CITATION: Bari v. Ahuja, 2017 ONSC 7693
COURT FILE NO.: CV-14-511998
DATE: 20171222
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Qazi Bari
Plaintiff
– and –
Suman Ahuja
Defendant
Michael Simaan and Jaclyn McNamara, for the Plaintiff
Raj Anand and S. Priya Morley, for the Defendant
HEARD: October 2, 3 ,4 ,5 ,6 , and 10, 2017
REASONS FOR JUDGMENT
Madam Justice D.A. Wilson
[1] This is a negligence claim brought by Mr. Qazi Bari (the “Plaintiff” or “Bari”) against his former solicitor, Ms. Suman Ahuja (the “Defendant” or “Ahuja”) arising from the purchase of properties in Orillia, Ontario in December 2006 and March 2007 and further legal services provided in 2012. There was a by-law registered on title to these properties in 1995. The Plaintiff alleges that the Defendant failed to advise him of the by-law’s existence and failed to discuss its potential significance to his plans to develop these properties. The Defendant denies this and asserts that the Plaintiff was a sophisticated purchaser who was familiar with these properties and he instructed her not to do further searches. Consequently, credibility is critical. My task was further complicated by the absence of expert evidence on the standard of care and the fact that neither party had much in the way of documentary evidence to support their respective versions of events.
[2] Over the course of the evidence, some facts emerged that were beyond dispute. Given the disparity in the evidence of the parties, the background facts are necessary to give context to the events which form the basis for the professional negligence claims asserted in this lawsuit. A Joint Book of Documents (“JBD”) containing various documents was filed as an exhibit at the trial.
The Background
[3] Bari is a real estate agent and broker who owns his own brokerage firm. Prior to the events giving rise to this claim, Bari had bought properties at tax sales and sold them for profit. He was familiar with agreements of purchase and sale. In August, 2006, he and his partner, Kamran Quereshi (“Quereshi”) found some properties in Orillia that were offered for sale by the city.
[4] Bari and Quereshi were successful in their bids on 2 properties and they purchased 481 and 483 Bay Street for $25,000 each. They transferred the title as joint tenants from the city on September 19, 2006 and did not use the services of a lawyer.
[5] Bari and Quereshi decided to purchase some additional lots in the same area. They contacted the owners and on December 11, 2006, they entered in to agreements of purchase and sale for 487 and 489 Bay Street, for the purchase price of $25,000 per lot. The Defendant was not involved in the negotiations for the purchase of these lots.
[6] Bari retained the Defendant, Ahuja, who had acted for him previously. He had known her for approximately a year at the time of these events. It was agreed that Ahuja would act for both the vendors and the purchasers on the deal. He dropped off the agreements of purchase and sale; the transactions were set to close on December 21, 2006.
[7] Bari attended at Ahuja’s office on December 21, 2006 to execute the necessary documents and the deals closed on December 22, 2006.
[8] Bari and Quereshi decided to purchase the middle lot between the 4 properties they owned, 485 Bay Street. Feeling it was advantageous to own a number of lots together, on February 19, 2007, Bari and Quereshi signed an agreement of purchase and sale to buy 485 Bay Street for $50,000.
[9] Bari retained the Defendant after the agreement of purchase and sale had been signed. As was his usual practice, he dropped off the agreement at her office. The transaction was set to close March 15, 2007. Bari and his partner did not have the funds to buy the property and they intended to finance it. They were able to find a private lender, Brian Kelly (“Kelly”) who agreed to provide $100,000 secured on the 487 and 489 Bay Street properties. The mortgages were registered against the properties.
[10] On March 7, 2007, Bari and Qureshi attended at Ahuja’s office to sign the closing papers. The purchase of 485 Bay Street closed March 15, 2007.
[11] In November 2007, Bari agreed to buy out Quereshi, who did not want to continue on with the development of the Orillia properties. Bari approached Kelly and requested a blanket mortgage on all of the properties for $175,000 so he could start the construction. The existing mortgages were discharged and the new one in the sum of $175,000 was registered and the properties were transferred into Bari’s name. The Defendant acted for Bari and Qureshi on these transactions.
[12] The appraiser, Jones, in his report of April 28, 2008, stated that the properties needed to be developed for their highest and best use and that a minor variance could be obtained to enable him to make 7 lots, which would be more profitable. Bari decided to move forward with the development of the properties. He undertook a survey of the land as he planned on severing the 5 lots into 7 lots and building houses on them.
[13] The application for a minor variance was submitted to the city on September 25, 2008. In November, 2008, it was conditionally approved; Bari needed to meet 10 conditions within a year.
[14] Unfortunately, at this time, the market crashed and Bari’s income spiraled downwards because people were not buying and selling real estate. He was forced to sell his own house and move to a rental unit. He had to put his plans for development of the Orillia properties on hold because he did not have the financial resources to proceed. There was little evidence at trial concerning what transpired over the ensuing 4 years.
[15] Bari approached Kelly in August 2012 to request a further loan of $50,000. In a letter dated September 17, 2012, Kelly advised that his new lawyer had done a property search and discovered that there was a by-law registered against the lots in June 1995 that prevented development of the lots and as a result he was not going to advance further monies. Kelly demanded repayment of the mortgage.
[16] Bari contacted the Defendant on October 30, 2012 and attended at her office. There was a discussion about the 1995 by-law and making a claim to title insurance. The Plaintiff wrote a letter, a “Petition to the City of Orillia”, on October 31, 2012 asking for financial relief because he had invested a lot of money developing the properties. On November 6, 2012 the properties were transferred to Kelly and the mortgage was forgiven. A claim was made to the title insurer and it was rejected on November 13, 2012.
[17] In April 2013, Kelly obtained approval from the Committee of Adjustments for a minor variance for the 5 lots. In April 2014, pursuant to the application made by Kelly, the City of Orillia repealed the 1995 by-law. The lots were developed and houses constructed on each of them.
The relevant evidence concerning the purchases of the lots in December 2006 and March 2007
Qazi Bari
[18] Bari’s evidence about the events of December 2006 was vague. He could not recall when he went to the Defendant’s office, whom he met with, what was discussed, what instructions, if any, he gave or how many times he had to go to the office before the transaction closed. He denied that he met Khalid Sheikh (“Sheikh”), the lawyer who was supervising the Defendant’s practice while she was out of the country. He knew the Defendant’s law clerk, Pawandeep Birk, (“Birk”) but he could not recall if he spoke to her about the purchase of these properties in December 2006. Nonetheless, he was adamant that there was no discussion of a by-law on title.
[19] After he and Quereshi signed the agreement of purchase and sale on February 19, 2007 for the middle lot (485 Bay St), Bari once again could not recall when he went to the Defendant’s office, nor with whom he met. He believed he met with Birk, the law clerk. The documentation indicates he and Qureshi signed the closing documents at Ahuja’s office March 7, 2007.
[20] He and Quereshi did not have sufficient funds to complete the deal so they secured a mortgage of $100,000 with Kelly and the Defendant did the work for the 2 mortgages. The mortgages were registered against the properties in favour of Kelly on March 15, 2007. The Defendant rendered her account for services which was paid by Bari and Quereshi. After this purchase was completed, Bari and his partner owned 5 properties in the same area in Orillia, which they planned to develop.
[21] Quereshi wanted out of the partnership so Bari arranged for a mortgage with Kelly for $175,000 and the $100,000 mortgage was discharged. On November 9, 2007, the properties were transferred from Bari and Qureshi to Bari alone and the Defendant acted for Bari and Quereshi. No further legal services were provided by the Defendant to the Plaintiff related to the Orillia properties from this time until 2012.
Brian Kelly
[22] Brian Kelly is a 79 year old gentleman who was approached by the Plaintiff and his partner Quereshi for a mortgage. He advanced the sum of $100,000 in March 2007 and it was secured on the properties at 481, 483, 487, and 489 Bay Street in Orillia.
[23] On November 3, 2007, Bari approached him and asked that the mortgage be increased from $100,000 to $175,000 and Kelly agreed. The original mortgage was discharged and the new mortgage in the sum of $175,000 was registered on the properties with Bari now being the only borrower. Kelly was aware that Bari was taking steps to develop the properties.
Suman Ahuja
[24] Ahuja was called to the Ontario bar in 2004 and has been practicing as a sole practitioner since that time, mainly in the areas of real estate, family law and wills. Ahuja gave her evidence without the benefit of her original file in front of her, for reasons which were never explained. She knew the Plaintiff because he was a real estate agent and he had referred some of his clients to her. In addition, Ahuja had done a sale of a property for the Plaintiff’s wife.
[25] Ahuja’s practice is in Mississauga and she works with 2 law clerks. Bari generally came to her office without an appointment. Ahuja would open a file the same day as she was retained by the client and she kept a register in her office with the information on each file. In this case, she opened a file on December 21, 2006 for the purchase of 485 and 487 Bay Street in Orillia. She also acted for the vendors on the sales.
[26] Ahuja’s practice in 2006-07 was to undertake a title search of the property close to the requisition date. Generally, when she is acting for a purchaser, she reviews the property description to ensure there is nothing adverse to title on the property, such as a right of way or easement. If something is disclosed on the initial search, Ahuja would do a more detailed search and pull the items and review them.
[27] Ahuja advises her real estate clients of the availability of title insurance to provide protection for things that occur prior to the date of closing. Title insurance does not provide coverage for future use of the land being purchased.
[28] In December 2006, Ahuja was in India for the month and she arranged for Sheikh to watch over her practice. He was tasked with the real estate closings in Ahuja’s absence.
[29] Ahuja was not contacted by Sheikh concerning the purchase of the properties in Orillia in December 2006. No documents were signed by Sheikh. Ahuja initially testified that she did not know if Sheikh ever met with Bari. However, she modified her evidence to state that she “believed that he definitely met with the clients.” Ahuja was certain that her law clerk met with the Plaintiff and Quereshi. When she returned from India in January 2007, she signed the reporting letter for the purchase and sale and other documents relating to these transactions.
[30] On March 6, 2007 Ahuja opened a file for the Plaintiff concerning the purchase of 485 Bay Street in Barrie. The closing date was March 12, 2007 and the Plaintiff attended at her office on March 6 and gave her a copy of the purchase and sale agreement that had been executed on February 19, 2007. He said it was a “rush” deal and that he already had 4 properties in the same area and this was the middle lot between the other parcels so he was very keen to buy it. The purchase price was $50,000 whereas the other lots had been bought for $25,000.
[31] Ahuja agreed that a lawyer handling a real estate transaction for a client needs to conduct a title search on the property and review all documents on title that could affect the client’s interest in the title. She did not know if Sheikh did title searches on 487 and 489 Bay Street when they were purchased in December 2006.
[32] Ahuja told him that the time for the search of the property had already expired and Bari advised that he was not concerned because he was very familiar with the property; he had done his due diligence in 2006 when he bought the first pieces of land in the area. She did the standard search, which did not disclose very much apart from the existence of 2 by-laws and a plan reference which is related to a subdivision plan. She spoke to Bari and asked if he wished her to do any further searches and he said he did not want that work undertaken. He did not have sufficient funds to close the deal and needed to obtain financing.
[33] He specifically told her that he did not want her doing any further searches on the property because he was trying to keep the costs to a minimum. She told him that this was not a good idea and was fraught with risk. However, Bari was a real estate agent and broker and he already owned 4 properties in the area; he was a sophisticated client and she felt she had to take his instructions.
[34] Bari was able to arrange financing and he came in with Quereshi to sign the closing documentation March 14 or 15. Ahuja gave them the parcel page and the draft title insurance policy as well as copies of the material that they signed to close the transaction. She explained the title insurance would protect them for any defect in the title but not for anything in the future. The purchase closed and the mortgages were registered.
[35] Bari asked Ahuja for a rebate because she did not have to do detailed searches of the property. She agreed. She did not have a retainer or any other documentation signed at this March 6, 2007 meeting nor did she take any notes. She planned to give Bari a rebate of $200 on the fee because she did not have to do the extra searches; but he complained so she gave him a rebate of $300.
[36] As of March 2007, Bari and Quereshi were the owners of 5 lots side by side; she testified that the Plaintiff did not tell her what the plans were for the land, although she acknowledged that he advised her that there was a “possibility” of developing the properties in the future.
[37] On November 7, 2007 a mortgage commitment for $175,000 was faxed to her office by Bari, unsigned. She knew nothing about it in advance. She called Bari and inquired whether the mortgage was being renewed. He advised that it was and that he was buying out his partner, Quereshi.
[38] Bari attended at Ahuja’s office that same day and she opened a file. The closing was set for 2 days later. Bari advised her that he was getting a mortgage of $175,000 and paying off the $100,000 mortgage, as well as paying Quereshi what he was owed. She spoke to Quereshi who confirmed that the property was being transferred to Bari on consent. Ahuja did the searches of the properties and found the by-law registered on title. She spoke to Bari who said he was aware of it and was not concerned. She did not make any notes of this conversation nor did she confirm it in writing.
[39] Since there was no agreement of purchase and sale between Bari and Quereshi, Ahuja drafted an acknowledgement to confirm their instructions to her (JBD, tab 183) and their agreement that she was acting for both of them. The acknowledgement also stipulated that the transfer of the property to Bari was to be done “without conducting the full searches.” It was signed November 9, 2007. The mortgages were discharged and replaced with a $175,000 mortgage held by Kelly.
[40] Following that transaction, the Plaintiff continued to come to Ahuja’s office from time to time. In 2009, she did the sale of his matrimonial home. However, she heard nothing from him concerning the Orillia properties.
Pawandeep Birk
[41] Ms. Birk (“Birk”) works as a law clerk for the Defendant since 2005. She confirmed that the details of a file are entered into the register that is done manually. The Plaintiff’s original file was opened December 21, 2006. She advised that he could discuss the transaction with Mr. Sheikh who came to the office daily, since the purchase was to close very soon. He said that he was familiar with the properties and did not need to discuss with a lawyer. He also confirmed that a detailed search of the properties was not to be undertaken since he was familiar with them. Birk did not know if Mr. Sheikh ever met with the Plaintiff or Quereshi. Sheikh told Birk that if the client was familiar with the properties it was “okay” to close the transaction. She gave no evidence about the March 2007 purchase or the events of the fall of 2012.
The Relevant evidence concerning the provision of legal services in October and November 2012
Qazi Bari
[42] After the properties were transferred to Bari and Quereshi was no longer involved, the Plaintiff retained an appraiser, a soil expert, a tree expert and he paid for a video to be done to show the house that would be built on the land. He also retained an architect in 2008 and applied for a minor variance in order to be able to proceed with the severance. This involved reducing the frontage of the lots from 80 feet to 57 feet. Bari testified that he paid numerous bills for the invoices from the architect, the appraiser, the surveyor, and the arborist, as well as to the city of Orillia. He was unable to produce receipts for the amounts paid.
[43] On September 25, 2008, his application for the minor variance was submitted to the City of Orillia and in November, he received conditional approval for the minor variance. Unfortunately, at this time the real estate market was in a downward spiral and Bari had serious financial difficulties which precluded him from going ahead with the development of the Orillia lots.
[44] When he asked Kelly for additional financing and Kelly sent the September 17 letter advising of the by-law, Bari testified that he knew nothing of the existence of any by-law on the properties that prevented development; he was in shock. He could not pay off the $175,000 mortgage; he tried to get alternate financing but he was unsuccessful. He had many conversations with Kelly in an attempt to come to some sort of agreement.
[45] He met with Ahuja on October 30, 2012 and told her of the existence of the by-law. She said that as a real estate agent he should have known about the by-law and she advised him to find another lender. She indicated she would look into whether a claim could be made to the title insurer. Bari did not tell her that his applications to the city for a minor variance in 2008 had been successful. He did not inform her of the threatened power of sale nor did he indicate that he was thinking of transferring the properties over to Kelly in exchange for a forgiveness of the debt.
[46] Bari sent a petition to the city October 31, 2012 advising that he knew nothing of the by-law, that he had invested a lot of money in developing the properties and asking for “financial relief” to which he was entitled. (JBD, tab 376)
[47] By this point, Bari was in desperate financial straits. He wrote to Ahuja on November 5, 2012 advising that the property had a by-law registered that prevented development of the lots and that Kelly would proceed with a power of sale if the full amount of the mortgage was not paid. In the letter, Bari told Ahuja that if he had known of the by-law, he would not have purchased the property. Bari felt he had no options, so on November 5, he agreed to transfer the properties back to Kelly, who would forgive the debt of $175,000.
[48] On November 7, he went to the Defendant’s office again and signed the necessary papers to make a claim to the title insurers. On November 13, 2012, Stewart Title sent a letter to Ahuja advising that there was no coverage for the claim being asserted. Stewart Title also confirmed that since Bari had transferred the title to the property to Kelly, the policy was no longer in effect.
[49] In cross examination, Bari agreed that after he purchased the first 2 properties in 2006, he had communication with the city about getting the lots serviced and there was no suggestion that the lots could not be developed. Furthermore, he agreed that the parcel register (JBD, tab 222) dated May 29, 2008 discloses the existence of the by law on title as of June 5, 1995.
[50] Bari agreed that he started the application process in September 2008 and there was no mention of the by-law from the City as an impediment; rather, he had the support of the city for his applications. He received the necessary approvals in November 2008.
Brian Kelly
[51] On August 10, 2012, Kelly received a letter from Bari requesting an increase of another $50,000 on the mortgage. By this point, Bari’s mortgage payments were in arrears and the property taxes had not been paid nor had the special assessment. There was approximately $100,000 that was outstanding. Kelly’s lawyer advised him that he had searched the 5 properties and discovered that there was a by-law that had been registered against the properties in 1995 which prevented development. As a result, Kelly sent the Plaintiff a letter dated September 17, 2012 refusing to provide further financing and demanding that the mortgage be paid off forthwith or he would commence a power of sale proceeding (JBD, tab 373).
[52] After some discussion and many telephone calls during September and October, 2012, it was agreed that the title to the properties would be transferred to Kelly and the amount of the mortgage would be forgiven. Bari did not want the properties sold under power of sale and he did not want to go bankrupt as it would affect his ability to work as a real estate agent. The transfer of the properties from Bari to Kelly was completed November 6, 2012.
[53] Kelly retained a consultant and he was successful in obtaining a minor variance in 2013 to enable him to subdivide the properties and create 7 lots. In 2014 he brought a successful application to repeal the 1995 by-law. Kelly had houses built on the lots; 4 of the houses are finished and the remaining 2 will be completed in the very near future. Kelly lives in one of the houses but he has not owned the properties since 2015.
Suman Ahuja
[54] On October 30, 2012 Bari came to her office unannounced. Ahuja met with Bari and he gave her a copy of the 1995 by-law, which he said was the reason the mortgagee would not continue on with the mortgage and was demanding repayment. He never mentioned that Kelly had threatened a power of sale of the properties.
[55] Ahuja told the Plaintiff that the by-law had no effect on Kelly’s security and that it should not present an obstacle to development. She inquired whether he had asked the city of Orillia if they could be of assistance. He gave her the names of 3 individuals he had spoken to at the city and she agreed to speak with them to see what could be done.
[56] During this meeting, Bari requested a copy of the title insurance policy and said he wished to file a claim. Ahuja advised that she did not believe the title insurer would respond but she would check. She also recommended that he look for alternate financing. She denied that Bari told her about the threat of power of sale proceedings or that he had successfully made an application to the city years before for consent or a minor variance.
[57] On November 2, Ahuja spoke to Mr. Duggan at the city. He advised her that Bari had secured a consent for severance and a minor variance years before but the time for acting had elapsed. He also said that the application could be reactivated if the required payments to the city were made to move forward. He estimated that approval could be obtained in a couple of months or so.
[58] Ahuja called Bari on November 5 and told him that the application could be reactivated if the fees were paid and it would be successful. She sent him an email setting out what the title insurer needed from him to evaluate a potential claim. The Plaintiff said he would come to her office the following day, November 6.
[59] Bari did not attend at her office until November 7. She advised the existence of the by-law should not present an obstacle to his plans for development; he could either have the by-law repealed or reactivate the application to apply for a minor variance which would enable him to sever the land into 7 lots. To do so would cost approximately $2,750-$3,750.
[60] He denied an application for a minor variance had been made and said she must be mistaken. He was interested in making an application to the title insurer and wished to pursue that course. He did not tell her that he had transferred the properties to Kelly on November 6.
[61] The next day she pulled the parcel page in order to file a claim with the title insurer. She discovered that he had transferred all of the properties and no longer owned any of them. On November 13, she received the letter from Stewart Title denying the claim as Bari was no longer the owner of the properties and the policy only covered the use of the lots as vacant land. Ahuja contacted him and informed the Plaintiff of Stewart’s denial of his claim.
Analysis
[62] The Plaintiff brings this action against his former solicitor alleging negligence in the services provided on 2 occasions: in December 2006 and March 2007 regarding the purchases of 487, 489 and 485 Bay Street; and in October/November 2012 when payment of the mortgage was demanded by Kelly.
[63] In order to be successful on a solicitor’s negligence claim, the Plaintiff must establish that the solicitor fell below the standard of care to be expected from a reasonably competent solicitor: see Ristimaki v. Cooper, 2006 CanLII 12415 (ON CA), 79 O.R. (3d) 648, [2006] O.J. No. 1559(C.A.).
[64] As I noted in 1483677 Ontario Ltd. v. Crain, 2015 ONSC 6217, [2015] O.J. No. 5350 at para. 55:
A lawyer who is retained must bring “reasonable care, skill and knowledge to the performance of the professional service which he [or she] has undertaken.” As well, “a solicitor’s conduct must be viewed in the context of the surrounding circumstances. The reasonableness of the lawyer’s impugned conduct is judged in light of the surrounding circumstances such as the time available to complete the work, the nature of the client’s instructions, and the experience and sophistication of the client.
The purchases of the lots December 2006 and March 2007
[65] There was no expert evidence called at trial to establish the standard of care for a solicitor in similar circumstances to those in which Ahuja found herself. The jurisprudence is clear that generally, a Plaintiff suing a professional in negligence requires an expert to testify at trial to establish the standard of care and to provide expert opinion on whether or not the actions complained of constitute a breach of that standard of care. As the court noted in Krawchuk v. Scherbak, 2011 ONCA 352, [2011] O.J. No. 2064 at paras. 132 - 135:
While the authorities discussed indicate that, as a general rule, it will not be possible to determine professional negligence in a given situation without the benefit of expert evidence, they do indicate two exceptions to the general rule.
The first exception applies to cases in which it is possible to reliably determine the standard of care without the assistance of expert evidence…this will be the case only where the court is faced with “nontechnical matters of those of which an ordinary person may be expected to have knowledge.”
The second exception applies to cases in which the impugned actions of the defendant are so egregious that it is obvious that his or her conduct has fallen short of the standard of care, even without knowing precisely the parameters of that standard…
[66] In the case before me, the Plaintiff alleges the Defendant solicitor was negligent in failing to properly search the title of the properties he was purchasing. The Plaintiff argues that if the Court accepts the evidence of Bari on what occurred in 2006-2007, the negligence of the Defendant is so egregious that expert evidence was not required.
[67] Whether or not a Plaintiff requires an expert to prove its case against a professional is fact-driven. A case where a solicitor fails to issue a claim within the limitation period, for example, does not require an expert opinion. Similarly, a case where a doctor leaves a sponge in a patient following surgery does not require an expert opinion. These are obvious examples of egregious behaviour on the part of professionals which the court can deal with without having to resort to expert testimony.
[68] It is beyond dispute that there was a 1995 by-law registered on title to the Bay Street properties; it was noted on the parcel register. There is no suggestion that the presence of the by-law was missed in December 2006. The issue to be decided is what ought to have done upon noting the existence of the by-law. Would a prudent solicitor in similar circumstances have pulled a more detailed search to determine the nature of the by-law and whether it would have any impact on her client’s purchase of the property? Would a prudent solicitor have done a more detailed search, even if her client was sophisticated, familiar with the property and instructed her not to as he did not want to pay the costs of doing so? What is the standard of care in this situation and what conduct meets this standard of care? In my opinion, these questions required expert evidence at trial to establish the proper standard of care and to opine on whether the actions of Ahuja constituted a breach of that standard.
[69] While I realize that credibility is critical in this case, and that the evidence of the parties on what Ahuja was supposed to do concerning searching the title is hotly contested, it was necessary for the Plaintiff to obtain an expert opinion on whether the Defendant failed to meet the standard of care by not undertaking further searches on title after noting the existence of the 1995 by-law. The court cannot speculate on what the applicable standard of care is and I do not agree that this is one of those “obvious, egregious” examples of negligence that does not require expert opinion as described in Krawchuk such that an expert opinion is unnecessary.
[70] There were few facts upon which the parties agreed at trial. Neither party had the expected documentation substantiating events; the manner in which the Defendant solicitor managed her files from a documentary point of view can be described, charitably, as sloppy and haphazard. Because of the paucity of paper documenting discussions and meetings, the court must look to the credibility of the parties and their evidence on important points. Neither party was an impressive witness; there were times during the testimony of both Bari and Ahuja that their evidence was less than accurate, somewhat contrived and definitely unreliable.
[71] The Plaintiff was not a novice in the real estate business; to the contrary, he was an experienced real estate agent and broker who had drafted many agreements of purchase and sale and had bought and sold properties for profit. When he attended upon the Defendant in December 2006, he had already purchased 2 properties in the Bay St. area of Orillia and he had signed agreements to purchase 2 more.
[72] Although he was not asked about this point in either examination in chief or cross examination, presumably he purchased the 2 lots in August, 2006, without investigating the by-law issue and without seeking the advice of a solicitor. He indicated that he had done his own research before he decided to buy the 2 lots and he was familiar with the area. When he decided to buy another 2 lots a month later, I do not accept his statement that he went to the Defendant in order to have her search the title and advise him of any issues affecting his interest in the properties. That is inconsistent with his past actions and is self-serving.
[73] The Defendant was out of the country for the month of December 2006. She testified that she had a lawyer friend, Sheikh, who was “looking after” her practice. The Plaintiff had no recollection of ever meeting Sheikh; there was nothing in writing from Sheikh concerning what he did in Ahuja’s absence. Ahuja’s evidence was unreliable at best; at her discovery she said that Sheikh never spoke to the Plaintiff in December 2006 yet at trial she attempted to say that she “believed that he definitely met with the clients.” I do not accept that evidence as being accurate.
[74] The Plaintiff’s law clerk, Birk, testified and in my view she attempted to provide honest recollections about the events of 2006 and 2007, although her memory was vague at times and she had no notes to assist her, she was the person who was doing the majority of the work for the purchase of the properties. She was not certain if Sheikh met with Bari and Quereshi in 2006, although he was overseeing the purchases and sale, according to Birk. She told the Plaintiff he could discuss the transaction with Sheikh, who came to the office daily, since the purchase was closing very quickly. The Plaintiff said that he was familiar with the properties and did not need to discuss anything with a lawyer. He also confirmed that a detailed search of the properties was not to be undertaken since he knew about them. Sheikh told Birk that if the client was familiar with the properties it was “okay” to close the transaction. Birk struck me as an honest, credible witness and I accept her evidence that the Plaintiff was aware of the existence of the by-law on title and declined a discussion with a lawyer and instructed her not to do any detailed searches.
[75] The arrangements that Ahuja made with Sheikh to deal with her files in her absence were not optimal; what the expectation was of Sheikh’s involvement was never clarified. What Sheikh actually did with respect to the purchases in December 2006 was unclear. What the requirements are for a lawyer supervising a practice for another lawyer who is out of town for a period of time was not articulated in evidence. The fact that a solicitor may not have documented events in the file or may not have confirmed instructions in writing may be less than ideal but that does not lead to a conclusion the lawyer was negligent or did not meet the appropriate standard for a lawyer in similar circumstances. The court should not be left in the position of having to guess at what the standard of care is in such circumstances; it may be appropriate to delegate certain tasks to an experienced law clerk for a real estate closing. There ought to have been clear expert evidence on what steps a prudent lawyer would take when doing a real estate purchase for a client from another lawyer’s practice in order to assist the court in coming to its conclusions on the issue of the alleged negligence of the Defendant.
[76] Bari’s evidence surrounding the December 2006 transaction was vague and generally not helpful. He could not recall anything that happened when he went in to sign the closing documentation in December 2006, but he alleges he was not apprised of the by-law and denies he instructed the clerk not to do further searches on title. In the circumstances, given the Plaintiff’s vague memory of the events and his assertion that he knew nothing of the by-law on title and the Defendant’s contention that she was instructed not to do any further searches by the Plaintiff, I would have expected Quereshi to testify about his recollection of the discussions took place when transactions were closing; this is particularly so given the lack of documentation from either party to confirm what transpired. The failure of the Plaintiff to call Quereshi gives rise to an adverse inference in these circumstances.
[77] I am persuaded on the evidence that Bari was familiar with purchasing properties and he did not rely on the Defendant to provide him with advice on his purchases, as the average person might do. He had bought properties in other cities for investment and he and Quereshi had found the Orillia properties on a tax sale and had purchased the first 2 lots (481 and 483 Bay St.) in August 2006. He did not seek the advice of the Defendant or any lawyer concerning those purchases, which were in the same development as the later properties he bought. He transferred the title without the assistance of the Defendant.
[78] Bari was also cavalier in how he dealt with the Defendant: he showed up at her office without an appointment; he dropped off agreements of purchase and sale that were already signed and he did so on a very tight time line, usually just days before the closing date for the transaction; he confirmed nothing in writing and kept no notes or other documentation about these purchases.
[79] I do not find that when he attended at her office in December 2006, he expected to receive advice about the legal title, the effect of the by-law and whether it would impact his plans to develop the property; that is inconsistent with the manner in which he conducted himself. Rather, the evidence persuades me that he and his partner had decided this area in Orillia was an attractive location and since they had purchased the lots for a very cheap price, they could be developed and sold for a profit. They bought the first 2 lots in August at a tax sale, and decided to buy another 2 lots in September for the same low price. Given the Plaintiff’s background in real estate, he was not expecting Ahuja to research the by-law on title; and I find that he advised her clerk that it was not necessary to do any detailed searches of the title. This finding is supported by the evidence; when he later bought out Quereshi, he signed an acknowledgement that he did not wish to have full searches of title conducted, which is consistent with the evidence of the law clerk.
[80] Instead of calling expert evidence on the appropriate standard of care, counsel made reference to the Law Society Guidelines for residential real estate transactions. These guidelines were not entered into evidence and appeared to be the current guidelines, as opposed to guidelines that existed in 2006 and 2007 when these events took place. The larger problem, however, is that guidelines do not establish what a reasonable standard of care is for a lawyer. As I wrote in 1483677 Ontario Ltd. v. Crain, 2015 ONSC 6217, [2015] O.J. No. 5350, at para. 160, “a breach of a Rule of Professional Conduct does not automatically equate with a finding of negligence or that the legal services provided by a solicitor fell below the requisite standard of care…” In my view, these guidelines are of no assistance to me in determining the standard of care in 2006.
[81] On March 7, 2007 the Plaintiff again retained the Defendant for the purchase of 485 Bay St. Bari could not recall who he met with at her office concerning this transaction and testified that he simply signed the papers he was asked to. Again, he denied he instructed Ahuja not to do detailed searches of the property because he was familiar with it.
[82] The Defendant asserts that Bari specifically instructed her office to only do a basic title search and not to pull the instruments from the parcel register. That is why she provided him with rebates in May 2007, because the full searches were not required to be done.
[83] The manner in which files were kept at the Defendant’s office left much to be desired. It seems that individuals who worked on the files did not make notes to file of their activities. There were no memoranda done to confirm conversations or meetings with clients. She was a poor record keeper.
[84] At its strongest, the Plaintiff’s case against Ahuja is that he entrusted her to do the purchase of the Bay St. properties and he relied on her to do so competently and she failed in this endeavor. Whether a lawyer’s actions were reasonable is to be judged in light of the surrounding circumstances such as the time the lawyer had to complete the work, the nature of the client’s instructions, and the experience and sophistication of the client.
[85] In this case, the Plaintiff was sophisticated in the area of real estate, since he was an agent and broker himself. He had previously purchased properties including 2 in the Bay Street area in Orillia. He attended at Ahuja’s office after he had already signed the agreements of purchase and sale and simply walked in to her office without an appointment, just a few days prior to the closing dates for the transactions. As Ahuja pointed out, by the time she was retained the date for requisitions had already passed.
[86] The Plaintiff argues that if he had been apprised of the by-law and its effect in December 2006, he would not have purchased 485 Bay Street in March 2007. I do not accept this submission and it contradicts the Plaintiff’s own evidence. He wanted 485 Bay St. because it was in the middle of the other properties he owned; that is why he paid double the price for it as he had paid for the other 4 properties. The evidence demonstrates that he knew of the existence of the by-law at least by December 2006 if not earlier and it was of no particular concern to him and his plans to develop the lots.
[87] While some of the practices of the Defendant were sloppy, without expert opinion to assist me, I am not persuaded on a balance of probabilities that the Defendant was negligent in relation to her handling of the purchases of the 3 lots on Bay St. in December 2006 and March 2007.
The Second Occasion
[88] The Plaintiff asserts that on October 30, 2012 he went to the Defendant to obtain her assistance because Kelly was demanding payment of the mortgage since he learned of the existence of the 1995 by-law. Instead of providing advice about the repeal of the by-law or obtaining a minor variance to permit building, the Plaintiff argues the Defendant was negligent and as a result he was forced to sign over the title to the properties to Kelly.
[89] The evidence from the parties surrounding the events of late October and early November 2012 was very different; neither party was a stellar witness. The Plaintiff was a vague historian; despite the fact that he is a sophisticated businessman in the area of real estate, he professed little actual memory of important events. Furthermore, his version of events makes little, if any, sense.
[90] Even on his own evidence, he had obtained a minor variance in late 2008 which permitted him to develop the property. He did not proceed because the real estate market had spiraled downward, and he had suffered significant financial losses to the point that he was forced to sell his own house and live in rented premises. He had no money to develop the Orillia properties.
[91] Bari knew on September 17, 2012, when he received the letter from Kelly, that he was demanding payment of the entire mortgage and threatening a power of sale of the properties. The Plaintiff testified that he was shocked to receive Kelly’s letter on September 17, 2012 advising about the by-law. He alleges he simply accepted as accurate Kelly’s statement that the by-law prevented development. I reject the Plaintiff’s evidence on this. In November 2007 when he bought out Quereshi, Ahuja had Bari sign an acknowledgement confirming his instructions that she was not to do any further searches. I accept the Defendant’s evidence that there was a discussion of the by-law on title at that time and Bari told her not to do any further searches; that is why the acknowledgement was drafted by Ahuja and signed by Bari. Further, Bari agreed that he had received the parcel register in May 2008 which clearly discloses the existence of a by-law on title. For him to suggest he did not know about the by-law on title and he was shocked to discover its existence in September 2012 lacks any ring of truth.
[92] If Bari were truly taken aback to discover that he could not proceed with his plans for development of the land because of a by-law, one would have expected him to have immediately contacted Ahuja to find whether what Kelly asserting was indeed the case. It is astonishing that faced with Kelly’s demand and threat of power of sale, given his own precarious financial circumstances, Bari did not immediately call Ahuja and advise her of the contents of Kelly’s letter. Instead, inexplicably, he waited some 6 weeks, had extensive discussions with Kelly about possible solutions, and when he did meet with Ahuja, he failed to tell her that Kelly was threatening to proceed with a power of sale. He did not advise her of his discussions with Kelly about possible resolution or that he was considering transferring the properties to him.
[93] The Plaintiff argues that he expected the Defendant to provide him with legal advice about what to do in the situation, and she failed to do so but simply told him to apply for title insurance. I do not accept the Plaintiff’s evidence on this point.
[94] At this time, Bari had already consulted another lawyer, Mr. Khichi, (“Khichi”) who eventually did the transfer of the properties to Kelly. While Bari testified that he retained him November 5, 2012, that is not accurate. The transfer was done on November 6 but there is a search of the parcel registers done August 27, 2012, (JBD, tab 372) which indicates Khichi was the requesting party. Clearly, he had spoken to Khichi at least by August about the properties in Orillia and the issue of the by-law.
[95] The evidence of Kelly is persuasive; he was the one witness who was truly impartial, gave his evidence in a straight forward fashion and struck me as honest and credible. He confirmed that after sending Bari the demand letter on September 17, they were in constant communication because the Plaintiff did not have the funds to pay off the mortgage. It is significant that Kelly testified Bari was approximately $100,000 in arrears on the mortgage payments, outstanding taxes and a special assessment that had not been paid at that time.
[96] Kelly was clear in his evidence that it was around October 15, 2012 that he agreed to accept the transfer of the properties to his name in exchange for forgiveness on the mortgage. Thus, I do not find on the evidence that when Bari met with Ahuja on October 30, 2012, he expected her to advise him of his rights and to suggest potential avenues to deal with the by-law. Rather, I find that when he met with the Defendant he had already decided to transfer the properties to Kelly; he did not have the money to pay the arrears or to proceed with the development he had started 5 years earlier so he decided to rid himself of the debt. It was his intention to make a claim to the title insurer to see if he could get some financial compensation.
[97] The Plaintiff failed to call Khichi as a witness and provided no explanation for the failure to do so. Given that Khichi was retained at the critical time, that being the same time that the Plaintiff is alleging he relied on Ahuja for her advice, I find it surprising that the Plaintiff failed to call Khichi as a witness, particularly given the disparate evidence at trial concerning the events.
[98] Bari did not need Ahuja to advise him about what to do about the by-law because he had already dealt with the city years before and obtained a minor variance to enable him to develop the lots. There was no evidence that he ever told Ahuja of his application to the city or his dealings with a variety of professionals in 2007 and 2008 concerning his development plans. He never told her that in November 2008 he had obtained approval of his minor variance application on a number of conditions and that it had expired because he failed to proceed with it.
[99] I note as well that although the 1995 by-law was in the JBD, there was no evidence called by the Plaintiff to explain what effect the by-law had on the lots that Bari had purchased and what the true impact was on the ability to develop the properties as Bari planned. Clearly, the by-law did not preclude building on the lots because Kelly was successful in repealing the by-law and building houses on the lots. Given the nature of the allegations made in this lawsuit, I would have expected the Plaintiff to call evidence about what the real effect was of the 1995 by-law registered on title.
[100] There is no evidence that between November 2007 when the properties were transferred into Bari’s name and the new mortgage for $175,000 was obtained that Bari had any contact with Ahuja concerning the properties in Orillia, what his plans were for them or his financial difficulties. Kelly testified that in August 2012 Bari approached him for additional financing and at that time, the mortgage payments were in arrears and some payments had been missed or returned without sufficient funds. By the time he attended at the Defendant’s office on October 31, 2012, he was in dire financial straits and yet, he failed to apprise Ahuja of all of the facts, including his plans to transfer the properties.
[101] While the Defendant solicitor’s evidence on a variety of points left much to be desired, the evidence demonstrates that she contacted Mr. Duggan at the city shortly after her meeting with the Plaintiff because she was trying to find out what could be done about the by-law, based on the information that Bari had provided to her. She would not have made that call if the Plaintiff had been candid with her about the history of his discussions with the City, including his successful application for a minor variance years earlier.
[102] I reject the submission that it was the conduct of the Defendant that “forced the Plaintiff to make a decision to either enter in to a legal battle with his mortgagee or give the property to the mortgagee in exchange for a release.” Bari was not candid with Ahuja on a variety of matters. He failed to tell her that he had sent a “petition” to the city the day after he met with her asking for compensation.
[103] The Plaintiff claims that he attended upon Ahuja on October 30, 2012 in a desperate situation and he relied on her to give him advice on how best to extricate himself from the quagmire in which he found himself and that she failed to address the issues and therefore was negligent. However, the situation in which he found himself in September 2012 was of his own making, related for the most part to his precarious financial situation. His attempt to blame the Defendant for his loss of the Orillia properties is ill conceived and unsupported by the evidence. As a result, I do not find the Defendant was negligent in this time frame.
[104] The Plaintiff’s claims against the Defendant are dismissed.
Causation
[105] Although I have determined that the Plaintiff has failed to demonstrate that the Defendant was negligent, in my view, it is necessary that I comment on the issue of causation. The Plaintiff argues that the Defendant was negligent in failing to properly search the title to the properties in 2006 and 2007 and as a result, he suffered damages. Assuming the Defendant was negligent, the Plaintiff must still prove that, as a result, he suffered losses that are causally related to the negligence.
[106] The law is clear that to establish causation, the Plaintiff must demonstrate that “but for” the negligence of the Defendant, on a balance of probabilities, he would have proceeded in a fashion that would have avoided the damages which he says he sustained as a result of the Defendant’s negligence: see Clements v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181. More recently, the Ontario Court of Appeal noted in Jarbeau v. McLean, 2017 ONCA 115, [2017] O.J. No. 717, at para. 17, “The “but for” test set out in the trial judge’s charge is the appropriate test for causation in negligence in all but rare cases.”
[107] As I wrote in Rider v. Grant, 2015 ONSC 5456, [2015] O.J. No. 4786, at para. 145, “Specifically in an action for solicitor’s negligence, the Plaintiff must demonstrate that if properly advised, he or she would have acted in a different manner and would have avoided the damages suffered.” (see also Marcus v. Cochrane, 2012 ONSC 146, 2012 CarswellOnt 1472).
[108] In this case, the Plaintiff was a sophisticated businessman in the area of real estate. He purchased the initial properties in Orillia at a tax sale without the assistance of a solicitor. It was his plan to buy additional properties so that he could develop the lots. There was no evidence he asked for her advice on the purchase of the various lots. He proceeded with the application for the minor variance and consent to severance and stopped only because of his financial constraints.
[109] Leaving aside the credibility issues between the parties, on the Plaintiff’s own evidence, he did not contact the Defendant for approximately 5 years while he proceeded with steps to develop the properties. When he was advised by Kelly in September 2012 that the by-law prevented the development of the property, Bari took no steps to determine if Kelly’s position had any basis in law. He did not contact the Defendant about the contents of Kelly’s letter until about a week before he decided to transfer the properties to Kelly, something he never discussed with Ahuja.
[110] Had the Defendant pulled the by-law that was shown on the parcel registry in 2007, I am not persuaded that Bari would have proceeded in a different fashion. Rather, I find on the evidence that he would have purchased the lots on Bay Street in Orillia and would have attempted to develop them, as he did. He secured the approval from the City and the reason that he did not proceed with the development was not because it was precluded by the 1995 by-law. It was due to Bari’s increasingly desperate financial situation. The Plaintiff has failed to establish causation on a balance of probabilities.
Damages
[111] In the event that I am incorrect on the issues of negligence and causation, I will assess the damages based on the evidence called at the trial. The Plaintiff has the onus of proving that he suffered losses that he would not have sustained but for the negligent conduct of the Defendant. The Plaintiff must establish that the negligence resulted in damages and it is trite law to say that a Plaintiff is put to the strict proof on damages. Here, the evidence led by the Plaintiff concerning the damages was less than satisfactory.
[112] As the court noted in Nicolardi v. Daley, [2005] O.J. No. 2346 (S.C.J.), reconsidered on other grounds [2005] O.J. No. 3255 (S.C.J.), affirmed [2009] O.J. No. 396 (Div. Ct.):
The plaintiff must establish on the balance of probabilities that: the defendant was negligent…in that his conduct fell below the standard of care of a reasonably competent…lawyer in Ontario; damage or loss to the plaintiff was a reasonably foreseeable result of such negligence or breach of contract; the loss or injury was, in a common sense view, caused by the defendants’ breach, in that the loss would not have occurred but for the fault of the defendant or, if that test is inappropriate, that the defendant’s breach contributed to the loss in a material way, although there may have been other causes; a defendant will not be liable for damage or loss resulting from the plaintiff’s own unreasonable actions or where the plaintiff has been the author of his own misfortune.
[113] In my view, the comments of Justice van Rensburg (as she then was) in Huong v. Nguyen, 2013 ONSC 6242, [2013] O.J. No. 4537, are applicable to the case at bar. She stated at para. 58, “The case law is clear that a plaintiff must prove her damages by leading evidence at trial, and it is not up to the court to simply find a number that would “make the plaintiff whole.” In Martin v. Goldfarb (1998), 1998 CanLII 4150 (ON CA), 41 O.R. (3d) 161 (C.A.), leave to appeal ref’d, [1998] S.C.C.A. No. 516, the Court of Appeal concluded that the plaintiff had failed to prove his losses through appropriate evidence and while it may be difficult for the court to calculate damages, it does not mean that a plaintiff is relieved from the obligation to prove damages.
[114] As the court noted in Threemor Enterprises Ltd. v. Parente, Borean, [2000] O.J. No. 1427, 2000 CarswellOnt 1357 (S.C.J.), at para. 150, “the measure of damages is those which are reasonably foreseeable at the time of the breach of duty and resulting from or consequent upon that breach.”
[115] During the course of the trial, the Plaintiff delivered his “summary of damages” claiming the sum of $165,551.34. It is comprised, for the most part, of the expenses he incurred when he made his application in 2007 for a minor variance. Thus, he claims the fees of the architect, the appraiser, the surveyor, the arborist who cleared the lots of trees and the cost of the soil test report. The property taxes of $19,373.51 are included as well as legal fees for the acquisitions. The largest item is the interest on the loan Bari paid to Kelly in the sum of $105,213.65.
[116] Although various invoices are included in the damage claim, the Plaintiff was unable to provide proof that these amounts were in fact paid by him. Specifically, he was unable to provide evidence that he paid invoices from the architect, the appraiser, the surveyor, Steinhoff Consulting and the arborist. Of the $105,213.65 claimed for the interest paid to Kelly for the loan, the cheques produced indicate that the Plaintiff paid, at most, $3,794.00.
[117] As the solicitor for the Defendant noted in his closing argument, the Plaintiff purchased the first 2 Orillia lots without any involvement from Ahuja. In addition, Bari bought the lots with his partner, Quereshi, so he had only a half interest in them at the time they were purchased. There was evidence that the Plaintiff’s company, Invest2Grow, paid various invoices for work done to develop the properties, amounts which are now being claimed as damages.
[118] The Plaintiff failed to inform Ahuja of his plan to transfer the properties to Kelly; it was not foreseeable to her when she did the purchases in 2006-2007 that he would decide not to pursue the development after having incurred costs in furtherance of the this purpose, nor could she have foreseen that in 2012, since he failed to advise her of his plans.
[119] In my view, on the facts, this case does not fall into the category where determining the damages is “inherently difficult”: see Martin v. Goldfarb, 1998 CanLII 4150 (ON CA), 41 O.R. (3d) 161, [1998] O.J. No. 3403. I do not accept the submission that had the Plaintiff been apprised of the 1995 by-law in December 2006, he would not have proceeded with the purchases of the 2 lots or the middle lot in March 2007 for the reasons I have expressed.
[120] The Plaintiff maintains that his intention in purchasing the 5 lots was to develop them into 7 lots. The evidence does not support his contention that the 1995 by-law prevented him from doing this; in fact, he knew he could do it and he was successful in 2008 in obtaining approval from the City to proceed with his plans. In furtherance of this, he retained consultants, an appraiser, lawyers, etc. to proceed with the development. These are the invoices that he now claims as damages from the Defendant.
[121] I find on the evidence the following: the 1995 by-law did not present an impediment to Bari developing the 5 lots into 7; had a further search been done by Ahuja or Sheikh and the by-law pulled, Bari would still have proceeded with the purchase of the properties for the low prices that he had secured; and his failure to fulfil the conditions of the minor variance and consent to sever approvals that he obtained in 2008 had nothing to do with any action or inaction of Ahuja.
[122] I agree with the Defendant’s submissions that the damages claimed are not a reasonably foreseeable consequence of the Defendant’s alleged breach. The by-law existed at the time of the purchase of the lots; the Plaintiff would have paid fees to the City and to the surveyor and other professionals as he did in order to be permitted to proceed with his development plans. There was no evidence led about any diminution in value of the properties as a result of the existence of the by-law on title.
[123] I am not persuaded on the evidence that the Plaintiff has established any damages related to the alleged negligence of the Defendant.
Conclusion
[124] The claims of the Plaintiff are dismissed. If the parties cannot agree on costs, I may be contacted.
D.A. Wilson J.
Released: December 22, 2017