Legal Blog: Lawyers’ Issues

Aug
14
2017

Client Duties

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.

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Aug
14
2017

Solicitors’ Negligence

Trillium Motor World Ltd. v. Cassels Brock & Blackwell LLP 2017 Ont CA

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).

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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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