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BARRISTERS AND SOLICITORS - Retention of counsel - Conflict of interest

Friday, September 27, 2019 @ 6:23 AM  

Lexis Advance® Quicklaw®
Motion by Legate to remove Cube’s law firm as counsel. Legate was hired as Cube’s chief executive officer. The employment contract entitled Legate to shares of Cube, to be issued each year on the anniversary of his employment. Legate agreed to take options instead of shares and set up a trust structure to hold them. The trust structure was set up by a lawyer at Cube’s law firm. Legate’s employment was terminated before the trust structure was used. The main issue was the amount owed to Legate in relation to the shares. Legate argued that Cube’s actions were oppressive toward him as a prospective shareholder, that the lawyer would be a witness and that the duty of loyalty required the law firm’s removal.

HELD: Motion dismissed. Legate was not a shareholder. The question was one of valuation. Legate had no ongoing interest in Cube’s affairs, apart from being paid out under the contract. The duty of loyalty was not engaged. The assistance that the law firm gave Legate was incidental to its role as counsel for Cube. The issues would not give rise to the lawyer becoming a witness. The allegations of oppressive conduct had no apparent relevance to the issues in dispute.

Legate v. Cube Packaging Solutions Inc., [2019] O.J. No. 4225, Ontario Superior Court of Justice, C. de Sa J., August 12, 2019. Digest No. TLD-September232019014