ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 15/09
DATE: 20120327

BETWEEN:

ROBERT GUINDON and NORMC Developers Inc. Plaintiff

– and –

DAVID DOLSON Defendant

G. Sheppard, for the Plaintiffs

J. Bennett, for the Defendant

HEARD: March 20, 21, and 22, 2012

C.J. CONLAN, J.

INTRODUCTION

[ 1 ] Robert Guindon claims that he was swindled by a fraudster. He asserts further that, to add insult to his injury, he was negligently represented by his real estate lawyer.

[ 2 ] The Plaintiffs, Normc Developers Inc. (“Normc”) and Robert Guindon (“Mr. Guindon”), have already sued and obtained Default Judgment against the alleged fraudster, Daniel Vanbodegom (“Mr. Vanbodegom”), and his companies, New Day Building Group Inc. (“New Day”) and 1448601 Ontario Inc. (“1448601”).

This is a separate action for the same damages against lawyer David Dolson (“Mr. Dolson”). Mr. Guindon claims that his counsel, Mr. Dolson, was negligent in the course of the real estate file.

[ 3 ] For the reasons that follow, the action is dismissed. The Plaintiffs have failed to prove on balance that Mr. Dolson was negligent.

THE FACTS

[ 4 ] The factual background is largely undisputed. Mr. Guindon owned some land in Southampton. He was looking for a buyer. He eventually found one in Mr. Vanbodegom. The corporate Plaintiff was to sell the property to Mr. Vanbodegom, in trust for a company to be incorporated, for $700,000.00. That Agreement of Purchase and Sale dated November 2006 can be found at Exhibit 1, Volume 2, Tab 73J.

[ 5 ] Mr. Guindon first retained Mr. Kenneth Johnson, Q.C. (“Mr. Johnson) of Port Elgin as his lawyer. Mr. Johnson became concerned that the deal was a bad one for his client. He repeatedly warned Mr. Guindon about the pitfalls of what he was getting himself and his company in to, culminating in a very strongly worded letter to the Plaintiffs dated January 19, 2007 – Exhibit 3.

[ 6 ] The concept at the time was that, of the $700,000.00 purchase price, Mr. Guindon would receive on closing $275,000.00 cash. The other $425,000.00 would be kept in the deal until the land was fully developed and the project was finalized. Mr. Guindon is a land developer. His objective was to have the land turned in to residential units. He expected at the end to get his $425,000.00 back plus a 30% share of the profits of the development project. He ended up getting neither.

[ 7 ] Mr. Johnson was astute. He warned his client against proceeding in the absence of a comprehensive land development agreement. Mr. Guindon was not heeding his lawyer’s concerns. Not surprisingly, very shortly after Mr. Johnson’s January 19, 2007 letter, Mr. Guindon went elsewhere to close the deal.

[ 8 ] Elsewhere turned out to be Mr. Dolson. Mr. Dolson closed the deal in relatively short order in February 2007. Mr. Vanbodegom was represented by separate counsel, Tibollo & Associates Professional Corporation. Mr. Guindon received a cheque on closing for $275,000.00. The transferee, New Day, immediately mortgaged the property for $490,000.00. Mr. Guindon never received another cent. New Day defaulted on the mortgage. Power of Sale proceedings were commenced by the mortgagee. The land was never developed. The project was never completed. Mr. Guindon now has no ownership, interest or security in the property. He has nothing but what is likely a hollow Judgment against the man who allegedly swindled him, Mr. Vanbodegom. Mr. Vanbodegom is currently facing criminal charges.

[ 9 ] Mr. Dolson charged his client, the corporate Plaintiff, $1500.00 total. Mr. Dolson would likely give that money back in a heartbeat.

[ 10 ] As part of the deal, Normc granted a mortgage on the property to 1448601 in the amount of $205,000.00. Nobody at Trial could explain the purpose of that mortgage. It makes absolutely no sense as Normc was the seller. In any event, that document is at Tab 73I of Exhibit 1, Volume 2.

[ 11 ] Another aspect of the whole transaction was what the parties have referred to as a Joint Venture Agreement between Normc, 1448601 and DenBot Investments Ltd. – Exhibit 1, Volume 2, Tab 73L. This was the agreement that set out, among other things, Normc’s entitlement to 30% of the profits of the land development project. Both Mr. Johnson and Mr. Dolson were of the view that the said Agreement was unsatisfactory in that it fell short of providing adequate protection to Mr. Guindon and Normc.

[ 12 ] Mr. Dolson did not negotiate or prepare the Agreement of Purchase and Sale dated November 2006 or the Joint Venture Agreement dated January 2007. In fact, Mr. Dolson was not on the scene until early February 2007, well after those documents were signed and binding. Exactly why Mr. Dolson ended up involved is not pivotal; it was either because Mr. Guindon could not get a hold of Mr. Johnson (as testified to at Trial by Mr. Guindon) or because Mr. Guindon simply chose to discharge Mr. Johnson and take the deal to another lawyer who would be less vigorous in raising concerns about the advisability of the arrangement.

THE ISSUES

I. Was Mr. Dolson negligent?

II. If not, then the action must be dismissed. If yes, then did Mr. Dolson’s negligence cause damages to the Plaintiffs?

III. If not, then the action must be dismissed. If yes, then what damages have been proven on balance?

[ 13 ] The parties agree that the action can succeed only on behalf of the corporate Plaintiff as that was Mr. Dolson’s client.

Was Mr. Dolson negligent?

[ 14 ] No lawyer is expected to be perfect. But a lawyer is expected to bring reasonable care, skill and knowledge to the work that s/he performs on behalf of his or her client. Mr. Dolson owed that duty of care to Normc. Did he fall below the standard of care expected of a reasonably competent or ordinarily prudent solicitor in the same circumstances? That is the threshold question to be determined.

[ 15 ] Counsel for the Plaintiffs submits that Mr. Dolson was negligent in several ways. First, Mr. Dolson failed to even attempt to obtain the file from Mr. Johnson. That is true. That is not good practice. Second, Mr. Dolson took instructions from both the vendor and the purchaser despite a clear conflict between them regarding the Joint Venture Agreement. It is true that Mr. Dolson never met and took instructions from Mr. Guindon privately in the absence of Mr. Vanbodegom. That is not good practice. Third, Mr. Dolson never had Mr. Guindon acknowledge in writing the cautions that Mr. Dolson testified that he relayed to Mr. Guindon about the fact that New Day was taking title to the property and regarding the inadequacies of the Joint Venture Agreement. That is true. That is not good practice. Fourth, Mr. Dolson never wrote the kind of letters that Mr. Johnson wrote making explicit to Mr. Guindon those warnings, including Mr. Dolson’s final reporting letter at Tab 73 of Exhibit 1, Volume 2. That is true. That is not good practice. Fifth, Mr. Dolson took no steps to improve the Joint Venture Agreement. That is true. Mr. Dolson testified that he warned Mr. Guindon about the shortcomings in the said Agreement at their in-person meeting in early February 2007; Mr. Guindon cannot recall one way or the other. Mr. Dolson testified that he was explicitly instructed by Mr. Guindon to not touch the said Agreement. I accept that evidence and find as facts that Mr. Dolson gave Mr. Guindon that verbal advice and received from Mr. Guindon that instruction.

[ 16 ] Mr. Sheppard, however, is an experienced and very competent counsel. He readily acknowledged in closing submissions that his clients were not relying upon the above instances of alleged negligence as, even if this Court found those matters or any of them as constituting negligence, none of them caused the alleged damages. The key point as submitted by Mr. Sheppard is with regard to the Transfer at Tab 73P of Exhibit 1, Volume 2. Mr. Guindon signed that Transfer as President of Normc. The Transfer shows New Day as the transferee. Remember that the Agreement of Purchase and Sale did not specify the name of any corporation as the purchaser except to say that it would be Mr. Vanbodegom in trust for a company to be incorporated. And remember further that New Day was not a party to the Joint Venture Agreement.

[ 17 ] So why would the Transfer show New Day specifically as taking title to the property? The answer is that Mr. Dolson was directed to so arrange. That Direction from Mr. Vanbodegom to Normc and Mr. Dolson is at Tab 73O of Exhibit 1, Volume 2. Mr. Dolson did what he was directed to do. The Transfer was signed by Mr. Guindon himself.

[ 18 ] The Plaintiffs argue that Mr. Dolson ought to have done more to meet the requisite standard of care. He ought to have ensured that the property was transferred to New Day as a nominee or trustee for 1448601, or alternatively, he ought to have at least ensured that New Day would be bound by the Joint Venture Agreement. The evidence from Mr. Johnson, both in terms of his letters marked Exhibits and his testimony at Trial, reveals that he was alert to and concerned about the lack of any agreement that the ultimate transferee of the property would be bound by the Joint Venture Agreement.

[ 19 ] This was a fairly streamlined two-day Trial. The only witnesses were Mr. Johnson and Mr. Guindon for the Plaintiffs and Mr. Dolson for the Defence. Mr. Johnson strikes me as a conscientious lawyer. He was not an expert witness, however. He was also not an independent witness as he had been involved both before and after Mr. Dolson; in fact he prepared as counsel for the Plaintiffs the Statements of Claim in both actions including the within proceeding against Mr. Dolson.

The Need for Expert Evidence on the Standard of Care

[ 20 ] Mr. Bennett, counsel for Mr. Dolson, ably argued that the lack of expert evidence in this case is fatal to the Claim. I agree.

Expert evidence is required to establish the requisite standard of care in professional negligence cases, including those against lawyers, except in (i) extraordinary cases involving non-technical matters or (ii) cases involving plainly egregious conduct. This Court draws that conclusion on the authority of jurisprudence from the Court of Appeal for Ontario including the decisions in Gauvreau v. Paci , 1996 CarswellOnt 2661 and Krawchuk v. Scherbak , 2011 CarswellOnt 3015 .

[ 21 ] Prior to closing submissions, I brought to the attention of both counsel the Krawchuk decision specifically.

[ 22 ] Mr. Sheppard dealt with that decision as best he could. Unfortunately for Mr. Guindon, I do not accept the argument made well in closing submissions by Mr. Sheppard. Counsel took the Court to the decision of Master Beaudoin (at that time) in Carlingwood Motors Ltd. v. Nissan Canada Inc. , 2000 CarswellOnt 2345 . That decision cannot displace the authorities from the Court of Appeal. Besides, it is distinguishable in that the Master decided against the requirement for expert evidence because it would, on those facts, offend the ultimate issue rule. The expert evidence in question was an affidavit setting out opinion evidence on whether a law firm was in a conflict of interest. The very issue to be decided was whether that law firm should be removed from the record for a conflict of interest. The Master found that the Court was fully capable of interpreting the relevant Rules of Professional Conduct.

[ 23 ] In our case, I am hardly capable of determining whether a reasonably competent solicitor or ordinarily prudent lawyer in the same circumstances as Mr. Dolson would have gone behind the Direction regarding title and beyond the instructions from Mr. Guindon to either arrange the Transfer to New Day as a nominee or trustee or ensure some agreement whereby New Day was bound by the Joint Venture Agreement. That depends on the standard of care expected. I have no expert evidence on that standard in these circumstances. All that I know is that Mr. Johnson, not an expert nor an independent witness, may have insisted on one of those two alternatives. That is not sufficient to hold on balance that Mr. Dolson was negligent.

[ 24 ] This case does not fall within either exception spoken about in Krawchuk . This is a technical issue in a relatively complicated real estate transaction involving at least three components: an Agreement of Purchase and Sale, a Mortgage and a Joint Venture Agreement. This is not one of those clear cases where the Court can assess in a vacuum what a reasonably competent or ordinarily prudent solicitor would have done in the shoes of Mr. Dolson. Expert evidence would have filled that vacuum. Nor is this a case where it can be said that Mr. Dolson’s conduct was particularly egregious. He did some things that are surely not textbook examples of ideal practice. On the key issue of the Transfer, however, he followed the Direction and his instructions. He testified that he cautioned Mr. Guindon about the title and Joint Venture Agreement issues, which I accept as that evidence was uncontradicted by Mr. Guindon. There is no reason for this Court to infer that Mr. Dolson must have foreseen or ought to have foreseen that Mr. Vanbodegom would breach the Joint Venture Agreement after closing.

[ 25 ] I suspect that Mr. Dolson would, if he could, do some things differently in hindsight. It is without question that he appears to have been less of an advocate and protector than Mr. Johnson appeared to be in December 2006 and January 2007. But he had a limited retainer to close this deal. He did so in accordance with his instructions from an experienced land developer. Mr. Guindon was very anxious to make it happen – he readily admitted that at Trial. Mr. Guindon trusted Mr. Vanbodegom. Mr. Guindon signed the Transfer to New Day. There is no suggestion that he did not know or understand what he was signing.

CONCLUSION

[ 26 ] In the absence of expert evidence on the standard of care, I conclude that the Plaintiffs have failed to prove on balance that Mr. Dolson as negligent. I am not convinced on a balance of probabilities that a reasonably competent or ordinarily prudent solicitor in the same circumstances as Mr. Dolson would have done anything differently or anything more with regard to the Transfer, which is the only issue of potential negligence argued by Mr. Sheppard on behalf of the Plaintiffs as being capable of grounding a claim for damages. I am not persuaded on balance that Mr. Dolson was negligent in any way, period, notwithstanding the items of concern outlined above. As such, it is unnecessary to deal with the other issues of causation and damages.

[ 27 ] The action is dismissed.

[ 28 ] As I said to counsel in Court at the conclusion of final submissions, it was a pleasure to have such experienced and competent counsel conduct such a professional Trial. I have some real sympathy for Mr. Guindon. He was polite and respectful at Trial and, for the most part, appeared honest and genuine. He had one of the worst memories I have ever seen in a witness, but at least he admitted so. I hope for his sake that he collects on the Judgment against Mr. Vanbodegom and his companies. And I wish him success in the future as a land developer.

Counsel are to arrange for a teleconference through the Trial Coordinator in Owen Sound should they be unable to settle the issue of costs. We can discuss at that time, if necessary, written or oral submissions.

MR. JUSTICE C.J. CONLAN

Released: March 27, 2012

COURT FILE NO.: 15/09
DATE: 20120327

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: GUINDON and NORMC v DOLSON REASONS FOR JUDGMENT C.J. CONLAN, J.

Released: March 27, 2012