Legal Blog

Communication

The case is Lemieux v. Gibney-McCullough (2001), 55 O.R. (3d) 520 (Ont. S.C.J.). What we have here is a failure to communicate. Actually, what we think we have here is a failure to prove communication and a client, who entered into an agreement on trust, turning against his lawyer when he finds that the trust was misplaced.

Deal

A hygienist owned part of the assets of a dental practice along with the dentist for whom he was working. The dentist decided to sell the practice. Ultimately, the dentist and hygienist executed an agreement with another dentist to purchase the practice and its business assets. The hygienist wanted to remain with the purchaser in the practice as her hygienist but did not insist on this as a condition of the agreement.

The dentist and the hygienist retained a lawyer to act for them regarding the sale. The lawyer asked the hygienist about his prospective employment with the purchaser and the hygienist told the lawyer “not to worry about his employment because he had an arrangement with the (purchaser) to continue on as her hygienist.” The lawyer informed the hygienist that there was nothing about his employment in the agreement and that the hygienist should get something in writing. The hygienist informed the lawyer that he had known the purchaser for 9 years “and trusted her.”

Pre-Closing

On August 15, the day before the scheduled closing, the lawyer met with the hygienist and the dentist to discuss the closing and the consents necessary to close the transaction. They also discussed the hygienist’s employment with the purchaser. It seems that the hygienist had done nothing to negotiate the employment arrangement, in writing or otherwise. The lawyer testified that the hygienist again told him that the hygienist was not concerned about the employment agreement because of the 9 years he had known the purchaser. The lawyer said that he would attempt to get something in writing for the hygienist but if he could not, he would close the transaction anyway. Neither the hygienist nor the dentist could remember the lawyer saying this.

On the same day and the next, the lawyer spoke and wrote to the purchaser’s solicitor and suggested that since no arrangement had been made regarding the employment of the hygienist, the closing should be postponed. The purchaser’s solicitor noted that the agreement was silent about the employment but agreed to postpone the closing to August 23.

On August 30 – the judge did not think it important enough to explain the missing week – the lawyer met with the hygienist to execute the closing documents. The lawyer testified that he asked about the employment issue and was told everything was fine; the hygienist denied that this subject was discussed.

It seems that there was a problem regarding consents and a PPSA registration. The judge does not tell us what it was. On August 30, the same day that the lawyer met with the hygienist, the purchaser’s solicitor wrote to the lawyer advising him that if the vendors could not meet the requisitions by September 3, the purchaser would consider that the agreement was terminated. On September 4, the solicitor warned that the vendors had until the end of that day to obtain the consents or the deal was over. The transaction closed on September 24. What went on between September 4 and September 24, we do not know.

Fired

The purchaser testified. She said that the relationship between the hygienist and her had deteriorated and that on August 24 the hygienist removed his equipment from the office, cancelled his appointments, and never returned. On September 4, she interviewed a replacement and, when the deal closed, hired that person. She had expected an employment proposal from the hygienist but had never received it.

The hygienist sued his lawyer.

Deep Pocket

The judge held that the lawyer never communicated to the hygienist the August 30 and September 4 threats of the purchaser’s solicitor that if consents were not obtained by a certain date the deal would be over. The hygienist could then have decided that he wanted out of the deal because he had obtained no employment contract. The judge held that the lawyer breached a fiduciary duty by his failure to communicate this information.

Damages

The purchaser testified that had she negotiated a contract, it would have been for 6 months to a year. The judge therefore granted the hygienist the income that he would have earned for a year. He deducted nothing for the possibility that no contract would have been agreed upon, deducted only holiday time and no other contingencies, and awarded lost income of $80,000. He took the longest period for which the purchaser might have contracted when it was equally possible that the period would have been half that time.

Dissent

Someone has to. Based on the information the judge has deigned to supply, we have great difficulty with the result and the reasons for it.

The judge did not mention the rule that the Court of Appeal set out in Wong v. 407527 Ontario Ltd. (see newsletter of December 1999) and Vas-Oxlade v. Volkenstein (see newsletters of April 1999 and April 2001). It is a simple one: once a client binds himself or herself to an agreement, it is not a lawyer’s duty to negotiate a better deal.

The judge fixated on the lawyer’s alleged lack of communication of the August 30 and September 4 threats to terminate the agreement. However, the judge did not mention that the hygienist obviously did not inform the lawyer about the hygienist’s August 23 tiff with the purchaser or that he moved his equipment out of the office on August 24. The judge did not seize upon the opportunity to emphasise that the hygienist knew his relationship with the purchaser was on the rocks when he met with his lawyer on August 30 and said nothing about it, then or after. The judge did not point out that the hygienist never retained the lawyer to negotiate and draft an employment agreement and did nothing about it himself. Nor did the judge acknowledge that the only person who seemed to be worried about the employment issue was the lawyer, not the hygienist.

Communication is a two-way street. If the client does not feel that something is important, after being advised of the consequences by a lawyer, why should the lawyer?

Either we are missing something because the reasons for decision are inadequate or the decision itself was incorrect.