Legal Blog

Outrageous

Occasionally, we read a case that, for one reason or another, knocks us off our chair. Lisik v. Personal Insurance Co. of Canada [2006] O.J. No. 4816 (S.C.J.) is one such case.

Background

It started as an ordinary run-of-the-mill legal action. Plaintiff sues his insurer under a homeowner’s policy. The insurer sends the statement of claim to its lawyer; the lawyer notifies the plaintiff’s lawyer that he is on board for the insurer; and the plaintiff’s lawyer acknowledges that the insurer need not file a statement of defence until the insurer has supplied him with documents. Quite mundane so far; it happens in countless actions.

Then the fun begins:

1.   The plaintiff instructs his lawyer to note the insurer in default and, contrary to his promise to the insurer’s lawyer, the plaintiff’s lawyer does so.

2.   The plaintiff attempts to obtain default judgment. The registrar refuses to sign judgment because a judge must do so.

3.   The defendant’s lawyer then speaks to the plaintiff’s lawyer and discovers that the defendant has been noted in default. The defendant’s lawyer is not pleased, to say the least, but requests the plaintiff’s lawyer to advise him of his costs thrown away and requests his consent to set aside the noting in default.

4.   The plaintiff’s lawyer notifies the defendant’s lawyer that the plaintiff will consent to setting aside the noting in default on payment of his expenses. The same day, the defendant’s lawyer serves the statement of defence. 12 days later, the defendant’s lawyer sends the plaintiff’s lawyer a consent to set aside the noting in default and a cheque for $412, the costs that the plaintiff demanded. The plaintiff’s lawyer executes the consent and cashes the cheque.

5.   The defendant’s lawyer files the consent on September 11, but the clerk’s office returns it because there is a problem with the wording of it. On October 12, the defendant’s lawyer sends a newly drafted consent and requests that it be executed. The plaintiff’s lawyer informs him that he has already obtained default judgment on October 6 for $168,000 and that there is an order for an expedited trial on the remaining issues.

6.   In the plaintiff’s motion to obtain the default judgment, notice of which he did not give the defendant’s lawyer, the plaintiff swore an affidavit. In it, he stated, “As no response followed the filing of my claim, I instructed my solicitor to note the defendant in default…” This was false. Not only had there been a response, there was an agreement to waive the filing of the statement of defence at that time.

7.   He further stated, “I instructed my solicitor to sign the consent on condition that the Defendant undertake to pay a modest amount of my default process expenses, in the amount of $412 and to proceed quickly thereafter to file a statement of defence…The defendant has taken no action to file its statement of defence with this court or to deliver the agreed upon affidavit of documents as promised by mid-September. No communication followed.” He failed to mention that his counsel had received and cashed the $412 cheque. Further, the plaintiff’s lawyer did not even know that the statement of defence had not been filed until after the affidavit was sworn.

8.   On October 19, the defendant’s lawyer informed the plaintiff’s lawyer that he had obtained November 30 as a date to hear a motion to set aside the default judgment. In response, the plaintiff’s lawyer did two things: he served a notice of examination in aid of execution on the defendant personally (even though he was represented by a lawyer) and he proceeded to move to trial in an attempt to obtain judgment on the balance of the claim. The case was on the November 22 trial list. The judge adjourned it to November 30 and heard the motion first.

Response

The most interesting aspect of the case was that, as the judge stated, the plaintiff “paints himself as a victim of the defendant’s efforts to set aside the default judgment. He described the defendant’s materials outlining the course of events as ‘a personal attack on me and my solicitor’, stated that he felt ‘intimidated by the Defendant’s overwhelming response’ and characterized the defendant’s motion as ‘vicious’.” The plaintiff did not apologise for reneging on the consent to set aside the noting in default or “for instructing his counsel to engage in unethical practice.” Further, at the hearing of the motion “plaintiff’s counsel kept trying to deflect blame for what had transpired onto the defendant. ‘A lot was not done by the defendant’, plaintiff’s counsel contended.”

As you might have guessed, the motions judge had some choice words for the plaintiff and his lawyer.

The judge noted that:

a)   the plaintiff’s lawyer was duty bound to contact the defendant’s lawyer when his client decided to insist on adhering to the deadlines for filing a defence. By acceding to his client’s demands, he made two errors: he failed to act honourably and he misconstrued the role of a barrister in the conduct of litigation. “A barrister is not an automaton, unthinkingly executing any instructions given by a client. A barrister must assess whether an instruction given by a client regarding the conduct of a case would result in the barrister engaging in unethical conduct…Plaintiff’s counsel should never have acquiesced in his client’s instructions to note the defendant in default without first giving some notice.”

b)   The plaintiff’s lawyer made a similar error in resiling from his agreement to set side the noting in default.

c)   The plaintiff’s affidavit to obtain default judgment was misleading in material respects.

d)   Once he obtained judgment, the plaintiff’s lawyer ought not to have given the JD Exam notice directly to the insurer when he knew that the insurer was represented by a lawyer.

e)   The plaintiff’s lawyer abused the court’s process in attempting to have the matter heard for trial on November 22 when he knew that the motion to set aside the default judgment was scheduled for November 30.

Result

Although the plaintiff’s lawyer tried to excuse his conduct due to inexperience, the judge would have none of it. As far as he was concerned, inexperience could excuse a single misstep, but the numerous improper steps could only be the result of deliberate actions. The judge set aside the default judgment and noting in default. He awarded costs to the defendant of $5,000.00

When we read the judgment, we emailed the defendant’s lawyer, with whom we had dealt in the past. He informed us that the episode had a happy ending: “The costs were paid and the action was dismissed without costs.”

By the way, the plaintiff’s lawyer is so new that as of early 2007 he was not listed in the Ontario Lawyer’s phone book. Welcome to the profession, pal.