Decisions of the Court of Appeal

[1]              The appellants appeal the dismissal of their action against John T. Clark, Clarks, Lynn Le Mesurier and Vice & Hunter.

[2]              The claims arise as the result of a failed “life lease” project on land owned by the appellants on Laurier Avenue in Ottawa, Ontario.  The respondents are lawyers and their respective law firms. 3220605 Canada Inc., Gary Zock and Deborah Edwards did not participate in the appeal.

[3]              The trial judge dismissed the action against the respondents before this court and granted judgment in the sum of $509,851.00 plus interest against 3220605 Canada Inc.

[4]              The appellants submit that when the trial judge found that Clark was in a solicitor-and-client relationship with them, it was then not open to her to conclude that he was not in a conflict of interest.  Although not pleaded nor argued below, the appellants’ position in this court was the fact that Clark acted both for Life Lease Associates of Canada (LLAC) and for the appellants placed him in a conflict of interest position via-à-vis the appellants.

[5]              The respondent Clark argues that the trial judge erred in finding he was in a solicitor-and-client relationship with the appellants.  It is submitted on behalf of Clark, that the appellants were represented by their own counsel of choice, that the contract for the provision of “legal services” was between the appellants and LLAC and that Clark never provided services to the appellants that are traditionally performed by a lawyer in such circumstances. They say the appellants were represented by their own counsel of choice upon whom they relied.

[6]              The appellants further argue that the trial judge erred in finding Vice & Hunter was on a limited retainer to them and that her finding in this regard was contrary to the evidence.

[7]              We do not accept this submission.  The evidence of Mr. Vice, which it was open to the trial judge to accept, was that at the outset he clearly and unequivocally informed the appellants, with whom he enjoyed a long-standing relationship, that he knew nothing about life leases and would not advise them in respect to that concept.

[8]              Assuming without deciding that both respondents were in a solicitor-client relationship with the appellants – it remained for the appellants to prove, on a balance of probabilities, that any breach of duty on their part caused the appellants’ losses which are the subject of these proceedings.

[9]              The central issue in this appeal is whether the failure on the part of either or both of Clark and/or Vice Hunter to advise the appellants of the legal “uncertainties” about “life leases” caused their losses.

[10]         The position of OMI, based solely on the evidence of Father Rushton was that had they been aware of the “legal uncertainties” in relation to “life leases”, they would never have gone ahead with the project.

[11]         This evidence given in-chief, in response to a leading question from his own counsel, is problematic.  It is clear from his overall evidence that Father Rushton suffers from memory problems and also he left the particulars of this project to others.  The trial judge quite properly gave careful consideration to this “retrospective” evidence.  She concluded that OMI had been informed of the fact that there was no regulatory control of life leases in Ontario and that there were “legal uncertainties” that might arise from other statutes such as the Ontario Human Rights Code, the Tenancy Protection Act, the Assessment Act and the Land Transfer Tax Act and concluded:

None of these ‘legal uncertainties’ caused OMI to abandon the Laurier Court project.  Therefore, it is also unlikely that the information that there were additional legal uncertainties ‘relating to the application of the Planning Act and the Residential Complex Sales Representations Act would have caused OMI to abandon the Laurier Court Project.

[12]         In our view, the trial judge’s conclusion in this regard is supported by the record.

[13]         Even assuming a breach of duty on the part of both Vice and Clark for failure to inform OMI of the “legal uncertainties” related to the “life lease” concept resulting from Planning Act and Residential Complex Sales Representations Act, any such breach did not, on the trial judge’s findings, cause the loss.

[14]         In our view, the record supports her conclusion.

[15]         The appellants also appeal the trial judge’s damages award and submit that they should be entitled to the entire amount of their damages, which they calculate to be $1,671,552 without any reduction.

[16]         The evidence disclosed that at the time of sale the property before proceeding with this project was appraised at $1.4 million – at that point the property had only been excavated and a developer, who subsequently built on the property, paid the appellants $1.8 million for the property.  At trial the plaintiffs, the appellants in this court, took the position that the defendants should get credit for the $400,000 being the difference of the appraised and sale value.  In this court they argue there should be no reduction.

[17]         The trial judge concluded that the damages to which the appellants were entitled were the losses incurred when the appellants decided to proceed to construction despite the fact they had not sold the requisite number of units.

[18]         Other additional costs were incurred as a result of the decision to embark on the project in the first place. Those costs arising from that original decision were, on the trial judge’s findings, the responsibility of none of the defendants (neither the respondents before this court nor the defendants who took no part in the appeal).

[19]         The trial judge concluded that the costs properly attributed to the decision to proceed to construction included:

Sponsor Development Costs to April 27/03        $ 25,296

Construction Costs paid to Warlyn                       $815,360

Fencing                                                                      $   2,604

Legal Fees                                                                 $ 66,591

                                                                                    $909,851

[20]         From this sum she deducted the $400,000 difference between the appraised value and the sale price, which represented the increased value of the property, by reason of the excavation, to the developer who acquired the property.

[21]         A trial judge’s damage calculation is entitled to deference in this court.  Absent an error in principle, this court will generally not interfere. In our view, there is no such error in this case.

[22]         The appeal is dismissed.

[23]         Costs of the appeal to the respondent Clark fixed in the sum of $15,000 and to the respondents, Le Mesurier and Vice & Hunter, fixed in the sum of $10,000, both sums inclusive of disbursements and HST.

                                                                                                “Robert P. Armstrong J.A.”

                                                                                                “J. MacFarland J.A.”

                                                                                                “David Watt J.A.”

RELEASED:  June 28, 2011 “RPA”