Simpson Wigle Law LLP et al. v. Lawyers' Professional Indemnity Company

[Indexed as: Simpson Wigle Law LLP v. Lawyers' Professional Indemnity Co.]

Ontario Reports

Court of Appeal for Ontario,

Gillese, van Rensburg and Hourigan JJ.A.

June 25, 2014

120 O.R. (3d) 655 | 2014 ONCA 492

Case Summary

Insurance — Liability insurance — Interpretation and construction — LawPro insurance policy providing that claims which arise from "related" errors, omissions or negligent acts shall be considered as single claim — Plaintiffs suing law firm for damages flowing from allegedly improper appointment of lawyer as committee of A's person and estate and from allegedly negligent administration of A's estate — Two claims not arising from "related" errors, omissions or negligent acts within meaning of policy.

W, a solicitor, prepared a power of attorney for A naming A's brother F as A's attorney and A's nephew R as the alternate attorney. W and the CIBC subsequently brought an application asking the court to declare A mentally incompetent and appoint them as committees of A's person and estate. The materials filed on the application did not include the power of attorney, and did not disclose that R was named as A's alternate attorney. The application was granted. When F died, W's partner M acted as executor of his estate and W acted as solicitor to the estate. W and M arranged for the disposition of six real estate properties jointly owned by F and A. The sales were allegedly improvident and unnecessary. Following A's death, his estate trustees brought an action against W, M, their law firm, and the CIBC for damages flowing from the allegedly improper appointment of W and the CIBC as committees of A's person and estate and from the allegedly negligent administration of A's estate. The defendant lawyers were insured under a professional liability policy which had a limit of liability of $1 million per claim, with an aggregate limit of $2 million. The policy provided that claims "which arose from a single or related error(s), omission(s) or negligent act(s), shall be considered a single claim". The defendant lawyers applied for a declaration that the allegations in the underlying action constituted two separate claims under the policy, rather than a single claim. The application judge found that the allegations were "related" and constituted one claim for the purposes of the policy. The defendant lawyers appealed.

Held, the appeal should be allowed.

Two or more errors, omissions or negligent acts are "related" when there is a sufficient association or connection between them. In determining whether there is a sufficient association or connection, the court must consider the similarities and differences between the nature and kind of the alleged misconduct which underlies each claim, and the kind and character of the losses for which recovery [page656] is sought in each claim. In this case, the committee claim and the real property claim did not arise from related errors, omissions or negligent acts. The allegations underlying the two claims were different in nature and kind. The specific misconduct in the committee claim was the failure to disclose to the court the fact that R had been named as an alternate attorney in the power of attorney. The real property claim arose from the allegedly improvident or unnecessary sales of six parcels of land. The alleged losses for which recovery was sought in the two claims were also different in nature and kind. The committee claim sought recovery for losses representing the costs, fees and expenses arising from the allegedly wrongful appointment of W and the CIBC as A's committees. The real property claim sought recovery for the diminution of A's estate due to the improvident or unnecessary sales of properties in which A had an interest. From a legal perspective, there was an insufficient association or connection between the two claims because they stood independently of one another. The statement of claim contained more than one claim within the meaning of the policy.

Cases referred to

Dunn v. Chubb Insurance Co. of Canada (2009), 97 O.R. (3d) 701, [2009] O.J. No. 2726, 2009 ONCA 538, 266 O.A.C. 1, 75 C.C.L.I. (4th) 29; Elfstrom, Smith & Co. v. Kansa General Insurance Co., 1988 2904 (BC SC), [1988] B.C.J. No. 1476, 29 B.C.L.R. (2d) 41, 36 C.C.L.I. 106, 11 A.C.W.S. (3d) 38 (S.C.); Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, [2010] 2 S.C.R. 245, [2010] S.C.J. No. 33, 2010 SCC 33, 2010 SCC 33, 293 B.C.A.C. 1, [2010] I.L.R. I-5051, 406 N.R. 182, 323 D.L.R. (4th) 513, 9 B.C.L.R. (5th) 1, EYB 2010-179515, 93 C.L.R. (3d) 1, 2010EXP-3049, J.E. 2010-1683, [2010] 10 W.W.R. 573, 73 B.L.R. (4th) 163, 89 C.C.L.I. (4th) 161; Simpson (Receiver of) v. Lloyd's Underwriters, [2009] O.J. No. 1577, 2009 ONCA 327, 73 C.C.L.I. (4th) 23, 73 C.C.L.I. (4th) 23, 176 A.C.W.S. (3d) 615, affg (2008), 2008 51771 (ON SC), 92 O.R. (3d) 551, [2008] O.J. No. 3919, 66 C.C.L.I. (4th) 311, 300 D.L.R. (4th) 722, [2009] I.L.R. I-4757, 170 A.C.W.S. (3d) 627 (S.C.J.)

APPEAL from the judgment of D.L. Edwards J. of the Superior Court of Justice dated December 20, 2013 dismissing an application for a declaration.

Alan J. Lenczner and Elizabeth Bowker, for appellants.

J. Stephen Cavanagh, for respondent.

The judgment of the court was delivered by

GILLESE J.A.: —

Overview

[1] Simpson Wigle Law LLP ("Simpson Wigle") is a law firm that is insured under a policy of insurance issued by the Lawyers' Professional Indemnity Company ("LawPro" or the "respondent"). The LawPro insurance policy (Policy No. 2004-001) has a limit of liability of $1 million per claim, with an aggregate limit of $2 million (the "Policy").

[2] The appellants brought an application for a declaration that the allegations in an underlying action against them constituted [page657] two separate claims under the Policy, rather than a single claim (the "application"). A statement of claim and an amended statement of claim (together the "statement of claim") have been filed in the underlying action.

[3] The application judge found that the allegations made in the statement of claim were "related" and that, as a result, they constituted one claim for the purposes of the Policy. By judgment dated December 20, 2013 (the "judgment"), he declared that the statement of claim contains a single claim.

[4] The appellants ask this court to set aside the judgment and declare that the statement of claim discloses more than one claim, within the meaning of the Policy.

[5] For the reasons that follow, I would allow the appeal and make the requested declaration.

Background

[6] The following alleged facts are drawn from the statement of claim and do not constitute findings of fact.

[7] Angelo Agro ("Angelo") and his brother, Frank Agro ("Frank"), jointly owned and operated a number of agricultural and related businesses and properties in Waterdown, Ontario. They were both clients of Francis Wigle and Simpson Wigle, the law firm in which he was a partner.

The committeeship application

[8] Angelo suffered from Parkinson's disease and other physical ailments. In view of this, Mr. Wigle prepared a power of attorney for Angelo in 1990, and a second one in 1991. In both powers of attorney, Frank was named as Angelo's attorney, and Angelo's nephew, Richard Agro, was named as the alternate attorney.

[9] In 1993, Mr. Wigle and CIBC Trust Corporation ("CIBC") brought an application in which they asked the court to declare Angelo mentally incompetent and appoint them as committees of Angelo's person and estate (the "committee application").

[10] Simpson Wigle acted as the counsel of record for the committee application. Mr. Wigle prepared all of the committee application materials.

[11] In the committee application, the existence of Angelo's two powers of attorney was disclosed. As well, there was an affidavit from Frank, in which Frank indicated that he was unable and unwilling to act as Angelo's committee. However, the materials filed on the committee application did not include the two powers of attorney. And, significantly, they did not disclose that [page658] in the powers of attorney, Richard Agro was named as Angelo's alternate attorney.

[12] By order dated August 19, 1993, Mr. Wigle and the CIBC were appointed as the committees of Angelo's person and estate. They acted in that capacity until Angelo's death on June 22, 2000.

[13] Simpson Wigle acted as solicitor to Angelo's committees.

[14] During the time in which Mr. Wigle and the CIBC acted as Angelo's committees, Angelo's estate was charged with committeeship fees, legal fees, administration fees and bank overdraft fees. Angelo's care costs were also paid out of his estate.

The sale of properties jointly owned by Angelo and Frank

[15] Frank died in 1996. Under his will, which Mr. Wigle had drafted, Mr. Wigle and Paul Milne, another lawyer and partner at Simpson Wigle, were named his executors.

[16] Mr. Wigle declined to act as executor, leaving Mr. Milne as the sole executor. However, Mr. Wigle acted as solicitor to Frank's estate and played an active role in its administration.

[17] Messrs. Wigle and Milne arranged for the disposition of six real estate properties jointly owned by Frank and Angelo. Considered from Angelo's perspective, there was no need for the sales, which were allegedly improvident or below market value. Two of the properties had the potential to be included in a designated Waterdown urban expansion area but no steps were taken in that regard. In the statement of claim, it is alleged that selling the two properties without having had them included in the Waterdown area resulted in significant loss to Angelo's estate because their value would have been much greater had they been within the urban boundary.

[18] Mr. Wigle was the solicitor who negotiated and effected these sale transactions.

[19] Mr. Milne, on behalf of Frank's estate, brought an application in respect of a farm property -- referred to as the Highway No. 5 property -- which Angelo and Frank also jointly owned (the "Highway No. 5 property application"). In the Highway No. 5 property application, the court was asked to declare that Frank and Angelo owned the Highway No. 5 property by way of a partnership, rather than as joint tenants. Accordingly, instead of Frank's interest in the Highway No. 5 property passing to Angelo on Frank's death, Frank's estate would retain a 50 per cent interest in it.

[20] Mr. Wigle drafted the materials for the Highway No. 5 property application, including the affidavits for both the applicants and the respondents. The materials filed on behalf of [page659] Angelo failed to include relevant material that would have affirmed that Frank and Angelo always intended to jointly own the Highway No. 5 property.

[21] The Highway No. 5 property application was successful and Frank's estate was declared to have a 50 per cent ownership interest in that property.

[22] Angelo's estate appealed. The appeal was resolved by means of a settlement negotiated between Messrs. Wigle and Milne, in which Angelo's estate obtained an additional 12.5 per cent interest in the Highway No. 5 property.

[23] Thereafter, Mr. Wigle acted as solicitor for Frank's estate in respect of the sale of Frank's portion of the Highway No. 5 property.

The statement of claim

[24] Following Angelo's death in 2000, his estate trustees (who included Richard Agro) started the underlying action against the defendants Simpson Wigle, Messrs. Wigle and Milne, and the CIBC. The appellants are those defendants that are insured by the Policy, namely, all of the defendants except the CIBC.

[25] The statement of claim sought, among other things,

a declaration that the appellants acted in breach of their fiduciary obligations and of the duties of care and competence owed to Angelo and his estate;

a declaration that the appellants acted in a conflict of interest in respect of the administration of the person and estate of Angelo;

damages for breach of fiduciary duty, breach of contract and negligence; and

an order disgorging all committeeship, guardianship, administration and legal fees received by the appellants in respect of the administration of the person and affairs of Angelo after the committee application was granted.

[26] At para. 19 of the statement of claim, it is alleged that had the appellants properly disclosed Angelo's 1990 and 1991 powers of attorney, Richard Agro would have assumed the role of attorney for Angelo's person and estate, and Mr. Wigle and the CIBC would never have been appointed as Angelo's committees.

[27] Specifically, at paras. 19(a)-(g) of the statement of claim, Angelo's estate is said to have suffered the following losses as a result of the allegedly wrongful appointment of Mr. Wigle and the CIBC as Angelo's committees: [page660]

(a) fees in excess of $620,000 paid by Angelo's estate to Mr. Wigle and the CIBC as committees, which would not have been incurred had Richard Agro served as Angelo's attorney;

(b) legal fees of approximately $125,000 charged by Simpson Wigle and Mr. Wigle to Angelo's person and estate, which would not have been incurred had Richard Agro served as Angelo's attorney;

(c) administration fees and expenses charged by the CIBC for maintaining and managing the bank account of Angelo's committees;

(d) the improvident or below market value sales of the six properties that Angelo owned jointly with Frank;

(e) the failure to take steps to have two of these properties included in a designated Waterdown urban expansion area, an action that would have increased these properties' values;

(f) care costs in excess of $490,000 that were charged to Angelo's estate, despite Frank's direction (contained in documents drafted by Mr. Wigle) that such costs were to be paid from Frank's estate; and

(g) overdraft charges unnecessarily incurred on Angelo's bank account due to the actions of Angelo's committees.

[28] At paras. 21-23 of the statement of claim, Messrs. Wigle and Milne are alleged to have placed themselves in an untenable conflict of interest by taking on various roles in respect of Angelo's and Frank's estates, particularly because the interests of the two estates were adverse to one another in a number of respects.

[29] At para. 23 of the statement of claim, Messrs. Wigle and Milne are alleged to have preferred the interests of Frank's estate to those of Angelo's estate by

(a) failing to pay Angelo's care costs out of Frank's estate;

(b) carrying out the improvident or below market real property sales;

(c) acting for the estates of both Angelo and Frank with respect to the Highway No. 5 Property and failing to disclose on the Highway No. 5 Property Application evidence showing that Frank and Angelo owned the property as joint tenants; and

(d) Mr. Wigle acting as solicitor for Frank's estate on the sale of the Highway No. 5 Property without regard to Angelo's estate, to whom he owed continuing fiduciary duties.

[30] The application judge found that prior to the application being heard, the estate trustees were no longer pursuing the allegations in respect of the Highway No. 5 property.

[31] The appellants have confirmed that of the claims asserted in para. 23 of the statement of claim, only the claim at para. 23(b) is still being pursued. The claim at para. 23(b) is [page661] the same as the claim advanced at paras. 19(d) and (e) of the statement of claim.

The Relevant Policy Provisions

[32] As noted earlier, the Policy has a limit of liability of $1 million per claim, with an aggregate limit of $2 million.

[33] The obligation to pay damages is set out in Part I of the Policy:

A. DAMAGES

To pay on behalf of the INSURED all sums which the INSURED shall become legally obligated to pay as DAMAGES arising out of a CLAIM, provided the liability of the INSURED is the result of an error, omission or negligent act in the performance of or the failure to perform PROFESSIONAL SERVICES for others.

[34] "Claim" is defined in Part V(b) of the Policy as

(i) a written or oral demand for money or services; or

(ii) a written or oral allegation of breach in the rendering or failure to render PROFESSIONAL SERVICES;

received by the INSURED and resulting from a single or related error(s), omission(s) or negligent act(s) in the performance of or failure to perform PROFESSIONAL SERVICES.[^1]

All CLAIMS, or circumstances of an error, omission or negligent act which any reasonable person or LAW FIRM would expect to subsequently give rise to a CLAIM, which arise from a single or related error(s), omission(s), or negligent act(s), shall be considered a single CLAIM regardless of the number of INSUREDS or the number of persons or organizations making the CLAIM or the time or times the error(s), omission(s), or negligent act(s) took place.

(Emphasis added; capitals in the original)

[35] Part III of the Policy sets out exclusions to coverage. Paragraph (h) of Part III stipulates that the Policy does not apply

(h) to any CLAIM in any way relating to or arising out of legal fees, accounts or any fee arrangement involving the INSURED[.]

The Decision Below

[36] Before the application judge, the appellants argued that the allegations in the statement of claim gave rise to at least [page662] two separate claims: one claim arising from the allegedly improper appointment of Mr. Wigle and CIBC as committees of Angelo's person and estate (the "POA allegation"), and a second claim arising from the alleged conflict of interest due to the various roles that Messrs. Wigle and Milne played in respect of Angelo's and Frank's estates (the "conflict allegation") (paras. 11-13).

[37] The application judge accepted the parties' position that the nub of the issue to be decided was whether the acts or omissions alleged in the statement of claim were "related", within the meaning of the Policy (para. 17). In deciding this issue, the application judge began by excluding from consideration those losses which, in his view, are not covered by the Policy. He concluded that because the Policy does not insure against disgorgement of fees or provide coverage to the CIBC, in para. 19, only paras. 19(d) and (e) were relevant to determining whether there is more than one claim (para. 25).

[38] At para. 35, the application judge stated that,

If one loss is alleged to be a consequence of different error(s), omission(s), or negligent act(s) it is logical that the error(s), omission(s), or negligent act(s) are related.

[39] With that in mind, the application judge gave three reasons for finding that the POA allegation and the conflict allegation are related, within the meaning of the Policy.

[40] First, in his view, the losses said to have been sustained in the two allegations are the same, with the exception of the losses alleged in respect of the Highway No. 5 property (para. 37).

[41] Second, he saw the fiduciary duty that Mr. Wigle owed to Angelo to be the same for both allegations and as arising from the same fact: the failure to disclose the powers of attorney (para. 42).

[42] Third, the fiduciary duty that Mr. Milne owed to Angelo was the same for both allegations and for the same reason: Mr. Milne was a partner at Simpson Wigle with Mr. Wigle, who owed a fiduciary duty to Angelo. Mr. Milne's actions as Frank's executor breached that same fiduciary duty (paras. 46-47).

[43] The application judge stated that even if he had determined that the statement of claim contained two claims, as a result of the fact that the estate trustees were no longer pursuing the Highway No. 5 property claim, he would have found that the loss claim is identical for both the committee allegation and the conflict allegation (paras. 49-51). [page663]

The Issue

[44] This appeal raises a single issue: did the application judge err in finding that the facts alleged in the statement of claim disclose a single claim under the Policy?

Analysis

A preliminary point

[45] As explained above, in deciding whether the statement of claim disclosed one or more than one claim, the application judge excluded from consideration all of para. 19 of the statement of claim, with the exception of paras. 19(d) and (e). He did so because the Policy does not insure against disgorgement of fees or provide coverage to the CIBC.

[46] The appellants submit that the application judge erred in approaching the issue on the basis that in para. 19, only clauses (d) and (e) were relevant. I agree.

[47] The application judge was correct when he stated that the Policy does not apply to any claim relating to, or arising out of, legal fees: see Part III(h), set out above. He was also correct when he noted that the Policy does not provide coverage to the CIBC.

[48] However, in my view, in reaching the conclusion that the Policy did not cover paras. 19(a), (b), (c), (f) and (g), he misunderstood the nature of the damages being sought. In those paragraphs, the estate trustees are not asking for the disgorgement of fees that were paid. Rather, they seek to recover damages for amounts that were needlessly expended on Angelo's behalf due to the wrongful appointment of Mr. Wigle and the CIBC as the committees of Angelo's person and estate. They say that had Richard known that Angelo had named him as the alternate attorney in his powers of attorney, Richard would have assumed the role of attorney when Frank was unable or unwilling to so act. If that had occurred, Mr. Wigle and the CIBC would never have been appointed committees of Angelo's person and estate. Thus, so the claim runs, all the costs, fees and expenses that flowed from Mr. Wigle and the CIBC's appointment as Angelo's committees were needless and the appellants are liable in damages representing those costs, fees and expenses.

[49] Accordingly, the claim at paras. 19(a), (b), (c), (f) and (g) is not a claim for legal fees in the sense contemplated by Part III(h) of the Policy, nor is it an attempt to seek coverage for the CIBC. The exclusion in Part III(h) is intended to exclude from coverage legal fees an insured receives qua legal fees -- in other [page664] words, as payment for his or her work as a lawyer. As I have explained, it is not the return of legal (and other) fees that the estate trustees seek in the relevant clauses of para. 19 of the statement of claim. Rather, they seek damages for those fees which they allege were needlessly paid from Angelo's estate because of the wrongful appointment of Mr. Wigle and the CIBC as his committees.

[50] Thus, in my view, the application judge erred in considering only the negligence claims in respect of the sales of the real property (i.e., paras. 19(d) and (e), and 23(b) of the statement of claim) when deciding the issue before him, namely, whether the statement of claim disclosed one or more claims.

The central question

[51] This brings us to the central question raised on appeal: does the statement of claim disclose one or more than one claim, within the meaning of the Policy?

[52] In answering this question, the wording of the Policy is the starting point.

General principles of insurance policy interpretation

[53] Before considering the key Policy provision, however, it is useful to recall the general principles that apply to the interpretation of insurance policies.

[54] As the application judge noted, at para. 21 of his reasons, the Supreme Court of Canada recently reiterated the general principles governing the interpretation of insurance policies in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, [2010] 2 S.C.R. 245, [2010] S.C.J. No. 33, 2010 SCC 33, at paras. 22-24. These principles can be summarized as follows:

The primary interpretive principle is that when the language of the policy is unambiguous, the court should give effect to clear language, reading the policy as a whole.

Where the language of the policy is ambiguous, the courts rely on general rules of contract construction. For example, courts should prefer interpretations that are consistent with the reasonable expectations of the parties, so long as such an interpretation can be supported by the text of the policy. Courts should avoid interpretations that would give rise to an unrealistic result or that would not have been in the parties' contemplation at the time the policy was concluded. Courts should also strive to ensure that similar insurance policies are construed consistently. These rules of construction are applied to resolve ambiguity. They do not operate to create ambiguity where there is none in the first place.

When the rules of contract construction fail to resolve the ambiguity, courts will construe the policy contra proferentem -- against the insurer. [page665] One corollary of the contra proferentem rule is that that coverage provisions are interpreted broadly, and exclusion clauses narrowly.

[Citations omitted]

The key policy provision

[55] There is no dispute that the claims advanced in the statement of claim fall within the definition in Part V(b)(ii) of the Policy. As we have seen, "claim" is defined in that provision to include a written allegation of breach in the rendering of a professional service. There can be no question in this case that the claims are for breaches of the professional services rendered by Mr. Wigle and Simpson Wigle.

[56] The key words in Part V(b)(ii) of the Policy, for the purposes of this appeal, are the following:

All CLAIMS . . . which arise from a single or related error(s), omission(s), or negligent act(s), shall be considered a single CLAIM regardless of the number of INSUREDS or the number of persons or organizations making a CLAIM or the time or times the error(s), omission(s) or negligent act(s) took place.

(Emphasis added)

[57] On a plain reading of this provision, claims which arise from "related error(s), omission(s) or negligent act(s)" shall be considered a single claim, regardless of the number of insured, the number of persons making a claim or the times at which the alleged errors, omissions or negligent acts took place.

[58] In this case, the claims in the statement of claim arise from a number of alleged errors, omissions and negligent acts. Thus, the question becomes, are the alleged errors, omissions or negligent acts "related"?

Meaning of the word "related"

[59] Three cases assist in determining the meaning of "related". The first is Simpson (Receiver of) v. Lloyd's Underwriters (2008), 2008 51771 (ON SC), 92 O.R. (3d) 551, [2008] O.J. No. 3919 (S.C.J.). This court expressly affirmed the analysis and conclusions of the application judge in Simpson: [2009] O.J. No. 1577, 2009 ONCA 327, at para. 1. The other two cases are Elfstrom, Smith & Co. v. Kansa General Insurance Co., 1988 2904 (BC SC), [1988] B.C.J. No. 1476, 29 B.C.L.R. (2d) 41 (S.C.) and Dunn v. Chubb Insurance Co. of Canada (2009), 97 O.R. (3d) 701, [2009] O.J. No. 2726, 2009 ONCA 538.

[60] In Simpson, a real estate council responsible for overseeing the conduct of real estate brokers claimed on its insurance policy for consumer deposits lost due to thefts perpetrated by a [page666] real estate broker and her corporation. A total of 22 claimants made 25 claims. The council's insurance policy provided that each claim had a limit of $100,000, but the aggregate liability for a series of "related occurrences" was capped at $500,000. The question for the application judge was whether the claims were separate occurrences or a series of "related" occurrences, for the purposes of the policy.

[61] In answering that question, the application judge began by setting out dictionary meanings of "related". These included "associated or connected with" and "of the same type; in the same group, category, etc.": Canadian Oxford Dictionary, 2nd ed., sub verbo "related". The application judge observed that if the court were to take the meaning of "related" as "of the same type; in the same group, category, etc.", any two acts of theft would be related, merely because they were thefts. There would be no need for any other connection in terms of time, place or person. In his view, this would be an unreasonable interpretation -- not just any type of relation is necessary but a particular kind of relation (paras. 26-27).

[62] At para. 28 of Simpson (S.C.J.), the application judge found that because of the breadth of the meaning of "related", its scope must be determined in the context of the policy in question.

[63] After reviewing other provisions of the council's policy, he concluded that the policy was intended to protect individual consumers who provide deposits to a registered real estate agent or broker (para. 32). The application judge then found that the thefts constituted 22 unrelated occurrences, one for each victim. The fact that the thefts were part of a single scheme by the same person did not make them part of a series of related occurrences, save for the multiple claims by the same claimant. Multiple frauds against the same victim were found to be "related" occurrences because the thief, the victim and the type of occurrence causing the loss were the same (para. 36).

[64] In Elfstrom, a chartered accounting firm that acted as receiver-manager of a number of farm companies was sued for failing to (1) consider and investigate the tax benefits that would have accrued to the companies had they pursued an amalgamation, and (2) properly manage the companies' property. The issue was whether these claims arose from "related acts" for the purposes of the firm's insurance policy.

[65] The court stated that it was necessary to consider the similarity or differences between the alleged errors, and the kind and character of the alleged losses. It found that the claims [page667] were not related because the errors underlying the claims were "different in kind and substance" (p. 48 B.C.L.R.). While the errors were alleged against the same party acting in the same capacity, they were the result of separate failures of judgment by the firm. The first claim was based on a failure to advise or propose amalgamation, an error arising from a failure to properly exercise accounting expertise, whereas the other claim arose from failures with respect to preservation of property (hay and equipment).

[66] In Dunn, this court considered, among other things, whether two schemes alleged to have been perpetrated by directors and officers of Nortel Networks Limited were "Interrelated Wrongful Acts", for the purposes of the directors and officers liability insurance policy. "Interrelated Wrongful Acts" was defined to mean "all causally connected Wrongful Acts" (emphasis in original).

[67] The first scheme, allegedly perpetrated in 2001, was a revenue recognition scheme in which material amounts of revenues were accelerated into the previous quarter. The second scheme, allegedly perpetrated in 2003, was an earnings management scheme in which the company improperly established, maintained and released reserves to smooth its quarterly earnings.

[68] The appellants argued that the second scheme arose out of, or was causally connected to, the first scheme because they were the result of a "culture of non-compliance" throughout the whole period.

[69] This court disagreed. At paras. 58-59, it held that the allegations of misconduct in the two schemes were different in nature, kind and time. The allegations underlying the first scheme related to different acts of non-compliance than those in the second scheme and the acts took place at different time frames and in different ways.

[70] From these cases, I conclude that in determining whether the two claims in the statement of claim arise from "related" errors, omissions or negligent acts, the court should be informed by the dictionary meaning of the word "related": two or more errors, omissions or negligent acts are "related" when there is a sufficient association or connection between them, reading the Policy as a whole and bearing in mind its objective. In determining whether there is a sufficient association or connection, the court must consider the similarities and differences between the nature and kind of the alleged misconduct which underlies each claim, and the kind and character of the losses for which recovery is sought in each claim. It will be noted that I have not [page668] included differences in timing between the two sets of allegations, as the court did in Dunn. The reason is the wording of Part V(b)(ii), which, it will be recalled, specifically provides "regardless of . . . the time or times the error(s), omission(s) or negligent act(s) took place".

The claims

[71] In considering the claims in the statement of claim, the court must look at the particular alleged errors, omissions or negligent acts underlying them. It is not sufficient to identify, at a general level, the relationship or obligations between the parties or the nature of the losses alleged to have been suffered. At a sufficiently general level, there is little doubt that the claims are related. After all, at a general level, the claims can be said to be identical. The players are the same -- Angelo and Mr. Wigle and the law firm in which he was a partner. The relationship between them is the same -- that of solicitor-client. The alleged wrongdoing is the same -- breach of fiduciary obligation. And, the alleged losses are the same -- damages for breach of fiduciary obligation.

[72] But the case law warns against approaching this matter at that general level: see Simpson (S.C.J.), at para. 27; and Dunn, at para. 58. Moreover, the plain wording of the Policy calls for a consideration of the specific allegations underlying each claim. Part V(b)(ii) dictates that the court must determine whether the claims arise from "related" errors, omissions or negligent acts. Therefore, it is necessary to look behind general labels and consider the specific alleged errors, omissions or negligent acts that underlie each claim.

[73] Such a consideration begins with a clear understanding of the claims advanced in the statement of claim. As I have explained, after taking into consideration the claims that have been abandoned, the statement of claim fundamentally advances two claims.

[74] The first claim arises from the allegedly improper appointment of Mr. Wigle and the CIBC as committees of Angelo's person and estate (the "committee claim"). The alleged error, omission or negligent act underlying this claim is the appellants' failure to disclose crucial information to the court that heard the committee application: namely, that in his powers of attorney, Angelo had named Richard Agro as his alternate attorney. The losses for which recovery is sought are damages representing the fees, charges and expenses that Angelo's estate incurred as a result of Mr. Wigle and the CIBC being appointed as Angelo's committees. [page669]

[75] The second claim arises from the allegedly negligent administration of Angelo's estate (the "real property claim"). The alleged errors, omissions or negligent acts relate to the appellants' sale of six properties in which Angelo had an interest, including the failure to have two of the properties brought within the Waterdown urban expansion area. The damages claimed are for the diminution in the value of Angelo's estate resulting from the improvident or unnecessary sales of the properties.

Do the claims arise from related errors, omissions or negligent acts?

[76] In my view, the two claims in the statement of claim arise from errors, omissions or negligent acts that are sufficiently different in nature and kind that they are not related within the meaning of the Policy.

[77] Let us begin by comparing the specific allegations of misconduct underlying each of the claims. The committee claim is based on Simpson Wigle's instrumentality, in 1993, in the allegedly improper appointment of Mr. Wigle and the CIBC as committees of Angelo's person and estate. The specific misconduct is their failure to disclose the appropriate information to the court during the committee application. The real property claim, on the other hand, arises from the allegedly improvident or unnecessary sales of six parcels of land in 1996 and 1997. The alleged errors, omissions or negligent acts include the failure to take the opportunity to increase the value of two of those properties through inclusion in a designated Waterdown urban expansion area. Instead of an error of omission or negligence (failure to include the requisite information in the court documentation), the real property claim is based on allegations of active mismanagement (selling at improvident values and unnecessarily) and the failure to take steps outside of a court process, namely, to have the designation of two properties changed.

[78] It is clear that the allegations underlying the two claims are different in nature and kind.

[79] So, too, is the nature of the alleged losses for which recovery is sought in the two claims. The committee claim seeks recovery for losses representing the costs, fees and expenses arising from the allegedly wrongful appointment of Mr. Wigle and the CIBC as Angelo's committees. The real property claim seeks recovery for the diminution of Angelo's estate due to the improvident or unnecessary sales of properties in which he [page670] had an interest. The two types of recovery are different in kind and character.

[80] Moreover, from a legal perspective, there is an insufficient association or connection between the two claims because they stand independently of one another. Regardless of the propriety of the appointment of Mr. Wigle and the CIBC as Angelo's committees in 1993, it may be that one or more of the parcels of land was improvidently sold. The court could find that the committees were wrongfully appointed but that the sales of the real property did not amount to negligent administration of Angelo's estate. Conversely, the court could find that the committees were properly appointed but that one or more of the sales was negligently performed.

[81] Thus, as I have said, the two claims arise from allegations of errors, omissions and acts, which are sufficiently different in nature and kind that they are not related, within the meaning of the Policy.

[82] I conclude on this point by noting that the issue raised in this appeal is whether the statement of claim raises one or more claims. That is, the court was not asked to determine whether the statement of claim raises more than two claims. Specifically, the court was not asked to determine whether the real property claim could be said to constitute more than one claim.

Disposition

[83] Accordingly, I would allow the appeal, set aside the judgment, grant the application and issue an order declaring that the statement of claim contains more than one claim within the meaning of the Policy.

[84] I would order costs of the appeal in favour of the appellants, fixed at $7,500, plus applicable taxes but inclusive of disbursements. In light of the result on appeal, the issue of the costs below must be revisited. If the parties are unable to agree on that matter, I would direct them to return to the application judge to have those costs decided.

Appeal allowed.

Notes

[^1]: "Professional Services" is defined as "[T]he practice of the Law of Canada, its provinces and territories . . . and shall include . . . those services for which the INSURED is responsible as a lawyer arising out of such INSURED's activity as a trustee, administrator, executor, arbitrator, mediator, patent or trademark agent."