SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 10-23687SR
DATE: 2012-03-06

RE: Jaskot Family Law Barristers Professional Corporation

AND: Jared MacDonald and Beatrice MacDonald

BEFORE: Mr Justice Ramsay

COUNSEL:
Mr Richard A. Wellenreiter for the plaintiff, responding

Mr Nelson A. McKay QC for the defendants, moving parties

HEARD: 2012-03-06 at Hamilton

ENDORSEMENT

[ 1 ] The plaintiff (“Jaskot”) is an incorporated firm of solicitors that is suing for payment of its bill. The defendants move for summary judgment on the basis that they are not bound to pay it.

[ 2 ] Mr Stanley Jaskot of the plaintiff’s firm acted for the defendants’ daughter Lorraine in her family law action against her husband. A one-week trial took place in May 2009. Judgement was released on September 11, 2009. The plaintiff submitted a bill for approximately $84,000. The daughter went bankrupt on December 16, 2009 at which point she anticipated a $75,000 bill from Jaskot, according to her notice of bankruptcy. She has not paid Jaskot’s bill. The plaintiff says that the defendants agreed to pay their daughter’s legal fees, and that their promise to do so was not conditional on the daughter’s failure to pay. That is, they gave an indemnity as opposed to a guarantee. The evidentiary basis of the claim is the conduct of the defendants in directing the course of the litigation and paying the fees directly to the lawyer and in two conversations between the defendant Jared MacDonald and Mr Jaskot which were tape recorded.

[ 3 ] On April 13, 2007 Lorraine retained the Jaskot firm in writing. The retainer was drafted by the firm. It is detailed and comprehensive. It sets out Lorraine’s financial obligations to the firm. It is signed by Lorraine and not her parents. It does not mention her parents.

[ 4 ] On July 4, 2008, Mr Jaskot, the defendants and Lorraine met to discuss the case after the settlement conference. The meeting was tape recorded by Mr Jaskot with the consent of all persons present. The portion of the interview that is directly relevant shows Mr MacDonald saying to Mr Jaskot, “I am speaking for both my wife and I and like I say as far as fees are concerned, you must know that we have paid all of your fees because she couldn’t.”

[ 5 ] Before saying this, Mr MacDonald made a number of comments about the inadvisability of settling. The plaintiff argues that Mr MacDonald was taking an interest in the litigation and directing it. However, his remarks were prefaced with, “what I am saying to my daughter is …”

[ 6 ] From the affidavit of the defendant Jared MacDonald it appears that context of his remark of July 4, 2008 that “we have paid all of your fees because she couldn’t” is that from time to time his daughter asked them for money when she could not pay her legal or other bills. On some occasions she would ask for a loan. There is some support for the allegation of a loan in the form of a promissory note dated May 2, 2007. On the other hand, no loan from her parents is mentioned in Lorraine’s notice of bankruptcy, so at least by then it must have been a gift. In any event, Jared MacDonald deposes that he made direct payments to the lawyer on his daughter’s behalf because she had been advised not to keep money in her bank accounts, where it could be traced, seized or used as evidence.

[ 7 ] On April 17, 2009, the daughter gave written instructions to Mr Jaskot. The memorandum was drafted by Mr Jaskot. It was detailed and comprehensive. It set out Lorraine’s position and exposure fairly and in detail. Lorraine acknowledged that she wanted to proceed on the terms set out in the direction, and that she did not want a second opinion. She acknowledged that she “will remain responsible for the payment of a trial retainer for Jaskot Family Law Barristers to prepare and attend a four-day trial which has been estimated at $50,000.” She also acknowledged that the risk that she was facing and said that she was not acting under any coercion or obligation. The defendants never gave any written acknowledgement or directions to Mr Jaskot.

[ 8 ] On September 22, 2009, not long after receiving the trial judge’s decision, which they did not consider favourable, Mr Jaskot, Lorraine and Mr MacDonald met again. According to the transcript of the tape of that meeting, the following was said:

Mr MacDonald: I would say, Stan we took a gamble”

Mr Jaskot: we took a gamble and a loss

Mr MacDonald: which we were prepared to do, which we were prepared to do…

Mr MacDonald: … We brought them up Stan to pay their way and we started giving Lorraine money you and other lawyers and whatever we said this is going to be marked down, so down the road somewhere when it is all over you can pay us back at your convenience, you know this is the truth. What can I say, I mean your bill my wife and I will pick up and that is something that I stated right from the beginning. I said do not worry about anything Lorraine mom and I will pick up the lawyer’s bill and your bill will be paid, but all of this stuff is the truth .

[ 9 ] The defendant’s initial position on the motion was that the action is barred by the Statute of Frauds which provides:

4. No action shall be brought … to charge any person upon any special promise to answer for the debt, default or miscarriage of any other person …unless the agreement upon which the action is brought, or some memorandum or note thereof is in writing and signed by the party to be charged therewith or some person thereunto lawfully authorized by the party.

[ 10 ] The plaintiff argues that the obligation undertaken by the defendants was not a promise to answer for the daughter’s debt or default. Rather it was an independent promise to pay the legal fees whether the daughter paid them or not. As an indemnity, as opposed to a guarantee, it is not covered by the statute: McArthur v. Banman , (1922) Sask. LR 61 (CA); McGuinness, The Law of Guarantee (2d ed., 1966) ¶3.23.

[ 11 ] The defendants accept that the Statute of Frauds does not bar recovery on an indemnity. They argue, however, that there is no evidence that they gave an indemnity, or at any rate, not enough to require a trial to decide the question.

Full appreciation

[ 12 ] The plaintiff argues that the number of witnesses and the conflicting evidence which will require findings of credibility weigh against the proposition that a judge on a motion for summary judgment can gain a full appreciation of the case without a trial. They also point out that this is a simplified proceeding under Rule 76. They have not been able to cross-examine the defendant Jared MacDonald on his affidavit. Discovery has not been held. The motion should at least be deferred until after discovery, but it would be more in keeping with fair and efficient resolution of the case to proceed to trial.

[ 13 ] The case depends on the evidence of five witnesses: Stanley Jaskot, his junior Jennifer Cooper, Jared MacDonald, Beatrice MacDonald and Lorraine MacDonald Sauer, together with the relevant signed documents (the retainer and the acknowledgement and direction) and tape recorded meetings. Jennifer Cooper and Jared MacDonald have filed affidavits on the motion. In so doing, I think that essentially both parties have put their best foot forward. Issues of fact between Mr Jaskot and Ms Cooper on the one side and the MacDonalds on the other will, in the circumstances, depend on the interpretation of the available documents, including the tape recordings. Inconsistencies in a witness’s evidence or the demeanour of the witnesses will not play the important role.

[ 14 ] The governing legal principles are not in dispute. There is a limited amount of documentary evidence and its content is not disputed. The issue is what to make of the content of the documents and tapes. There are only a few relevant witnesses. I think that it is possible to have a full appreciation of the case for the purpose of deciding whether there are issues that require a trial. In other words, the case falls within the sort described by the Court of Appeal at ¶52 of the Combined Air Mechanical case, 2011 ONCA 764 .

The case

[ 15 ] First, there is not an iota of evidence that Mrs MacDonald gave any sort of representation to Jaskot that she would pay Lorraine’s legal fees. She was present at one meeting in 2008 in which her husband said, using the past tense, that the defendants had paid Lorraine’s fees [to that point]. That is the extent of it. She is entitled to summary judgment. The action against her should be dismissed.

[ 16 ] Jennifer Cooper deposes in paragraph 6 of her affidavit that all major decisions involving the litigation were made by consensus among Lorraine and her parents. “It is also particularly noteworthy that if Jared or Beatrice MacDonald did not agree with a course of action considered it did not occur. This meant that the ultimate control and direction of the … litigation… was with Jared and Beatrice MacDonald. I note that offers to settle were made and withdrawn based upon their instruction.”

[ 17 ] Like much of the affidavit, this paragraph is essentially conclusory and argumentative. It is also inconsistent with the acknowledgement and direction that Lorraine MacDonald Sauer signed on April 17, 2009. If the defendants were making the decisions and paying the freight, any lawyer would have had them sign an acknowledgement and direction. Furthermore, however much Lorraine may have taken her parents’ views into account, what was said on the tapes and recited in the acknowledgement and direction show that the decisions were Lorraine’s.

[ 18 ] Ms Cooper deposed in paragraph 24 of her affidavit:

[Mr] Jaskot and I were aware from the statements made to us by Jared and Beatrice Macdonald and from Lorraine herself that she did not have the funds to pay us and as such, without the undertakings from Jared and Beatrice Macdonald that they would pay us directly, we would not have continued to provide the legal services and we would not have proceeded to trial. We at all times understood from Jared MacDonald, Beatrice MacDonald and Lorraine that Jared and Beatrice were at all times to be directly responsible for the legal services provided to them at their direction.

[ 19 ] This is not credible. It is contradicted by the acknowledgement and direction of April 17, 2009 and by the fact that the bills were always sent to Lorraine and they were never in arrears. It is also contradicted by the words spoken at the taped meetings.

[ 20 ] On July 4, 2008, Mr MacDonald, using the past tense, told Mr Jaskot that he and his wife had paid Lorraine’s bills because she could not pay them. He did not say that she could not pay future bills. In the action, the husband was making a claim on Lorraine’s property. She had property to claim and a good job. The words in context do not permit the utterance to be interpreted fairly as a promise of future action or a statement about a future or continuing state of affairs.

[ 21 ] In paragraph 14 of her affidavit, Ms Cooper deposes that Mr MacDonald’s utterances of September 22, 2009 confirmed his “undertaking and indemnity” of July 4, 2008. But reading the transcript shows that it did no such thing. Mr MacDonald said on September 22, 2009, “What can I say, I mean your bill my wife and I will pick up and that is something that I stated right from the beginning. I said do not worry about anything Lorraine mom and I will pick up the lawyer’s bill and your bill will be paid, but all of this stuff is the truth.” What Mr MacDonald was saying confirmed a promise he had made to his daughter, not to Jaskot. He was telling her that he would pick up the bill, for her, not for Jaskot. Moreover, all the work had been done at this point, so Mr Jaskot and Ms Cooper could not have relied on anything said at that point in their decision to stay on the file.

[ 22 ] It must also be remembered that while the meetings were taped with the knowledge and consent of Mr MacDonald, a person in his position would easily slip into a normal conversational mode of speaking. The subject matter was emotionally charged for him and his daughter. One cannot interpret his words as if they were carefully considered and intended to create legal obligations. As a non-lawyer he was very much at a disadvantage in these circumstances. It is not possible that on September 22, 2009 he was recalling and adopting something he said 14 months previously. To attempt to fix Mr MacDonald with legal obligations from words spoken in these circumstances would be difficult fairly to do, unless his words were clear and unequivocal.

[ 23 ] In my view, examination of the affidavits and the relevant documents and transcripts make it plain and obvious that Mr MacDonald never gave the indemnity that the plaintiff attributes to him, and that it is not necessary to have a trial so to decide.

[ 24 ] The motion is granted. The action is dismissed against both defendants. The parties may make submissions to costs in writing, the defendants within 10 days and the plaintiffs within 20 days.

J.A. Ramsay J.

Date: 2012-03-06