ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No.: 5519/13
Date: 20140919

B E T W E E N:

MANUEL BLAUTH and
1337932 ONTARIO LTD.

Manuel Blauth for the Plaintiff

Plaintiff

• and -

MICHAEL WEBSTER

No one for the Defendant

Defendant

Heard: September 5, 2014

D E C I S I O N

WILCOX, J.

INTRODUCTION

1The Plaintiffs’ Statement of Claim was served on April 13, 2013 on the Defendant who was subsequently noted in default. The matter came on for trial on September 5, 2014. The Plaintiff Manuel Blauth was the sole witness.

FACTS

2The facts consist of the allegations of fact in the Statement of Claim, which are deemed to have been admitted when the Defendant was noted in default, and those found in the oral testimony of Manuel Blauth and the exhibits that he filed.

3Blauth described himself as the sole owner, director and officer of the Plaintiff 1337932 Ontario Ltd. He created it to own a Pizza Pizza Limited (PPL) franchise, from April 2000. A dispute arose over the figures that PPL was using for the franchise’s sales. Blauth alleged that PPL was using a high figure for the purpose of calculating royalties, thereby inflating the amount owed to it by the franchise, but reporting a low figure for the purpose of calculating the required remittances for PST and GST. PPL forced the Plaintiffs out of the franchise by August, 2002. The Ministry of Finance later performed an audit, determined that taxes were owed, and liened Blauth’s house.

4Blauth retained the Defendant Michael Webster, barrister and solicitor, in August, 2002 to deal with PPL. The retainer later expanded to include dealing with the Ministry of Finance matter.

5In 2008, Webster started an action in the Superior Court against PPL for $500,000 for breach of the statutory tort of good faith and $150,000 special damages, plus interest and costs. PPL defended. No subsequent steps were taken by Webster in the action, to Blauth’s knowledge. Contacting Webster was difficult. Eventually, he replied to Blauth’s emailed inquiry as to when the case would go to court that Webster was temporarily suspended from practice and could not talk with Blauth. Indeed, there was no further communication. Blauth contacted the Law Society of Upper Canada and found that Webster had been suspended, investigated and ultimately been disbarred. He had taken no steps to get off the record for the Plaintiffs.

6Blauth contacted the court and found that the case had been dismissed. He did not understand the procedure involved, but documents from PPL’s counsel, filed herein as Exhibit 4, show that the case was administratively dismissed for delay under Rule 48. Blauth was unsuccessful in his efforts to have the dismissal set aside. He had tried on his own, failed, and could not afford to retain counsel to attempt it.

7Blauth was able to resolve the tax issue without paying or owing anything more. The Ministry of Finance, he said, wrote it off and lifted the lien.

8The Statement of Claim in the present matter claims:

• damages in the sum of $1,000,000; - special damages in an amount to be proven at trial; - interest; - costs

for which it alleges Webster is responsible, for, in essence, failing to represent the Plaintiffs and their interests as he was retained to do.

As the matter has gone by way of default, I find that the allegations and liability are admitted. It remains to quantify the damages.

9I note in passing that Blauth is not legally knowledgeable and that he candidly admitted that he did not fully understand the Statement of Claim. It had been drafted for him by, or with the assistance of, someone who had more such knowledge.

REPRESENTATION OF THE CORPORATE PLAINTIFF

10There are, obviously, two Plaintiffs, the individual Manuel Blauth and the numbered company. They are self-represented. Rule 15.01(2) states that: “(a) party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the court”. Blauth testified that he is the sole shareholder, officer and director of the corporation. His pleadings and those of the corporation are identical.

11In Lamond and Smith 2004 6218 (ON SC), [2004] O.J. No. 3255, the Ontario Superior Court of Justice dealt with a similar situation. It concluded that “(t)he historical reluctance of the trial courts to grant leave to a corporation to be represented by a non-lawyer has little merit in the case of a small one man company.” Therefore, it exercised its discretion to grant leave to the company to be represented by the other, individual, plaintiff who, like Blauth, was its sole shareholder, officer and director and was a non-lawyer. I find the case’s reasoning persuasive and grant leave for the corporate plaintiff herein to be represented by Blauth.

DAMAGES

12In court, Blauth sought $32,000 in damages made up of:

• $18,000 that he said he had paid to Webster; - $200 that he said that he had paid on each of two occasions to file motions to reopen the case, for which he had no receipts; - the cost of hotels in Toronto at $200 to $250 each, one to two times per year for nine years, from 2002 to 2011, when he travelled to meet with Webster about the case, also for which he had no receipts; - $1,000 for motor fuel for those trips to Toronto, for which there are no receipts; - interest.

13Exhibit 7 is a collection of statements that Blauth received from Webster from December, 2002 to April, 2006. They substantiate payments to Webster by Blauth of $17,000 in the matters involving PPL and the Ministry of Finance, which is the amount that will be allowed, rather than the $18,000 alleged by Blauth.

14I am satisfied that Blauth brought motions to court on two occasions to reopen the case, and that there would have been filing fees. The fee for filing a motion on notice is $127, not $200. Therefore, I will allow $254 for these.

15Webster’s offices were in downtown Toronto and Blauth’s home was in New Liskeard. So, it is to be expected that he used hotels when travelling to meet with Webster. The time dockets of Webster in Exhibit 7 for 2002 to 2004 show there were four meetings with Blauth over about two years, so Blauth’s evidence of the frequency of use of hotels appears to be reasonable, although what evidence there is on point suggests that the frequency of meetings decreased over time. I find his estimate of the cost of accommodation is also reasonable. Although exact figures are not available, I would allow the cost of an average of 1.5 stays per year for nine years at $225 per stay, totaling $3,037.50.

16I would also allow the $1,000 sought for fuel, which is likely an underestimate in my opinion.

17These would be the special damages. They shall be subject to pre-judgment interest at the rate of 1.3 percent from October 27, 2011 being the date of the order dismissing Blauth’s action against PPL for delay. The Statement of Claim also seeks unspecified damages of $1,000,000. Blauth did not address this point in submissions. However, I think that it is appropriate that I also deal with the issue of what other damages, if any, should be awarded to the Plaintiffs.

18The Plaintiffs’ chance of success against PPL and their losses, if any, from the Defendant’s failure to prosecute the claim against PPL cannot be quantified, so there is no way to determine the amount of these damages directly. Punitive damages were not specifically claimed, nor is there evidence to justify a punitive damages award. Nominal damages are available, however, where a lawyer’s conduct falls below the requisite standard, but damages cannot be proven. Therefore, I also award the Plaintiffs nominal damages of $1.00.

COSTS

19The Plaintiffs shall also have their costs which I fix at $1,262.25, including five hours at $60.00 per hour and disbursements incurred for issuing the present Statement of Claim, locating and serving Webster and setting the matter down for trial.

JUDGMENT

20In summary, then, the Plaintiffs shall have judgment against the Defendant for $21,292.50 plus pre-judgment interest from October 27, 2011 at 1.3 percent, costs of $1,262.25 and post-judgment interest.