Juroviesky et al. v. Lawyers Professional Indemnity Company
[Indexed as: Juroviesky v. Lawyers Professional Indemnity Co.]
Ontario Reports
Ontario Superior Court of Justice,
Matheson J.
January 6, 2014
118 O.R. (3d) 627 | 2014 ONSC 43
Case Summary
Insurance — Liability insurance — Insurer's duty to defend — Lawyer's professional liability policy excluding coverage for claims in any way related to or arising out of provision of investment advice unless as direct consequence of performance of professional services — Policy containing "notwithstanding" clause that allowed insurer to deny defence if it determined on reasonable grounds that claim was excluded and that permitted consideration of extrinsic evidence — Client suing lawyer for negligent provision of legal advice and breach of retainer in relation to investment — Exclusion clause operating where there was mix of investment advice and legal advice related to investment advice — Exception in exclusion clause not applying as extrinsic evidence established that lawyer provided investment advice before providing professional services in relation to investment — Insurer having no duty to defend.
The applicant lawyer was sued by a client for the negligent provision of legal advice and breach of retainer in relation to an investment. The applicant's professional liability policy excluded coverage for claims in any way related to or arising out of the provision of investment advice unless as a direct consequence of the performance of professional services. The policy contained a "notwithstanding" clause that allowed the respondent insurer to deny a defence where it had reasonable grounds to conclude that the exclusion applied. The clause permitted the consideration of not just the pleading but also extrinsic evidence. The respondent refused to defend the action on the ground that the exclusion clause applied. The applicant brought an application for an order requiring the respondent to defend the action.
Held, the application should be dismissed.
The claims made in the action were "related to" the provision by the applicant of investment advice. All of the allegations of breach related to the investment. The exclusion clause operated to exclude coverage altogether, subject only to its exception, where, as here, there was a mix of investment advice and legal advice related to the investment advice. The exception did not apply if the investment advice came before the professional services. Extrinsic evidence established that the applicant did, in fact, provide investment advice first, and subsequently provided related professional services. The respondent had no duty to defend the action.
Derkson v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27, 2001 SCC 72, 205 D.L.R. (4th) 1, 277 N.R. 82, 273 N.R. 356, 150 O.A.C. 1, 153 O.A.C. 310, 33 C.C.L.I. (3d) 1, [2002] I.L.R. I-4029, 15 M.V.R. (4th) 1, 108 A.C.W.S. (3d) 893, consd
Other cases referred to
Alie v. Bertrand & Frère Construction Co. (2002), 2002 31835 (ON CA), 62 O.R. (3d) 345, [2002] O.J. No. 4697, 222 D.L.R. (4th) 687, 167 O.A.C. 20, 26 C.L.R. (3d) 5, 119 A.C.W.S. (3d) 129 (C.A.); Cassels Brock & Blackwell LLP v. LawPro (2007), 85 O.R. (3d) 318, [2007] O.J. No. 692, 2007 ONCA 122, 221 O.A.C. 177, 45 C.C.L.I. (4th) 15, 155 A.C.W.S. (3d) 437; Cicchi v. The Lawyer's Professional Indemnity Co. (December 11, 2008), Toronto CV-08-361396 (Ont. S.C.J.); James v. Lawyers' Professional Indemnity Co., 2006 122 (ON SC), [2006] O.J. No. 46, [2006] O.T.C. 6, 33 C.C.L.I. (4th) 269, [2006] I.L.R. I-4480, 144 A.C.W.S. (3d) 947 (S.C.J.); Palmieri v. Misir, [2003] O.J. No. 3518, [2003] O.T.C. 812, 125 A.C.W.S. (3d) 334 (S.C.J.); 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, 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 [page629]
APPLICATION by the insured for a declaration that the insurer had a duty to defend it.
Eliezer Karp, for applicants.
Valerie A. Edwards, for respondent.
Reasons for Decision
1MATHESON J.: — This is an application for an order requiring that the Lawyers Professional Indemnity Company ("LawPRO") defend the applicant lawyer and law firm, and for related orders. The applicants have been sued for $1.2 million in damages by Robert Bell and Georgian View Holdings Ltd. in Court File No. CV-10-410359 (the "action"). LawPRO has denied coverage.
2The applicant Henry Juroviesky is a lawyer practising with the firm and second applicant Jurovieksy and Ricci LLP. Mr. Juroviesky is insured under LawPRO Policy 2010-001 (the "Policy"). On June 8, 2010, Mr. Juroviesky reported the claim to LawPRO. He had received a letter from a lawyer for Mr. Bell and Georgian View Holdings making allegations against him and his firm regarding an equity investment in a company called Clear Vision Windows. Ultimately, that complaint gave rise to the action.
3The main issues in this application relate to the exclusion in the Policy regarding investment advice.
Circumstances Giving Rise to Coverage Issue
4In late 2007, Mr. Juroviesky learned from a friend that a business called Clear Vision Windows ("CVW") was looking for a business partner to provide investment capital and become involved in management. The friend, Benjamin Stern, was a principal in CVW.
5Mr. Juroviesky then communicated with Mr. Bell about the potential investment. Mr. Bell had been a client of Mr. Juroviesky. Among other things, Mr. Juroviesky had incorporated the company Georgian View Holdings for Mr. Bell. There is, however, no suggestion that Mr. Juroviesky's communication about CVW was part of a then current legal retainer by Mr. Bell or his company. The report to LawPRO simply said that Mr. Juroviesky "believed [Mr. Bell] would be interested in such an opportunity".
6On November 14, 2007, Mr. Juroviesky sent Mr. Bell an e-mail. LawPRO relies upon this e-mail to deny coverage. It appears on its face to be an investment recommendation. Its "Re: line" is "Window Company Investment", and after some pleasantries it begins as follows: [page630]
Let us review where we are.
We talked about the potential in investing in a window and door manufacturing company situated in Barrie.
At the time we spoke, I expressed my intuition after interviewing my friend (an investor in the Company and responsible for Sales) which was as follows:
Small company that has economic potential.
Cash crunch due to long Accounts Receivable cycle (from time order in materials until order is filled and paid).
Lack of executive management on the business vision side.
Lack of expertise in financial affairs management.
Good inside technical people.
Opportunity to be white knight investor (come in and save company in return for healthy interest in company).
7In the e-mail, Mr. Juroviesky talked about a "detailed interview" he did with his friend (Mr. Stern) as well as John Benevides, the founder of CVW. Mr. Juroviesky indicated that based on that interview he believed that his initial intuition as set out in the six points above was "on mark".
8In the e-mail, Mr. Juroviesky said that the above was subject to further due diligence and documentation, including financial and legal due diligence. On what to do next, he stated as follows:
My suggestions:
Short term: What I suggest on the short term liquidity crisis is that you as an investor lend the Company a nominal amount, say $50K, on Accounts Receivable factoring terms. What this means we lend money on a fully secured basis (secured by the Accounts Receivable, i.e., the company pre-signs over the A/R to you) at a high interest rate and/or a fee. This is subject to our office verifying that no other party has recorded an interest against the A/ R, and that the A/R are viable to the tune of $50K.
Long term: Subject to further due diligence, you make a further equity investment in the company of say $200K for 1/3rd of the Company. As a second prong, you lend the company on Bank terms say $300K, as a line of credit which only can be drawn as a percentage of Accounts Receivable, and secured by those Accounts Receivable. Further, if the Company does well, you should receive an option to convert any amounts you have lent to the company into equity at a pre-determined rate (so that if there is a buy out of your equity interest). On top of that, it may be appropriate to further negotiate options to purchase more equity at a pre-determined valuation.
All professional fees should come out of the company's line of credit. Respectfully, you should not have to bear that cost, rather the Company should absorb it. While onerous, this is the way the Banks do it.
Rob, please instruct me on how you would like to proceed. [page631]
9Despite the above e-mail, Mr. Juroviesky says the following in his affidavit on this application: "At no time did we provide Investment Advice to the Plaintiffs." He makes no reference to the e-mail in his affidavit.
10Mr. Bell decided to pursue an equity investment in CVW. Mr. Juroviesky and his firm were retained by Mr. Bell's company, Georgian View Holdings, in connection with the investment. The services provided by Mr. Juroviesky and his firm included the preparation of a letter of understanding and other agreements, as well as due diligence. A due diligence report was prepared dated February 11, 2008.
11Ultimately, CVW was unsuccessful and closed in 2009. In 2010, Mr. Juroviesky received a letter from a lawyer for Mr. Bell and Georgian View Holdings advancing a complaint about Mr. Juroviesky and his firm's advice and services in relation to the investment in CVW and the damages suffered by Bell and Georgian View Holdings. Mr. Juroviesky reported the complaint to LawPRO. LawPRO initially indicated that based on its information at that stage it was unlikely the investment advice exclusion would apply, but it reserved its position. At a later stage, LawPRO reviewed documents including the above e-mail and declined coverage.
12The action was commenced on September 13, 2010. The statement of claim was amended on September 10, 2012, removing a specific allegation of negligent investment advice. LawPRO fairly accepts that this application should be decided based upon the amended statement of claim, not the original statement of claim.
13LawPRO declined coverage relying on the exclusion for investment advice found in Part III of the Policy, clause (d), as follows:
This POLICY does not apply: . . .
(d) to any CLAIM in any way related to or arising out of an INSURED providing investment advice and/or services, including without limitation, investment advice and/or services relating to or arising out of a business, commercial, or real property investment, unless as a direct consequence of the performance of PROFESSIONAL SERVICES.
Issues
14The overarching issue on this application is whether or not it is possible that there is coverage under the Policy. If there is the possibility of coverage, there is a duty to defend.
15It is LawPRO's position that, even if the claims made in the action do include a failure to perform professional services as defined in the Policy, coverage is excluded under the above-quoted clause (d), and the exception within clause (d) for investment advice that is a direct consequence of performing professional services does not apply. It is essentially a timing issue. LawPRO submits that, since the investment advice came first, the exception to the exclusion does not apply. LawPRO further submits that it properly relied upon a "notwithstanding" clause in the Policy that allows it to deny a defence where it has reasonable grounds to conclude that the exclusion applies. The "notwithstanding" clause permits the consideration of not just the pleading but also extrinsic evidence such as the above e-mail.
16The applicants submit that they provided professional services as defined in the Policy. They submit that even if there was a mix of legal and investment advice/services, the claims regarding the legal advice/services should still be covered. In the alternative, they submit that the exception within clause (d) applies because any investment advice was a direct consequence of performing professional services. Although the applicants submit that the duty to defend should be determined based upon the pleading alone, they too advance extrinsic evidence for consideration.
17The specific issues arising in the application are therefore the following:
(i) whether the claim comes within the coverage provided by the Policy;
(ii) if so, whether the claim is excluded under the investment exclusion in Part III, clause (d), and in that regard:
(a) whether, if the claim includes allegations regarding both legal and investment advice, both are excluded; and
(b) whether the exception to the exclusion for investment advice applies because the investment advice was a "direct consequence of performing PROFESSIONAL SERVICES";
and
(iii) whether LawPRO can nonetheless decline to defend under the "notwithstanding" clause in the Policy and ask the court to consider extrinsic evidence in that regard.
18These issues must be considered against the backdrop of well-settled legal principles regarding the duty to defend and the proper approach to interpreting insurance policy contracts. [page633]
Duty to Defend
19The Supreme Court of Canada has recently summarized the circumstances in which there will be a duty to defend in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, [2010] S.C.J. No. 33, at para. 19:
(i) An insurer is required to defend a claim where the facts alleged in the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim.
(ii) It is irrelevant whether the allegations in the pleadings can be proven in evidence. That is to say, the duty to defend is not dependent on the insured actually being liable and the insurer actually being required to indemnify. What is required is the mere possibility that a claim falls within the insurance policy.
(iii) Where it is clear that the claim falls outside the policy, either because it does not come within the initial grant of coverage or is excluded by an exclusion clause, there will be no duty to defend.
20In examining the pleadings, the parties are not bound by the labels selected by the plaintiff; it is the true nature or substance of the claim that is determinative: Progressive Homes, at para. 20.
21The court will decide whether or not there is a duty to defend based upon the statement of claim alone unless the policy expressly indicates to the contrary: Alie v. Bertrand & Frère Construction Co. (2002), 2002 31835 (ON CA), 62 O.R. (3d) 345, [2002] O.J. No. 4697 (C.A.), at para. 182.
22The Policy has a "notwithstanding" clause that expressly permits LawPRO to deny a defence if it determines on reasonable grounds that the claim is excluded. Under this clause, the parties may adduce evidence to be considered by the court in addition to the statement of claim. Extrinsic evidence has previously been considered by courts as a result of this clause: see Palmieri v. Misir, [2003] O.J. No. 3518, [2003] O.T.C. 812 (S.C.J.), at para. 39; James v. Lawyers' Professional Indemnity Co., 2006 122 (ON SC), [2006] O.J. No. 46, [2006] O.T.C. 6 (S.C.J.), at para. 27; Cicchi v. The Lawyer's Professional Indemnity Co. (December 11, 2008), Toronto CV-08-361396 (Ont. S.C.J.).
23In my view, the roles of the amended statement of claim and the extrinsic evidence under the Policy are best addressed as part of a two-step process. First, the court should consider the issue of possible coverage based upon the amended statement of claim alone. Second, it can also consider the extrinsic evidence in order to decide whether or not LawPRO was entitled to deny coverage under the "notwithstanding" clause in the Policy. This was the approach taken in James.
Interpretation of Insurance Policies
24The Supreme Court of Canada has also recently summarized the interpretive principles for insurance policies in Progressive Homes, at paras. 22-24, as follows:
(i) when the language of the policy is unambiguous, the court should give effect to clear language, reading the contract as a whole;
(ii) when the language is ambiguous, the court should rely on general rules of contract construction; and
(iii) when the rules of construction fail to resolve the ambiguity, the court will construe the policy contra proferentem against the insurer -- coverage provisions are interpreted broadly and exclusion provisions narrowly.
25In Progressive Homes, the court discussed the alternating structure of insurance policies. A policy typically sets out the types of coverage, exclusions to coverage and exceptions to exclusions to coverage. Although exclusions do not create coverage, they should be read in light of the initial grant of coverage. As a result, the court found that it is generally advisable to interpret an insurance policy in the following order: coverage, exclusions and then exceptions (at paras. 26-28). I follow this approach below.
Analysis
(i) Coverage
26The Policy provides for coverage as follows:
Part I -- INSURANCE COVERAGE
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 that 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.
Part V -- DEFINITIONS
PROFESSIONAL SERVICES means the practice of the Law of Canada, its provinces and territories, and specifically, those services performed, or which ought to have been performed, by or on behalf of an INSURED in such INSURED's capacity as a LAWYER.
27The amended statement of claim is short, with little detail. It does not expressly plead that the applicants were retained to provide legal advice or legal services. It does, however, plead that the applicants "acted" for the plaintiffs in connection with the equity investment in CVW. As well, in the particulars of breach, it alleges that "the legal advice provided by Juroviesky was undertaken negligently" and that he "breached his retainer and acted negligently" in a number of respects, including a failure to obtain security, a conflict of interest, a failure to perform any or adequate due diligence and a failure to provide an opinion on the legal basis for the plaintiffs to provide a guarantee.
28LawPRO contends that the true substance of the claim is one for negligent investment advice. I agree that aspects of the amended statement of claim do appear to be indirect complaints about investment advice. However, I do not conclude that the claim is obviously a claim for negligent investment advice that has been cloaked as allegations about legal advice. In the context of the duty to defend, the amended statement of claim is to be construed generously, giving the widest latitude to the allegations.
29I therefore find that the allegations in the amended statement of claim are sufficient to give rise to the possibility of coverage under the grant of coverage for "PROFESSIONAL SERVICES" in the Policy.
(ii) Investment exclusion
30Having found that the pleadings fall within the initial grant of coverage, the onus now shifts to LawPRO to show that an exclusion clause precludes coverage. LawPRO must show that the exclusion clearly and unambiguously excludes coverage. LawPRO relies on Part III, clause (d).
31Leaving aside its exception, clause (d) excludes any claim in any way related to or arising out of an insured providing investment advice and/or services, including without limitation investment advice and/or services "in any way relating to or arising out of" a business, commercial or real property investment.
32The wording "in any way related to or arising out of" is very broad, especially the phrase "in any way related to". When considering the same clause in the very similar case of Cicchi, Justice Spence said the following, at para. 20: [page636]
The phrase in the LawPro Policy "related to" appears substantially similar to the phrase "in connection with". In this respect Cohen J. in Douglas Symes & Brissenden v. LSBC Captive Insurance Co. (1999) 1999 5493 (BC SC), 65 B.C.L.R. (3rd) 300 (S.C.), appeal dismissed (2000) 2000 BCCA 518, 80 B.C.L.R. (3rd) 201 (C.A.) stated in para. 36 that:
. . . [T]he phrase "in connection with", in the context of the [Law Society of British Columbia] Policy indicates a requirement something less than "arising out of" especially where, as is the case here, the phrases appear side by side [as in the LawPro Policy as well].
(Emphasis added)
33Based on the unambiguous words of clause (d), the claims made in the action are "related to" Mr. Juroviesky providing investment advice. The amended statement of claim alleges that Mr. Juroviesky contacted the plaintiffs "in relation to investing in [CVW]". The particulars of negligence and breach of retainer include, among other things, an alleged "failure to perform any or adequate due diligence in respect of [CVW's] financial stability and future financial viability before recommending the investment" (emphasis added). All of the allegations of breach relate to the CVW investment. There is therefore no question, based on the pleadings, that the claims "relate to" investment advice given by Mr. Juroviesky about a business investment.
34The claims may also be "arising out of" investment advice but I do not find that clear based upon the pleading. This is of no consequence because the claims do fall within the broader language, "related to".
35The applicants submit that, if the allegations in the amended statement of claim are mixed, involving investment advice and legal advice, the claims regarding legal advice should still be covered. In essence, it is their position that clause (d) only operates to exclude coverage for the negligent investment advice itself.
36This position cannot be sustained on the plain wording of the Policy. If this submission were accepted, it would essentially render clause (d) of no effect. As stated in Progressive Homes, at para. 27, exclusions should be read in light of the initial grant of coverage. The initial grant of coverage in the Policy does not provide coverage for investment advice. No exclusion is needed to exclude only that advice. Using ordinary principles of contract interpretation, the Policy ought not to be interpreted so as to render clause (d) meaningless. Even bearing in mind that exclusions ought to be interpreted narrowly, clause (d) must have some role.
37Perhaps more significantly, on its plain words clause (d) excludes more than just claims of negligent investment advice. It excludes claims "in any way related to or arising out of" investment advice, as discussed above. Further, its exclusion is for "any CLAIM" and "CLAIM" is defined as "a written or oral allegation of breach in the rendering or failure to render PROFESSIONAL SERVICES".
38Hence, when clause (d) excludes "any CLAIM" it must exclude the allegations regarding legal advice that would otherwise be covered as "PROFESSIONAL SERVICES".
39The applicants rely on Derkson v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27, 2001 SCC 72. In this case, an accident was the result of two concurrent causes: a failure to safely clean up a work site and a failure to ensure that a truck was operated safely. The issue was whether a general liability policy effectively excluded liability where there were two concurrent causes only one of which (the automotive cause) was excluded under the policy. The court concluded that it did not, and there was still coverage for the work site allegations. However, the court emphasized (at paras. 40, 49-50) that the issue was a matter of contract interpretation. The decision in that case is consistent with a narrow interpretation of the phrase "arising out of" but it does not dispose of the issue of the interpretation of clause (d) of the Policy. The policies differ.
40I find that the Policy is unambiguous for the reasons set forth above. Where there is a mix of investment advice and legal advice related to the investment advice, clause (d) operates to exclude coverage altogether, subject only to its exception.
(iii) Exception
41Clause (d) includes an exception shown in underlining below:
This POLICY does not apply: . . .
(d) to any CLAIM in any way related to or arising out of an INSURED providing investment advice and/or services, including without limitation investment advice and/or services relating to or arising out of a business, commercial, or real property investment, unless as a direct consequence of the performance of PROFESSIONAL SERVICES.
(Emphasis added)
42The issue is therefore whether the investment advice alleged in the claim is "a direct consequence of the performance of" professional services as defined in the Policy. LawPRO's position is that, since the investment advice came first, the exception does not apply.
43The wording of clause (d) supports this position. The word "consequence" introduces the timing requirement. The professional services must come first. As put by the Court of Appeal in Cassels Brock & Blackwell LLP v. LawPro (2007), 85 O.R. (3d) 318, [2007] O.J. No. 692, 2007 ONCA 122, at para. 8, when considering the same clause, "its claim for losses cannot be said to be a 'direct consequence' of any prior professional services the appellant may have provided" (emphasis added).
44Turning then to the amended statement of claim, after introducing the parties it begins with this paragraph:
- In 2008, Georgian View and Bell was contacted by Henry Juroviesky and Juroviesky & Ricci LLP (collectively referred to as "Juroviesky") in relation to investing in a company [CVW] and the entering into of a Shareholders Agreement.
45The amended statement of claim does not expressly allege whether or not the contact about CVW was a consequence of prior professional services. It also does not expressly state that investment advice was given at this time. While it could be implied that the first step was investment advice, it is not express and it is not clear. Therefore, giving a wide latitude to the pleadings in favour of the insured, I conclude that based upon the pleading alone there is the possibility that the exception applies and there is coverage.
46There remains the question of the "notwithstanding" clause and the extrinsic evidence.
(iv) "Notwithstanding clause"
47The Policy contains the following clause, giving LawPRO the right to decline a defence when it has reasonable grounds to do so:
- Notwithstanding the INSURER'S obligations pursuant to Part I Coverage B, paragraph 1, i.e. its obligation to defend, investigate and pay certain expenses and costs, the INSURER may decline to so defend, investigate or pay the expenses or costs . . . where it determines on reasonable grounds that the CLAIM does not arise out of an error, omission or negligent act in the performance of or failure to perform PROFESSIONAL SERVICES . . . or is excluded pursuant to Part III of the POLICY.
In the event that the INSURED shall disagree with the decision of the INSURER, the dispute or disagreement may be heard . . . upon application or action by either party to the Ontario Superior Court of Justice. The INSURER or the INSURED may introduce evidence relating to the issues of coverage and the activities of the INSURED . . . on the application or action, which evidence shall be considered by the . . . judge in making his or her determination of the respective obligations of the INSURED and INSURER.
(Emphasis added) [page639]
48Both sides have filed extrinsic evidence. LawPRO relies on the e-mail from Mr. Juroviesky to Mr. Bell that I have quoted from above. That e-mail, on its face, shows that the first step in the dealings between Mr. Juroviesky and Mr. Bell about CVW was advice relating to the potential of an investment in CVW. The professional legal services provided, such as the preparation of agreements and the due diligence report, came later. Mr. Juroviesky's bald denial that he did not give investment advice does not change the content of his e-mail, which he did not attempt to explain in his affidavit.
49Counsel to the applicants argued that "intuition" is not advice and preliminary advice subject to further due diligence is not advice. The e-mail does begin with a reference to intuition, but it goes on to describe a detailed meeting with two senior people in the business after which Mr. Juroviesky states in his e-mail that his intuition was "on mark". Mr. Juroviesky's e-mail also says his points were subject to further due diligence. But to suggest that advice that is qualified is not advice belies common sense. These arguments may be relevant to the merits of the action, but I am not deciding the merits here. Construing the exclusion narrowly, the e-mail falls within its reference to investment advice. This is also consistent with the allegation in the amended statement of claim that Mr. Juroviesky was negligent in "recommending the investment".
50In addition, Mr. Juroviesky has attested to the legal services he and his firm provided to the plaintiffs prior to the events described in the action. He has not suggested that any prior retainer called for or gave rise to his decision to contact the plaintiffs about CVW. This is consistent with his report to LawPRO, also filed in evidence, which simply said that he "believed [Mr. Bell] would be interested in such an opportunity".
51Having regard for not only the amended statement of claim but also the extrinsic evidence, I readily conclude that the exception to the exclusion in clause (d) is not available to the applicants and the exclusion applies to the claim advanced in the action. The claim is "related to" investment advice and cannot be said to be a "direct consequence" of any prior professional services provided by the applicants. I further conclude that LawPRO had the necessary "reasonable grounds" to conclude that the claim was excluded and deny a defence.
Order
52I therefore dismiss this application. [page640]
53If the parties are unable to agree on costs, LawPRO shall make its submissions by brief written submissions together with a bill of costs to be delivered by January 29, 2014. The applicants' brief written response shall be delivered within 30 days after service of the LawPRO submissions.
Application dismissed.
End of Document