COURT OF APPEAL FOR ONTARIO
CITATION: King Lofts Toronto I Ltd. v. Emmons, 2014 ONCA 215
DATE: 20140321
DOCKET: C57845
Watt, Strathy and Benotto JJ.A.
BETWEEN
King Lofts Toronto I Ltd. and King Lofts Toronto II Ltd.
Plaintiffs (Respondents)
and
P. Martin Emmons, Fraser Milner Casgrain LLP and First Canadian Title Insurance Company Ltd.
Defendants (Appellants)
Anne Posno, for P. Martin Emmons and Fraser Milner Casgrain LLP
Melvyn L. Solmon and Matthew Valitutti, for the respondents
Heard and released orally: March 17, 2014
On appeal from the judgment of Justice Paul Perell of the Superior Court of Justice, dated September 30, 2013.
ENDORSEMENT
[1] This is an appeal of the summary judgment granted against Martin Emmons (the solicitor) and Fraser Milner Casgrain (the law firm) for solicitor’s negligence in connection with a commercial real estate transaction.
[2] The respondent corporations (the respondent) purchased four commercial properties in downtown Toronto. The purchase price was $22.5 million. The respondent retained the appellants to act on the purchase. At the time of the offer, the city of Toronto owned a strip of land underneath a building on one of the properties.
[3] Before the closing, the appellant solicitor discussed the laneway issue with the respondent. The respondent understood from the solicitor that it was a minor matter that would be resolved with the conversion of the property to Land Titles, that the cost would be few thousand dollars and that title insurance would deal with the matter.
[4] A number of deficiencies were dealt with on closing with the use of holdbacks. There was no holdback for the laneway.
[5] After closing, the solicitor reported that the laneway could not easily be converted to Land Titles, that the city would need to transfer it to the respondent but “in order to provide you with some comfort” title insurance was arranged to “deal with” the “ownership issues.”
[6] Two years later, the respondent received an offer to purchase and retained a different solicitor to act on the sale. In response to requisitions from the purchaser, this lawyer attempted to obtain a conveyance from the city. The city expected to be paid $106,000 for the laneway. The respondent made a claim on the title insurance policy but learned that the insurance did not cover the issue. It brought action against the appellants for solicitor’s negligence. This transaction closed for $31.5 million.
[7] The appellants brought a motion for summary judgment seeking dismissal of the action. The respondent did not file a cross-motion. The motion judge granted summary judgment in favour of the respondent on the basis of negligence and directed a trial on the quantum of damages.
[8] The appellants submit that the motion judge erred in in his determination of the limitation period and the necessity for expert evidence on the standard of care.
The limitation period
[9] The appellants submit that the notice of action was filed late, more than two years after the new lawyers discovered the cause of action. It is submitted that they learned of the loss in April 2008 when the city indicated it expected to be paid for the land. The motion judge held that the period started to run in January 2009 when the title insurance claim was denied.
[10] In our view, the respondent was entitled to rely on the solicitor’s advice regarding title insurance. The appellant had been told by the solicitor that title insurance would deal with “the issue” of the laneway. Until coverage was denied, and the solicitor was proven wrong, there was no cause of action so the limitation period did not start to run.
[11] We agree with the motion judge in this regard.
The Expert evidence on the standard of care
[12] The appellants submit that the motion judge could not conclude that the solicitor breached the duty when expert evidence was not called to give testimony about the standard of care. We do not agree. The evidence was clear that the respondent was not warned of the risk that the city might expect payment. There was a clear duty to warn and the facts are not in dispute that there was no warning. On the contrary, there was erroneous advice that the matter could be “dealt with” by title insurance. We do not suggest that there is no need for expert opinion in solicitor’s negligence matters generally. Here, there was a clear duty to warn that was not complied with and expert evidence was not required.
[13] Although not referred to in oral submissions, the appellants submitted in their factum that the motion judge erred on the issue of causation. The appellants submit that there are no damages because they would have been able to negotiate a holdback for the laneway. The motion judge correctly determined that this was speculative.
[14] In oral argument, the appellant added a new ground of appeal: that the motion judge erred in granting judgment in favour of a party who had not given advance notice of a claim for summary judgment. There are two points in response to this:
The appellant did not request an adjournment at the time; and
The Supreme Court of Canada in Hryniak v. Mauldin 2014 SCC 7, has approved a “culture shift” requiring judges to manage the process in line with the principle of proportionality in the application of Rule 20.
[15] This action involves a claim for $106,000 arising out of a multi-million dollar transaction. The principles of proportionality and sensible management of the court process support the motion judge’s ruling.
[16] The appeal is dismissed. Costs to the respondent in the amount of $15,000, inclusive of disbursements and all applicable taxes.
“David Watt J.A.”
“G. Strathy J.A.”
“ML. Benotto J.A.”