In R. v. Neil, Justice Binnie stated that the duty of candour was an aspect of the duty of loyalty. As Justice Binnie put it, an aspect of the duty of loyalty is
a duty of candour with the client on matters relevant to the retainer
The fiduciary duty of candour was the basis for the earlier decision of the Supreme Court of Canada with respect to physicians in McInerney v. MacDonald,
While not previously said quite so plainly, it has long been clear that fiduciaries owe a duty of candour to their beneficiaries. As the B.C. Court of Appeal said in Ocean City Realty Ltd. v. A & M Holdings Ltd.2 (cited with approval by the Court of Appeal for Ontario in Raso v. Dionigi3):
The obligation of the agent to make full disclosure … includes "everything known to him respecting the subject matter of the contract which would be likely to influence the conduct of his principal" (Canada Permanent Trust Co. v Christie) or, as expressed in 1 Hals., 3rd ed, p. 191, para. 443, everything which ". . would be likely to operate upon the principal's judgment". ..
This fiduciary duty is mirrored in the Federation of Law Societies Model Code by Rule 3.2-2 which states:
When advising a client, a lawyer must be honest and candid and must inform the client of all information known to the lawyer that may affect the interests of the client in the matter.
But like many other statements of professional standards that seem obviously true when stated generally, it just isn't quite that simple in real life.
Let's start with an easy one. In intellectual property litigation, it is common for confidential information to be disclosed on the basis that the lawyers will have access to the adverse party’s confidential information but their clients will not. This is often, but not always, by court order. Despite the duty of candour, lawyers can withhold this material information to their clients. On one view of this, there is no issue because the client consent is required in the circumstances. But does that mean that the duty of candour can be waived? Is waiver of candour permitted in all circumstances or just in some?
A harder case is inadvertent receipt of privileged information. Here, the lawyer would not have the protected information had things worked out properly. Clearly, the administration of justice requires protection of privileged information4. Does candour require disclosure of what should never have been known? Is client consent required not to disclose?
Law society rules regulate joint retainers requiring that lawyers advise their joint clients that secrets can't be kept between clients in a joint retainer. If candour can be waived by clients, does this rule apply where clients want secrecy between them for some matters in a joint retainer?
While law society rules are (mostly) about the duties of individual lawyers, fiduciary duties are owed by firms to their clients as well as by individual lawyers. Does the fiduciary duty of candour mean that the firm (i.e. every lawyer in the firm) must disclose everything known by the firm that is material? This is practically impossible of course in a firm of any size. But why isn't it so nonetheless as a matter of principle? And what about confidentiality screens? If the duty of candour is owed in respect of everything known by the firm, aren't confidentiality screens per se improper?
One might think that all of this would have been worked out in the jurisprudence somewhere but, if it has been, I can't find it. So let me sketch out what seem to me to be some of the necessary nuances to the general rule.
First, there are some situations where the administration of justice requires that candour be limited. In these situations, any lawyer would be in the same position. If candour is not limited, justice cannot be done.
Second, it is important to be clear about the nature of the retainer. The duty of candour is limited to matters relevant to the retainer.
Third, candour probably can't be waived. We know that actual conflicts, as opposed to potential conflicts, can't be waived. Where representation will be materially impaired by a conflict, the conflict is not waivable. A client can only accept the risk of material impairment. If clients cannot agree to impaired representation for conflicts, the same should be true for candour. It follows that clients must have the information required to effectively instruct counsel and act on advice given by counsel. Further, the client must have the information required to assess whether the fiduciary lawyer has acted properly.
Fourth, it is unclear whether candour is owed by the firm or just by the lawyers involved in the representation. I think that it must be just the lawyers involved if only as a practical matter. Otherwise, every lawyer in a firm would have to understand every retainer of the firm and consider what information is relevant from every other retainer they have had and from any other source.
Fifth, being in the position of accepting a legal obligation of confidentiality (that is not inherent in the retainer as discussed above) is not an excuse for lack of candour but rather a real problem. The House of Lords put this nicely in Hilton v. Barker Booth and Eastwood:
… if a solicitor puts himself in a position of having two irreconcilable duties … it is his own fault.
Food for thought, I hope.
1 The duty of candour owed to clients is not to be confused with obligation of candour to the court. The scope of and the basis for these obligations are entirely different.
2 Ocean City Realty Ltd. v. A & M Holdings Ltd. (1987), 36 D.L.R. (4th) 94 (B.C.C.A.)
3 Raso v. Dionigi (1993), 12 OR (3d) 580 (O.C.A.)
4 Protection of the administration of justice sometimes requires disqualification of lawyers who inadvertently receive privileged information of the adverse party. But that is outside of the subject of this column.