The Ontario Court of Appeal recently upheld a Superior Court of Justice decision granting summary judgment as against a lawyer and his law firm, despite the fact that summary judgment had not been sought by the Plaintiff at the hearing of the motion. Summary judgment is the rendering of a judgment in a case, on its merits or on a discrete issue in the case, without a hearing of the entire trial.
In King Lofts Toronto I Ltd. et al v. P. Martin Emmons and Fraser Milner Casgrain LLP et al. 2014 ONCA 215 (CA), the Appellants (the lawyer and law firm) appealed a decision of The Honourable Mr. Justice Paul Perell of the Ontario Superior Court of Justice, who granted summary judgment in favor of the Respondents (the Plaintiffs in the motion) and ordered a trial of an issue on the quantum of damages.
The facts of the case are fairly straightforward: The Plaintiff, King Lofts Toronto I Ltd. and King Lofts Toronto II Ltd. retained P. Martin Emmons and Fraser Milner Casgrain LLP to represent them in the purchase of commercial properties in downtown Toronto. The purchase price was $22.5 million. At the time of the purchase, the City of Toronto owned a small laneway strip immediately adjacent to the properties.
Prior to the closing, Mr. Emmons advised the Plaintiffs that the laneway was of only minor concern and it could be resolved by conversion of the property to Land Titles, and that the costs associated with doing so would be only a few thousand dollars that title insurance would cover. However, after the closing, Mr. Emmons advised that the laneway issue could not be resolved as easily as anticipated through conversion to Land Titles and that "in order to provide the Plaintiffs some comfort, title insurance was arranged to deal with the ownership issues" and ensure the transfer of the laneway from the City to the Plaintiffs.
Two years later, the Plaintiffs received an offer to purchase the property and retained another lawyer to conduct the transaction. In response to requisitions from the purchaser, the new lawyer attempted to obtain the conveyance from the City. At this time, it was learned that the City expected to be paid $106,000.00 for the laneway. The Plaintiffs made a claim as against their Title Insurance but learned that they were not covered for this particular issue. The Plaintiffs commenced an action as against the former lawyer, the law firm and the title insurer.
Mr. Emmons and his law firm brought a motion for summary judgment as against the Plaintiff on the basis that the two year limitation period had been missed prior to the commencement of the Action. The Plaintiffs did not file a cross-motion, but rather filed only responding motion materials to defend against the summary judgment motion. On hearing the summary judgment motion, the Honourable Mr. Justice Perell granted summary judgment in favor of the Plaintiffs, despite the fact that they had not sought such relief.
Mr. Emmons and the law firm appealed the decision on the basis that Justice Perell had misapplied the facts in determination of the limitation period, but also on the basis that the Plaintiffs had not sought summary judgment and had not produced an expert report demonstrating that the lawyer had fallen below the standard of care expected of a lawyer in such a circumstance.
The Court of Appeal dismissed Mr. Emmons' appeal, finding that the Plaintiffs had commenced their Action within two years of learning that title insurance would not cover the laneway issue and held that the Plaintiffs were entitled to have relied on the legal advice he had provided them.
Furthermore, the Court of Appeal held that although the Plaintiff had not produced any expert evidence to demonstrate that the lawyer and the law firm had fallen below the standard of duty expected, such evidence was not necessary in the within case. The Court of Appeal agreed with Justice Perell that the lawyer had a clear duty to warn the plaintiff of the risk associated with the laneway issue, and had provided erroneous advice that the matter would be dealt with inexpensively by the title insurer. While the Court of Appeal did warn that in most cases of lawyer negligence, an expert report would be necessary, in the within case it was clear that the duty to warn was not complied with, even without an expert report.
The Court of Appeal also relied on the recent decision of the Supreme Court of Canada in Nryniak v. Mauldin, 2014 SCC 7 (SCC), acknowledging the "culture shift" in the judicial system that requires judges to manage the process in line with the principle of proportionality in the application of Rule 20 (Summary Judgment). As this case involved a claim of $106,000.00 arising out of multi-million dollar transactions, the Court of Appeal held that the principles of proportionality and sensible management of the court process favored summary judgment rather than a lengthy and costly trial.
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