DATE: 20050131

DOCKET: C31783

COURT OF APPEAL FOR ONTARIO

RE:

NANCY AGNES ROSE (Plaintiff (Appellant) – and – DAVID MELANSON, GEOFF DEL GRANDE, GRANDMARK FINANCIAL SERVICES LTD., RE-DEL PROPERTY MANAGEMENT LIMITED, LUCILLE DOBSON, DAVID HODGES, ROB McCRUDDEN, JOHN JOSEPH DEL GRANDE, 774232 ONTARIO LIMITED AND DONALD McKEE (Defendants (Respondent in Appeal)

BEFORE:

MOLDAVER, BLAIR AND LAFORME JJ.A.

COUNSEL:

William J. Burden and Linda I. Knol

for the appellant

H.J. Dickie

for the respondent Donald McKee

HEARD:

January 25, 2005

On appeal from the judgment of Justice M.A. Sanderson dated February 24, 1999.

E N D O R S E M E N T

[1] This is an appeal from a judgment dismissing the appellant's action for breach of fiduciary duty and professional negligence. The respondent was the appellant’s former solicitor on a mortgage transaction.

[2] At the outset, the appellant brought a motion to have a new trial ordered on the grounds that significant portions of the trial evidence are lost due to the theft of the court reporter’s carrying bag during the course of trial.

[3] Some portions of the transcript were lost, but in oral argument, counsel for the appellant fairly conceded that in view of an admission by the respondent, we can accept as factual, the one critical item of concern to the appellant. As a result, the motion was no longer being pursued.

[4] The motion is therefore dismissed. Turning then to the appeal.

The Appeal

[5] The grounds of appeal raised by the appellant are that the trial judge misapprehended the evidence in deciding whether the respondent properly acted in the face of a conflict of interest; that she erred in finding that the respondent did not breach a fiduciary duty he owed to the appellant; and that she erred by speculating that the appellant would have gone ahead with the transaction regardless.

[6] The appellant agreed with Mr. Del Grande and Mr. Melanson – two friends and business associates – to lend them, or their company Re-Del, the sum of $300,000 to complete renovations on a commercial property they were acquiring in Richmond Hill (“the Wells Street loan and transaction”). She arranged to borrow those funds from The Royal Bank of Canada and Household Realty Corporation on the strength of mortgages on her home (“the Fernwood transaction”).

[7] The respondent solicitor knew, had acted for, and was acting for Del Grande, Melanson and Re-Del. He had also acted for the appellant once previously, and she was referred to him again in connection with the subject transactions. He discussed with appellant not only the mortgages regarding the Fernwood transaction but also the overall loan transaction.

[8] It is clear that the respondent wanted to act for the appellant on the larger transaction. On his own volition he took steps to obtain some security for the appellant in connection with it because he recognized that she needed protection. Indeed, he warned the appellant against proceeding because of the risky nature of the Wells Street loan and transaction.

[9] The appellant declined to accept his advice in this regard, refused to provide the respondent with particulars of her loan agreement with Del Grande and Melanson, and made it clear that she did not wish the respondent to act for her in connection with the Wells Street loan and transaction.

[10] The trial judge's decision on the scope of the retainer was based on a careful and thoughtful balancing of the evidence of the parties and their experts. She recited and examined the evidence in a lengthy judgment. In doing so she made findings of fact, which spoke to the state of mind of the appellant, and that, which was in knowledge of the respondent.

[11] The trial judge made a clear finding that the respondent’s retainer was limited to preparing and seeing to the execution of the mortgages relating to the Fernwood transaction and did not extend to the wider transaction. There is more than sufficient evidence to support the finding of a limited retainer.

[12] The trial judge also found that the respondent did not place himself in a position of conflict of interest with the appellant, and that he did not breach any fiduciary duty that he might have owed her. In so concluding, she made a firm finding that the appellant did not place any reliance whatsoever on the respondent in respect of the wider transaction and on that basis alone, the breach of fiduciary duty claim could not succeed. Manifestly, that finding was open to the trial judge and we see no reason for interfering with it.

[13] The evidence at trial included that of the respondent expressing to the appellant that he had serious concerns about her participating in the loan transaction, and that he could not vouch for the security. The trial judge found that the appellant rebuffed the respondent's concerns and made it clear she did not want to have anything to do with the wider transaction.

[14] The trial judge made no overriding and palpable error in her findings of fact. Once again, she found – as the evidence allowed her to do - that the respondent’s retainer was limited to the two mortgages against the Fernwood property. This finding was a central consideration in her evaluation of whether or not the respondent was negligent, had a conflict of interest, or had breached any contractual obligations or fiduciary duties.

[15] It is clear from our review of the evidence that, at no time did the appellant say she would not have gone ahead with the transaction had she known about the status of the Del Grande agreement of purchase and sale. Indeed, the evidence is overwhelming that she would have proceeded.

[16] The appellant has not raised any error with respect to these findings of fact, nor shown that the respondent’s obligations to the appellants reached beyond the limited retainer. Further, the appellant has not demonstrated that the trial judge was wrong in her application of the proper legal principles in deciding whether the respondent breached his obligations within the scope of the retainer.

[17] The appeal is dismissed.

[18] Costs to the respondent in the all-inclusive amount of $7,500.

Signed: “M.J. Moldaver J.A.”

“R.A. Blair J.A.”

“H.S. LaForme J.A.”