Canada: Plaintiff's "Kicks At The Can" Are Limited

Last Updated: May 31 2017
Article by Stephen Thiele

In Canada, a plaintiff generally gets two "kicks at the can" to win their case: once at trial; the second time on appeal. But some plaintiffs want more "kicks" and sometimes, after being dissatisfied with a trial or appeal decision, they seek to bring additional claims, particularly against their lawyers, to re-try a previous unsatisfactory judgment.

This is what happened in Kalsatos v. Conway Estate, 2017 ONSC 1483, where a simple dispute between two brothers, Gus and Alex, over a used car business was turned into a decade long piece of protracted and costly litigation that ultimately showed once again that a plaintiff's "kicks at the can" are limited.

The original action

The original action was decided at a trial in June 2011, a decade after a car business venture involving Gus and Alex, called Centre City Auto Sales Inc. ("Centre City"), failed.

In that action, Gus sued Alex, Alex's company, Centre City Quality Cars Inc. ("Quality Cars"), Alex's wife, Evelyn, and Evelyn's company, Axela Finance Inc., for damages in connection with Gus's investment in the business.

Whereas Gus alleged that he was a shareholder in the business and thus was entitled to damages for, among other things, loss of profits, the trial judge ultimately determined that Gus was only entitled to recover $113,020.65. This amount represented Gus' investment in the business.

In essence, the trial judge, Justice Lederman, concluded that an agreement between Gus and Alex made him a "creditor" of Quality Cars rather than a shareholder. Under the agreement, the trial judge found that Gus was a shareholder in "name only".

Gus appeals and sues lawyer

Gus appealed on the grounds that he was more than just a nominee shareholder. He also issued a new action against his civil litigation lawyer for negligence and breach of fiduciary duty based on his lawyer's handling of the trial.

Sadly, Gus' trial lawyer died a few months after the trial judgment was released and so Gus' new action was against the lawyer's estate.

The appeal proceeded first. At the hearing, Gus wanted to introduce fresh evidence to show that he was more than a nominee shareholder. However, Gus also did not allege that the trial judge had made any reviewable errors and conceded that if the fresh evidence was not admitted, the appeal should be dismissed.

Based on Gus' submissions, the appellate court dismissed the appeal because the fresh evidence failed to meet the established due diligence test for admissibility.

The lawsuit against the trial lawyer

So Gus proceeded with the action against his trial lawyer and introduced the fresh evidence here.

Gus alleged that but for the lawyer's negligence and breach of fiduciary duty, he would have received a larger judgment at trial and would have obtained a judgment against Evelyn and Axela.

A judgment against Evelyn and Axela was important because Gus was unable to collect on the judgment against Alex and Quality Cars while Evelyn owned a house.

To support his action, Gus filed an expert report which suggested that the trial lawyer was negligent in his handling of the initial action and that there were many instances where the trial lawyer fell below the standard of care of a reasonable litigation lawyer.

The trial lawyer's estate argued that Gus' claim should be dismissed on the grounds that it was an abuse of process and collateral attack against the initial judgment and the decision of the Court of Appeal. The estate also argued that the fresh evidence would not have changed the result and that the expert's report should not be relied upon.

Decision of the Court

Justice Hood agreed that Gus' action against his trial lawyer's estate should be dismissed.

His Honour accepted that where a party claims that his or her lawyer was negligent in the presentation of a case at trial, such an action might succeed, but only if it could be established that the result at trial would have been different.

In this kind of claim, the court was required to look to what evidence was presented at trial, what evidence should have been presented, and what the result at trial was and how it might have been different had different evidence been presented.

Justice Hood concluded that the fresh or "new" evidence relied upon by Gus, on a motion for summary judgment to dismiss his claim, would not have made any difference in the outcome of the original trial; the original judgment still would only have been against Alex and Quality Cars and the quantum awarded would have been the same.

The new evidence did not support a finding of any wrongful benefit to Evelyn or Axela.

Justice Hood also rejected the expert's report which Gus sought to rely upon because nowhere in the report did the expert point to how the new evidence might have resulted in a different decision by the trial judge. Accordingly, the expert's report was of no assistance.

Representation by Gardiner Roberts LLP

The trial lawyer's estate was represented throughout by Gavin Tighe, certified specialist in civil litigation and Partner at Gardiner Roberts LPP, and litigation associate, Alexander Melfi.

They were assisted in the preparation of the summary judgment factum to dismiss Gus' action against the lawyer's estate by Stephen Thiele, Partner and Director of Legal Research for Gardiner Roberts LLP.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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