Griffiths v. Zambosco et al. [Indexed as: Griffiths v. Zambosco]

54 O.R. (3d) 397

[2001] O.J. No. 2096

Docket Nos. C32838, C32840, M26490

Court of Appeal for Ontario

Osborne A.C.J.O., Doherty and Goudge JJ.A.

June 5, 2001

Damages--Liability--Waiver of claim--Lawyer negligent for failing to include due on sale clause in mortgage--Only one co- tenant mortgagee suing lawyer for professional negligence --Other mortgagee not suing but joined as party defendant --Lawyer not required to compensate co-tenant mortgagee who did not seek compensation.

Family law--Matrimonial home--Occupation rent--Husband and wife owning matrimonial home as joint tenants--Husband and wife separating but husband continuing to live in matrimonial home --Husband liable for occupation rent.

Professions--Barristers and solicitors--Negligence--Quantum of damages--Lawyer negligent for failing to include due on sale clause in mortgage--Only one co-tenant mortgagee suing lawyer for professional negligence--Other mortgagee not suing lawyer but joined as party defendant--Lawyer not required to compensate co-tenant mortgagee who did not seek compensation.

Real property--Co-ownership--Joint tenancy--Matrimonial home --Occupation rent--Husband and wife owning home as joint tenants--Husband and wife separating but husband continuing to live in matrimonial home--Husband liable for occupation rent.

Restitution--Unjust enrichment--Husband taking assignment of estranged wife's judgment debts--Husband setting off judgment debts against his liability to pay wife occupation rent for residing in matrimonial home--Judge erring in extinguishing judgment debts for less than full face value--Husband not unjustly enriched by claiming full payment for validly assigned judgment debts.

FZ, a lawyer, acted for JG and his then wife, IS, on the sale of an investment property. Their agreement of sale stipulated that a vendor take back mortgage would contain a provision that the mortgage would become due and payable on any resale of the property. When the sale closed, however, the mortgage did not contain the due on sale clause stipulated in the agreement of sale. The property was subsequently sold twice, in sales that would have triggered the due on sale clause, and then the mortgage went into default. JG and IS sold the property under power of sale, but there was a deficiency of $297,434 on their recovery of the mortgage debt.

JG sued FZ for solicitor's negligence in respect of the mortgage. IS, who was then involved in matrimonial proceedings with JG, refused to join in the action as a plaintiff because FZ was her brother-in-law. JG, however, joined IS as a defendant. IS then counterclaimed against JG claiming occupation rent with respect to JG's occupation of their former matrimonial home for a period of over six years after they agreed it should be sold.

The claim and counterclaim were tried. The trial judge, McKenzie J., held that FZ was negligent and required to pay damages assessed at $297,434. These damages were to be paid to both the plaintiff JG and also the defendant IS. On the counterclaim, McKenzie J. held that JG was liable to pay occupation rent of $79,500. However, he further held that this liability was eliminated by an $89,000 credit on account of three judgment debts of IS, which had a face value of $151,000. The three judgment debts had been assigned to JG, who had purchased them for $89,000. Thus, McKenzie J. held that IS's liability as a judgment debtor could be set off against JG's liability for occupation rent. McKenzie J., however, also ordered that the executions against IS were fully extinguished.

FZ appealed the finding of solicitor's negligence, the finding that the damages were reasonably foreseeable and the requirement that any damages be paid to IS. JG appealed the findings in the counterclaim that he was liable for occupation rent and that the executions against IS had been extinguished.

Held, FZ's appeal should be allowed in part; JG's appeal should be allowed in part.

In the absence of a palpable or overriding error, the Court of Appeal will not interfere with findings of fact made by a trial judge. FZ owed JG and IS a duty of care, and, in light of the trial judge's findings of fact, he breached that duty to JG. There was no merit in FZ's appeal on the issue of liability. On the issue of the assessment of damages, it was foreseeable that there might have been some loss if the due on sale provision as contained in the agreement was not included in the mortgage. There was no merit in FZ's appeal on the issue of damages.

The most difficult issue concerned whom FZ should be required to compensate in light of the fact that IS chose not to sue FZ. However, a party who has not sought relief cannot obtain a judgment. Further, in the circumstances of this case, it did not follow that because FZ breached the duty he owed JG that he also breached the duty he owed IS. One joint tenant is not the agent of the other. One joint tenant may waive a solicitor's negligence claim thus exposing the solicitor to a claim in negligence only by the other joint tenant. FZ should not have been required to compensate a defendant who did not seek compensation from him. FZ was only liable to JG in the amount of JG's loss, which was one-half of $297,494. Accordingly, FZ's appeal should be allowed in part.

Turning to JG's appeal, since there was joint ownership of the matrimonial home and since JG occupied it for over six years after the matrimonial separation, there was jurisdiction to order JG to pay occupation rent if it was reasonable and equitable to do so. In a family law context, some relevant factors are the timing of the claim, the duration of occupancy, the inability of the non-resident spouse to realize on the equity in the property, reasonable credits to be set off against the rent and other competing claims. An appellate court will not interfere with the exercise of the trial judge's discretion about occupation rent, unless the finding is unreasonable or the trial judge erred in principle. In this case, the order to pay occupation rent should not be set aside.

The trial judge erred in extinguishing JG's rights as assignee of the three judgments in exchange for the $89,000 set-off against his occupation rent obligation. IS should not have been relieved of her obligation to pay the face value of the three judgments validly assigned to JG. He was entitled to stand in the place of the three judgment creditors, and his motives in acquiring the judgments were not relevant. Further, the doctrine of unjust enrichment did not prevent JG from asserting the full face value of the judgments against IS. She owed the three judgments, and it would be she and not JG who would be unjustly enriched if she was forgiven from paying the remaining value of the judgments. The trial judgment should be varied accordingly.

APPEAL from a judgment in an action for damages for solicitor's negligence.

Cases referred to 337965 B.C. Ltd. v. Tackama Forest Products Ltd. (1992), 1992 CanLII 5964 (BC CA), 67 B.C.L.R. (2d) 1, 91 D.L.R. (4th) 129 (C.A.), revg in part (1991), 1991 CanLII 753 (BC SC), 64 B.C.L.R. (2d) 131, 87 D.L.R. (4th) 753 (S.C.); Di Guilo v. Boland, 1958 CanLII 92 (ON CA), [1958] O.R. 384, 13 D.L.R. (2d) 510 (C.A.); Equity Waste Management of Canada Corp. v. Halton Hills (Town) (1997), 1997 CanLII 2742 (ON CA), 35 O.R. (3d) 321, 40 M.P.L.R. (2d) 107 (C.A.), revg (1994), 22 M.P.L.R. (2d) 167 (Ont. Gen. Div.), supp. reasons (1995), 1995 CanLII 7182 (ON SC), 22 O.R. (3d) 796, 27 M.P.L.R. (2d) 123 (Gen. Div.); Gottardo Properties (Dome) Inc. v. Toronto (City) (1998), 1998 CanLII 6184 (ON CA), 162 D.L.R. (4th) 574, 46 M.P.L.R. (2d) 309 (Ont. C.A.), affg (1994), 1994 CanLII 11004 (ON SCDC), 116 D.L.R. (4th) 533, 20 M.P.L.R. (2d) 230 (Ont. Div. Ct.), affg (1992), 1992 CanLII 8684 (ON SC), 96 D.L.R. (4th) 1, 13 M.P.L.R. (2d) 197 (Ont. Gen. Div.); Irrsack v. Irrsack (1979), 1979 CanLII 1647 (ON CA), 27 O.R. (2d) 478, 106 D.L.R. (3d) 705 (C.A.), affg (1978), 1978 CanLII 2158 (ON SC), 22 O.R. (2d) 245, 93 D.L.R. (3d) 139 (H.C.J.); Kienzle v. Stringer (1981), 1981 CanLII 1851 (ON CA), 35 O.R. (2d) 85, 130 D.L.R. (3d) 272, 21 R.P.R. 44 (C.A.), revg in part (1980), 14 R.P.R. 29 (Ont. S.C.); Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, 20 Alta. L.R. (3d) 296, 115 D.L.R. (4th) 478, 168 N.R. 381 Statutes referred to Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, s. 53 Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 5.03

Frederick E. Leitch, Q.C., for appellant Griffiths. J. Brian Casey, for appellant Zambosco. John M. Banfill, for respondent Sloan.

The judgment of the court was delivered by

OSBORNE A.C.J.O.:--

Overview

[1] John Griffiths sued his solicitor, Frank Zambosco, alleging negligence in respect of a vendor take back mortgage to Griffiths and his then-wife, Amy Griffiths, now known as Irmgard Catherine Sloan ("Sloan"). When Sloan refused to join in Griffiths' action as a plaintiff, Griffiths added her as a defendant under rule 5.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Sloan then counterclaimed against Griffiths for occupation rent for Griffiths' occupation of the parties' matrimonial home.

[2] Griffiths' claim against Zambosco and Sloan's counterclaim against Griffiths were tried by MacKenzie J. In reasons delivered July 16, 1999, the trial judge concluded that Zambosco was negligent in his work as Griffiths' and Sloan's solicitor. He held that Zambosco was required to pay compensatory damages to both Griffiths and Sloan, which he assessed at $297,434. He also found that Griffiths was liable to Sloan for occupation rent subject to certain credits, or "chargebacks", including an $89,000 credit for three judgment debts against Sloan that Griffiths purchased from the judgment creditors for $89,000, but whose face value at the time was $151,000. Having given Griffiths an $89,000 credit referable to the three judgments Griffiths purchased, the trial judge then extinguished Griffiths' rights against Sloan as assignee of the judgment debts and ordered that the executions filed against her be lifted.

[3] I note here that the August 19, 1999 trial judgment, as issued and entered, requires that Zambosco pay each of Griffiths and Sloan $297,434 (see paras. 5 and 6 of the judgment). The trial judge's comments and reasons are somewhat confusing on the issue of the quantum of the damages caused by Zambosco's negligence. In his September 10, 1999 supplementary endorsement at para. 19, he referred to the $297,494 as "representing [Sloan's] share of the damages award". However, while the trial judge clearly meant to award damages to Sloan, it does not appear to me that he in fact intended to award each of Griffiths and Sloan $297,494. When the actual numbers are examined, the total loss caused by Zambosco's negligence, as found by the trial judge, was $297,494. Indeed, when Griffiths and Zambosco were debating how much interest Zambosco should pay, the trial judge adopted Griffiths' position and assessed total damages for Zambosco's negligence at $297,494.

[4] The trial judgment gives rise to two appeals. First, Zambosco appeals from the trial judge's finding of solicitor's negligence. He further takes issue with the quantum of the damages assessed by the trial judge on the ground that the damages were not foreseeable. Finally, he appeals from the trial judge's finding that Zambosco was required to pay damages to Sloan who chose not to join in Griffiths' action against him. Second, Griffiths appeals from the trial judge's finding that Griffiths was liable to Sloan for occupation rent. Assuming that Griffiths was liable to pay occupation rent, he appeals from the trial judge's related declaration extinguishing Griffiths' rights against Sloan as assignee of the three judgments against her.

The Evidence

[5] Zambosco is a solicitor who practises in Oakville. He is married to Sloan's sister. Griffiths is a chartered accountant who was married to Sloan at the time of the alleged negligence by Zambosco. In May 1988, Griffiths and Sloan agreed to sell an investment property that they owned jointly (the "Lakeshore property") for $800,000. The agreement of purchase and sale ("the agreement") provided that $550,000 of the $800,000 purchase price would be paid by way of a vendor take back mortgage bearing interest at 10 per cent and having a five-year term. The agreement also provided that the vendor take back mortgage would become "due and payable" on any resale of the Lakeshore property, or on the demolition of the building located on the property. I will refer to this clause in the agreement and mortgage back as the "due on sale" clause.

[6] The vendor take back mortgage to Griffiths and Sloan jointly was registered when the Lakeshore property deal closed on August 3, 1988. By that time, Griffiths and Sloan had separated. The mortgage back was prepared by the purchaser's solicitors and submitted to Zambosco for his approval. It contained a demolition provision requiring the purchaser to reduce the principal of the mortgage by $50,000 in the event that the building on the property was demolished. The mortgage did not include the due on sale provision contained in the agreement. Zambosco testified that the purchaser, Peros, had requested or demanded that the mortgage back not include the due on sale clause, and that the demolition clause be modified. The critical factual issue at trial was whether Zambosco had instructions from Griffiths to delete the due on sale clause from the mortgage. Zambosco testified that he did receive those instructions. Griffiths testified that he gave no such instructions to Zambosco. Griffiths acknowledged that to accommodate the purchaser's concerns he agreed to change the demolition clause in the agreement, which had provided that if the building on the property were demolished, the mortgage would become due and payable.

[7] In his reporting letter to Griffiths and Sloan dated September 29, 1988, Zambosco made specific reference to the revised demolition provision in the vendor take back mortgage. His letter did not refer to the deletion of the due on sale clause from the mortgage. Nor did it mention any instructions Zambosco said he received from Griffiths on that subject.

[8] A copy of the vendor take back mortgage was sent to Griffiths and Sloan along with Zambosco's reporting letter. Griffiths testified that he did not examine the mortgage back or turn his mind to the due on sale clause. He simply assumed that the due on sale clause was included in the mortgage.

[9] As it turned out, there were two subsequent sales of the Lakeshore property, either one of which would have triggered the due on sale clause had it been made part of the mortgage. After the sale to Peros, the subsequent sales of the Lakeshore property were:

First sale -- from Peros to Quin Que Enterprises on December 15, 1988 for $1,275,000;

Second sale -- from Quin Que to Oaklake Properties Ltd. on June 1, 1989 for $1,500,000.

[10] Shortly before the first resale of the Lakeshore property, the purchaser's solicitors asked for a mortgage statement for assumption purposes. Zambosco prepared the statement and on November 2, 1988 wrote to the original purchaser's solicitors about the absence of a due on sale provision in the vendor take back mortgage. He characterized that absence as a "conveyancing error". This is inconsistent with his trial evidence in which he clearly stated that he had allowed the due on sale provision to be deleted on Griffiths' instructions. Griffiths testified that he was not aware of Zambosco's November 2, 1988 letter, or the mortgage statement Zambosco prepared. Indeed, he said that in November 1988, ". . . I didn't even know there was a sale happening."

[11] Griffiths testified that he learned of the first resale of the Lakeshore property in early January 1989. He telephoned Zambosco on January 4, 1989 and Zambosco told him that the mortgage was not assumable. Griffiths then checked "the documents" and telephoned Zambosco again on January 10, 1989. Zambosco said that he would try to collect the mortgage debt in full from the purchaser, Peros. If that could not be done, he said he would find out who bought the Lakeshore property and obtain post-dated cheques and proof of insurance from the new purchaser. Griffiths did not put Zambosco on notice of any claim based on solicitor's negligence that Griffiths might have had against Zambosco because of the missing due on sale provision. Nor did he do anything to suggest that he was waiving any claim against Zambosco.

[12] In May 1989, Griffiths learned that the second purchaser, Quin Que, was about to sell the Lakeshore property to Oaklake. After the second resale, he met with his Toronto solicitors who were dealing with his family law problems. In the course of those discussions, Griffiths' Toronto solicitors were made aware of the vendor take back mortgage and Griffiths' 50 per cent interest in it. This interest was recorded on Griffiths' net family property statement.

[13] Griffiths continued to cash monthly mortgage cheques from the Lakeshore property's new owner, Oaklake which had purchased the property on June 1, 1989. In July and September 1990, the monthly mortgage cheques were returned NSF. Griffiths spoke to Zambosco and in accordance with Griffiths' instructions Zambosco requested replacement cheques from Oaklake. Once again, Griffiths did not put Zambosco on notice of any claim based on Zambosco's solicitor's negligence. Nor did he do anything to suggest that he was waiving any claim he might have had.

[14] After the sale of the Lakeshore property by Griffiths and Sloan closed in August 1988, Zambosco did not bill either Griffiths or Sloan for any of his post-closing services in respect of the vendor take back mortgage.

[15] By February 1991, the building on the Lakeshore property was boarded up and the mortgage was in default. Griffiths told Zambosco that "it was also [Zambosco's] problem" and that "all three of us were in trouble". Griffiths also instructed Zambosco to commence power of sale proceedings. By the time the property was sold under power of sale, the real estate market had collapsed. When all relevant expenses were taken into account, Griffiths' and Sloan's recovery on the mortgage was $297,434 less than what was owing on the vendor take back mortgage. The trial judge assessed the damages caused by Zambosco's negligence in that amount.

[16] Griffiths sued Zambosco for solicitor's negligence. Sloan chose not to join in the action, in part because Zambosco was her brother-in-law. When she refused to join him as a plaintiff in his action against Zambosco, Griffiths moved under rule 5.03 to add Sloan as a defendant. He did this to ensure recovery of the equalization payment Sloan owed him. Under the terms of their family law settlement, Sloan owed Griffiths an equalization payment of $197,033.86. [See Note 1 at end of document] Assuming that he would have problems collecting from Sloan, Griffiths attempted to ensure that Sloan would recover damages against Zambosco for Zambosco's alleged solicitor's negligence by bringing Sloan into the action. Griffiths' strategy was to then apply Sloan's recovery from Zambosco to her equalization payment debt.

[17] Griffiths and Sloan separated in the spring of 1988. Immediately before their separation, they lived in their jointly owned matrimonial [home] on Trafalgar Road in Oakville. In January 1992, they settled their family law property issues and signed minutes of settlement confirming their agreement. The minutes of settlement were incorporated in a consent judgment dated February 13, 1992. In addition to providing for an equalization payment to Griffiths of approximately $197,000, the consent judgment provided that the matrimonial home be sold.

[18] On February 13, 1992, when the consent judgment issued, the matrimonial home was vacant. Consistent with the consent judgment, the matrimonial home was listed for sale until April 1995, when it was taken off the market. Griffiths moved back into the matrimonial home in June 1992. He used the matrimonial home as his residence and for some business purposes from June 1992 to the date of the trial, a period of over six years. He paid all of the expenses related to the matrimonial home in that period.

[19] In January 1992 when Griffiths and Sloan signed their minutes of settlement, Sloan did not disclose that three of her creditors held judgments against her. The three creditors and their judgments were:

-- Bank of Nova Scotia $16,675.62

-- Municipal Savings and Loans Corporation $64,427.69

-- Mortgage Insurance Corporation of Canada $48,865.40

$129,968.71

[20] Griffiths learned about the three judgments against Sloan when he and Sloan were in Zambosco's office in March 1992 to discuss aspects of their family law problems.

[21] By April 1992, the three judgment creditors had filed executions against Sloan's assets, including her interest in the matrimonial home. At that time, the three judgment debts totalled $151,000. Between October 1994 and February 1998, Griffiths, through third party intermediaries, obtained assignments of the three judgments. No issue is taken with the validity of these assignments, although Sloan does question Griffiths' surreptitious approach in obtaining them.

[22] Once Sloan realized that Griffiths had obtained assignments of the three judgments, she counterclaimed against Griffiths for occupation rent. Her claim was based on Griffiths' rent-free occupation of the matrimonial home from June 1992 to the date of trial. In her counterclaim, she also sought an order for the judicial sale of the matrimonial home.

The Trial Judge's Findings

[23] The trial judge found that Zambosco was negligent for failing to ensure that the due on sale clause was included in the vendor take back mortgage. He rejected Zambosco's evidence that Griffiths instructed him to delete the due on sale clause from the mortgage. He assessed the damages caused by Zambosco's negligence at $297,494.58, plus prejudgment interest. In his reasons released on July 16, 1999, he found that Sloan was entitled to occupation rent of $156,000 less "chargebacks" of $143,429, for a net occupation rent entitlement of $12,570. The "chargebacks" included the $89,000 Griffiths paid to obtain the assignments from Sloan's judgment creditors. On September 10, 1999, after hearing counsel's submissions, the trial judge reduced Sloan's occupation rent entitlement by 50 per cent, but left the credits against occupational rent intact. He also declared that since Griffiths had received a credit against occupation rent for the full amount that he paid for the three judgments against Sloan, the three judgments were therefore satisfied and the "executions shall be removed from title". I will refer to this aspect of the occupation rent issue shortly.

[24] As I have said, Zambosco appeals from the trial judge's finding of solicitor's negligence and from his assessment of damages which Zambosco contends was excessive. He further submits that the trial judge erred in awarding damages to Sloan in light of the fact that she chose not to sue him.

[25] Griffiths appeals from the trial judge's finding that he pay occupation rent to Sloan and from the trial judge's further order that once Griffiths received a credit against occupation rent equal to the amount he paid to obtain assignments of the three judgments, the three judgment debts were extinguished. Griffiths submits that as an assignee of the three judgments, he should be able to collect the face value of the judgments from Sloan less, of course, the $89,000 for which he had already been given a credit. In March 1999, the three judgments against Sloan had a face value of $371,156.

The Zambosco Appeal

(i) The issue of liability

[26] In support of his submission that the trial judge's finding of solicitor's negligence is in conflict with a "preponderance" of the evidence, Zambosco points to various features of the evidence which he contends the trial judge ignored. I see no need to review the evidence upon which Zambosco relies. The critical issue at trial in respect of the solicitor's negligence claim was the credibility of Zambosco and Griffiths and the reliability of their evidence on the factual issue whether Griffiths did nor did not give instructions to Zambosco to delete the due on sale clause from the mortgage.

[27] In finding against Zambosco on the critical issue of credibility, the trial judge attached considerable weight to Zambosco's November 2, 1988 letter to the purchaser's solicitor. In that letter, Zambosco referred to the failure to include the due on sale clause in the mortgage as a "solicitor's error". The trial judge concluded that Zambosco's November 2nd letter was inconsistent with his trial evidence. He said:

If Griffiths had given the instructions alleged by Zambosco, it is untenable that Zambosco would have written this letter; there would have been no reason to write this letter.

[28] The trial judge rejected Zambosco's explanation for the letter and found that Griffiths did not instruct Zambosco to delete the due on sale clause from the mortgage. He reviewed the duty of care that Zambosco owed Griffiths and Sloan as their solicitor as well as the applicable standard of care. He then concluded that Zambosco was negligent for permitting the Lakeshore property sale to close and the vendor take back mortgage to be registered without the due on sale provision in it.

[29] In the absence of a palpable or overriding error, this court will not interfere with findings of fact made by a trial judge. It is not the function of an appellate court to substitute its views on factual matters for the views of the trial judge. See Equity Waste Management of Canada Corp. v. Halton Hills (Town) (1997), 1997 CanLII 2742 (ON CA), 35 O.R. (3d) 321, 40 M.P.L.R. (2d) 107 (C.A.) and Gottardo Properties (Dome) Inc. v. Toronto (City) (1998), 1998 CanLII 6184 (ON CA), 162 D.L.R. (4th) 574, 46 M.P.L.R. (2d) 309 (Ont. C.A.).

[30] I agree with the trial judge that Zambosco owed a duty of care to Griffiths and Sloan and, in light of the trial judge's findings of fact, that he breached that duty. Common sense and the expert evidence support those findings.

[31] In my view, the trial judge did not err in his assessment of the evidence. He was entitled to conclude that Zambosco's November 2nd letter was inconsistent with Zambosco's trial evidence and to reject Zambosco's explanation for writing the letter. I see no merit in Zambosco's appeal on the issue of liability.

[32] Zambosco further submits that after it was discovered, Griffiths waived the error in the vendor take back mortgage and instead chose to look to the new owners for payment of the mortgage debt.

[33] One of the problems with Zambosco's waiver submission is that he did not plead waiver in his statement of defence. On his appeal, he brought a motion to amend his statement of defence so that waiver would be a live issue. I do not think it is necessary to specifically deal with that motion. Waiver can only arise where the evidence demonstrates that the party allegedly waiving a right has full knowledge of that right and evinces an unequivocal and conscious intention to abandon it. See Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, 115 D.L.R. (4th) 478. On the evidence, it cannot be said that Griffiths, by his conduct, waived any rights he had against Zambosco. In my opinion, taken at its highest, the evidence on which Zambosco relies does not support a finding that Griffiths waived Zambosco's conveyancing error and decided to look for payment to the subsequent purchasers of the property instead. Both Griffiths and Zambosco hoped that they could wait out the five-year mortgage term without there being any loss on the mortgage. The purchase prices on the two subsequent resales supported Griffiths' and Sloan's assumption that they had a substantial equity cushion. This "wait it out" approach, an approach Zambosco seems to have supported, does not constitute waiver by Griffiths of his rights against Zambosco on the issue of damages.

(ii) The quantum of damages

[34] Zambosco's submissions on the issue of damages centre mainly on the issue of foreseeability. In particular, Zambosco submits that the loss which eventually occurred was not foreseeable when the due on sale clause was not incorporated in the mortgage back.

[35] The trial judge assessed the damages on the premise that, had the due on sale provision been included in the mortgage when the Lakeshore property was eventually sold under power of sale, there would have been no loss since the mortgage would have been paid out in December 1998 when Peros sold the property to Quin Que.

[36] At trial, Zambosco challenged some of Griffiths' interest calculations, but he did not take issue with the method by which the damages were quantified. I do not think that it is appropriate at this stage to attempt to introduce a new method of assessing damages when the trial judge was given no real option on this issue.

[37] In my view, it was foreseeable in this case that there might have been some loss if the due on sale provision as contained in the agreement was not included in the mortgage. This is not a case where a solicitor's negligence led to a series of losses, with the result that foreseeability became a live issue. See Kienzle v. Stringer (1981), 1981 CanLII 1851 (ON CA), 35 O.R. (2d) 85, 130 D.L.R. (3d) 272 (C.A.). I see no merit in Zambosco's submissions on the issue of damages.

(iii) The issue of Zambosco's liability to Sloan

[38] The most difficult issue on Zambosco's appeal concerns Sloan's judgment against Zambosco. Griffiths' claim against Zambosco was based in negligence arising out of an error made in the preparation and eventual registration of the vendor take back mortgage. It was not a claim under the mortgage itself. In my opinion, the critical issue is therefore not the determination of the total loss, which would of course include Sloan's 50 per cent interest in it. Rather, the issue is who Zambosco should be required to compensate for his negligence, and in what amount.

[39] As I have said, Sloan chose not to sue Zambosco. Nor did she counterclaim against him once Griffiths added her as a defendant. The issue whether a person who has not sued a defendant could nonetheless obtain judgment was considered by the B.C. Court of Appeal, albeit in a quite different factual context, in 337965 B.C. Ltd. v. Tackama Forest Products Ltd. (1992), 1992 CanLII 5964 (BC CA), 91 D.L.R. (4th) 129 at p. 189, 67 B.C.L.R. (2d) 1 (C.A.). In that case, partners in a venture financed by a limited partnership brought an action to force a cash distribution. Five limited partners chose not to join in the action but were brought in as defendants, apparently on the theory that since all of the limited partners were "joint contractors", all of them had to be in the action before any of them could succeed. Southin J.A. disagreed. She concluded that the five limited partners who chose not to sue could not obtain judgment in their favour. She said at p. 189 D.L.R.:

The question for us is whether these defendants [the five limited partners who chose not to sue] could obtain judgment in this proceeding. I think not. I know of no authority for the proposition that judgment can be given in favour of one defendant against another when the first defendant has made no direct claim against the other on the pleadings.

(Emphasis added)

[40] I agree with Southin J.A. that a party who has not sought relief in the relevant pleadings cannot obtain a judgment. In the circumstances of this case, quite apart from the pleadings issue, I do not think that it follows that because Zambosco breached the duty he owed to his client Griffiths, he also breached the duty he owed to Sloan who held the mortgage back jointly with Griffiths.

[41] A solicitor may breach the duty of care he owes to one joint tenant without breaching the duty of care he owes to the other. The fact that joint tenants may have different interests and concerns was clear in this case, since Griffiths and Sloan were separated when the Lakeshore property deal closed. Manifestly, Zambosco owed a duty of care to both Griffiths and Sloan while he acted for both Griffiths and Sloan on real estate matters. He acted for Sloan against Griffiths in connection with their family law problems. In my view, Zambosco should have obtained instructions from both Griffiths and Sloan before he agreed to accept the vendor take back mortgage which did not contain a due on sale clause consistent with the terms of the agreement.

[42] The damages assessed by the trial judge were compensatory in the sense that their purpose was to compensate Griffiths (and according to the trial judge, Sloan) for Zambosco's negligence. As I have already mentioned, there is no doubt that Zambosco owed a duty of care to both Griffiths and Sloan. Both parties were his clients on the sale of the Lakeshore property, including the vendor take back mortgage component of the sale. However, it is not clear that Zambosco breached the duty of care he owed to Sloan. In her pleadings and evidence, Sloan did not suggest that Zambosco breached his duty to her. Unlike Griffiths, she did not deny that Zambosco had received instructions with respect to the mortgage. She was unable to remember much about the circumstances of the closing of the sale of the Lakeshore property, including the vendor take back mortgage.

[43] The order Griffiths obtained adding Sloan as a defendant to the action did not expose Zambosco to a claim by Sloan for damages for solicitor's negligence. Although Griffiths and Sloan held the mortgage back on joint account, when it came to Zambosco's dealings with them they were two separate clients who had different interests to protect. One joint tenant is not, by the existence of the joint tenancy, the agent of the other. One joint tenant by his or her conduct may waive a solicitor's negligence thus exposing the solicitor to a claim in negligence only by the other joint tenant. Joint tenants have a separate, albeit indivisible, interest in the jointly held asset. One joint tenant's interest in jointly held property is exigible. Griffiths and Sloan quickly realized this when they learned that Sloan's three judgment creditors had filed executions against Sloan's interest in the parties' matrimonial home.

[44] In my opinion, Zambosco should not be required to compensate a defendant who did not seek compensation from him in the action. For those reasons, I would give effect to this ground of Zambosco's appeal and set aside para. 6 of the judgment, which requires Zambosco to pay damages to Sloan. Zambosco is required to pay damages only to Griffiths in an amount equal to Griffiths' loss arising out of Zambosco's negligence. Griffiths' loss is one-half of $297,494, that is, $148,747.50. That is his share of the loss caused by the omission of the due on sale provision.

The Griffiths Appeal

[45] Griffiths' appeal raises two issues. First, was the trial judge correct in ordering Griffiths to pay occupation rent to Sloan from June 1992 to the date of trial and beyond? Second, did the trial judge have jurisdiction to extinguish Griffiths' rights as assignee of three judgments against Sloan, and if so was he correct in extinguishing those claims?

[46] On August 19, 1999, after he released his original reasons, the trial judge met with counsel. In reasons released on September 10, 1999, he accepted Griffiths' submissions on the quantification of occupation rent and reduced the occupation rent that he had originally ordered Griffiths to pay by 50 per cent. It is accepted that this change in the quantification of occupation rent was correct.

[47] The trial judge did not, however, accept Griffiths' submissions on the issue of Griffiths' rights as assignee of the three judgments against Sloan. Consistent with his July 16, 1999 reasons, the trial judge concluded that one of the appropriate credits against occupation rent was $89,000, that is what Griffiths paid to secure the assignments. No issue is taken with the inclusion of $89,000 as one of the credits against Griffiths' occupation rent obligation. Nor is any issue taken with any of the other credits against occupation rent. However, in dealing with the $89,000 credit, the trial judge held that payment of the $89,000, as a credit against Griffiths' occupation rent obligation, would extinguish the three judgment debts that Griffiths held as assignee. As I have said, Griffiths submits that the trial judge was wrong in limiting his rights as a judgment creditor by assignment to $89,000.

(i) Occupation rent

[48] In my view, occupation rent is somewhat moot given the 50 per cent reduction in gross occupation rent and the quantum of the credits against occupation rent. However, as Griffiths put occupation rent in issue, I will deal with it.

[49] Since Griffiths and Sloan owned the matrimonial home jointly, and since Griffiths occupied it for over six years after he and Sloan separated, the trial judge clearly had jurisdiction to order Griffiths to pay occupation rent if it was reasonable and equitable to do so. See Irrsack v. Irrsack (1979), 1979 CanLII 1647 (ON CA), 27 O.R. (2d) 478, 106 D.L.R. (3d) 705 (C.A.). The relevant factors to be considered when occupation rent is in issue will vary from case to case. However, in a family law context some factors are consistently taken into account. They include:

-- The timing of the claim for occupation rent;

-- The duration of the occupancy;

-- The inability of the non-resident spouse to realize on her equity in the property;

-- Any reasonable credits to be set off against occupation rent;

-- Any other competing claims in the litigation.

[50] The weight to be given to these and other relevant factors is a matter for the trial judge to determine. This court will not interfere with the exercise of the trial judge's discretion to order or to refuse to order occupation rent, unless the finding is unreasonable or the trial judge has erred in principle.

[51] The trial judge gave significant weight to the length of Griffiths' rent-free occupancy of the matrimonial home. At the same time, he was alert to Griffiths' argument that his occupation of the matrimonial home did not in any real way deny Sloan access to her equity in it. Although the trial judge could have come to a different conclusion on the occupation rent issue, I am not satisfied that his finding was unreasonable or that he erred in principle. Accordingly, I would not give effect to Griffiths' submission that the trial judge's order that he pay occupation rent should be set aside.

[52] The trial judge dealt with Sloan's occupation rent claim in his reasons released on July 16, 1999. At that time he found that Sloan was entitled to occupation rent and he quantified her entitlement at $156,000. In considering what should be set- off against that entitlement, he concluded that Griffiths should receive credits against his occupation rent obligation totalling $143,429. The credits included the $89,000 which Griffiths paid to obtain assignments of the three judgments against Sloan. The trial judge included the $89,000 as a credit because Sloan acknowledged that the judgments assigned to Griffiths compromised her equity in the matrimonial home. In any case, no issue is taken with the inclusion of the $89,000 Griffiths paid to Sloan's judgment creditors as a credit against Griffiths' occupation rent obligation. After deducting the occupation rent credits from Griffiths' gross occupation rent obligation, the trial judge found Griffiths owed Sloan $12,500 for occupation rent.

[53] The occupation rent issue was revisited on August 19, 1999 when counsel made submissions to the trial judge on a number of issues, including occupation rent. In reasons released on September 10, 1999, the trial judge reduced Sloan's gross occupation rent entitlement by 50 per cent, as I previously noted. This adjustment reduced Griffiths' occupation rent obligation to $79,500. [See Note 2 at end of document]

[54] In light of the fact that Griffiths and Sloan owned their matrimonial home jointly, the parties acknowledge that the trial judge was correct in reducing Griffiths' occupation rent obligation by 50 per cent. Similarly, no issue is taken with the trial judge's decision to limit the credits against the occupation rent by one-half to reflect the value of Sloan's share of the expenses connected with the matrimonial home. [See Note 3 at end of document] The trial judge determined that Griffiths' gross occupation rent obligation was $79,500 and that the total credits against occupation rent, including the $89,000, were $143,429. Since no issue is taken with the trial judge's quantification of either the occupation rent or the credits against occupation rent, using the trial judge's final numbers, Griffiths owed Sloan nothing for occupation rent. Indeed, one arrives at a zero balance for occupation rent by using only $63,929 of the total credits available to Griffiths.

[55] By way of summary, para. 8 of the formal judgment provides that Sloan was entitled to $79,500 for occupation rent, subject to Griffiths' ongoing post-trial obligation to pay $1,500 per month until the matrimonial home was sold. Paragraph 9 of the judgment provided that the credits to which I have referred be set off against Griffiths' $79,500 occupation rent obligation. Subject to the matter of Griffiths' ongoing occupation rent obligation, the application of these two paragraphs of the judgment leads to a zero balance for occupation rent.

(ii) The Extinguishment of Griffiths' rights as assignee of the three judgments against Sloan

[56] It is against that somewhat confusing background that I turn to consider whether the trial judge was correct in extinguishing Griffiths' rights as assignee of the three judgments in exchange for the $89,000 set-off against his occupation rent obligation. For reasons that follow, I think that the trial judge erred in relieving Sloan of her obligation to pay the face value of the three judgments assigned to Griffiths.

[57] I should note at the outset that there is no reference to the extinguishment of Griffiths' rights as assignee of the three judgments in the formal judgment dated August 19 or the Reasons for Judgment dated July 16, 1999. However, the trial judge made his decision clear on the extinguishment issue at para. 2 of his supplementary reasons dated September 10, 1999:

The principal amount of the plaintiff's claim for the executions against the defendant Sloan registered on title to the Trafalgar Road property shall be limited to $89,000.00. The allocation of such sum to the account of the plaintiff shall be a satisfaction of the debts represented by such executions and the executions shall be removed from title.

(Emphasis added)

[58] Griffiths submits that there was no pleading about, or any relief sought in respect of his rights as assignee of the three judgments against Sloan. He therefore contends it was not open to the trial judge to make the order he did in respect of Griffiths' rights as assignee.

[59] By contrast, Sloan makes three submissions in support of the trial judge's conclusion on Griffiths' rights as assignee. First, she emphasizes that although the judgments were assigned to Griffiths, the assignments were executed surreptitiously through nominees. She notes that Griffiths' motive for purchasing the judgments was to use them to extinguish her one- half interest in the matrimonial home. Second, she argues that since Griffiths paid for the assignments there are now no rights of any third party creditors involved. Finally, she submits that it would [be] unjust and inequitable were Griffiths to be permitted to assert a claim against Sloan representing the full value of the judgments. She submits that if Griffiths were permitted to claim the face value of the judgments against her, he would be unjustly enriched at her expense.

[60] I see no merit in Sloan's appeal on this issue. No issue is taken with the validity of the assignments of the three judgments. Thus, in the circumstances, Griffiths has a legal right to sue Sloan in his own name to recover the three judgment debts. See Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34. Section 53 of that Act provides:

53(1) Any absolute assignment made on or after the 31st day of December, 1897, by writing under the hand of the assignor, not purporting to be by way of charge only, of any debt or other legal chose in action of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action is effectual in law, subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted, to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor.

See also Di Guilo v. Boland, 1958 CanLII 92 (ON CA), [1958] O.R. 384 at pp. 384-404, 13 D.L.R. (2d) 510 (C.A.).

[61] In my opinion, Griffiths' motives in acquiring the assignments are not of any real relevance. First, I do not think that the absence of any third party rights is determinative or even relevant to the issue whether he can recover the face value of the judgments he now owns. Under s. 53(1) [of] the Conveyancing and Law of Property Act, once a judgment is assigned to a third party, that third party stands in the place of the original creditor with respect to any lawful claim. Unless Sloan can make an estoppel argument, as long as Griffiths is entitled to stand in the shoes of the three judgment creditors, he is entitled to sue to recover the existing debts in his own name.

[62] Finally, the equity issues raised by Sloan seem to me to cut both ways. Even after Sloan signed the minutes of settlement in January 1992, she continued to run up debts which eventually resulted in executions being filed against her interest in the matrimonial home. The doctrine of unjust enrichment does not prevent Griffiths from asserting the full face value of the judgments against Sloan. Although Griffiths will profit from the three assignment transactions if he collects the full value of the debts, there will be no corresponding deprivation to Sloan. Quite apart from Griffiths' intervention, Sloan owed the three judgment creditors the full face value of their judgments. Indeed, by forgiving the remaining value of her judgment debts, the difference between the face value of the three judgments and the net credit Griffiths received against occupation rent -- the trial judge has enriched Sloan at Griffiths' expense, not the reverse.

[63] Given the absence of deprivation to Sloan, whether there is a juristic reason for the enrichment is moot. However, even if there is a deprivation, the juristic reason that justifies what Sloan characterizes as a windfall is s. 53(1) of the Conveyancing and Law of Property Act.

[64] Sloan ran up debts which eventually attached to her interest in the matrimonial home. If Griffiths were to enforce those debts, Sloan does not "lose" her equity. She has already compromised her equity by incurring the three judgment debts in the first place. It is an uncontroverted fact that had Griffiths not purchased the debts, Sloan would have lost her equity in the matrimonial home by the time of trial.

[65] I would therefore set aside the part of the trial judge's order extinguishing Griffiths' rights as assignee of the three judgment debts.

Summary and Conclusion

[66] For the foregoing reasons, I would allow Zambosco's appeal in part by setting aside that part of the judgment requiring Zambosco to compensate Sloan for his negligence. I would vary the judgment by requiring Zambosco to pay damages to Griffiths of $148,747 (one-half of the total damages assessed by the trial judge). In the circumstances, Sloan should have no interest in Griffiths' $148,747 recovery. I would give Zambosco his costs of his appeal since he has achieved substantial success.

[67] On the issue of occupation rent, it is apparent that the credits against occupation rent exceed $79,500, Sloan's gross occupation rent entitlement as found by the trial judge. As far as the occupation rent debt goes, the $143,429 credit should, in my view, be exhausted once the credits equal $79,500. If it makes any economic sense to do so, the balance of the credits can be taken into account upon the sale of the matrimonial home. At that time, the interests of Griffiths and Sloan in the matrimonial home can be adjusted.

[68] I see no proper basis to extinguish Griffiths' rights as assignee of the three judgments against Sloan. Griffiths' rights of assignment remain intact. This will not require a variation of the judgment.

[69] I would give Griffiths 50 per cent of his costs of his appeal. He did not have to appeal occupation rent since the trial judgment, as it stood, required him to pay nothing to Sloan for occupation rent. He was, however, successful on the issue of his rights as assignee of the three judgments against Sloan.

Order accordingly.

Notes

Note 1: The equalization payment as determined by the minutes of settlement was reduced to $163,812 when the Lakeshore property was sold.

Note 2: $79,500 is not one-half of $156,000; however, no issue was taken with this apparent miscalculation.

Note 3: The $89,000 credit for the amount that Griffiths paid to obtain the assignments was not reduced by 50 per cent.