Law360 Canada ( March 23, 2017, 8:46 AM EDT) -- Appeal by the defendants from an order allowing the plaintiff’s appeal from the refusal to remove counsel for two of the defendant insurers, Chartis Insurance Company and American Home Assurance Company,  based on an alleged conflict of interest. The respondent, the Province of Ontario, sued the appellants as a result of an insurance coverage dispute. Ontario was represented by an outside law firm. One of the lawyers at the firm, Foulds, who had been working closely with senior counsel to Ontario on the dispute, moved to the firm representing the appellants and was working closely with counsel for the appellants. Counsel for the two parties discussed the apparent conflict before Foulds took up his new position. An ethical screen was implemented at the law firm representing the appellants, which included all of the measures suggested by the Law Society Guidelines. Those measures included Foulds having no involvement in the action, or discussing the action with lawyers in the new firm, and being physically and electronically segregated from the file. Foulds and the appellants' lawyers and staff involved in the coverage dispute gave undertakings to comply with the terms of the screen. In addition, a senior partner in the firm was appointed to supervise the screen. Ontario continued to oppose counsel for the appellants continuing to act. Ontario argued that despite the ethical screen, there was a possibility of inadvertent disclosure due to the close working relationship between the lawyers at issue in the context of working at a small law firm. The appellants brought a motion for a declaration that the ethical screen was sufficient to prevent disclosure of the respondent's confidential information and that it was in the interests of justice that they continue to act. The respondent brought a cross-motion for the removal of appellants’ counsel. The motion judge concluded the appellants’ counsel had been pro-active in minimizing the risk of disclosure of confidential information and that the ethical screen was comprehensive. He found that it was in the interests of justice to allow the appellants’ counsel to continue to act. Ontario appealed. The Divisional Court overturned the decision and disqualified the appellants’ firm from continuing to act. The appellants appealed, arguing that the Divisional Court applied the wrong test....