917488 Ontario Inc. v. Gore Bay (Town), 2015 ONSC 3241
COURT FILE NO.: 3640-14 OT
DATE: 2015-05-22
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
917488 Ontario Inc.
Moving Party/Applicant
– and –
The Corporation of the Municipality of the Town of Gore Bay
Respondent
Laura Pinkerton, for the Applicant/Moving Party
Gerard E. McAndrew, for the Respondent
HEARD: April 7, 2015
DECISION ON MOTION
CORNELL, J.
Introduction
[1] This is a motion for, among other things, an order removing the law firm of Weaver Simmons as counsel to the Town of Gore Bay. On April 7, 2015, I indicated that the motion was to be dismissed with costs with reasons to follow. I now take this opportunity to provide such reasons.
Request for Relief
[2] In addition to seeking an order removing Weaver Simmons as solicitors for the Town of Gore Bay, the moving party sought an order reporting such firm to the Law Society of Upper Canada for having a conflict of interest, an order requiring Weaver Simmons to repay to the applicant legal fees in an amount of $350,000 from 1997 to 2012, an order that Weaver Simmons discharge any mortgages on the property known as “Gordon’s Lodge”, an order that Weaver Simmons reimburse the applicant for mortgage broker fees in an amount of $300,000, and finally, an order that Weaver Simmons reimburse the applicant in an estimated amount of $5,500,000 representing “interception of proceeds of crime from a company known as Gordon’s Lodge (owned by 917488 Ontario Inc.) an active business.”
Background
[3] In 1982, Robert and Virginia Rusk transferred the property known as Gordon’s Lodge to Gordon’s of Manitoulin Limited. In or about 1996, a share sale of the shares of this corporation was completed by the Rusks whereby such shares were transferred to Laura Pinkerton and Andrew Pinkerton. As part of this transaction, various mortgages were taken back to finance the transaction.
[4] The purchasers defaulted on their obligations. As a result, the mortgagees retained the law firm of Weaver Simmons who commenced foreclosure proceedings on behalf of the mortgagee. A final order of foreclosure was registered on January 29, 1998, as instrument number 62737.
[5] One or more of the mortgages that had been provided as security for the share sale failed to include all of the land owned by the mortgagor with the result that there was a violation of the Planning Act. The problems associated with this violation were rectified by virtue of a court order that was registered on January 31, 2001, as instrument number 67080.
[6] As a result of the registration of the final order of foreclosure and the correcting order, the property known as Gordon’s Lodge was once again vested in Robert and Virginia Rusk. On September 19, 2001, the Rusks transferred the property to Gordon’s Lodge (1998) Limited. On November 14, 2007, the property known as Gordon’s Lodge was transferred to 917488 Ontario Inc., a corporation that is owned and controlled by Laura Pinkerton and Andrew Pinkerton.
[7] Weaver Simmons represented the mortgagees throughout the course of the foreclosure proceedings and the work that was undertaken in order to obtain the subsequent court order that addressed the problems created by the prior violation of the Planning Act. Weaver Simmons rendered a 39 page account for these various services. The account was paid from trust funds as well as funds that were received from “Gordon’s Bay”.
Analysis
[8] Although the argument was exceedingly difficult to follow, it seemed to amount to a collateral attack upon the propriety of the foreclosure proceedings. The argument continued that as a result of the violation of the Planning Act the mortgage was void. The argument continued that as a result of the mortgage being void, the foreclosure proceedings were void. Having recovered ownership in 2007, Ms. Pinkerton appeared to be under the mistaken impression that the applicant was now in a position to obtain financial redress for the years when the Rusks or their corporation had possession of the property and operated Gordon’s Lodge.
[9] The argument that Weaver Simmons has a conflict of interest that would prevent them from acting against the interests of the applicant rested upon the fact that there was one entry in the 39 page legal account that referenced Laura Pinkerton’s name. In addition, payment of the account had been made by “Gordon’s Bay”, a company that Ms. Pinkerton and her husband now own and operate by way of use of the applicant corporation.
[10] The obvious difficulty for the moving party lies in the fact that at the time that the legal account was rendered on March 29, 2001, Weaver Simmons was representing the Rusks in connection with the foreclosure proceedings that had been commenced as a result of the mortgage default. In 2001, Gordon’s Lodge was owned and operated by the Rusks or their corporation as a result of the successful completion of the foreclosure action. The Rusks had every right to pay the Weaver Simmons legal account from Gordon’s Lodge as they were then the lawful owners of it.
[11] Bryan Searle was the lawyer working at Weaver Simmons who was responsible for the work done for the Rusks and Gordon’s Lodge. The affidavit filed by Mr. Searle indicates the following:
At all times my retainer was from Robert Rusk and Virginia Rusk to enforce the security that they held as a result of non-payment and at no time did I have a retainer or act for Laura Pinkerton or 917488 Ontario Inc.
[12] Additional affidavit material filed on behalf of Weaver Simmons indicates that a review of their accounting records and consultations with senior partners show neither a recollection of a retainer nor a record of representing either Laura Pinkerton or 917488 Ontario Inc. The affidavit goes on to indicate that Weaver Simmons has consistently acted against those parties.
[13] There is no retainer agreement or retainer letter nor is there anything else to show that Weaver Simmons was consulted, let alone ever provided legal services to the Pinkertons or any of their corporations. In view of this, I have no hesitation in coming to the conclusion that the motion to remove Weaver Simmons as counsel for the Town of Gore Bay as well as the balance of the relief sought in the applicant’s notice of motion dated April 29, 2014, be dismissed with costs.
Costs
[14] Written submissions were received from both parties. The respondent has submitted a solicitor and client account in an amount of $40,591.72. The account covers all of the work that has been done on this file including various attendances before Del Frate J. and Gordon J. It is requested that substantial indemnity costs in an amount of $20,295 should be awarded in connection with this motion.
[15] The moving party takes issue with the claim for costs on the basis that the respondent failed to file a Costs Outline as required by Rule 57.01(6). I am satisfied that where there is no prejudice to the other party, costs can be awarded even if there is non-compliance with Rule 57.01(6). see Gibbons Contracting Limited v. Losani Homes (1998) Ltd. [2008] O.J. No. 4056, 170 ACWS (3d) 229.
[16] The approach taken by the respondent is most unhelpful. The respondent is entitled to the costs of this motion, not simply one half of the solicitor and client costs incurred to date.
[17] After using my best efforts to discern from the solicitor/client account, the work that was actually done in connection with this motion and bearing in mind that any costs order must be proportionate, I award the respondent costs in an amount of $3,600 together with HST in an amount of $468 for a total of $4,068. These costs are immediately due and payable.
The Honourable Mr. Justice R. Dan Cornell
Released: May 22, 2015
CITATION: 917488 Ontario Inc. v. Gore Bay (Town), 2015 ONSC 3241
COURT FILE NO.: 3640-14 OT
DATE: 2015-05-22
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
917488 Ontario Inc.
Moving Party/Applicant
– and –
The Corporation of the Municipality of the Town of Gore Bay
Respondent
DECISION ON MOTION
Cornell, J.
Released: May 22, 2015