Legal Blog: Lawyers’ Issues

Jun
06
2017

Chance

Posted in Lawyers' Issues

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.”

Facts

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.

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Apr
06
2017

Charge It

Posted in Lawyers' Issues

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.”

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Feb
06
2017

Dead Deal

Posted in Lawyers' Issues

“Does the obligation of good faith in contracting mean that everything must be flexible, and that a fixed closing date is really an approximate closing date?” This question was posed and answered in 2336574 Ontario Inc. v. 1559586 Ontario Inc. 2016 ONSC 2467 (SCJ).

Deal

Corporate parties entered into an agreement of purchase and sale for a commercial condominium. The $640,000 transaction called for payments of four $10,000 deposits over six months, $32,000 on the interim occupancy closing, and the balance of $568,000 on final closing. The agreement allowed the vendor to set the closing date, but the outside closing date was July 8, 2015. On May 21, 2015, the vendor set the final closing date to be June 26, 2015.

The purchaser immediately, and without explanation, requested an extension to September 1, 2015. The vendor immediately, and without explanation, refused to grant the extension. Later, the purchaser’s principal reduced the requested extension to July 8, 2015 and explained that he needed the extension because he had been travelling. The vendor then learned from its real estate agent that the purchaser’s real reason for the extension request arose out of problems with financing. The vendor refused the extension.

Closing

On the day of closing, the vendor’s lawyer sent the closing package to the purchaser’s lawyer, but was advised at 4:30 p.m. that the purchaser’s lawyer had left the office for the day. The vendor’s lawyer immediately wrote to confirm the purchaser’s breach of the agreement.

The next business day, the purchaser’s lawyer confirmed that the purchaser would be in funds the following day and requested direct deposit information. The vendor’s lawyer did not respond to this request.

The purchaser registered a caution and brought an action for specific performance and a motion for a certificate of pending litigation. The vendor requested a declaration that the agreement was at an end and that the purchaser had forfeited its deposit, which the vendor claimed was the full $72,000.

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Jan
12
2017

Insurance

Posted in Lawyers' Issues

We have spent many hours negotiating the wording of insurance and repair clauses in leases, both for landlords and tenants. However, is the wording of those clauses critical for the allocation of risk? That question was answered in Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., (2016) 130 O.R. (3d) 418 (C.A.).

 

insurance

Lease

When determining whether a landlord or a tenant is liable for a loss in an insurance context, the lease, not the insurance policy, is the most important document. Who has agreed to obtain insurance and for what? In any subrogated claim, the insurer’s rights are no better than the rights of its insured.

The lease obliged the parties to obtain insurance coverage for specified risks:

      • The landlord was to maintain coverage caused by identified perils to the “Premises” and the landlord’s property.
      • The tenant was to obtain business interruption insurance to meet its obligations to the landlord and protect the tenant against loss of revenue. It was also to obtain insurance against all risks of loss or damage to its property. Further, if that provision were not wide enough, the tenant was to carry insurance against all perils, including fire, to its property within the Premises.
      • The tenant was to add the landlord as an additional insured under the policies.
      • The tenant and landlord had cross-indemnity covenants. The tenant indemnified the landlord against all claims arising out of the tenant’s occupancy of the Premises for damage to the Premises occasioned by any negligence of the tenant or people for whom it was responsible. The landlord indemnified the tenant in the same manner arising out of the landlord’s use or occupancy of the Premises for damage to the Premises occasioned by the negligence of the landlord or people for whom it was responsible (the “Landlord’s Indemnity“).
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Oct
24
2016

Knowledge of the Limitation Period

Posted in Lawyers' Issues

People either have knowledge; do not have it and should not be expected to; or do not have it, but ought to. No, this is not a philosophical discussion; it is a discussion relating to the proper commencement of a limitation period. Two relatively recent decisions of the Ontario Court of Appeal answer some questions regarding commencement of limitation periods and knowledge: Lauesen v. Silverman, 2016 ONCA 327 and Clarke v. Faust, 2016 ONCA 223.

knowledge

Discovery

We have paraphrased provisions of section 5(1) of the Limitations Act, 2002 (the “Act“); the exact section follows:

“5.  (1)  A claim is discovered on the earlier of,

(a)       the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii)       that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii)      that the act or omission was that of the person against whom the claim is made, and

(iv )     that, having regard to the nature of the injury, loss or damage, a proceeding would be an    appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).”

 

Our discussion centres on sections 5(1)(a)(iv) (i.e. subjective knowledge) and 5(1)(b) (i.e. objective knowledge)

 

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Aug
11
2016

Clarity

Posted in Lawyers' Issues

Prudent employers enter into written employment agreements with each of their employees. These agreements set out the terms of employment. They deal with ongoing employment matters, such as vacations and sick days, as well as with termination issues. Smart employers try to ensure that their agreements are somewhat reasonable. Overreaching employers enter into employment agreements, which are either so one-sided or nasty that the courts go out of their way to strike them down as unenforceable. The dichotomy between smart and overreaching was demonstrated in Howard v. Benson Group Inc. (2016), 129 O.R. (3rd) 677 (C.A.)

 

clarity

Essence

A five-year employment contract had a provision stating that the employer could terminate the employee’s employment by paying an amount set out under the Employment Standards Act (E.S.A.). The motions judge held (at 2015 O.J. 2029) that this provision was too vague to be enforceable and that the contract should therefore be interpreted as if it were a contract for reasonable notice subject to mitigation. The Court of Appeal held that the motions judge’s interpretation was an extricable question of law and that, as a question of law, once the termination provision was set aside, the contract remained a contract for a five-year fixed term. The employer therefore had to pay the employee to the end of the term without benefit of mitigation.

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Jul
11
2016

Causation – Contract and Tort

Dobara Properties Ltd. v. Arnone 2016 Ont SCJ

Client had a claim against his real estate lawyers. The real estate he purchased was contaminated and he spent $57,000 to remediate it. His action was dismissed against the real estate lawyers because his trial lawyers commenced the action after the expiry of the limitation period. The client sued the trial lawyers for negligence. The client claimed the remediation costs; loss of the value of the property of $82,000; commission of $30,000 on a failed sale; excess mortgage interest of $29,000; and mental distress of $150,000. The client claimed that he would not have purchased the real estate had he known that it had been used as a former gasoline station. The trial lawyers admitted that they were negligent, but claimed that there were no compensable damages. The trial lawyers argued that since the plaintiff did not prove that the property was worth less than the amount the client paid for it, the client had no damages. The court noted that consequential damages were also payable, but found that the only foreseeable consequential damages were the remediation costs.

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Jun
16
2016

Estimates of Legal Fees

Posted in Lawyers' Issues

Some lawyers, like us and many of you, have been using alternate fee arrangements, such as fixed fees, value driven fees, or contingency fees, rather than a fee determined by the product of hourly rate and time. However, even those lawyers who use straight hourly rates are called upon, on occasion, to estimate what the ultimate fees might be. Just as the setting of the fixed fee is difficult, so too is the setting of an estimate. The only difference is that a fixed fee is set in stone, and must be honoured, regardless of the time spent, but an estimate is still just an estimate.

Lawyers who provide an estimate have a duty to notify the client if they can reasonably determine, as the case progresses, that their estimate will be too low. If they fail to do so, they may find, on an assessment, that their fees will be cut back, regardless of the non-binding nature of an estimate.

For some clients, it is not sufficient just to attack fees as being too high. In Mitchinson v. Baker (2015) O.R. (3d) 220 (C.A.), the client wanted to go the extra mile.

Retainer

The client retained the lawyer to deal with the client’s employment-based, human rights complaint. He settled the matter favourably for the client, but charged significantly more than his $30,000 estimate. The client assessed the account, as was her right. However, that did not seem to suffice. Before the assessment was completed, the client commenced a number of actions against the lawyer, we assume for negligence and breach of retainer. LawPro, in accordance with its obligations, defended the lawyer.

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