Legal Blog: Lawyers’ Issues
The Supreme Court of Canada informed us in Creston Moly Corp v. Sattva Capital Corp (2014) that, in contract interpretation, the overriding concern is to determine the intent of the parties and the scope of their understanding, giving words their ordinary grammatical meaning consistent with the surrounding circumstances known to the parties at the time of the contract formation. That is all well and good, assuming that the contract is properly drafted. Unfortunately, we see many contracts, some drafted by laymen and some, unfortunately, drafted by lawyers, that are almost incomprehensible. Looking at the ordinary grammatical meaning of words does not help much when the contract drafter can barely put together a sentence. What does one do when a provision in a contract makes no sense? The judge in Mohamed v. Information Systems Architects Inc. 2017 ONSC 5708 had to answer that question.
An employer hired an employee (who was classified as an independent contractor, but could just as easily have accepted employment as an employee) to work as an information technology consultant for the employer’s clients.
Before the parties entered into an agreement, the employee informed the employer that, 17 years ago when in high school, he had been convicted of assault with a weapon. This information did not dissuade the employer from giving the employee a 6-month, fixed term services agreement, with a particular client in mind. The employee consequently resigned from his previous full-time job.Continue Reading >
On occasion, we read reasons for decision and have to shake our head. “Really?,” we say to ourselves. One such decision is that of the Ontario Court of Appeal in Meehan v. Good 2017 ONCA 103, a decision dealing with the duty of a lawyer to a client to give advice outside the lawyer’s retainer.
Clients retained a lawyer (“new lawyer”) to assess the accounts of their former lawyer (“old lawyer”), who had acted for them on the settlement of their tort and accident benefits claims arising out of a motor vehicle accident. Presumably, the clients felt that they had paid old lawyer too much money.
New lawyer made it crystal clear that the clients retained him only for the assessment and not for a possible negligence action against old lawyer. New lawyer went even further than that. He advised the clients more than once to seek legal advice regarding the negligence issue. The clients admitted that they had received this advice. They had even signed an acknowledgment that they had received this advice.Continue Reading >
As we have stated previously (see newsletters of October 1999 and February 2000), a party repudiates a contract when it evinces an intention not to be bound by it. The test is objective. Just as for fundamental breach, the court must ask whether the breach deprives the innocent party of substantially the whole benefit of the contract. A simple breach of contract is not necessarily a repudiation of the contract.
Contrary to the concept of rescission, repudiation requires the non-repudiating party to make an election. If that party treats the contract as being in full force and effect, the contract remains in force for both parties. If it accepts the repudiation, the contract is terminated and the non-repudiating party can sue for damages for failure to receive its benefits under the contract. This is exactly what a law firm’s client expected in Miller, Canfield, Paddock and Stone v. BDO Dunwoody LLP 2016 ONCA 281.
The client and the law firm entered into a contingency agreement. Under the agreement, the firm agreed to act on behalf of the client “in any and all proceedings.” The agreement also contained a provision entitling the client to “cancel“ the firm’s services, with or without cause, but, in that case, was liable to pay the value of all services rendered to the termination. The agreement set out the methodology to value those services.Continue Reading >
At times, some parties are more interested in raising procedural hurdles than in having a matter tried on its merits. It would seem that the case of York Condo No. 890 v. Hendler 2017 ONSC 3420 is an example of that proposition.
A lawyer acted for a condominium. He was a partner in a law firm and, under its name, rendered an account for his services to the condo. The condo did not pay the account and the law firm moved to assess it. So far, this is a garden variety fees dispute.
Instead of just dealing with the assessment, the condo went on the offensive. On the eve of the assessment, it commenced an action against the partner and the law firm claiming that they were negligent in dealing with the condo’s affairs. (i.e. they gave faulty advice).Continue Reading >
We have previously discussed the importance of wording in releases (see August 2012, June 2006, and December 2002 newsletters). The decision in Biancaniello v. DMCT LLP 2017 ONCA 386 highlights how important it is.
A client and an accounting firm had a dispute over fees and the services that the firm rendered, which included applying for research credits, negotiating the departure of an employee, and, most importantly, structuring a reorganisational “butterfly transaction.” The firm commenced an action for $67,000.00 for its fees. The client claimed that it obtained little value from the services and had incurred damages arising out of the firm’s advice. Before the client delivered a statement of defence, the parties settled the action by way of a payment from the client to the firm of $35,000. Since the client had alleged improper advice, the firm demanded and received a release before it agreed to take $32,000 less for its accounts than it had wanted to receive.Continue Reading >
Molly’s article was recently featured in Canadian Lawyer Magazine. Click here to read: When your client sees red: In litigation, emotions often cloud a client’s judgment
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York Condo No. 890 v. Hendler 2017 Ont SCJ
A law firm moved to assess its legal fees against a condominium. The condominium then brought an action framed in negligence alleging faulty advice. In effect, the action was a setoff claim against law firm’s’ fees. The law firm represented itself in the action and brought a summary judgment motion. The lawyer in charge sworn an affidavit in that motion. The condominium then moved to remove the law firm as lawyers of record in the condominium’s action against the law firm. The judge noted that the law firm could represent itself, just as any other entity can represent itself; the actual lawyer would simply have to put on street clothes rather than a barrister’s gown. However, the judge felt that this would not be necessary. He held that this was merely a dispute over fees and that this type of relationship between a testifying lawyer and the law firm client does not jeopardise the fairness of the proceedings. There is nothing particularly unjust about a law firm defending its own economic interest.Continue Reading >
Trial judge found that law firm breached its retainer, which had given rise to a bright line conflict or, at minimum, a substantial risk of conflict. The law firm had not disclosed to its clients that it had a retainer with another party that would result in a refusal to act for the first party if the law firm felt that there was a conflict. The trial judge found that had the clients been properly represented, they would have had a 55% chance of successfully negotiating with a third party for a substantial increase in the compensation paid to the clients. The massive decision deals with fiduciary duty; negligence; standard of care and expert evidence; contract interpretation of the retainer; limited retainers; contract interpretation (Sattva) and the relevance of surrounding circumstances that occur before the contract and, if the contract is still ambiguous, that occur after the contract; conflict of interest; causation; and the doctrine of loss of chance in both contract and tort (which differ).Continue Reading >
Everyone is affected by chance. In Jarbeau v. Maclean 2017 ONCA 115, a lawyer appealed a judgment and took a chance on a position, which contended that his clients’ damages were not 100% of their losses but, rather, a lesser amount representing the “loss of a chance.”
Clients purchased from a builder a leaky new house, not constructed or designed according to Code. The clients retained the lawyer to sue those responsible for building and selling them a defective house. The lawyer sued the builder, the municipality, and Tarion. Unfortunately, the lawyer did not sue the engineer who negligently certified the design and construction of the house. The lawyer incorrectly thought that, because the clients did not have a contract with the engineer, there was no cause of action against the engineer.Continue Reading >
A law firm, acting for a plaintiff, performs the bulk of the work on a file. After a dispute with the client arises, or perhaps before, the law firm finds that it is fired and that another law firm has taken over the file. The law firm has grave doubts whether the client will voluntarily pay the firm for the work it did, regardless of whether the retainer was on contingency or hourly basis. What does the law firm do? Get a charging order. We discuss two cases in which a law firm did exactly that: Dalcor Inc. v. Unimac 2017 ONSC 945 (SCJ) and Fancy Barristers, PC v. Morse Shannon, LLP 2017 ONCA 82.
What is it?
As stated by Justice Perell in another case, “a charging order is a statutorily-based proprietary right of a lawyer to claim property owned by a client or former client when the lawyer’s acts were instrumental in recovering the property. The charging order or charging lien is for the lawyer’s fees, costs and disbursements in the proceeding.”Continue Reading >