CmB magazine cmba-achc.ca spring 2017 | 23
present matter, the merged law firm is asked
to enforce those very same obligations against
the borrower in favour of the lender. Simply
put, the firm is now suing the borrower on
the very document it advised him in 2011.e
borrower was entitled to assume in 2011 that
the law firm then advising him would not in a
few years be suing him on the very document
on which their advice was given. e same
mortgage is central to both the earlier
mortgage matter and the later foreclosure
matter. e two retainers are accordingly
related.
Because there was a prior relationship and
because the two matters are sufficiently related,
it is presumed the borrower provided the law
firm with confidential information at the time
of the earlier mortgage matter. It is for the
law firm to show that confidential information
was not provided and the law firm did not do
that.
e presence of relevant confidential
information automatically leads to a
conclusion that there is a conflict of interest
and the law firm is disqualified from acting
for the lender in the present matter.
Decision re: Fees
A conflict of interest does not create an
absolute bar to the payment of fees; whether
fees are owed depends on the facts of each
case.
Generally, borrowers are responsible
under the mortgage and the rules of court to
contribute to the lender's legal fees of hiring
a lawyer to bring court action. However, the
norm is that unless the former client benefitted
from the conflict (other than the potential
exemption from costs), the law firm is not
entitled to fees. In the present case, the former
client suffered a detriment by having his
former law firm take action against him. e
merged law firm is not entitled to charge the
borrower fees.
Takeaway
Almost always, a lawyer who acted for the
borrower at the time of registering and
funding the mortgage cannot act in collection
or foreclosure proceedings against the same
borrower under the same mortgage.
With few exceptions, a lawyer
who acted for a borrower at
the time of registering and
funding cannot act against
that borrower in collection
and foreclosure proceedings
