Roy Wise v. Colaco, 2015 ONSC 3801

CITATION: Roy Wise v. Colaco, 2015 ONSC 3801

COURT FILE NO.: CV-08-364088

DATE: 20150827

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROY WISE PROFESSIONAL CORPORATION AND ROY WISE

Plaintiffs (Defendants by Counterclaim)

– and –

NOEL MARK COLACO

Defendant (Plaintiff by Counterclaim)

Benjamin Salsberg for the Plaintiffs

Tim Gleason and Sean Dewart, for the Defendants by Counterclaim

Noel Mark Colaco, In Person

HEARD: January 13, 14, 15, 16, 19 & 20, 2015

REASONS FOR JUDGMENT

FIRESTONE J.

Introduction

[1] The plaintiffs Roy Wise Professional Corporation and Roy Wise (“Wise”) bring this action against the defendant Noel Mark Colaco (“Colaco”) for payment of $101,183.82 inclusive of GST ($107,729.01 less a credit of $6,545.19) for outstanding legal services provided to Colaco between 2002 and 2007 in accordance with a verbal retainer agreement between the parties.

[2] Colaco by way of counterclaim claims:

(a) That following the settlement of a dispute with John Baranyai (“Baranyai”) (“The Baranyai settlement”) Wise failed to collect and or account for the sum of $17,799.59, which with interest totals $28,011.35. This claim is referred to in the counterclaim as “amount short collected from Baranyai’s lawyer by Mr. Wise on completion of the sale of the building”. [^1]

(b) The sum of $400,000 in damages as a result of the improper handling by Wise of the all matters related to the application for Mareva injunction “the Hanna litigation.” Colaco submits that the manner in which the matter was handled left Colaco with no alternative and in effect forced him to accept what he believes was an improvident settlement in that litigation. The specific errors alleged are that Wise failed to make full and frank disclosure on the June 30, 2005, ex parte application for a Mareva injunction in Court file No. 05-CV-292516 PDL, as well as his failure to commence and pursue a proceeding to enforce the payment agreement between Colaco and the Hanna rather than bring a motion to vary the judgment in Action No: 52589/90Q to reference that payment agreement. This claim is referred to in the counterclaim as “compensation for the financial loss sustained as a result of errors in applying the law properly, attending court without properly prepared documents to avoid adjournments of the case and allowing long periods to elapse without any activity on the file”. [^2]

FACTUAL BACKGROUND

[3] The factual backdrop which gives rise to the issues in this action agreed to between the parties in their respective pleadings began in or about 1987. At that time, Colaco and Kahlid Malik (“Malik”) purchased a commercial property located at 1085 Fewster Avenue, Mississauga, Ontario (“the Mississauga property”) as well as a taxi business from Baranyai. On closing both Colaco and Malik made cash payments to Baranyai. The balance of the purchase price was secured by vendor take back mortgages.

[4] As a result of a falling out between Colaco and Malik, they subsequently agreed to sell the taxi business they had purchased from Baranyai. On or about April 26, 1989, the taxi business was sold to Maroun and Cobra Hanna (“Hanna”) through their company 684804 Ontario Limited. Subsequently, the Mississauga property was sold to Mohinder Pal Singh and Balwan Singh Royal (“Singh”). The sale involved mortgage vendor take back financing in favour of Baranyai as well as Colaco and Malik.

[5] Hanna subsequently failed to make the agreed to payments thereby defaulting on their obligations to Colaco and Malik. As a result, prior to Wise’s retainer, Colaco and Malik commenced litigation and obtained a judgment against Hanna for a fixed sum of money as well as costs to be assessed. Those costs were never assessed. Rather than having those costs assessed and the judgment varied to include those costs, Colaco and Malik entered into a payment agreement with Hanna for payment of the judgment over time. The terms of the payment agreement required Hanna to both resume making the agreed to payments and pay costs.

[6] On or about June 30, 2005, following Wise’s retainer, Wise on Colaco’s behalf, commenced further litigation against the Hanna’s and their Corporation as a result of the Hanna’s apparent intention and actions to circumvent both the judgment and payment agreement and to dispose of security by way of taxi licenses. This litigation took place between June 2005 and October 2007.

[7] In addition, further litigation took place related to payments concerning vendor take back financing. This litigation was commenced October 4, 1990 in Action No: 56194/90Q. Judgment in that matter was obtained on June 3, 1993. Further litigation was the subject matter of actions 93-CQ-41959, C16953 and 57012/00. Various disputes between Colaco and Malik were the subject matter of action 97-CV-136157.

[8] Following default by which deprived Colaco of necessary funds to pay Baranyai, as well as disagreements between Colaco, Malik and Baranyai regarding the amounts paid and amounts outstanding, litigation ensued to enforce Baranyai’s securities. This litigation involved action Nos. 94669/98; 00CV-196054 and application 100502/99. Wise, following his retainer, represented Colaco’s interests in that litigation.

[9] Following Wise’s retainer, the disputes involving Baranyai were subsequently settled. In addition, the Mississauga property was sold. The net proceeds from that sale were placed in trust pending resolution of the remaining issues between Colaco and Malik.

THE MAIN ACTION: WISE’S CLAIM FOR PAYMENT OF OUTSTANDING FEES AND DISBURSEMENTS

[10] The evidentiary record consists of the various statements of account, time dockets and correspondence as well as the evidence of Colaco and Wise. The totality of that evidence confirms that beginning in or about 2002 Colaco retained Wise and subsequently Roy Wise Professional Corporation to deal with a number of litigation matters. That verbal retainer authorized Wise to provide legal services regarding the following matters:

(a) A dispute that Colaco and Malik had with Baranyai following purchase of the taxi business and the Mississauga property which gave Baranyai extensive purchase money security including mortgage on Colaco’s residence. Action No. 94669/98 and Application No. 100502/99

(b) A dispute between Colaco and Malik regarding theft by Malik as well as Malik’s share of the litigation and closing expenses for the taxi business. Action No. 7-CV-136157CM

(c) A dispute between Colaco and Malik against Hanna arising out of a disagreement regarding the amount owing to Colaco and Malik pursuant to the judgment and subsequent payment agreement entered into between them without the benefit of legal counsel. In that dispute Malik was represented by separate counsel. This included the obtaining of a Mareva injunction to restrain the Hannas from liquidating their assets in order to avoid enforcement of Colaco’s judgment. While this issue was the focus of the retainer between the parties the evidentiary record confirms that the retainer was not limited to only that issue. This aspect of the retainer was the subject of Application No. 05-CV-292516-PD1 and Action 52589/90Q.

[11] Regarding Wise’s claim for unpaid fees and disbursements, it has been agreed between the parties that for the purposes of trial, Wise spent the time and performed the services reflected in the detailed statements of account, time dockets and supporting correspondence at issue which were filed as exhibits at trial. What is in dispute is firstly, whether all of the services provided by Wise were necessary (which would include whether the time spent was excessive) in order to fulfill the terms of the retainer, and secondly, whether all the services provided by Wise were of benefit to Colaco. The retainer was terminated by Wise in October 2007 for nonpayment of its legal accounts.

[12] The statements of account, for which Wise seeks payment are attached as schedule “A” to the statement of claim and were entered as a trial exhibit. The disputed accounts are (a) Colaco v. Malik, File 02-0773 = $44,367.16 and (b) Colaco v. Hanna, File 05-0992 = $63,361.85. The total of $107,729.01 is inclusive of GST. From this sum a credit of $6,545.19 inclusive of GST has been applied being the amount Wise charged at a higher hourly rate without Colaco’s knowledge.

[13] At trial it was agreed that Wise’s direct evidence related to the counterclaim would be given by way of his will-say statement dated January 9, 2015, entered as an exhibit. During the trial I had the opportunity to observe Wise during his viva voce evidence related to both the main action and the counterclaim. I found him to be a very credible witness. He gave his evidence in a forthright and logical manner. On balance, I found his version of events to be consistent with the other documentary evidence.

[14] At no time during the procedural history of this case did Colaco advise Wise that he was confused about the retainer or that Wise was providing legal services for which he was not retained, for which he was not authorized or which were beyond the scope of the retainer. At all times Wise acted in accordance with the instructions received from Colaco.

[15] The record confirms that Wise through his regular reporting letters kept Colaco fully appraised of all matters related to his retainer regarding the matters which were the subject of his retainer as summarized above, and the steps taken and associated costs in furtherance of that retainer.

[16] The evidence confirms that Wise was requested to move the Hanna litigation forward. Colaco and Malik agreed to a standstill agreement regarding the dispute between them until and so that the Hanna matter could be and was concluded. I accept the plaintiffs’ submission that such an agreement would not have been necessary if Colaco had given instructions to take no steps in that matter.

[17] Regarding the dispute that Colaco and Malik had with Baranyai, Wise acted in accordance with the agreed to course of action, which was confirmed in writing. This included a settlement meeting and preparation by Wise for examinations for discovery and attendance at those discoveries. At those discoveries Colaco and Baranyai were able to settle the matter between themselves in large part because of the work Wise had done. With respect, I do not accept Colaco’s submission that he instructed Wise to take no steps and that the matter was settled on his own with no assistance from Wise. This is inconsistent in light of the steps and work done by Wise in that matter.

[18] Regarding the dispute between Colaco and Malik against Hanna, Wise was successful in obtaining an ex parte interlocutory injunction restraining Hanna from disposing of assets. The injunction was in place throughout the entire term of Wise’s retainer. The record confirms that Wise, in addition, did take steps to resolve this litigation by taking all appropriate steps to ascertain amounts outstanding between Hanna and Colaco-Malik. In addition, steps were taken to have the original judgment varied to incorporate the agreed amount for costs given the concern that an action would undermine their position on the motion to vary the judgment.

[19] With respect, I reject Colaco’s submission that had none of the work been done by Wise on these matters he would be in the same position he is in now. This conclusion is simply not supported by the evidentiary record. Wise acted in accordance with his retainer and Colaco benefited from those legal services.

[20] There is no credible or reliable evidence to support the proposition that the services provided were not requested or that they were of no benefit to him. Accordingly, I respectfully reject this argument in its entirety. I further note that at no time did Colaco terminate his retainer with Wise on the basis that he was acting outside the scope of his retainer.

The Law

[21] A lawyer who seeks unpaid legal fees can proceed by way of a civil action under s. 2(1) of the Solicitors Act, R.S.O. 1990, c. S. 15, or by referral of the matter for assessment under s. 3(c) of the same Act.

[22] It would appear from the documents filed that the accounts at issue were signed as per the requirements of the Solicitors Act, s. 2(1), which states:

2. (1) No action shall be brought for the recovery of fees, charges or disbursements for business done by a solicitor as such until one month after a bill thereof, subscribed with the proper hand of the solicitor, his or her executor, administrator or assignee or, in the case of a partnership, by one of the partners, either with his or her own name, or with the name of the partnership, has been delivered to the person to be charged therewith, or sent by post to, or left for the person at the person’s office or place of abode, or has been enclosed in or accompanied by a letter subscribed in like manner, referring to such bill. R.S.O. 1990, c. S.15, s. 2 (1).

[23] Neither party raised any issue with the form of accounts delivered either in their pleadings or at trial. Moreover, Colaco acknowledges that the accounts were received and agrees that Wise spent the time allotted and did the work described in those accounts. Colaco disputes whether that work was necessary and of benefit to the plaintiff.

[24] The purpose of the requirement in s. 2(1) is to put the client on notice that an account is due and owing. The requirement for a signature is to ensure the validity of the bill.[^3] In this case, it is not disputed that the plaintiff received appropriate notice of the accounts or that the accounts are valid.

[25] In deciding this action, it is appropriate for the court to exercise its inherent jurisdiction. In Glanc v. O’Donohue & O’Donohue, 2008 ONCA 395, Blair J.A. refused to let procedural impediments created by the Solicitor’s Act interfere with the court’s inherent jurisdiction to ensure fairness in the assessment of a solicitor’s accounts. He wrote, at para. 42:

This Court emphasized the importance of the court's inherent jurisdiction as the guardian of public confidence in the administration of justice in Price v. Sonsini. At para 19 Sharpe J.A. said:

Public confidence in the administration of justice requires the court to intervene where necessary to protect the client's right to a fair procedure for the assessment of a solicitor's bill. As a general matter, if a client objects to a solicitor's account, the solicitor should facilitate the assessment process, rather than frustrating the process. See Orkin, The Law of Costs, 2nd ed., looseleaf (Aurora, Ont.: Canada Law Book, 2001), at p. 3-13. In my view, the courts should interpret legislation and procedural rules relating to the assessment of solicitors' accounts in a similar spirit. As Orkin argues, ‘if the courts permit lawyers to avoid the scrutiny of their accounts for fairness and reasonableness, the administration of justice will be brought into disrepute.’ The court has an inherent jurisdiction to control the conduct of solicitors and its own procedures. This inherent jurisdiction may be applied to ensure that a client's request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities. [Citations omitted. Emphasis added.]

[26] Sachs J. applied this principle in Adam J. Brown Professional Corp. v. Faber, [2005] O.J. No. 334 (S.C.), when the solicitor objected that the motion had not been brought by a proper form of application under s. 11 of the Solicitors Act. Justice Sachs disposed of this objection stating, “in my view this is precisely the type of procedural objection that the court should not be persuaded by in proceedings where a client is seeking a fair opportunity to assess a solicitor's bill.”

[27] In Glanc, at para. 44, the court states:

Finally, procedural issues notwithstanding, it is well-established that the court has a discretion to direct the assessment of a solicitor’s account apart from the provisions of the Solicitor’s Act: see Re Park, (1889), 41 Ch. D. 326 (C.A.); Arnoldi v. Tremaine, 1925 CanLII 431 (ON CA), [1925] 3 D.L.R. 911 (Ont. S.C.C.A), at 915-916, Middleton J.A.; and Storer & Co. v. Johnson (1890), L.R. 15 App. Cas. 203 (H.L.). In the latter case - in which the client was out of time and therefore had no right to tax the solicitor's bill under the U.K. Solicitors Act - no less an authority than Lord Halsbury, L.C. said at p. 206:

But it was of course open to the Court to pronounce a judgment which should do justice between the parties when once the case was brought before them.... think it is quite clear that the Solicitors Act did not deprive the Court of the jurisdiction which they always possessed to do justice in the premises when dealing with one of their officers, and that they might therefore order that the costs should be taxed...

[28] The Superior Court has the inherent jurisdiction to determine disputes related to solicitors’ fees. In Plazavest Financial Corp. v. National Bank of Canada, [2000] O.R. (3d) 641, O.J. No. 1102 (C.A.) at para. 14, the Ontario Court of Appeal states as follows:

The rendering of legal services and the determination of appropriate compensation for the services is not solely a private matter to be left entirely to the parties. There is a public interest component relating to the performance of legal services and the compensation paid for them. That public interest component requires that the court maintain a supervisory role over disputes relating to the payment of lawyers’ fees.

[29] In J.B.C. Consulting Inc. v. Gray, [2000] 47 O.R. (3d) 122 (S.C.), the court confirmed that in an action for unpaid legal fees, such as the one before me, the court will apply the same factors used by assessment officers when determining whether the fees in question were “reasonable and appropriate for the services rendered” (para. 31). At para. 32, Justice Stinson stated in part:

Among the factors that have traditionally been considered when assessing the quantum of a lawyer’s account are the time spent, complexity of the matter, the importance of the matter to the client, the amount involved, the results achieved in the ability of the client pay.

[30] In Cohen v. Kealey & Blaney, (1985) O.J. No. 160, 26 C.P.C. (2d) 211 (Ont. C.A) the court confirmed that the factors to be considered in assessing a solicitors account include the time expended by the lawyer, the legal complexity of the matter, the degree of responsibility assumed by the lawyer, the monetary value of the matters in issue, the importance of the matters to the client, the degree of skill and confidence demonstrated by the lawyer, the results achieved, the clients ability to pay and the expectation of the client regarding the amount of the fee.

[31] In deciding an action for unpaid legal fees a judge is to consider all the factors listed above and is not to simply base his or her decision on the reasonableness of the hourly rate charged and whether hours docketed were actually spent.

[32] Here Colaco does not dispute that Wise spent the time reflected in the account. He argues that all of the services which were provided, and the time spent in doing so for which he was charged was excessive and were not necessary and of no or little benefit. As a result, he submits that he owes Wise nothing.

[33] As indicated above on the evidentiary record I am satisfied that the services provided by Wise were in accordance with instructions received and were necessary to fulfill the terms of the retainer between Wise and Colaco. Further the services rendered were of benefit to Colaco.

[34] In reviewing the accounts at issue in this action as well as all supporting documentation and after applying the applicable legal principles, I find that there was some excessive time expended by Wise in performing the specific tasks at issue.

[35] As a result I exercise my discretion and reduce the accounts from $107,729.01 to $97,000.00. From this amount I apply the credit of $6,545.19. Colaco is to pay Wise the sum of $90,454.81 plus applicable interest.

THE COUNTERCLAIM

[36] The counterclaim is grounded in solicitor’s negligence. That claim, which is framed by Colaco’s pleading, is based on alleged errors committed by Wise in the Baranyai and Hanna matters as follows:

(a) Regarding the Baranyai matter, Colaco pleads that Wise did not collect or account for the proceeds of settlement regarding his dispute with Baranyai in the sum of $17,799.59 which with interest totals $29,011.35. At no time was that counterclaim amended to plead any other cause of action.

(b) Regarding the Hanna matter, that as a result of Wise’s improper handling of all matters related and incidental to the motion for a Mareva injunction, Colaco was forced to accept what he believes to be an improvident settlement. The specific alleged errors are that Wise failed to make full and frank disclosure on the ex parte Mareva application on June 30, 2005 and his failure to commence a proceeding to enforce the payment agreement between Colaco and Hanna.

[37] For the reasons that follow the counterclaim is dismissed.

The Law

[38] In Folland v. Reardon, [2005] O.R. (3d) 688, O.J. No. 216 (C.A.) at para. 44, the Court confirmed the standard of care that applies to a lawyer in the performance of legal services as follows:

…[L]awyers make many decisions in the course of a lawsuit. Those decisions require the exercise of judgment. Inevitably, some of those decisions, when viewed with the benefit of hindsight, will be seen as unwise. The reasonable lawyer standard does not call for an assessment of the sagacity of the decision made by the lawyer. The standard demands the lawyer bring to the exercise of his judgment the effort, knowledge and insight of the reasonably competent lawyer. If the lawyer has met that standard, his or her duty to the client is discharged, even if the decision proves to be disastrous.

THE BARANYAI SETTLMENT

[39] The evidentiary record confirms that the Baranyai matter was settled in or about April 2006. The total settlement funds were received, with Colaco’s express and or implied consent, from the trust account jointly held and in the name of both Wise and by Malik’s lawyer, Mr. Stephen Turk (“Turk”). The account was held at the HSBC. Both Wise and Turk had signing authority. Turk testified that the purpose of the account was to hold the settlement funds which were provided by Baranyai’s lawyer, John Hart (“Hart”) in the sum of $277,295.57. Payment of this amount into the joint trust account is confirmed by the ledger report entered into evidence.

[40] Turk testified that the remaining amount with interest in the amount of $266,995.98 in the form of a draft “went over to Mr. Malik and Mr. Colaco”. Payment of this amount is confirmed both by the joint letter signed by both Turk and Wise to HSBC which reads in part “‘Re Davis & Turk and Roy Wise in Trust’…With respect to our 0004 account, the above-noted joint account, please have a draft prepared for the full amount in the joint account and made payable to ‘K. Malik and N. Colaco’”. On November 24, 2006, the bank draft made payable to K. Malik and N. Colaco was sent by courier by Turk to Malik. Colaco in cross-examination confirmed that he “got all of that”.

[41] At trial various documents which included a handwritten letter from Colaco to Wise dated February 8, 2007, an email from Wise to Hart dated July 27, 2012, and an email from Hart to Wise dated July 27, 2007, were entered as exhibits. These documents in conjunction with the other accounting evidence as well as the viva voce evidence of Wise and Turk clearly establish that there was no shortfall in the sum of $28,011.35 or any other amounts as alleged by Colaco regarding the Baranyai settlement or any other related matter. The documentary and viva voce evidence confirms that Colaco received all funds to which he was entitled.

[42] Notwithstanding that leave was not sought to amend the counterclaim, Colaco at trial alleged that Wise should not have permitted Turk to pay his accounts from the joint trust account.

[43] Wise gave evidence that Colaco in fact reluctantly agreed that both Turk and he could pay their accounts referable to the Baranyai matter from the joint trust account. Colaco was advised that if he did not agree then Wise and Turk could no longer act for him. Colaco in his testimony disagreed with this. Wise’s version of events is supported and corroborated by the evidentiary record.

[44] That evidentiary record confirms that in correspondence dated February 6, 2006, Wise wrote to Colaco demanding payment of both his and Turk’s account and confirmed that further steps would not be taken by Wise until such payment was received. In addition, ongoing requests were made by Wise to Colaco for payment of the outstanding accounts. At no time was there any agreement between Colaco and Wise that the accounts were being waived or did not have to be paid. I also note that at no time prior to the issuance of the counterclaim or in the counterclaim itself is there any allegation that trust funds were wrongly distributed. This submission is therefore rejected.

HANDLING OF THE HANNA MATTER

[45] Colaco alleges that as a result of the errors and improper handling of all matters related to the motion for a Mareva injunction, he had no choice, based on the advice of his subsequent counsel, Mr. Tuder Carsten (“Carsten”) to accept an improvident settlement.

[46] The errors upon which the negligence claim is grounded are:

(a) That Wise failed to make full and frank disclosure on the ex parte Mareva injunction application on June 30, 2005 in Court file No. 05-CV-292516 PDL;

(b) That as a result, Hanna sought to set the injunction aside on the basis of non-disclosure; and

(c) That Wise failed to commence a proceeding to enforce the payment agreement between Colaco and Hanna.

[47] Wise submits that in accordance with the retainer between the parties he did take steps to recover amounts owing under the payment agreement and did obtain an injunction against Hanna to prevent the liquidation of assets.

(a) Failure to Enforce the Payment agreement

[48] The evidentiary record confirms that Wise did take steps to enforce the payment agreement in accordance with his retainer.

[49] Specifically, Wise prepared a motion record dated March 30, 2007 in action No. 52589/90Q which was entered as an exhibit at trial. The motion included a request for an order that the terms of the payment agreement incorporated into the judgment obtained in that action.

[50] In that Notice of Motion Wise on Colaco’s behalf sought “an order if necessary amending the judgment herein to reflect the payment provisions entered into by agreement between the parties in writing on January 10, 1996.” The motion was pending at the time Wise terminated the retainer for nonpayment of his legal services. Colaco’s affidavit sworn March 28, 2007 was included in support of the relief sought on that motion. Following the termination of the solicitor-client relationship Colaco subsequently retained Carsten to argue the motion.

[51] For strategic reasons Wise determined that it would be in his client’s best interests to pursue the motion in an action where a judgment had already been obtained as opposed to by way of a new action. There was no prejudice to Colaco in proceeding in this manner.

[52] That decision was based on his concerns that an action to enforce the payment agreement might be statute-barred; that the provisions of the Interest Act, R.S.C. 1985, c. I-15, might render the interest provisions of the payment agreement void, resulting in a much lower recovery for his client; and that an action to enforce the payment agreement could undermine his client’s claim under the original judgment, including the 10% interest amount, based on the argument that the judgment had merged into the payment agreement.

[53] Colaco called Mr. Christopher Du Vernet (“Du Vernet”) to give expert opinion evidence regarding whether Wise fell below the standard of care by failing to seek an order enforcing payment agreement, and further, by failing to advise Colaco of the necessity when seeking an ex parte injunction to make full and frank disclosure to the court of all material facts.

[54] Wise conceded that Du Vernet is “qualified to give opinion evidence about the standard of care concerning lawyers acting in litigation matters in 2005” and that “there’s no need for the defendant to qualify the witness for the purpose”. I was satisfied that Du Vernet should be qualified as an expert to opine on the standard of care. It was agreed between the parties that Du Vernet’s expert report would be entered as an exhibit and would constitute his examination in chief evidence.

[55] I do not accept Wise’s position in his written closing submissions that Du Vernet’s opinion should be given no weight or that it should now be excluded. At trial, Wise did not move to have Du Vernet’s evidence excluded in its entirety or request that he not be qualified to give expert evidence on the basis that he was not neutral or objective.

[56] Trial fairness requires that if there is an issue as to whether to admit an expert’s evidence at all on the basis of a lack of independence or neutrality then that should be disclosed to the opposite party before the evidence is concluded so that a voir dire can be conducted: Carmen Alfano Family Trust (Trustee of) v. Piersanti, 2012 ONCA 297, O.J. No. 2042 (QL) at para. 112; R. v. Inco Ltd., 2006 CanLII 14962 (ON SC), [2006] 80 O.R. (3d) 594 (S.C.) at 607. I therefore do not exclude his evidence in its entirety on that basis.

[57] I found Du Vernet to be a knowledgeable and credible witness. However, given that Du Vernet did provide procedural and other advice to Colaco concerning this action, I do find that this affects the weight to be given to his opinion.

[58] During his cross-examination he was not aware and was “seeing for the first time” the supplementary motion record which included the supplementary notice of motion which sought in part “an order if necessary amending the judgment herein to reflect the payment provisions entered into by agreement between the parties in writing on January 10, 1996.” Du Vernet confirmed that he had been misinformed that no steps have been taken by Wise to “reduce the payment agreement.”

[59] I find that Wise exercised his judgment appropriately based on the factual matrix he was presented with in bringing a motion to amend the Judgment to reflect the payment agreement entered into on January 10, 1996. Wise acted appropriately by determining, after he had issued a claim to preserve his client’s rights, that amending or varying the judgment was a more effective way of proceeding in order to accomplish his client’s objectives.

(b) Failure to make Full and Frank Disclosure

[60] Wise candidly admitted that he could not recall the specific advice he gave to Colaco during his meeting with him to prepare the ex parte injunction application material. He did testify that he would have provided advice consistent with his normal practice. This included the importance of being truthful and complete in his evidence.

[61] Wise further testified that Colaco in fact misrepresented to him the number and quantum of payments he had received from Hanna. In addition, Colaco did not advise him that there had been an oral amendment to the written payment agreement filed in support of the ex parte application for an injunction.

[62] Wise’s evidence was that he had a specific recollection of asking Colaco why the payments he received did not reflect the amounts written payment agreement. Wise’s recollection is that he was told by Colaco that he accepted the partial payments because he did not want to incur legal costs suing Hanna in addition to the fact that he was satisfied with interest earned. This version of events is corroborated by the affidavit of Colaco sworn June 29, 2005, and July 24, 2007, filed as exhibits at trial.

[63] In May 2008, Carsten advised Colaco that the failure to disclose particulars regarding the oral amendment to the payment agreement in the application material was important because it undermined his position in maintaining the ex parte injunction.

[64] The record confirms that Colaco never informed Wise, either verbally or in writing, of the existence of the oral amendment to the payment agreement at any time prior to the completion of the injunction material or prior to the hearing of the injunction. The record also confirms that Wise did not keep this information from the court.

[65] I accept Wise’s version of events on this issue. I base this on the fact that Colaco initially denied “ever” consulting with Wise in order to prepare the injunction material, notwithstanding that the documentary record contains notes and dockets of those very meetings which Colaco claims did not occur. It is also inconsistent with the fact that Colaco’s affidavit sworn in support of the injunction, prepared by Wise, was based on information and belief given to him by Colaco. Further, Colaco’s denial is inconsistent with Colaco’s admission in cross-examination that “yes, I agree he got the information from me.”

[66] If it is believed that Colaco disclosed the existence of the oral amendment to the payment agreement, then Colaco would have insisted that his affidavit be amended accordingly. I find that he did not. If Colaco would have informed Wise of the existence of an oral amendment to the payment agreement I accept that Wise would have insisted this be disclosed to the court.

[67] Based on the documentary evidence in conjunction with the oral testimony given by Wise and Colaco, I find that Colaco did not disclose the existence of an oral amendment to the payment agreement to Wise. Where the evidence of Wise and Colaco contradict, I respectfully prefer the evidence of Wise. Colaco candidly agreed in cross-examination in reference to his affidavit in support filed of the original ex parte injunction with the statement put to him that “if there was an error, if this was misleading in any way, it had nothing to do with anything Mr. Wise did or did not do”.

[68] Based on the evidentiary record before me, I accept that the reason why Colaco accepted the settlement in the Hanna matter was because the available evidence likely established and it would be accepted that the oral amendment to the written payment agreement provided for simple interest and not compound interest.

[69] This is the logical conclusion given the evidence of Malik during his cross-examination in relation to the pending February 2008 motion. Further, at trial Carsten, Colaco’s lawyer testified that in his view Malik’s evidence undermined and was fatal to Colaco’s position regarding the type of interest owing under the agreement.

[70] If it was simple interest which applied and was owed, then the debt owing to Colaco would be negligible. Carsten testified that in his opinion the payment agreement that was attached to the original application was poorly drafted with respect to the interest calculations. He confirmed his understanding that Wise did not participate in the drafting of that payment agreement. Carsten’s evidence is that Colaco was lucky to receive the settlement he did which was a good settlement.

[71] Carsten testified that: “I remember being concerned that there was a credible argument that there had been a verbal modification of the payment agreement to provide for $3,000 monthly payments.”

[72] He further testified that:

[I]t was my understanding that the Court was very likely to conclude that monies owed to Mr. Colaco were owed on the basis of simple interest with payments allocated first in principle and then to interest. Both of those were damaging in that they considerably reduced the amount owed to Mr. Colaco.

Yes it seemed to me that the parties had all agreed, I recall now from looking at the various evidence some more, had all agreed in their examinations that there had been this oral modification, the failure to disclose that at an ex parte injunction I thought was almost certainly going to lead to it being set aside with costs against our client.

[73] Carsten agreed that in the circumstances he thought that the $40,000 was a pretty good deal because he arguably was not owed any more than that and the case was settled for that amount after receiving Colaco’s consent to do so. There are no documents or notations in Carsten’s 2008 file which would indicate that he advised Colaco in writing that Wise had made mistakes which forced him to settle the case.

[74] Carsten’s evidence, as Wise points out, is corroborated by his contemporaneous notes of his advice to Colaco in May 2008. There are no notes which indicate there was any other reason to accept the settlement. It was after receiving this advice from Carsten in May 2008 regarding the type of interest which would likely be found payable as a result of the amendment to the written payment agreement that Colaco decided to settle. Colaco subsequently entered into a settlement with Hannah which provided for a consent order setting aside the injunction which Wise previously obtained in June 2005 and which, through Wise’s efforts had been in place for approximately 3 years.

[75] The fact that it was Malik’s damaging evidence which formed the basis of Colaco’s decision to settle the Hanna matter is further corroborated by the fact that after the settlement was entered into, Colaco commenced an action against Malik for providing evidence which was fatal to his claim against Hanna.

[76] As confirmed in the will-say statement of Stephen Turk, on June 30, 2009, Colaco amended his claim against Malik to plead at paragraph 21(f): “[A]t discovery the defendant Khalid Malik took a position that there was a verbal agreement to accept simple interest instead of compound interest from the judgment debtors…As a result of the position taken by the defendant the very basis of the case and the amount we expected to recover from the judgment debtors changed completely resulting in our having to withdraw the lawsuit. The financial loss amounted to $400,000.00.”

[77] This is consistent with the evidence given by Colaco at his examination for discovery on October 21, 2011 in action No: 97-CV-136. There Colaco deposes that he was told by his lawyer that as a result the position taken by Malik that “you just lost his case...and the whole case was done on this thing and that’s why I had to settle for 40,000 bucks.” I do not accept Colaco’s argument that he decided not to pursue Malik when he learned that Wise had not sued on the payment agreement in light of the motion which sought the desired relief.

[78] Du Vernet’s evidence is that Wise’s failure to expressly warn a prospective litigant about the obligation to make full and frank disclosure on seeking ex parte relief and the failure to include the omitted information in the injunction material fell below the standard of care. Du Vernet’s expert report dated February 26, 2014, entered into evidence states:

In my opinion a solicitor’s failure to be aware of this obligation and the consequences of its breach, and to expressly warn a prospective litigant about the obligation and its breach falls below the standard of a civil litigator of ordinary competence…Similarly, Mr. Wise’s failing to include the omitted information in the circumstances of the Hanna case fell below the standard of a civil litigator of ordinary experience. The extent of the security in issue, the parties’ subsequent agreement modifying the terms of the judgment, and the basis of the calculation of the biggest component of the debt in issue were all facts material to the injunction, and ought to have been disclosed to the Court as part of the application.

[79] The parties concede that the standard of care of a lawyer acting on an ex parte motion is to advise the client of the need to make full and fair disclosure.

[80] An expert’s evidence is only as good as the assumptions it is based upon and the documentation reviewed. In this case I find the expert’s opinion that Wise fell below the standard of care was based on a number of incorrect assumptions. As a result I do not accept the expert’s conclusions.

[81] I accept that Wise did inform and advise Colaco that he must be truthful and complete in his evidence to be presented to the Court on an ex parte proceeding. I do not accept Colaco’s evidence to the contrary. The opinion of Du Vernet that Wise fell below the standard based on such non-disclosure cannot respectfully be accepted.

[82] In addition, I do not accept that Wise knowingly failed to disclose or include the existence of the oral amendment to the written payment agreement given Colaco’s evidence at the relevant time was that there was no such oral agreement. Based on the evidentiary record, I find that Colaco did not advise Wise of the existence of any oral agreement to amend the original written payment agreement.

[83] I also note that the expert did not opine that the injunction, which had been in place for approximately three years, would have been set aside as a direct result of what Wise did or did not do. There was no opinion evidence given that, based on non-disclosure in this case, the injunction would have been set aside in any event based on the applicable legal principles.

[84] Based on the totality of the evidentiary record I find that Colaco made an informed decision to settle the Hanna matter as a result of the damaging evidence given by Malik regarding the type of interest payable and not because of any breach of the standard of care on the part of Wise. At no time did Wise breach the appropriate standard of care.

[85] Wise acted in accordance with his retainer and in his client’s best interests. He obtained a 10 day ex parte injunction which was subsequently continued for three years. The injunction material was prepared based on the information provided to him by Colaco. Wise exercised his judgment appropriately by seeking to have the terms of the payment agreement incorporated into the judgment obtained in action 52589/90Q rather than proceeding with an action. The fact that in the Hanna matter Colaco did not recover the sum of $400,000 as he had hoped or expected had nothing to do with any failure on Wise’s part.

Disposition

[86] I order that Colaco is to pay Wise the sum of $90,454.81 plus applicable pre and post judgment interest. The counterclaim is dismissed.

[87] I encourage the parties to agree on the issue of costs. If they cannot, Wise is to provide his costs submissions in both the main action and counterclaim by September 16, 2015. These submissions are not to exceed five pages. Colaco is to provide his responding costs submissions of the same length in the main action and counterclaim by September 25, 2015. Any reply submissions by Wise related to the main action or counterclaim are to be submitted by September 30, 2015.

Firestone J.

Released: August 27, 2015

CITATION: Roy Wise v. Colaco, 2015 ONSC 3801

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROY WISE PROFESSIONAL CORPORATION AND ROY WISE

Plaintiffs (Defendant by Counterclaim)

– and –

NOEL MARK COLACO

Defendant (Plaintiff by Counterclaim)

REASONS FOR JUDGMENT

Firestone J.

Released: August 27, 2015

[^1]: Para 8(a) of counterclaim [^2]: Para 8(b) and 10 of counterclaim [^3]: Atkinson v. Metropolitan Toronto (Municipality) (1976), 1976 CanLII 43 (ON CA), 12 O.R. (2d) 401 (C.A.): As Lord Evershed, M.R., pointed out in Goodman v. J. Eban, Ltd., [1954] 1 All E.R. 763 at p. 766, when considering a rubber stamp bearing a solicitor's name on a bill of costs: “...the essential requirement of signing is the affixing, either by writing with a pen or pencil or by otherwise impressing on the document one's name or "signature" so as personally to authenticate the document. It is the personal authentication of the individual "signing" that is the essential requirement. In each case, it is necessary to consider the particular statute or rule to see whether it contemplated the document being signed in any particular way.”