ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
LOUISE MARCUS
Richard R. Marks, for the Plaintiff
Plaintiff
- and -
CAROL ANN COCHRANE and LOW MURCHISON LLP
Heather Williams, CAVANAGH WILLIAMS CONWAY BAXTER LLP, for the Defendants
Defendants
HEARD: September 19, 20, 21, 22, 23, 27, 28 and 29, 2011 with additional written submissions.
REASONS FOR JUDGMENT
Warkentin J.
1This is a claim alleging solicitor negligence. The Plaintiff, Louise Marcus (“Ms. Marcus”) alleges that her former solicitor, Carol Ann Cochrane (“Ms. Cochrane”) failed to meet the required standard of care of a lawyer in the conduct of Ms. Marcus’ case. Ms. Marcus asserts that she suffered damages as a result of that failure. Ms. Marcus’ claims are against Ms. Cochrane personally and against Ms. Cochrane’s Law Firm, Low Murchison LLP. Ms. Cochrane, a family law lawyer, acted for Ms. Marcus in March 2006 following Ms. Marcus’ separation from her husband David Marcus. The damages claimed by Ms. Marcus are as follows:
a) Payment of a sum equal to the equalization payment she claims would have been due her, in the amount of $72,634.78;
b) Pre-judgment interest on that equalization payment from March 24, 2006 to the present;
c) Payment of $12,000.00, which are the costs Ms. Marcus paid in litigation with her former husband David Marcus in family law proceedings in which Ms. Marcus attempted to have the terms of the separation agreement set aside;
d) Her legal fees and disbursements relating to the family law litigation in which she attempted to set aside the separation agreement; and
e) Her costs of this action against Ms. Cochrane and the law firm, Low Murchison LLP.
Background
2The plaintiff Ms. Marcus and her former husband David Marcus were married for approximately 14 years. They separated in August 2005 but remained living separate and apart in the matrimonial home until early April 2006. Notwithstanding their separation, they maintained a fairly amicable relationship during this period of time.
3By early February 2006, Ms. Marcus and Mr. Marcus had agreed to the terms for the resolution of their family law issues and had prepared their own draft separation agreement. They then sought legal advice on the agreement they had reached between themselves.
4The key features of their draft separation agreement provided that Mr. Marcus would purchase Ms. Marcus’ interest in their matrimonial home for $87,000.00 which they had determined was half of the net equity; each would keep his/her pension and RRSP’s; and neither party would pay spousal support to the other. They also agreed to share parenting of their children with neither one paying child support to the other.
5Mr. and Ms. Marcus relied upon Mr. Marcus’ brother Phillip Marcus, a real estate agent, for advice about the value of their matrimonial home for the purposes of calculating Ms. Marcus’ net equity after payment of the mortgage and certain joint debts. Ms. Marcus also relied on Phillip Marcus to locate and negotiate the terms for the purchase of a home for herself. Ms. Marcus had been pre approved for mortgage financing by the Royal Bank and on February 15, 2006, she made an unconditional offer to purchase a home. Her offer was accepted shortly thereafter.
6In 2005 when they separated, Mr. and Ms. Marcus earned similar incomes, both in the mid to high $70,000.00’s per annum . Mr. Marcus was a school teacher in Ottawa and Ms. Marcus was an Assistant Director with the Canadian Medical Association. Unfortunately, on January 19, 2006, Ms. Marcus was notified that her employment was being terminated effective January 26, 2006 without cause. Ms. Marcus retained an employment lawyer to resolve the issues related to wrongful dismissal with her former employer. This matter was settled on March 16, 2006. Ms. Marcus received the sum of $125,000.00 for pay in lieu of notice and other benefits.
7Ms. Marcus also retained the services of a real estate lawyer to assist her with the closing of her new home purchase. The closing date for her purchase was April 4, 2006. One of the requirements for financing her purchase was a signed separation agreement. The bank required that the separation agreement contain certain terms; two of which were that she would receive $87,000.00 for her share of the equity in the matrimonial home and that neither party owed spousal or child support to the other. The bank informed Ms. Marcus that they required the signed separation agreement by March 17, 2006 in order to ensure her mortgage funds were available for the April 4, 2006 closing date.
8On February 21, 2006, Mr. Marcus first consulted his lawyer, Gil Rumstein, and asked him to prepare a separation agreement incorporating the terms of the draft agreement that Mr. and Ms. Marcus had prepared on their own. Mr. Rumstein provided Mr. Marcus with a number of lawyers’ names to give Ms. Marcus for independent legal advice. The defendant Ms. Cochrane was one of those lawyers recommended by Mr. Rumstein.
9On February 24, 2006 Ms. Marcus contacted Ms. Cochrane by telephone and after confirming that Ms. Cochrane would act for her, advised that Mr. Rumstein would forward a draft separation agreement to Ms. Cochrane.
10In summary, before contacting a family law lawyer to provide her with legal advice on the issues related to her separation from Mr. Marcus, the following had taken place:
a) Ms. Marcus lost her employment and retained an employment lawyer to represent her in her claims for wrongful dismissal;
b) Ms. Marcus and Mr. Marcus had reached an agreement on the division of their assets, spousal support and the future care and support of their children and prepared their own draft agreement;
c) Ms. Marcus accepted the advice of her brother in law (an experienced real estate agent) in determining the value of the matrimonial home and her net equity;
d) Ms. Marcus was pre approved for a mortgage with the Royal Bank for a home purchase on her own;
e) Ms. Marcus, with the assistance of her brother in law, entered into an unconditional Agreement of Purchase and Sale of a home for herself, the closing date of which was April 4, 2006; and
f) Ms. Marcus retained a real estate lawyer to represent her in the purchase of the home.
11After their initial telephone discussion on February 24, 2006, Ms. Marcus and Ms. Cochrane had a variety of telephone meetings and corresponded by email about the terms to be incorporated into the separation agreement.
12Ms. Cochrane first received a draft of the proposed separation agreement from Mr. Rumstein on March 8, 2006. Her review of that draft agreement caused her some concern and she advised Ms. Marcus in a telephone meeting not to sign the agreement without first completing financial disclosure.
13In particular, Ms. Cochrane cautioned Ms. Marcus not to sign an agreement that included a release of spousal support in light of the fact that Ms. Marcus was then unemployed. Ms. Cochrane also advised Ms. Marcus not to sign a final agreement when there had been no exchange of financial statements and the parties’ pensions had not been valued by an actuary.
14Ms. Marcus resisted any change to the agreement that she had already reached with Mr. Marcus and advised Ms. Cochrane that she was under pressure because of her new home purchase. In an effort to accommodate Ms. Marcus, but still protect her interests, Ms. Cochrane suggested that the parties enter into a partial or interim separation agreement to address the issues required by the bank and prepare a final separation agreement after full financial disclosure had been completed. Ms. Marcus initially agreed with this approach provided the essential elements of the original agreement were respected.
15On March 11, 2006 Ms. Cochrane prepared a partial agreement in accordance with their discussion and forwarded the agreement by email to Ms. Marcus. The partial agreement confirmed that Ms. Marcus would receive the $87,000 as her equity in the matrimonial home but required the parties to exchange financial statements for the purposes of determining if either party was owed an equalization payment and left open the issue of spousal and child support for review should either party have a need in the future.
16Almost immediately thereafter, Ms. Marcus informed Ms. Cochrane that the partial agreement was unacceptable and that Mr. Marcus would not agree to terms that might require him to make a further payment to her in the form of either an equalization payment or spousal support. Mr. Marcus’ most significant concern was to protect the full value of his pension and to avoid any obligation for the payment of spousal support.
17Between March 11 and 21, 2006, Ms. Marcus settled her claims against her former employer for a payment of $125,000.00 and obtained new employment, earning $75,000.00 per annum , approximately the same income as she had previously enjoyed. As a result of her settlement and new employment, Ms. Marcus’ taxable income for 2006 was approximately $120,000.00.
18On March 21, 2006 Ms. Marcus informed Ms. Cochrane of her intention to enter into a final separation agreement with Mr. Marcus to be prepared by Mr. Rumstein containing the same terms as the original agreement with some additional information and releases about the parties’ pensions and Ms. Marcus’ settlement funds.
19The final separation agreement also contained a paragraph in which the parties acknowledged that there had not been an exchange of court financial statements and that Mr. Marcus’ pension from his employment had not been valued by an actuary. Specifically Mr. and Ms. Marcus waived the right to more extensive disclosure with full legal advice, and acknowledged they knew the implications and consequences of proceeding in that fashion.
20Ms. Marcus arranged to meet at Ms. Cochrane’s office on March 24, 2006 to execute the final agreement, Ms. Marcus having received an extension of time with which to provide the bank with the signed separation agreement from March 17 to March 24, 2006.
21Ms. Marcus met with Ms. Cochrane on March 24 when they reviewed and executed the final agreement. In addition to the $87,000.00, Ms. Marcus received a payment of $4,573.59 from Mr. Marcus to “equalize their net family properties.” There were two handwritten amendments added by Mr. Marcus to the final agreement when he executed the agreement. The handwritten amendments included adding the value of Mr. Marcus’ sick leave gratuity in his schedule of assets and that Ms. Marcus would hold her wedding rings in trust for the parties’ daughter. Ms. Marcus and Ms. Cochrane initialed those amendments.
22After executing the separation agreement, Ms. Marcus was provided with an original signed copy of the separation agreement and Ms. Cochrane’s final statement of account. Ms. Cochrane subsequently closed her file. No reporting letter was prepared.
23Subsequent to completing the separation agreement, Ms. Marcus completed the purchase of her home in early April as scheduled.
24Approximately one year after completing the separation agreement, in the fall of 2007, Mr. Marcus commenced proceedings in Family Court to deal with issues related to their children. Ms. Marcus in response sought to have the separation agreement set aside and pursued an equalization of the parties’ Net Family Properties and other relief as though there had been no agreement in place.
25Shortly thereafter, Ms. Marcus commenced this litigation against Ms Cochrane for negligence.
(continued verbatim…)
Warkentin J.
Released: January 24, 2012
COURT FILE NO.: 08-CV-42440
ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: LOUISE MARCUS Plaintiff – and – CAROL ANN COCHRANE and LOW MURCHISON LLP Defendants REASONS FOR JUDGMENT Warkentin J.
Released: January 24, 2012
1Michiels v. Kinnear , 2011 ONSC 3826 (ONSupCtJus)
2Rose v. Melanson , [1999] O.J. No. 512 , at para 156 and 157 .
3Michiels v. Kinnear , 2011 ONSC 3826 , (ONSupCtJus) at paras. 157-170
4Folland v. Reardon , 2005 ONCA 15 , [2005] O.J. No. 216 (ONCA) at para. 61
