CITATION: Laiken v. Carey, 2011 ONSC 7629

DIVISIONAL COURT FILE NO.: CV-09-389-964

DATE: 20111222

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: JUDITH LAIKEN

Plaintiff

AND:

PETER W. G. CAREY, STEPHEN P. PONESSE and BRIAN GREENSPAN

Defendants

BEFORE: JENNINGS J.

COUNSEL: Patrick Schindler, for the Defendant Peter W. G. Carey, Moving Party

Kevin Toyne, for the Plaintiff Judith Laiken, Responding Party

HEARD: at Toronto on December 8, 2011

ENDORSEMENT

[1] This is a motion for leave to appeal from the decision of Roberts J. dated October 12, 2011, dismissing Carey’s motion for summary judgment of this action as against him.

facts

[2] Judith Laiken (“Laiken”) invested money with one Sabourin and his companies. She was sued by them for her deficit in her margin account. Peter W. G. Carey (“Carey”) acted as counsel for Sabourin and his companies.

[3] Laiken counterclaimed in the action alleging fraud and breach of fiduciary duties. On May 4, 2006, Laiken obtained a Mareva order against Sabourin and his companies. The order was served upon Carey as counsel for the Sabourin defendants by counterclaim on May 5, 2006.

[4] On September 21, 2006, Sabourin sent $500 000 to Carey, which Carey deposited in his trust account. Subsequently Sabourin instructed Carey to pay his account from his trust account and retain the balance to pay other creditors unrelated to Laiken. Carey refused to do so, advising Sabourin that such payments would be in breach of the Mareva order. Sabourin then instructed Carey to retain the funds in his trust account and attempt to negotiate a settlement with Laiken and other creditors. No settlement could be reached. In October and November 2006 Carey returned to Sabourin the $440 000 remaining in his trust account.

[5] Early in 2007 Sabourin terminated Carey’s retainer. Apparently no new solicitors were retained and Carey remained the solicitor of record.

[6] On November 27, 2007, Laiken obtained summary judgment on her counterclaim against the Sabourin defendants in the sum of $1 150 157.80 and costs in the amount of $295 638.98.

[7] On October 27, 2009, Laiken commenced these proceedings against Carey and others for damages for negligence arising out of Carey’s return of the amount of $440 000 to Sabourin in breach of the Mareva order.

[8] Laiken then moved for an order that Carey be held in contempt for breach of the Mareva order. Carey responded with a motion for summary judgment to dismiss Laiken’s action against him. Both motions were heard by Roberts J. in September 2011. On Laiken’s motion, she found Carey to be in contempt for breaching the Mareva order. The penalty hearing on that finding is to take place this month. The contempt finding has been appealed to the Court of Appeal.

[9] Roberts J. dismissed the motion for summary judgment. It is from that order that leave to appeal is now sought.

[10] As noted by Roberts J., Ms. Laiken frames her action against Mr. Carey in negligence because he knowingly breached the Mareva order in paying monies from his trust account to Sabourin. Mr. Carey’s response is two-fold:

(a) a lawyer for a party owes no duty to the opposite party; and

(b) regardless there is no tort for breach of a court order.

[11] At paragraph 46 of her reasons, Justice Roberts begins her careful analysis of the motion for summary judgment. She was clearly alive to the purpose of motions under rule 20, the increased powers given to judges hearing summary judgment motions pursuant to the recent rule amendments, the evidentiary burdens on the parties, and the matters at issue.

[12] Roberts J. found that the allegation against Mr. Carey is not that he was negligent while acting as a lawyer, but that he allegedly fell below the standard of care expected of a “reasonable person” when he breached the Mareva order. She noted Ms. Laiken’s position that a breach of a court order can inform a duty of care “… in that it can establish proximity, foreseeability and support to the claim that the care fell below the standard required in the circumstances”. She accepted Ms. Laiken’s position that her claim could be recognized as a novel cause of action for pure economic loss under an Anns v. The Merton and London Borough Council analysis.

[13] Roberts J. found on the evidence that “it is clear that Mr. Carey knew or should have known about Ms. Laiken’s interest in the Sabourin trust funds and knew or should have known that she would be directly affected if those funds did not remain secure under the terms of the Mareva order”. Because of that Roberts J. held that the foreseeable test is met. I have no reason to doubt the correctness of that finding.

[14] In paragraph 63 to 67 of her reasons, Roberts J. reviewed the authorities relied upon by the parties touching on claims for damages arising out of disbursal of funds from a bank account in breach of a court order. She concluded her analysis at paragraph 68 in these words:

In my view, whether or not Mr. Carey owes Ms. Laiken a duty of care in the particular circumstances of this case gives rise to a potentially novel cause of action. Novel causes of action, particularly ones involving public policy concerns, are best determined on a fully developed record at trial, rather than on a summary judgment motion.

In support of that finding she relied upon a decision of the Court of Appeal in this province in Romano v. D’Onofrio 2005 43288 (ON CA), 77 O.R. (3d) 583 at paragraph 7.

[15] I have no reason to doubt the correctness of Roberts J.’s analysis or of her decision to dismiss the summary judgment motion pursuant to the practice and jurisprudence that pertained on October 12, 2011, when her decision was rendered.

[16] Before me, counsel for Mr. Carey relied heavily on the just-released reasons of the Court of Appeal in Combined Air Mechanical Services Inc. v. Flesh (2011), O.N.C.A. 764, and particularly paragraph 74 of that judgment which reads as follows:

The amended rule also now permits the summary disposition of a third type of case, namely, those where the motion judge is satisfied that the issues can be fairly and justly resolved by exercising the powers in rule 20.04(2.1). In deciding whether to exercise these powers, the judge is to assess whether he or she can achieve the full appreciation of the evidence and issues that is required to make dispositive findings on the basis of the motion record – as may be supplemented by oral evidence under rule 20.04(2.2) – or if the attributes and advantages of the trial process require that these powers only be exercised at a trial.

[17] In that decision, the Court of Appeal articulated the “full appreciation test” and directed judges hearing summary judgment motions to ask the following question: “Can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?” (See judgment, paragraph 50). Counsel submitted that for obvious reasons Justice Roberts did not ask herself the question and make the analysis it required. Counsel submitted that there was sufficient material before the motions judge that would have permitted her to answer the question in the affirmative and grant summary judgment.

[18] I disagree. Obviously, Combined Air is applicable to summary judgment motions where novel causes of actions are present. However, in my opinion, Romano v. D’Onofrio is still good law. It was not referred to by the Court of Appeal in Combined Air, and I note that Laskin J.A. was a member of the Court of Appeal panel that heard both Romano and Combined Air. In my opinion, Roberts J. impliedly considered the full appreciation question in her analysis to which I have referred and obviously came to the conclusion that she could not determine the issue on the motion record.

[19] I do not doubt the correctness of her decision in that regard and in my opinion it is consistent with the direction given to motions judges in Combined Air.

[20] For these reasons leave to appeal is denied and the motion is dismissed. In default of agreement as to costs the parties may make written submissions not to exceed four pages in length, to be filed with the Registrar by September 16, 2012.

JENNINGS J.

RELEASED: