Ontario Court Disqualifies Counsel in Construction and Defamation Litigation

THC Lawyers successfully represented Shandong Haiwei Decoration Engineering Co., Ltd. and Jian Ming Chen on a motion to disqualify opposing counsel in related construction and defamation proceedings. In 2384331 Ontario Inc. v. Shandong Haiwei Decoration Engineering Co., Ltd., 2025 ONSC 6855, reported at 179 O.R. (3d) 707, Associate Justice B. McAfee ordered the plaintiffs’ law firm and two of its lawyers removed as lawyers of record in both actions.

The decision, released on December 8, 2025, addresses a practical risk in commercial relationships: legal work undertaken while parties are cooperating can prevent a firm from acting against one of them when a related dispute arises. The Court found a solicitor-client relationship despite the absence of a signed retainer agreement or direct payment by Haiwei and Chen. It also found that the lawyers’ likely involvement as witnesses supported disqualification.

A construction project followed by related disputes

The proceedings arose from the construction of Wutai Shan Buddhist Gardens in Bethany, Ontario. Haiwei supplied specialized artisanal labour for the project. After a fire destroyed a building in July 2022, the parties disputed responsibility for the loss and the effect of a subsequent settlement agreement. A separate defamation action followed. The allegations underlying those claims remained unproven, as the Court expressly noted.

Before the litigation, the plaintiffs’ law firm had assisted with visa applications for Haiwei’s workers. That work later became relevant to issues pleaded in both actions, including allegations concerning the workers’ immigration status and the arrangements for their participation in the project. Haiwei and Chen argued that the firm had acted jointly for them and the plaintiffs and therefore could not now act against them in the related proceedings.

The plaintiffs disputed that any solicitor-client relationship had existed between their firm and Haiwei or Chen. They had approached the firm and paid its invoices, and Haiwei and Chen had signed no retainer agreement. The Court examined the actual dealings between the participants to determine whether the relationship nevertheless existed.

A solicitor client relationship without a signed retainer

The Court applied an objective assessment of the relationship. Relevant indicators can include communications, instructions, legal advice, documents prepared for a party, and the party’s reasonable understanding of the lawyer’s role. A formal retainer and payment of an account are relevant, but neither is essential in every case.

Several features of the visa work supported the finding of a solicitor-client relationship. A WeChat group included the lawyer, immigration consultants from the firm, representatives of the project owner, Chen, and a Haiwei coordinator. There was evidence that the parties jointly decided which type of visa the workers should seek. Haiwei and the workers provided approximately 895 documents, including corporate and financial information and the workers’ personal information. The firm’s immigration team prepared the applications and signed as representatives of the workers.

The Court also considered the absence of clarification about whom the firm represented. The lawyer had not advised Chen that she was not acting for Haiwei and the workers, had not provided a non-engagement letter, and had not told them that she was not protecting their interests. Considering the circumstances together, the Court concluded that a reasonable person in Chen and Haiwei’s position would believe that the firm was also acting for them on the visa matter.

For businesses coordinating legal work with contractors, affiliates, or other participants, the practical lesson is to define the scope of representation clearly. The identity of the party paying the invoices does not, by itself, determine every solicitor-client relationship that may arise. Clear engagement terms and timely explanations of the lawyer’s role can reduce uncertainty before interests diverge.

Shared information did not resolve the loyalty conflict

The plaintiffs argued that the firm held no confidential information unavailable to them because the information supplied by Haiwei and Chen had been shared. The Court observed that sharing information would be expected in a joint retainer. It identified the central conflict as one concerning the duty of loyalty.

Having acted for Haiwei and Chen on the visa applications, the firm was now acting against them in proceedings connected with that work. Visa-related issues appeared in both actions, and the Court found the earlier retainer related to the matters in dispute. It therefore concluded that continued representation breached the duty of loyalty and warranted disqualification.

The decision illustrates why a conflict review must consider the relationship between earlier legal work and the new dispute, as well as the handling of confidential information. Where a joint engagement is involved, the fact that information was shared during the engagement does not necessarily permit the firm to take one participant’s side against another in related litigation.

The likely role of counsel as witnesses

The Court separately considered whether the lawyer and firm employees were likely to be witnesses. This assessment required a flexible review of the circumstances, without requiring certainty that the witnesses would ultimately testify. The proceedings were at an early stage, and visa-related issues had been pleaded by all parties. The firm had prepared the applications, and Haiwei and Chen expected to call the lawyer and firm employees to give evidence about that work.

The Court found that the motion had a reasonable basis and had not been brought for tactical reasons. It also found that prejudice to the plaintiffs would be minimal because their separate co-counsel would remain on the record. These circumstances supported removal, notwithstanding the importance of a litigant’s choice of counsel.

The ruling does not mean that identifying opposing counsel as a possible witness automatically requires disqualification. The likelihood and significance of the evidence, the stage of the proceeding, the good faith of the motion, and the effect on the client’s choice of counsel remain important. Here, the Court was satisfied that the anticipated witness role justified intervention.

The order and its practical significance

The Court disqualified the plaintiffs’ law firm and the two named lawyers in both the construction and defamation actions. The removal request against separate co-counsel was no longer being pursued. Costs were left for agreement or subsequent written submissions; this decision did not award a specified amount.

For businesses, the decision supports reviewing representation arrangements when a cooperative project becomes contentious, particularly where the same firm has assisted several participants. For parties considering a removal motion, it demonstrates the importance of evidence connecting the earlier retainer and the proposed witness testimony to issues in the litigation.

Ran He appeared for Haiwei and Chen on the successful motion. The result protects their position concerning representation in the two proceedings. Liability for the fire, enforceability of the settlement, and the defamation claims remained matters for determination in the underlying litigation.

Decision discussed

2384331 Ontario Inc. v. Shandong Haiwei Decoration Engineering Co., Ltd., 2025 ONSC 6855, 179 O.R. (3d) 707, Associate Justice B. McAfee, December 8, 2025. Paragraph references are to the reasons for decision.