Executive Summary: Key Legal and Evidentiary Issues

• Sniper Pressure Services Ltd sued its insurer, Northbridge General Insurance Company, for $650,000 allegedly still owing under its insurance policy following two roof collapses at its commercial building in Woodlands County.

• A conflict of interest dispute arose because Northbridge retained the same counsel (Ken Haluschak / Bryan & Company LLP) to pursue subrogated claims in Sniper's name while simultaneously defending Northbridge against Sniper's coverage claims.

• The Applications Judge initially dismissed Sniper's application to disqualify Haluschak, finding no solicitor-client relationship and no basis to apply the "bright line rule."

• On appeal (heard de novo), the Court reversed, concluding the substantial risk test was satisfied due to risks of compromised representation, misuse of confidential information, and threats to the integrity of the administration of justice.

• Northbridge's application for further particulars of Sniper's Statement of Claim was dismissed, as the Court found the pleadings were sufficiently detailed.

• Applicable legislation included Section 546 of the Alberta Insurance Act (subrogation of insurer to rights of recovery) and Rule 3.61 of the Alberta Rules of Court (request for particulars).

The underlying dispute

Sniper Pressure Services Ltd owned land and a commercial building in Woodlands County. The building suffered two roof collapses: the first on March 4, 2020, and the second on January 17, 2022. Sniper was insured by Northbridge General Insurance Company for both losses. Following the first collapse, Sniper sued the alleged tortfeasors for $5,000,000 in damages. Northbridge paid approximately $2,000,000 to Sniper and, in turn, commenced proceedings against the alleged tortfeasors for its subrogated claims arising from the loss. With respect to the second roof collapse, Northbridge sued the alleged tortfeasors for $2,670,000 for its subrogated claims arising from the loss. Northbridge also commenced a separate action against CEP Forensic Inc. for breach of contract and negligence for engineering services rendered, in which both Northbridge and Sniper are named Plaintiffs. Sniper commenced a second action against Northbridge, CEP and other alleged tortfeasors for $6,500,000 in damages. In addition, Sniper commenced the present action against Northbridge, alleging that Northbridge had failed to make full payment of all losses or damages arising out of the loss covered by the insurance policy. In its Statement of Claim, Sniper claimed losses and damages to the building ($2,350,000), business interruption ($300,000), loss of business personal property ($200,000), debris removal and manipulation ($100,000), and professional fees ($50,000). Sniper acknowledged Northbridge had made partial payment of $1,986,000 and claimed judgment against Northbridge for amounts still owing under the insurance policy of $650,000.

The conflict of interest application before Applications Judge Smart

The first procedural dispute to reach the Court was Sniper's application to remove Ken Haluschak of Bryan & Company LLP as counsel for Northbridge, on the basis of an alleged conflict of interest. Haluschak acted for Northbridge in the two subrogated claim actions and acted for Northbridge and Sniper in the subrogated action against CEP. He was also defending the action by Sniper against Northbridge for the amounts alleged owing under the insurance for the first roof collapse and the action by Sniper against Northbridge (and CEP and other alleged tortfeasors) for the second roof collapse. Sniper argued that because Haluschak was counsel on the subrogated claim, Sniper was properly characterized as his client, and therefore the "bright line rule" from Canadian National Railway Co v McKercher LLP, 2013 SCC 39, would apply, requiring Haluschak to cease to act. The opposite view, as noted by the Applications Judge, was that when counsel is retained by an insurer on a subrogated claim, it is incorrect to characterize that as creating a solicitor-client relationship between that counsel and the insured. Both parties had sought guidance from Law Society Practice Advisors, but at different times and from different advisors, and their conclusions completely differed. Applications Judge L.A. Smart, in a decision dated February 11, 2025 (2025 ABKB 77), dismissed Sniper's application. He found that the subrogated claim is brought by Northbridge in the name of the insured, making Sniper a "nominal" plaintiff, and concluded he was not convinced that the bright line rule was applicable in the current circumstances. He further noted that there was no retainer nor had there ever been one between Sniper and Haluschak. On the question of confidential information, Sniper had only provided a generic response without actual production or satisfactory description of specific information of concern, and the Applications Judge concluded he had no basis to find the concern was valid or warranted. The Court indicated that each party should bear its own costs, but was prepared to consider written argument on costs in light of a Calderbank offer made by Northbridge.

The appeal before Justice Becker Brookes on the conflict issue

Sniper appealed the Applications Judge's decision, and the matter was heard de novo by Justice Kelsey L. Becker Brookes (2026 ABKB 193, dated March 13, 2026). The standard of review was correctness. The appeal Court conducted a thorough analysis of whether a solicitor-client relationship existed between Haluschak and Sniper, examining the indicia set out in Jeffers v Calico Compression Systems, 2002 ABQB 72, which include a contract or retainer, meetings between the lawyer and the party, correspondence, accounts rendered and paid, instructions given, a reasonable expectation by the party about the lawyer's role, legal advice given, and legal documents created for the party. The Court recognized that many of these indicia were present or would arise, noting that close collaboration between Haluschak and Sniper would be required, including meetings and correspondence with Sniper and preparing legal documents in Sniper's name. However, other indicia, such as an executed retainer agreement or accounts rendered and paid, were absent. Northbridge's core submission was that Sniper was not a client of Haluschak, as there was no retainer, instructions, billing, or independent advice given to Sniper, and no reasonable belief by Sniper that Haluschak represented Sniper. The Court concluded that a reasonable person in Sniper's position with knowledge of all the facts would not reasonably form the belief that Haluschak was Sniper's lawyer. Accordingly, no solicitor-client relationship was established, and the bright line rule did not apply. The Court also declined to extend the duty of utmost good faith governing the performance of insurance contracts to the relationship between Sniper and Haluschak, while recognizing that the relationship was unique and may give rise to some duty or obligation.

Application of the substantial risk test

Having found the bright line rule inapplicable, the Court turned to the substantial risk test from R v Neil, 2002 SCC 70, which asks whether the concurrent representation creates a substantial risk that the lawyer's representation of the client would be materially and adversely affected by the lawyer's duties to another current client, a former client, or a third person. On the question of confidentiality, the Court noted that in the subrogated actions, Haluschak would need to work with Sniper representatives for document productions, review Sniper's records for materiality and relevancy, identify privileged records, prepare Sniper's corporate representative for questioning, lead Sniper's evidence at trial, and rely on Sniper's evidence to advance the subrogated claims. The Court found that Sniper was placed in the untenable position of either treating Northbridge's counsel as their lawyer and disclosing confidential information related to the insurance contract and the insured event, or withholding information and failing in its responsibility to cooperate with the insurer's lawyer. On impaired representation, the Court found there was a real and substantial risk of compromised representation. In the coverage action and the recovery action related to the second roof collapse, Haluschak acts directly against Sniper, defending Northbridge by attacking Sniper. He would be cross-examining Sniper's representative, challenging their credibility, and eliciting admissions harmful to Sniper, while being privy to the litigation positions of each party and the strengths and weaknesses of each party's case. The Court noted that Northbridge faces no risk from this arrangement — in fact, it benefits from it — and that the party at a disadvantage is Sniper. On the integrity of the administration of justice, the Court concluded that Haluschak's dual role unequivocally creates a readily apparent risk of unfairness or oppression toward Sniper, and that a fair-minded and reasonably informed observer would recognize that counsel cannot fulfill obligations to both parties simultaneously.

The particulars application

In a separate decision also dated March 13, 2026 (2026 ABKB 194), Justice Becker Brookes addressed Northbridge's application to compel Sniper to provide further particulars of its Statement of Claim, governed by Rule 3.61 of the Alberta Rules of Court. Northbridge contended that the Statement of Claim, particularly paragraphs 10, 12, 14, and 15, was vague and lacked sufficient detail regarding the alleged breach of contract, and that particulars were needed to clarify the specific breaches and amounts claimed, define the issues in dispute, streamline discovery, avoid unnecessary trial surprises, and reduce litigation costs. Sniper argued that the request sought evidence, which is inappropriate at the pleadings stage, and that with pleadings now closed, the bar for ordering particulars was higher. Sniper also noted that Northbridge failed to file the usual supporting affidavit. The Court noted that since no substantive affidavit had been filed, Northbridge had to show the Statement of Claim was defective on its face and that the allegations were so general and so vague that the need for particulars was evident, applying the threshold from Oceatain Investments Ltd v Canadian Commercial Bank (1983), 51 AR 364 (ABQB). The Court found that the Statement of Claim adequately set out the nature of Sniper's claim and was sufficiently detailed to allow Northbridge to frame a proper defence, acknowledging that while Sniper had used round numbers and estimates, the basis for the claim was clear. The Court further observed that Northbridge does not need to know which clauses of the insurance policy Sniper relies on, or the exceptions or exclusions Northbridge relied upon to deny coverage, to defend the claim, noting that Sniper may not know on what basis Northbridge denied coverage or how Northbridge calculated its partial payment, but Northbridge would know that.

Rulings and outcome

On the conflict of interest appeal, Justice Becker Brookes allowed Sniper's appeal and ordered that Ken Haluschak along with Bryan & Company LLP be removed as counsel of record for Northbridge in all three subrogated actions. The Court found that disqualification was necessary to prevent the risk of misuse of confidential information, avoid impaired representation due to divided loyalties, and maintain public confidence in the administration of justice. The Court also considered that Haluschak had accepted the conflicting retainer in good faith, relying on the advice of a practice advisor, and that Sniper did not delay in bringing its application. On the particulars application, Northbridge's application was dismissed. Both decisions were rendered on March 13, 2026. No exact monetary award was determined at this stage, as the decisions addressed procedural and interlocutory matters, and the underlying substantive claim of $650,000 remains to be adjudicated. Sniper was the successful party on both the appeal and the particulars application.