Royal Bank of Canada v. Slopen, 2011 ONCA 516

CITATION: Royal Bank of Canada v. Slopen, 2011 ONCA 516

DATE: 20110712

DOCKET: C51189

COURT OF APPEAL FOR ONTARIO

Rosenberg, Simmons and Blair JJ.A.

BETWEEN

Royal Bank of Canada and Royal Trust Corporation of Canada

Plaintiffs (Respondents)

and

Jeffrey Mark Slopen and Wilson Walker LLP

Defendants (Appellants)

W. A. Kelly, Q.C., for the appellants

Milton A. Davis and J. Thomas Curry, for the respondents

Heard: May 3, 2011

On appeal from the judgment of Justice Jane E. Kelly of the Superior Court of Justice, dated October 6, 2009.

ENDORSEMENT

[1] The principal submission by the appellant is that Kelly J. erred in failing to apply the doctrine of issue estoppel given the earlier finding by Abbey J. in the rectification application. Assuming without deciding that the trial judge erred in that respect, that error had no effect on the outcome. The trial judge’s finding, which is not disputed, that Mr. Slopen was negligent in failing to seek instructions on whether the bank wanted the mortgages to be registered on all three parcels of land did not depend on whether the respondents intended to have a mortgage only on Parcel 1 (as found by Abbey J.) or on all three parcels (as found by the trial judge). The only way that the mortgage could be enforced is if it was registered on all three parcels of land.

[2] But for the negligence of the solicitor, the respondents would either have not advanced the funds or would have obtained security on all three parcels. In either case, the measure of damages is the same. Had the respondents not advanced the funds, there would have been no loss. Had the respondents decided to advance the funds, they would have done so only if the mortgage was registered against all three parcels. Given the value of the three parcels, again, there would have been no loss. The damage award cannot be limited solely to the value of Parcel 1. Thus, we are satisfied that the trial judge did not err in finding the appellants liable and in her award of damages.

[3] We have not been persuaded that the trial judge erred in choosing the Navigant Report over the PWC report. The trial judge explained why she accepted the Navigant Report and her decision was reasonable.

[4] With respect to the interest award, the appellants raise two issues. They submit that the trial judge erred in using the mortgage rate of 8.4 percent rather than the Courts of Justice Act, R.S.O. 1990, c. C.43 rate which, over the period, was between 2.8 and 3.3 percent and erred in awarding compound interest.

[5] The awarding of interest is a discretionary matter and an appellate court will not lightly interfere with the trial judge’s exercise of discretion: Air Canada v. Ontario (Liquor Control Board), 1997 CanLII 361 (SCC), [1997] 2 S.C.R. 581, at para. 86 and Murano v. Bank of Montreal (1998), 1998 CanLII 5633 (ON CA), 41 O.R. (3d) 222 (C.A.), at p. 253. The appellant has not established that the trial judge erred in principle in using the mortgage rate and awarding compound interest. She provided reasons for those awards, that are supported by the record.

[6] In Confederation Life Insurance Co. v. Shepherd, McKenzie, Plaxton, Little & Jenkins (1996), 1996 CanLII 3206 (ON CA), 88 O.A.C. 398 (C.A.), this court refused to award compound interest in a solicitor’s negligence case in the handling of a mortgage transaction. The court reasoned, at para. 9, that compound interest should be reserved for cases where the defendant wrongfully kept the plaintiff’s money “to ensure that they did not profit.” In our view, that decision has been overtaken by the decision of the Supreme Court of Canada in Bank of America v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601 where the court held that compound interest could be awarded as compensation, in that case for breach of contract. We can see no difference in principle between awarding compound interest in a breach of contract case and in a solicitor’s negligence case where, as here, the negligence is rooted in a mortgage transaction. Different considerations might well apply in other types of negligence cases.

[7] We agree with the decision of the Alberta Court of Appeal in a solicitor’s negligence case, Pasko v. Willis (2004), 2004 ABCA 395, 357 A.R. 215 where, at para. 10, Hunt J.A. wrote as follows: “The evidence established that if the plaintiffs’ instructions had been followed, they would have earned compound interest. Bearing in mind the time-value of money, the only way to properly compensate them on these facts is to award compound interest”.

[8] Accordingly, the appeal is dismissed with costs fixed at $20,000 inclusive of disbursements and H.S.T.

Signature: “M. Rosenberg J.A.”

“Janet Simmons J.A.”

“R. A. Blair J.A.”