DATE: 20030523

DOCKET: C37616

COURT OF APPEAL FOR ONTARIO

MOLDAVER, GOUDGE AND CRONK JJ.A.

B E T W E E N:

JOHN SUSIN, ROMACO CONSTRUCTION CO. A DIVISION OF QUEENSMEADOW DEVELOPMENTS LTD., AND JOHN SUSIN CONSTRUCTION CO. LTD.

Cynthia Sefton and Michael Buonaguro for the appellant

Plaintiffs

(Appellant)

• and -

HOWARD SWARTZ

Sandra L. Secord for the respondent

Defendant (Respondent)

Heard: May 20, 2003

On appeal from the judgment of Justice Silia Seppi of the Superior Court of Justice dated December 21, 2001.

BY THE COURT:

[1] The appellant Queensmeadow Developments Ltd. (QDL) appeals from the dismissal of its claim to recover damages from the respondent for the amounts that it agreed to pay to lien claimants in the consent judgment in the prior lien action. The trial judge found that the appellant was obliged to prove in this action the validity of the lien claims in the prior action, and failed to do so.

[2] In this court, the appellant argues that the trial judge erred and that the respondent is estopped by conduct from contesting the validity of the lien claims or that they were caused by the wrongful actions of the bank.

[3] We disagree.

[4] In this court counsel for the appellant (who was not counsel at trial) was handicapped by the fact that estoppel by conduct was not pleaded or argued at trial nor dealt with by the trial judge. No findings were made setting out the precise nature of the representation by conduct said to have been made, nor the detrimental reliance said to flow from it.

[5] The appellant argues that the representation can be found in the finding by the trial judge that the respondent indicated at the time of the consent judgment that on the facts as related by the appellant it had a strong case against the bank. However, the trial judge also found that the lien claimants other than those claiming in this action were almost assured of recovery of their total claims and that no one clarified the extent of recovery against the bank. Hence, it is far from clear that the respondent’s representation extended to all lien claimants and included those claiming here, or that it went beyond an assertion that the bank had wrongfully removed funds from the appellant’s account to implicitly include an assertion that this caused the default that lead to the filing of the liens. The appellant simply cannot establish the necessary representation for its estoppel by conduct argument.

[6] Nor can it establish the necessary reliance. The appellant says that reliance is constituted by its remaining with the respondent as its lawyer, rather than seeking other counsel to bring the action against the bank. However, the trial judge made no finding to this effect. Indeed, the appellant continuing with the respondent would seem to flow more logically from the respondent’s undertaking to commence the action, not from his opinion about the merits of the case which, by itself, would not have been enough to get the appellant to give up seeking other counsel to commence the action.

[7] Thus, we cannot agree that the respondent is estopped by conduct. The appellant was required at trial to prove that the bank’s actions caused valid lien claims to be created. It failed to do so and its action to recover damages from the respondent for the amount of those liens was properly dismissed.

[8] The appellant’s second argument seeks return of the $10,000 retainer paid from the holdback to the respondent. The appellant argues that there was a complete failure of consideration for this payment.

[9] Again we disagree. Here too, there was no finding by the trial judge. However, the retainer was not just for the action against the bank, which the respondent failed to commence, but for other work as well, some of which appears to have been performed. There would therefore seem to be no basis for the return of the entire $10,000. This court is not in a position to determine at first instance the proportion of the $10,000 used up by the services in fact performed.

[10] More importantly, the appellant QDL was found in the prior action not to have a valid lien and therefore no claim to any part of the holdback. In the consent judgment both the other plaintiffs gave up any claim to any part of the holdback. Thus, none of them have any claim to a return of the $10,000 paid from the holdback whether or not there was a complete failure of consideration.

[11] In the result, both the appellant’s arguments fail and the appeal must be dismissed.

[12] It is therefore unnecessary to deal with the respondent’s arguments styled by way of cross-appeal. They simply seek to sustain the order of the trial judge. However, since these issues were argued we can say that we see nothing wrong with the trial judge’s finding that the limitation period to sue the bank had expired and that, therefore, the respondent was negligent or with her finding that the appellant could not have reasonably discovered the respondents’ breach before November 1989.

[13] The appeal is dismissed. Costs to the respondent fixed on a partial indemnity basis at $10,000 inclusive of disbursements and G.S.T.

Released: May 23, 2003 “MJM”

“M.J. Moldaver J.A.”

“S.T. Goudge J.A.”

“E.A. Cronk J.A.”