Although a recent Ontario Court of Appeal decision reaffirms the existence of absolute privilege, it also holds that the privilege does not necessarily prevent an aggrieved party from suing their lawyer for conduct while representing another client, says commercial litigator Brian Radnoff in an interview about the recent decision of the Ontario Court of Appeal in Amato v. Welsh.
The Court of Appeal considered whether it is "plain and obvious" that absolute privilege can prevent a claim against a lawyer for alleged breaches of fiduciary duty and the duty of loyalty based on statements made or omitted while the lawyer was representing a different client.
This important decision, says Radnoff, a partner with Lerners LLP, involves an unusual factual situation which gives rise to the underlying legal question.
"Alleged Ponzi scheme operators faced an OSC investigation. While this was going on, the operators urged the plaintiffs, investors in the scheme, to retain their lawyers to get an opinion on whether the Ponzi scheme complied with securities laws. By taking on the plaintiffs' retainer, the lawyers put themselves in a very difficult situation, owing fiduciary duties and duties of loyalty to both the operators and the plaintiffs, who were investors and therefore victims of the Ponzi scheme," he says.
The issue, he explains, was whether, in the subsequent action by the plaintiffs against the lawyers, the plaintiffs could include allegations in their claim that the lawyers had failed to provide accurate information or stop the provision of inaccurate information to the OSC when the operators were being examined.
"There is no doubt the plaintiffs could sue their lawyer for conduct in the plaintiffs' retainer, and that absolute privilege would not apply. Here, the plaintiffs claimed that their lawyers breached their duties to the plaintiffs in their representation of another client. It is not immediately apparent, as the court found, that absolute privilege prevents such a claim and there is no case that stands for this proposition," he adds.
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