Traffic Law Advocate (E.E.) Professional Corp. v. Awad, 2017 ONSC 1245
CITATION: Traffic Law Advocate (E.E.) Professional Corp. v. Awad, 2017 ONSC 1245
DIVISIONAL COURT FILE NO’s.: 296/16 & 297/16
DATE: 20170222
ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
TRAFFIC LAW ADVOCATE (E.E.) PROFESSIONAL CORP. Plaintiff (Respondent)
– and –
FAWZIA AWAD and FARIHA AWAD Defendants (Appellants)
A. Toms, for the Plaintiff (Respondent) A. Akinyemi, for the Defendants (Appellants)
HEARD at Toronto: February 22, 2017
NORDHEIMER J.
[1] The defendants appeal from the decision of Deputy Judge Ashby of the Small Claims Court dated May 30, 2016, which awarded judgments in favor of the plaintiff/respondent against each of the defendants/appellants, and ordered the appellants to each pay $3,500 to the respondent, including costs assessed at $750 and interest calculated from October 11, 2013.[^1] At the conclusion of the hearing, I allowed the appeals, set aside the judgments and dismissed the actions. I said my reasons would follow and I now provide those reasons.
[2] The appellants are sisters. They were involved in a motor vehicle accident on September 27, 2009. They retained the respondent to represent them for the recovery of statutory accidents benefits from their insurance company. The appellants were introduced to the respondent by the tow truck driver, who towed their vehicle from the scene of the accident.
[3] The appellants met with Mr. Gino Evdassin, the President of the respondent, about their claims. During the course of the meeting, the appellants signed written retainer agreements. The appellants do not have education beyond high school and they gave evidence that, when they met the respondent’s president, they made it clear to him that they do not have any income or money to retain the respondent, and that they could only pay for any services rendered on their behalf from the proceeds of any money recovered for them. The respondent does not appear to dispute that that was the basic understanding underlying its retainer.
[4] Indeed, the written retainer agreements reflect this fact. In paragraph five of the written retainer agreements, the following appears:
I authorize the firm of TRAFFIC LAW ADVOCATE (E.E.) to deduct from any settlement proceeds obtained on my behalf their proper fees and disbursements.
[5] The problem arises, however, because of a later provision in the written retainer agreements. In paragraph seven, the agreement provides that “despite the above”, the undersigned acknowledges and agrees that, if the representation is terminated for any reason, the undersigned will pay the respondent’s account based on the applicable hourly rates along with disbursements.
[6] The appellants had a falling out with the respondent in July 2010. They retained counsel and terminated their relationship with the respondent. The respondent, relying on paragraph seven of the retainer agreements, proceeded to send each of the appellants an account for slightly more than $4,000 on account of the work that the respondent had done on their respective claims.
[7] On July 15, 2011, the respondent commenced actions in the Small Claims Court against the appellants on account of these fees. The appellants defended the claims based on misrepresentation, and also based on negligence in the handling of their claims.
[8] As I said at the outset, at the end of the trial, the Deputy Judge granted judgment in favour of the respondent, although the Deputy Judge reduced the amount of the claim to $3,500 in each case, because of some duplication in the work charged. In reaching his conclusion, the Deputy Judge said:
So, turning to what was pleaded, in paragraph five of the defence, it is an essential claim that there was a representation made that the plaintiff would only be expected to receive fees from any settlement that was received from the case upon successfully representing the defendant. That, in fact, was true. That was exactly what is in the agreement, and I am sure they were told exactly that. However, as I have already indicated, the agreement says, despite the above, if they change the terms of the representation, then an account can be rendered.
[9] Having made that finding, the Deputy Judge proceeded to deal with the allegations of negligence, and concluded that there was no evidence that would enable him to conclude that the respondent had been negligent. The Deputy Judge also dealt with an unpleaded allegation of unconscionability, which he rejected.
[10] The Deputy Judge returned to the issue of the written retainer agreements. He concluded his reasons by finding that the appellants had to be bound by the terms of the written retainer agreements, that they had signed, “unless there are extraordinary circumstances”. The Deputy Judge then said:
There is nothing that would have misled the defendants into signing the agreement.
[11] I do not find any error in the Deputy Judge’s conclusion regarding the allegation of negligence, nor in his conclusion regarding the suggestion that the agreements were unconscionable. With respect, however, to the Deputy Judge’s conclusion that there was nothing that would have misled the defendants into signing the agreements, I am unable to see how that conclusion can be reconciled with the evidence, or with the factual findings that the Deputy Judge made.
[12] It appears to be undisputed, on the evidence, that the appellants entered into their arrangements, in terms of their personal dealings with the respondent, on the clear understanding that they would not have to pay for the respondent’s services except as a deduction from any settlement that was reached. The Deputy Judge found that that was the foundation for the relationship. It is confirmed by paragraph five of the agreement which, I note, is set out in bold face in the agreement, unlike any of the other paragraphs. I also note that while some of the paragraphs in the agreement, including paragraph five, bear separate initials by the appellants, no separate initials appear beside paragraph seven.
[13] I agree with the Deputy Judge that, as a general proposition, persons are to be held to the written agreements that they sign. However, where one party to an agreement entices the other party to enter into the agreement, based on a specific representation as to the terms of the agreement that is different from what the agreement actually provides, then that party bears the burden of showing that the other party knew and understood the true parameters of the relationship. The respondent, in this case, failed to do so.[^2] Indeed, the Deputy Judge did not make any finding that the respondent had clearly and adequately explained the terms of the agreement, particularly paragraph seven, and how those terms departed from the representation that preceded the signing of the agreement.
[14] The principle that a contract, that is brought about by a misrepresentation, cannot be enforced, does not allow for any debate. As was said in Bauer v. Bank of Montreal, 1980 12 (SCC), [1980] 2 S.C.R. 102, by McIntyre J. at p. 111:
Various authorities were cited for the proposition that a contract induced by misrepresentation or by an oral representation, inconsistent with the form of the written contract, would not stand and could not bind the party to whom the representation had been made. [citations omitted]
No quarrel can be made with the general proposition advanced on this point by the appellant.
[15] Another statement of the principle, and one that is more directly related to this case, can be found in the English Court of Appeal decision in Mendelssohn v. Normand Ltd., [1970] 1 Q.B. 177 at 183-184, where Lord Denning MR said:
There are many cases in the books when a man has made, by word of mouth, a promise or a representation of fact, on which the other party acts by entering into the contract. In all such cases the man is not allowed to repudiate his representation by reference to a printed condition…The reason is because the oral promise or representation has a decisive influence on the transaction – it is the very thing which induces the other to contract – and it would be most unjust to allow the maker to go back on it. The printed condition is rejected because it is repugnant to the express oral promise or representation.
[16] This principle has particular application, in my view, where a lawyer or paralegal makes a representation as to the basis upon which they will be paid for their services, but then purports to change that basis in a written retainer agreement, that may be signed by a client at a time when the client is particularly vulnerable. If lawyers and paralegals want to promote their services, through representations regarding how they will be paid (the expression “we don’t get paid unless you get paid” comes to mind), but then seek to alter or qualify that representation, through the signing of a written retainer agreement, those lawyers and paralegals will bear the burden of establishing that the alteration in the manner of payment was fully and fairly explained to the client, and that the client willingly agreed to it.
[17] As I have said, there was no evidence led by the respondent that that was done in this case. In those circumstances, the respondent is disentitled from relying on the strict language of the written retainer agreement.
[18] It is for these reasons that I allowed the appeal, set aside the judgments below, and dismissed the plaintiff’s claims. I awarded the appellants their costs of the appeal, which I fixed in the amount of $5,000, inclusive of disbursements and HST. I made no order as to the costs of the trial.
___________________________ NORDHEIMER J.
Released: February 22, 2017
Traffic Law Advocate (E.E.) Professional Corp. v. Awad, 2017 ONSC 1245
DIVISIONAL COURT FILE NO’s.: 296/16 & 297/16
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
TRAFFIC LAW ADVOCATE (E.E.) PROFESSIONAL CORP. Plaintiff (Respondent)
– and –
FAWZIA AWAD and FARIHA AWAD Defendants (Appellants)
REASONS FOR JUDGMENT
NORDHEIMER J.
Released:
[^1]: While there were two separate actions, they involve the same issue. The Deputy Judge, understandably, gave only one set of reasons that disposed of both actions. I intend to similarly treat the two proceedings as one such that these reasons apply to both appeals. [^2]: The respondent did not call Mr. Evdassin as a witness. The only witness it called was an officer manager, who was not present at the time that the retainer agreements were signed.