference that lawyers working together in a firm share confidences, especially on active files.

The relevant time period was from March 31, 2022, when MCR was retained to defend Breakaway, to April 2023, when Ms. Biglou left MCR for McCague Borlack. During this period, confidential information concerning Breakaway’s defence could, in theory, have been shared within the firm.

The only piece of file material specifically linking Ms. Biglou to Breakaway’s defence was a document in a folder titled “Pleadings” labelled “Precedent for Third Party Claim,” which contained a precedent third-party claim from an unrelated matter listing her as the lawyer of record. The court found that this did not prove she had any substantive involvement with Breakaway’s defence in this case.

In her affidavit, Ms. Biglou provided detailed evidence aimed at rebutting the inference of shared confidential information. She stated that during the relevant period she worked from home, that the precedent bearing her name would have been retrieved from a shared drive rather than drafted or tailored by her for this file, that she had no recollection of substantive discussions about specific files—including this one—with the lawyers who had carriage, and that neither those lawyers nor their support staff had discussed the action with her. She also swore that she had never received confidential information regarding Breakaway or the defence of this matter from anyone, including representatives of Breakaway or its insurer.

The court considered how the presumption of shared confidences can be rebutted. It noted that in many cases, the only practical way to rebut it is by affidavit evidence from the lawyer whose knowledge is in question. While a bare conclusory assertion might be insufficient, a detailed, situationally specific explanation can be adequate, particularly because the opposing party can test that evidence by reviewing the file and speaking with those who had carriage. The court emphasized that it is not required to accept such evidence at face value; it must be capable of objective verification and can be contradicted by the moving party.

In this case, the court found that Ms. Biglou’s affidavit was both persuasive and uncontradicted. There was no evidence that she had accessed the file, discussed the matter with the lawyers running it, or received any confidential information directly from Breakaway or its insurer. On these facts, the court concluded that the inference of shared confidences had been successfully rebutted.

Reasonably informed person and risk of misuse of confidential information

The court acknowledged that on a superficial view, it may seem unpalatable that a partner from a firm that previously defended a client could later act against that same client in the same action. However, it stressed that this intuitive discomfort is not the legal test. The question is whether a reasonably informed person would be satisfied that no misuse of confidential information would occur.

The notional reasonably informed person in this case would know that there was no contact between Ms. Biglou and Breakaway or its insurer, that there was no evidence suggesting she had any confidential information about the case, and that she had been working from home with no substantive discussions about the file and no reason to access it. Fully informed of those circumstances, such a person would be satisfied that she possessed no confidential information about the matter. If she had no confidential information, there was no risk that it could be misused to Breakaway’s prejudice.

On that basis, the court concluded that the first part of the MacDonald Estate test was not met—no confidential information, actual or imputed, had been shown to be in Ms. Biglou’s possession. Without confidential information, there could be no risk of its misuse. Accordingly, there was no disqualifying conflict under the governing common law test, and the motion to remove McCague Borlack as counsel for the plaintiffs failed.

Rules of Professional Conduct and public policy considerations

The court then considered the Law Society of Ontario’s Rules of Professional Conduct, which articulate professional obligations that intersect with, but are not identical to, the common law test for disqualification. Under these rules, Breakaway is deemed to have been a client of Ms. Biglou by virtue of her partnership at MCR. The general conflict rule provides that a lawyer must not act for a client where there is a conflict of interest, subject to limited exceptions. Commentary to the rule emphasizes that lawyers should not act against former clients in the same or a related matter, even if the former client’s confidential information is not at risk, in order to protect trust and avoid undermining previous legal work or positions taken on the client’s behalf.

However, the rules governing “transferring lawyers” and their new firms draw an important distinction. For the new firm, automatic disqualification arises only if the transferring lawyer actually possesses confidential information relevant to the matter. In such a situation, the new firm must either cease to act, obtain the former client’s consent, or implement effective measures to prevent any disclosure of the former client’s confidential information. The commentary clarifies that these rules are aimed at situations where the moving lawyer has actual knowledge; imputed knowledge alone does not automatically disqualify the new firm.

The court remarked that while the Rules of Professional Conduct are not binding law in themselves, they are an important expression of public policy and underscore the profession’s concern with avoiding even the appearance of impropriety. Nevertheless, when assessing whether McCague Borlack should be removed from the record, the court’s central inquiry remained whether there was evidence that Ms. Biglou in fact possessed confidential information about Breakaway relevant to this matter. Having found that she did not, the court concluded that the conditions for disqualification under both MacDonald Estate and the law society’s transferring-lawyer framework were not met.

Outcome of the motion and treatment of costs

The court held that Ms. Biglou does not possess confidential information about Breakaway, either in fact or by imputation that survives the evidence presented. As a result, McCague Borlack is not disqualified from continuing to act for the plaintiffs in the fire-loss action. The judge noted that whether Ms. Biglou herself continues to have carriage of the file within the firm is an internal matter for the firm and not for the court to determine.

Breakaway’s motion to disqualify McCague Borlack was therefore dismissed. On the question of costs, the court did not fix any amount in this decision. Instead, it directed that if counsel were unable to agree on costs, they could make short written submissions, not exceeding three pages plus attachments, within thirty days. No specific dollar amount for costs, damages, or any other monetary relief was ordered or quantified in this motion decision. Accordingly, the successful parties on the motion are the plaintiffs, Walter and Susan Mozek, but the total monetary award or costs ordered in their favour cannot be determined from this decision, as no concrete figure was set.