One of the parties who appeared before the trial judge had previously been a client of the judge's former law firm. So had members of that party's family. The judge had never personally represented the party in question, or any of his family members. All of this occurred well before the judge was appointed to the bench and well before the events giving rise to the litigation.
However, the rule laid down by the Supreme Court of Canada in Macdonald Estate v. Martin provides that there is a rebuttable presumption that confidential information is shared between members of a law firm. In situations where a conflict of interest is alleged, it is very difficult to rebut this presumption. Following the strict logic of Macdonald Estate, one might say that the judge was presumed to have confidential information about one of the parties to the case before him.
When the issue was raised, the judge responded that he had never had any personal dealings with the litigants. A subsidiary issue was that the judge had eaten at a restaurant owned by family members of the party in question: here, his response was that he did not know the proprietors personally and had not eaten there for several years.
For Slater J.A. (writing for the majority on the point), this was enough:
One could criticize the Court of Appeal for not requiring the judge to do more to rebut the Macdonald Estate presumption. In Macdonald Estate, the Supreme Court of Canada was skeptical even of the utility of affidavits. Here, the Court of Appeal only had the trial judge's word. This record does not disclose circumstances that would create a reasonable apprehension of bias. The trial judge’s only connection with the litigants was indirect, through other partners at the law firm, and it arose only because of a rebuttable presumption that members of a firm would share confidences: MacDonald Estate v Martin, 1990 CanLII 32 (SCC),  3 SCR 1235 at para. 46. That presumption is weak here because the supposed source of the confidential information is remote from the issues arising from the marriage. The trial judge was appointed to the bench prior to this cohabitation and marriage, and therefore prior to the occurrence of most of the events which were the subject of the trial. Merely eating in the family restaurant, and meeting the proprietors in that context, would not create an apprehension of bias in the eyes of a reasonably informed bystander. The trial judge clearly had no recollection of any private information he may have overheard while in practice. A reasonable observer would not assume that a trial judge would adopt any speculative grudges that his former law firm may have developed after he left the firm.
More broadly, however, Canada's conflicts rules have been the subject of much debate and controversy. It is interesting to note, therefore, that the rule against bias, which is strict in order to preserve public perceptions of the impartiality of the justice system, was applied in a manner which is less demanding than the rules governing conflicts.
Whether the judge would have been able to take the case as a lawyer is a separate question, which turns on the relevance of the confidential information he would be presumed to receive. Here, the trial was a family law matter, about support and property entitlements. The party in question had worked in the family restaurant during the marriage, and his finances were bound up with those of the restaurant.
I am not an authority on conflicts of interest, but I don't think I would risk taking the subsequent family law retainer in such circumstances...