2116656 Ontario Inc. v. Grant and LLF Lawyers LLP, 2019 ONSC 114

COURT FILE NO.: 8408-12

DATE: 2019/01/08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

2116656 ONTARIO INC.

Plaintiff

– and –

JOSEPH A.G. GRANT and LLF LAWYERS LLP

Defendants

Catherine M. Patterson, for the Plaintiff

John McNair and Mavis J. Butkus, for the Defendants

HEARD: April 3, 4, 5 and 6, 2018

JUSTICE I.F. LEACH

Introduction and overview

[1] This is an action alleging solicitor negligence in relation to a purchase of residential real estate in the town of Orono – formally now within the municipality of Clarington, Ontario – in 2010.

[2] In particular, the numbered plaintiff corporation, (through the efforts of its sole shareholder, officer and principal Tom Gjorgievski), alleges that the defendant solicitor Joseph or “Joe” Grant and his law firm, (at the time “Howell Fleming LLP” but since merged into the defendant “LLF Lawyers LLP”), owed and breached alleged duties to the plaintiff corporation, in turn causing it to lose financing it had extended towards the purchase of the relevant Clarington property.

[3] For their part, the defendants deny that the plaintiff corporation, in its amended statement of claim, has even pleaded or relied upon all of the duties the defendants are now said to have breached vis-à-vis the plaintiff corporation.

[4] In any event, the defendants deny that any such duties existed or were breached vis-à-vis the plaintiff corporation, or that the plaintiff corporation sustained any damages as a result of the alleged duties or breaches.

[5] The entire litigation takes place in a wider context where there clearly seem to have been efforts on the part of someone to commit mortgage fraud. In particular:

• The Home Trust Company, (i.e., the institutional lender conditionally committing to lend mortgage financing to facilitate purchase of the relevant Clarington property), required, inter alia, an assurance that the identified purchaser of the Clarington property, Craig Loucks, would be providing the balance of the Clarington property purchase price himself; i.e., using his own funds, and without any “secondary financing”.
• In fact, despite indications and assurances to the contrary, almost all of the down payment funds used to purchase the Clarington property, (with the exception of a relatively modest deposit paid by Mr Loucks and the mortgage financing extended by The Home Trust Company), were provided by the plaintiff corporation – whose principal Mr Gjorgievski alleges that corresponding security for the plaintiff corporation’s investment was to be provided by his being put on title to the Clarington property as a beneficial owner of half the interest therein, subject to his relinquishing that interest once the purchase financing extended by the plaintiff corporation had been repaid with a substantial “bonus” payment.
• Not only was the balance of the purchase price down payment actually paid with funds from the plaintiff corporation, (i.e., rather than funds belonging to Mr Loucks personally), but numerous misrepresentations clearly were made to disguise that reality. In particular, not only was the balance of the Clarington property purchase price (beyond the Home Trust Company mortgage funds) wrongly said to have been provided by Mr Loucks personally from his own funds, but there were additional express and/or implied misrepresentations made:
  • that Mr Loucks had annual employment income from another corporation partly owned by Mr Gjorgievski, (Universal Welding & Gases), which was not the case;
  • that Mr Loucks had been “gifted” a substantial portion of the funds ($80,000) from his supposed “brother in law” Michael Snow, despite the relevant funds actually having been loaned by the plaintiff corporation instead of being gifted, and despite the reality that Mr Snow was not Mr Loucks’ brother-in-law but acknowledged business partner; and
  • that the remainder of the down payment purchase funds provided by Mr Loucks ($55,000) had or would come from the net sale proceeds of a condominium property owned by Mr Loucks, despite the relevant funds actually having been loaned by the plaintiff corporation instead of coming from the personal assets of Mr Loucks.
• At least one confirmed perpetrator of fraud – Mr Snow – has been convicted and sent to prison for his improprieties.
• Mr Loucks, Mr Gjorgievski and the plaintiff corporation, (through Mr Gjorgievski), all deny contemporary awareness of any impropriety relating to purchase or mortgaging of the Clarington property, and claim to have relied on others; e.g., Mr Snow and/or Mr Grant – and through Mr Grant, his law firm.
• Mr Grant categorically denies that he – or by extension his law firm – was knowingly involved in any perpetrated misrepresentations or other improprieties. To the contrary, he says he not only acted properly throughout the relevant transactions, but also with the appropriate standard of care owed to his only two clients; i.e., Mr Loucks and the Home Trust Company. Again, the existence of any duties vis-à-vis the plaintiff corporation are denied – although Mr Grant says his actions were entirely proper and met any applicable standard of care in that regard as well.

[6] In any event, having been unable to recover its loaned funds from Mr Loucks or Mr Snow, or through a tertiary mortgage in favour of Mr Gjorgievski registered against the Clarington property - before or through the property’s sale via power of sale proceedings taken by the Home Trust Company, (when its primary mortgage on the property went into default and neither Mr Gjorgievski nor the plaintiff corporation took steps to intervene), the plaintiff corporation, (through the efforts of its principal Mr Gjorgievski), now seeks to recover those funds in damages from solicitor Grant and his law firm – as currently constituted.

[7] In that regard, trial of his matter proceeded before me in April of 2018, at which time I was presented with substantial agreed documentation, and received oral testimony from the following witnesses:

• Mr Gjorgievski, who testified on behalf of the plaintiff corporation;
• Mr Loucks, who was called as a witness by the plaintiff corporation;
• Mr Andrew Fortis, a lawyer specializing in real estate law, who was called as a witness by the plaintiff corporation and qualified to give expert opinion evidence as to the standard of care required of Mr Grant in the circumstances, if duties were owed by Mr Grant and his law firm to the plaintiff corporation;
• Mr Grant, who testified on behalf of the defendants; and
• Mr Steven Pearlstein, another lawyer specializing in real estate law, who was called as a witness by the defendants, and qualified to give expert opinion evidence as to the standard of care required of Mr Grant in the circumstances, if duties were owed by Mr Grant and his law firm to the plaintiff corporation.

[8] By agreement of the parties, I also was presented with evidence obtained by David Lord, an investigator retained by the defendants, who interviewed Mr Loucks by telephone on April 24, 2010, and obtained what were said to be statements and admissions by Mr Loucks inconsistent with the testimony Mr Loucks provided at trial. Mr Lord did not testify at the trial. However, by agreement of the parties, extracts from a written report prepared by Mr Lord of the aforesaid interview were read into the record, on the understanding that I was to give the evidence the same force and effect as if it had been sworn or affirmed and delivered personally in the courtroom.

[9] Following receipt of oral and written submissions from counsel, I then reserved judgment.

Background and general findings of fact

[10] Although the trial itself lasted only four days, I was presented with considerably detailed testimony and documentary evidence – along with a number of formal admissions emanating from “Request to Admit” procedures – and, despite the length of these reasons, will not address all of those details here.

[11] While considering all of that evidence, I will focus in these reasons on the facts I think more relevant to providing overall context, and the fundamental grounds for my decision.

[12] With that in mind, (and noting that I also intend to make additional comments on the evidence in the course of these reasons), the following findings form the general factual matrix in which I will address the issues raised by the plaintiff corporation’s amended statement of claim:

• Mr Grant graduated from law school in 2006 and, after articling with a large law firm in its Ottawa office, was called to the bar in 2007. He then began practising law with the firm of Howell Fleming LLP, with a focus on real estate, commercial and estate-related matters. Approximately 60 percent of his practice was devoted to legal work done in relation to real estate transactions.
• Mr Grant first became acquainted with Mr Loucks and Mr Snow in July of 2010, when Mr Snow was referred to Mr Grant by another lawyer, (known to Mr Grant), who had been doing work for Mr Snow but was moving away from the area. In relatively short order, Mr Loucks and Mr Snow thereafter retained the services of Mr Grant in relation to a number of matters, including:
  • incorporation on July 14, 2010, of a company, (Razor Industries Inc.), in which Mr Loucks and Mr Snow were both involved as officers and shareholders;
  • a transaction in which Mr Loucks and Mr Snow purchased the shares of another corporation, Razor Routers Inc., in which both men also would be actively involved; and
  • the sale of a Thornhill condominium owned by Mr Loucks, (and known by its municipal address as Suite 1503, 15 North Park Road, Thornhill, Ontario), which had a contemplated closing date of August 31, 2011.
• Although Mr Snow had been the one to make initial contact with Mr Grant, there were many meetings thereafter with Mr Grant which usually were attended by both Mr Snow and Mr Loucks.
• On July 15, 2010, another formal Agreement of Purchase and Sale was entered into by Mr Loucks and a woman named Julie Langton, (as purchasers), and a couple named Murray and Linda Taylor, (as vendors), in relation to a residential property identified by its municipal address as 3253 Concession Road in the municipality of Clarington; i.e., what I have referred and will refer to herein as “the Clarington property”. Terms of that agreement included the following:
  • the specified purchase price was $550,000;
  • the contemplated closing date of the transaction was September 15, 2010;
  • completion of the agreement was subject to a number of conditions, including a home inspection satisfactory to the purchasers, mortgage financing to be obtained by the purchasers, and the sale of two other properties: the Thornhill condominium noted above, (at the time still owned by Mr Loucks), and another property known by its municipal address as 5279 Main Street, Orono, Ontario; and
  • unless the purchasers delivered a formal notice to the vendors by 6:00pm on August 27, 2010, indicating that the two indicated properties belonging to the buyers had been sold, the offer contained in the Agreement of Purchase and sale was to be considered null and void.
• The aforesaid Agreement of Purchase and Sale dated July 15, 2010, was forwarded to Mr Grant by Mr Loucks, who indicated his intention to retain Mr Grant to act on his behalf in relation to that contemplated transaction as well. Mr Grant instructed his assistant, Ms Catherine DeWaard, to open a file accordingly. However, as for Ms Langton and the Main Street property in Orono, mentioned in the Agreement of Purchase and Sale:
  • Mr Grant was not familiar with Ms Langton;[^1]
  • Ms Langton had no contact with Mr Grant in connection with the purchase transaction contemplated by the Agreement of Purchase and Sale dated July 15, 2010, and did not retain Mr Grant to act on her behalf in connection with the contemplated purchase; and
  • while Mr Grant assumed (without knowing) that Mr Loucks also owned the Main Street property in Orono, Mr Grant was never consulted or retained in relation to the contemplated sale of that property.
• In any event, the transaction contemplated by the Agreement of Purchase and Sale dated July 15, 2010, did not proceed.[^2]
• On August 27, 2010, a new Agreement of Purchase and Sale was entered into by Mr Loucks, (as purchaser), and the Taylors, (as vendors), in relation to the same Clarington property. (Ms Langton was not a party to the new agreement.) Terms of that new agreement included indications that the specified purchase price was once again $550,000, and that the contemplated closing date of the new transaction was October 15, 2010. Unlike the earlier and aborted agreement relating to the same Clarington property, the new Agreement of Purchase and Sale was not conditional on the sale of other properties or any other significant conditions. In the vernacular, it was considered to be a “firm deal”.
• The aforesaid Agreement of Purchase and Sale dated August 27, 2010, was provided to Mr Grant by Mr Loucks, who retained Mr Grant and his law firm to act on behalf of Mr Loucks, in connection with the contemplated purchase. Mr Grant responded, in accordance with his firm’s usual practice at the time, in relation to such matters, by sending Mr Loucks a formal “engagement letter”, (rather than a written retainer agreement), on September 2, 2010. Amongst other things, that engagement letter:
  • acknowledged receipt of the relevant Agreement of Purchase and Sale;
  • thanked Mr Loucks for referring the matter to Mr Grant and his law firm; and
  • requested the provision of specified information, including “any arrangements [Mr Loucks] had made for financing” the contemplated purchase – as Mr Grant believed Mr Loucks was contemplating the use of an institutional lender to provide some of the purchase price in exchange for a first mortgage.
• On August 31, 2010, Mr Loucks completed the sale of his Thornhill condominium, with the legal assistance of Mr Grant. The sale generated net proceeds of $54,649.17, which were deposited in the bank account of Mr Loucks on September 1, 2010, in accordance with his instructions.
• On or about October 4, 2010, Mr Grant incorporated a number of further companies on behalf of Mr Loucks and Mr Snow; e.g., Shockwave Aerospace & Machining Inc., Shockwave Security & Defence Inc., and Linear Leasing Inc.
• On October 7, 2010, Mr Grant’s assistant, Ms DeWaard, sent an email to Mr Loucks noting that she and Mr Grant had not received any mortgage instructions from Mr Loucks in relation to the anticipated closing date of the transaction, on October 15, 2010, relating to the Clarington property. She also asked whether Mr Loucks was obtaining financing in relation to the purchase or intending to pay “cash” for the property; i.e., to fund the purchase entirely from his own resources.
• On October 8, 2010, Mr Loucks responded to the previous day’s email message from Ms DeWaard, informing her that he was obtaining financing in relation to his purchase of the Clarington property, and would have his mortgage broker contact her.
• By October 12, 2010, Ms DeWaard and Mr Grant still had received no further information about the financing Mr Loucks apparently intended to obtain in relation to his purchase of the Clarington property. Ms DeWaard therefore sent Mr Loucks a further email, confirming that Mr Loucks was scheduled to meet with Mr Grant on October 14, 2010, to review documents relating to the purchase closing. In the same email, Ms DeWaard noted that she and Mr Grant still had not received anything from the mortgage broker employed by Mr Loucks, and asked Mr Loucks to provide the name of that mortgage broker.
• Later the same day, (i.e., on October 12, 2010), Mr Loucks informed Ms DeWaard that his mortgage broker was Steven Crowe, at “Kingsbury Mortgages”. At the time, Mr Grant was unfamiliar with Mr Crowe.
• On October 14, 2010, (i.e., the day before the scheduled closing of the contemplated purchase of the Clarington property by Mr Loucks), there were a number of developments, which included the following:
  • Mr Loucks spoke with Ms DeWaard, indicating that he was working on satisfying conditions relating to his down-payment for the purchase, and that mortgage documentation might not be provided that afternoon, but that he also was still intending to meet with Mr Grant at 2pm that day. Shortly thereafter, Ms DeWaard sent Mr Grant an email relaying that information.
  • At approximately 2pm, Mr Loucks attended, with Michael Snow, at the Peterborough office of Mr Grant.[^3] (At the time, the mortgage financing documentation and instructions still had not arrived in Mr Grant’s office.) During the course of the meeting that followed:
    • Mr Grant had Mr Loucks execute certain documents needed for the anticipated closing, including the formal land transfer and other documents required by Mr Grant and his firm. However, the “charge” documentation had not yet been prepared and readied for signature by Mr Loucks, owing to the ongoing lack of mortgage documentation and instructions. For the same reason, Mr Grant was unable to calculate and let Mr Loucks know how much money he would need to bring the next day to complete the transaction; i.e., because Mr Grant and his firm still had no idea how much money would be received from the contemplated mortgage lender.
    • Mr Loucks and Mr Snow then informed Mr Grant, for the first time, that the down payment required in relation to the Clarington property purchase, (i.e., the balance of the purchase price not being covered by the mortgage financing being arranged through Mr Crowe), would be coming from Tom Gjorgievski – someone previously unknown to Mr Grant, but identified by Mr Loucks as a “friend” of Mr Snow. In particular, Mr Grant was advised that Mr Gjorgievski would be providing $125,000 of the Clarington property purchase price; funds which Mr Loucks would be depositing to the trust account of Mr Grant’s law firm. No information was provided to Mr Grant about any financial arrangements between Mr Loucks and Mr Gjorgievski pursuant to which the latter would be funding that portion of the property’s purchase price.
    • Notwithstanding the provision of that funding information relating to Mr Gjorgievski, Mr Loucks gave Mr Grant instructions that he, (Mr Loucks), was to have sole title to the Clarington property. To that end, Mr Loucks also executed a formal “Direction Re Title”, indicating that the vendors of the Clarington property and their lawyer irrevocably were authorized and directed to engross the Transfer/Deed of Land in the contemplated transaction to Mr Loucks.
    • At the conclusion of the meeting, the transaction informally was “on hold”, pending receipt of the mortgage documentation and instructions from the contemplated mortgage lender. Only then would Mr Grant and his firm be able to prepare mortgage documents on behalf of Mr Loucks and the mortgage lender – assuming the latter also retained Mr Grant and his firm for that purpose.
  • At approximately 6pm, (after Mr Grant’s office had closed for the day), mortgage financing documentation and instructions were faxed to Mr Grant’s attention by the Home Trust Company; i.e., the institutional lender intending, (subject to the satisfaction of specified conditions), to provide Mr Loucks with mortgage financing to complete his contemplated purchase of the Clarington property, in exchange for being placed on title to the property as a mortgagee. Terms and conditions set forth in the instructions, as prerequisited to The Home Trust Company extending the contemplated mortgage financing, included the following:
    • The Home Trust Company contemplated advancing the sum of $459,675.00 towards the $550,000 purchase price;
    • Mr Grant also would act on behalf of The Home Trust Company in relation to the contemplated transaction, and advise Mr Loucks of that dual representation.
    • Prior to the closing, Mr Grant was to notify The Home Trust Company of “any concerns” he might have regarding, inter alia, matters that might affect the title of the subject property and/or the enforceability or priority of the mortgage to be placed on the property in favour of The Home Trust Company, and thereafter not proceed without first obtaining authorization from The Home Trust Company to do so.
    • Amongst other things, Mr Grant was required to confirm, to the Home Trust Company, that no secondary financing was being used to purchase the property, and that a minimum cash down-payment in the amount of $108,250.00, (i.e., a $100,000 down payment and $8,250 in closing costs), was being held on deposit in trust.
    • The Home Trust Company required verification of income for the identified mortgagor, (i.e., Craig Loucks), “by way of a current dated salary letter and paystub confirming income of $145,000 with Universal Welding & Gases”.
    • The Home Trust Company also required further confirmation, by way of a “copy of [the] Agreement of Purchase and Sale on existing property located at 15 North Park Road, Thornhill, Ontario”, that Mr Loucks was making a cash down payment of at least $100,000 in relation to the Clarington property purchase.
  • Mr Grant would not see or review the aforesaid material from the Home Trust Company until the following day.
• On October 15, 2010, (i.e., the scheduled closing date for the contemplated Clarington property purchase by Mr Loucks), there were a number of developments, which included the following:
  • In accordance with his usual practice, Mr Grant probably carried out some level of personal review of the documentation faxed the night before by The Home Trust Company.[^4]
  • Sometime that morning, Mr Loucks or Mr Snow called and had a telephone conversation with Mr Grant.[^5] In that regard:
    • The caller advised Mr Grant for the first time that a “deal” had been worked out with Mr Gjorgievski, whereby Mr Gjorgievski would be provided security for the $125,000 he was providing by being placed on title to the Clarington property, with a 50 percent interest therein, on the understanding that Mr Gjorgievski would be removed from title once $165,000 had been “repaid” to Mr Gjorgievski.[^6] The caller further indicated that Mr Gjorgievski wanted a letter indicating that Mr Grant had been instructed to help with securing Mr Gjorgievski’s position by placing him on title in that manner.
    • Mr Grant immediately concluded, for a number of reasons, that it would not be possible to carry out those instructions or have Mr Gjorgievski added to title on the Clarington property that day. In particular, Mr Grant thought:
      • that it was not feasible to have Mr Gjorgievski attend at Mr Grant’s office that day in time to complete the contemplated transaction, even if Mr Grant could also represent Mr Gjorgievski in relation to the transaction; and
      • that, more importantly, it was not possible for Mr Grant to represent both Mr Loucks and Mr Gjorgievski in the contemplated transaction, as the contemplated arrangement involved a private borrower/lender relationship in respect of which Mr Grant believed Mr Gjorgievski would require his own lawyer; i.e., to represent Mr Gjorgievski in relation to the transaction and contemplated transfer.
    • Mr Grant explained that conclusion and reasons for that conclusion to the caller. In particular, Mr Grant advised that the contemplated transaction could not possibly be done that day, and that it likely would take “a week or so” before all necessary arrangements could be made, including Mr Grant working with a separate lawyer, retained by Mr Gjorgievski, to make arrangements for the transfer of a 50 percent interest in the Clarington property to Mr Gjorgievski, as security for the $125,000 he was contributing to the purchase price.
    • In response, the caller indicated that he was “fine” with that, and instructed Mr Grant to proceed with preparation of an appropriate letter to Mr Gjorgievski. In terms of contact information for Mr Gjorgievski, the caller provided Mr Grant with a residential address in Bradford, but no email address.
  • After that morning telephone call, Mr Grant then prepared and signed a letter dated that day, (October 15, 2010), addressed to Mr Gjorgievski, That letter then was relayed to Mr Gjorgievski via a “cover email” Mr Grant sent to Mr Loucks and Mr Snow at 12:15pm, attaching an electronic copy of the letter. In that regard:
    • The text of the cover email from Mr Grant read as follows: “Please find the attached letter to Mr Gjorgievski. Please note that Mr Gjorgievski will have to have his own lawyer sign the transfer next week. Please let me and Catherine know when the money has been deposited. Regards, Joe.” [Emphasis added.]
    • The text of Mr Grant’s letter to Mr Gjorgievski read as follows: “Re: Purchase of 3253 Concession Road 7; Orono, Ontario, L0B 1M0; PIN 26723-0030 (LT). Please be advised that I represent Craig Loucks who is purchasing the above-mentioned property. The transaction is scheduled to close today. I have been advised that you will be providing $125,000 of the consideration for the purchase of the subject-property. I have been instructed by Mr Loucks to have your name put on title to the subject-property after closing as a 50% owner of the property, with the understanding that you will be removed from title once you have been repaid $165,000 by Mr Loucks. As the transaction is scheduled to close today, we will not be able to have you put on title before the close of the transaction, however we will endeavor to do so before the end of next week. Please feel free to contact me personally or have your legal counsel contact me to discuss this matter. Yours very truly, Joseph A.G. Grant.” [Emphasis added.]
    • Mr Grant testified, and I accept, that he deliberately used the word “endeavor” in his letter to Mr Gjorgievski to reflect his belief that he simply had no authority or ability to indicate that Mr Gjorgievski actually would be put on title to the Clarington property. In particular, Mr Grant firmly believed that such a transaction would require not only the co-operation of his client Mr Loucks, but also the signing of documents by Mr Gjorgievski, who would need to involve another lawyer acting on his behalf.
    • As reflected in his relevant “cover email”, at the time Mr Grant sent the letter indirectly to Mr Gjorgievski, (i.e., via that cover email, sent to Mr Loucks and Mr Snow), the contemplated $125,000 from Mr Gjorgievski had not yet been received by Mr Grant and his law firm.
    • Mr Grant testified and I accept that, when he sent the aforesaid cover email and letter at 12:15pm that day:
      • he had no intention of signifying that he would be acting on behalf of Mr Gjorgievski in relation to the contemplated transaction;
      • he did not expect Mr Gjorgievski to rely upon the letter as any form of confirmation that he (Mr Grant) would be acting on Mr Gjorgievski’s behalf;
      • he was not aware that Mr Gjorgievski was the principal of the plaintiff corporation; and
      • no one even had suggested to Mr Grant, up until that point, that the money supposedly being contributed from Mr Gjorgievski actually would be coming from Mr Gjorgievski’s company; i.e., 2116656 Ontario Inc., the plaintiff corporation.
  • At 12:16pm, someone at a Staples store faxed, to an unspecified recipient, (but in my view probably Mr Crowe), a copy of a document entitled “DOWN PAYMENT GIFT LETTER – HOME TRUST COMPANY”. The document, dated that day, (i.e., October 15, 2010), was signed by Mr Snow as an indicated “Donor” and by Mr Loucks as an indicated “Borrower”. The terms of the document also indicated:
    • that Mr Snow purportedly had made “a financial gift” in the amount of $80,000 to Mr Loucks to assist in the purchase of the Clarington property;
    • that the funds allegedly had been provided by Mr Snow to Mr Loucks “as a GIFT” that would “never have to be repaid”;
    • that Mr Snow was “a relative” of Mr Loucks and, in particular, that Mr Snow was the brother-in-law of Mr Loucks; and
    • that “no part” of the “financial gift” was “being provided by any third party having any direct or indirect interest in the purchase and/or sale of the subject property”.
  • At 12:17pm, someone then faxed, from the same Staples store, to an unspecified recipient, (but apparently Mr Gjorgievski, according to his testimony), a copy of a “PROMISSORY NOTE”, signed by Mr Loucks and Mr Snow that day, (i.e., October 15, 2010), but not yet signed by Mr Gjorgievski. (The document had another blank signature line, contemplating a signature by “Tom Gjorgievski”.) Amongst other things, the terms of the promissory note indicated:
    • that $135,000 was being “released” that day;
    • that, in exchange for that “value received”, Mr Loucks and Mr Snow jointly and severally were promising to pay 2116656 Ontario Inc., (i.e., the plaintiff corporation, identified as “the Holder” of the promissory note), on or before a specified maturity date of April 15, 2011, the amount of $165,000.00 in “one lump sum payment”;
    • that “to secure the performance of the obligations” under the promissory note, and as a “general and continuing collateral security for repayment of the sum of $165,000” owed by Mr Loucks and Mr Snow as signatories of the promissory note, both Mr Loucks and Mr Snow would register Tom Gjorgievski “on title” to the Clarington property “until such time of repayment”, at which time the security would be “released”; and
    • that Mr Loucks and Mr Snow were thereby granting, to the plaintiff corporation, “a security interest in a real property”; i.e., the Clarington property.
  • At approximately 2:00pm, Mr Loucks and Mr Snow then both attended at Mr Grant’s office, and met with Mr Grant in the law firm’s boardroom.[^7] In that regard:
    • The meeting began with the signing of some additional preliminary documents. While steps had been taken to prepare the contemplated Charge document, Mr Grant and his firm still were waiting for confirmation of the amount to be funded by The Home Trust Company, which in turn was waiting for the transaction to be reviewed by one of its departments.
    • However, sometime after the meeting began, Mr Grant’s assistant, (Ms DeWaard), entered the boardroom to advise Mr Grant that there was an “issue” with the anticipated Home Trust Company financing.
    • At that point, Mr Grant left the boardroom, (where Mr Loucks and Mr Snow waited), in order to return to his office and review an email, sent to Ms DeWaard by a loan officer at The Home Trust Company; an email which Ms DeWaard in turn had forwarded by email to Mr Grant. In particular:
      • The last email in the provided email chain had been sent at 2:37pm that day by a Mortgage Funder at The Home Trust Company, (Sara Fleguel), asking Ms DeWaard to “read the following about today’s purchase” and then contact Jeremy Ciccarelli, (a “Mortgage Officer-Accelerator” at The Home Trust Company), if there were any questions.
      • The penultimate email in the forwarded email chain had been sent by Mr Ciccarelli, at 2:30pm that day, to Steven Crowe; i.e., the mortgage broker identified by Mr Loucks. It also had been copied to various individuals, including Ms Fleguel. Its topic was a “gift letter”. In that regard, Mr Ciccarelli’s email to Mr Crowe read in part as follows: “Hello Steven. I am sorry to hear this is the only documentation that can be provided, but for us not being able to show the source of $80K this poses a huge AML [i.e., anti-money-laundering] issue and we cannot proceed with the current documentation. If the client can somehow show where he obtained this money then we can move forward. If not this deal will not close.”
      • The earliest email in the forwarded email chain, (i.e., an email sent by Mr Crowe to Mr Ciccarelli at 1:43pm that day), read in part as follows: “Hello Jeremy. Here is the gift letter showing the total down payment and closing costs. Craig said that Michael did one draft to save time as the house is closing and the vendors have purchased another house and will not extend the closing. I have attached a copy for your file. This is all we have.”
    • Mr Grant testified and I accept that, on the afternoon of October 15, 2010, he actually read, within that forwarded email chain, only the two most recent emails, (i.e., the ones that had been sent by Ms Fleguel and Mr Ciccarelli), before “instantly” calling Mr Ciccarelli to obtain further details of the identified concern.[^8]
    • After speaking by telephone with Mr Ciccarelli, Mr Grant carried out a closer personal review of the mortgage documentation and instructions faxed to his office the evening before by The Home Trust Company. In doing so:
      • Mr Grant noticed, in particular, the term requiring “Solicitor to confirm no secondary financing is being placed on closing”. That term caused Mr Grant immediate concern, as he understandably considered the arrangement disclosed to him just that morning, (i.e., whereby Mr Gjorgievski actually would be providing $125,000 towards the purchase price, and placed on title as security for repayment of that loan), to be “secondary financing”. As matters stood, he accordingly would not be able to give The Home Trust Company that required solicitor confirmation.
      • Mr Grant also noticed and was concerned by the term requiring “Solicitor to confirm a minimum cash down payment in the amount of $108,250.00 … is on deposit in trust”. That term also caused Mr Grant immediate concern, as he interpreted that, (especially after his conversation with Mr Ciccarelli), as a further indication from The Home Trust Company that it was expecting solicitor confirmation that Mr Loucks actually was providing at least $108,000 of his own money, (covering the required down payment and closing costs), towards the contemplated purchase. Once again, as matters stood, Mr Grant felt unable to provide that further required solicitor confirmation, based on the additional financing arrangement disclosed to Mr Grant that morning.
    • Following his review of the above email messages forwarded by The Home Trust Company, and his telephone conversation with Mr Ciccarelli, Mr Grant also had additional concerns about the “gift letter” which apparently had been provided by Mr Loucks to The Home Trust Company – although Mr Grant, at the time, had very little information about the precise content of that “gift letter” and assumed that it may have indicated that funds being provided to Mr Loucks by Mr Gjorgievski were a gift.[^9]
    • Mr Grant then returned to the boardroom, where Mr Loucks and Mr Snow were waiting, to have a further discussion with them. In that regard:
      • Mr Grant testified and I accept that he made the following points clear to Mr Loucks and Mr Snow:
        • The transaction could not proceed on the contemplated basis as the closing of the purchase could not involve any secondary financing;
        • The contemplated arrangement with Mr Gjorgievski, (i.e., involving his lending of $125,000 to complete the transaction, with his being put on title that day or the following week to secure the loan), was one involving secondary financing;
        • The purchase money for the property had to come from Mr Loucks personally, and could not be borrowed; and
        • The only way the transaction could close was if Mr Loucks provided the down payment himself, from his own resources, without the money being borrowed.[^10]
      • Mr Grant also asked Mr Loucks whether he had provided a gift letter; i.e., the aforesaid letter which indicated, (although Mr Grant lacked details of the indications at the time), that $80,000 of the purchase funds had been irrevocably gifted to Mr Loucks by Mr Snow, and that Mr Loucks was the brother-in-law of Mr Snow. In that regard:
        • Mr Loucks confirmed that he had provided the gift letter, event thought he was not actually getting an $80,000 gift.
        • Mr Grant admittedly then became quite angry with Mr Loucks, yelling at his wayward client to emphasize that the gift letter was a false document; i.e., falsely representing to The Home Trust Company that Mr Loucks was receiving $80,000 towards the Clarington property’s purchase price “with no strings attached”, and “no obligation to pay it back”, when everyone in the room clearly knew that actually was not the case.
        • It seemed to Mr Grant that Mr Loucks, in response, appeared shocked and mortified. In particular, Mr Loucks then became quite apologetic, claiming that his mortgage broker had told him that was how it “had to happen”, and that provision of such a gift letter was “standard practice” that was “done all the time”. Mr Grant assured Mr Loucks that it was not.
      • Discussion then returned to whether or how the transaction might still close. In that regard:
        • Again, Mr Grant emphasized that could happen only if Mr Loucks provided the down payment himself, from his own resources.
        • In response, (and as noted above), Mr Loucks indicated that could do so, but would “need a few days”. While Mr Grant could not recall the precise words used in that regard by Mr Loucks, he was sure, and I accept, that Mr Loucks expressly indicated, in some manner, that Mr Loucks essentially would be liquidating some of his own investments and converting them into cash.
        • Mr Grant testified and I accept that, at the time, he believed for numerous reasons that Mr Loucks did indeed have the ability to come up with the required down payment funds from his own resources, and that Mr Loucks would do so. In particular:
          • Mr Loucks had been a client of Mr Grant’s for three or four months and, over the sustained course of various meetings and interactions, Mr Grant had come to like Mr Loucks and view him as a “nice guy”. Mr Grant felt that the shocked reaction of Mr Loucks, and his apologies for providing the false and misleading gift letter, were sincere.
          • As noted above, Mr Grant had closed the Thornhill condominium purchase for Mr Loucks only a short time before, (on August 31, 2010), and Mr Grant accordingly knew and remembered that transaction had generated approximately $55,000 in net sale proceeds, which Mr Grant’s firm had deposited into Mr Loucks’ bank account.
          • Mr Grant also knew, from the extensive work he already had done for Mr Loucks and Mr Snow, that Mr Loucks had many corporate interests, and Mr Grant assumed that Mr Loucks “had the money to make those work”.
          • Mr Grant’s attention also had been drawn to terms of the mortgage documentation, provided by The Home Trust Company, indicating that Mr Loucks was earning income of $145,000 per year through employment with Universal Welding & Gases.[^11]
          • Mr Grant did not think it unusual or suspicious that Mr Loucks initially may have agreed to an arrangement to borrow $125,000 in exchange for repaying $165,000, rather than liquidate other assets in the first place. He was familiar with many situations wherein clients and others preferred to borrow additional funds instead of liquidating other investments and properties they wished to maintain. He also knew, from his earlier dealings with Mr Loucks and Mr Snow, that the two men frequently made business decisions and monetary transactions that often seemed “thrown together” in relatively short order.
      • Before the meeting ended, Mr Grant also had a discussion with Mr Loucks and Mr Snow about what would be done with any money received from Mr Gjorgievski. In particular, Mr Grant told the two men that the money would have to be returned to Mr Gjorgievski as soon as possible.
      • Later that afternoon, (i.e., on October 15, 2010, following Mr Grant’s receipt of further instructions from Mr Loucks, indicating his intention to complete the transaction by providing the entire required down payment from his own resources, without borrowing any money), Mr Grant successfully obtained, through negotiations with the solicitor representing the vendors of the Clarington property, (i.e., Mr and Mrs Taylor), an agreement to extend the contemplated closing date of the Clarington property transaction to October 20, 2010.
      • At some point during that same day, (i.e., October 15, 2010), as confirmed by the client ledger maintained by Mr Grant’s law firm, a deposit of $135,000 was made by Mr Loucks, or someone acting on his instructions, to the trust account of Howard Fleming LLP. In that regard:
        • The deposit was made via a bank draft drawn on the Toronto-Dominion Bank. The bank draft did not identify the account from which the funds had been drawn, or the identity of the holder of the account.
        • Mr Grant testified, and I accept, that although the funds were deposited to the trust account of his law firm on Friday, October 15, 2010, he in fact did not learn of the deposit or its amount that day. He instead learned of the deposit only after the ensuing week-end; i.e., on Monday, October 18, 2010.
• On October 18, 2010, there were a number of further developments, including the following:
  • As noted above, Mr Grant learned, on that Monday morning, that funds relating to the contemplated Clarington property transaction had been deposited into his law firm’s trust account sometime on October 15, 2010, and that the amount deposited was $135,000. Mr Grant believed the funds had been provided by Mr Gjorgievski, pursuant to the contemplated but by then aborted arrangement involving the lending of down payment funds to Mr Loucks by Mr Gjorgievski.
  • Consistent with what he had indicated to Mr Loucks and Mr Snow on the afternoon of October 15, 2010, (i.e., about the need to return any such funds to Mr Gjorvievski as soon as possible), Mr Grant instructed his assistant Ms DeWaard to return the deposited funds to Mr Gjorgievski; i.e., to prepare a cheque in that amount payable Mr Gjorgievski. As confirmed by the client ledger for Mr Grant’s law firm, Ms DeWaard promptly did so.
  • However, Mr Grant then received a telephone call from Mr Gjorgievski.[^12] In that regard:
    • Mr Gjorgievski asked Mr Grant why the “deal” had not closed - which Mr Grant understandably interpreted as a reference to the contemplated purchase of the Clarington property given the timing of the call, and the fact that it was the only transaction being dealt with by Mr Grant with known involvement of Mr Gjorgievski.
    • Mr Grant advised Mr Gjorgievski of the two conditions in The Home Trust Company mortgage documentation that had been highlighted the previous Friday afternoon; i.e., that there had to be no secondary financing in relation to Mr Loucks purchase of the property, and that Mr Loucks accordingly could not borrow any funds for the required down payment. Mr Grant indicated, (albeit admittedly without any express reference to Mr Gjorgievski no longer going on title to the Clarington property), that he was obliged, in the circumstances, to return the purchase funds that had been provided by Mr Gjorgievski. Mr Grant testified, and I accept, that he felt at the time that his statements to Mr Gjorgievski made clear what was happening, and that the transaction being contemplated the previous Friday, involving Mr Gjorgievski, definitely was not going to go ahead.
    • Mr Gjorgievski responded by indicating that he wanted the deposited funds returned to his corporation, and not to him personally.
    • Mr Grant indicated to Mr Gjorgievski that he required a formal written direction in that regard, (i.e., as a verbal direction by telephone would not suffice), and provided Mr Gjorgievski with Mr Grant’s email address for that purpose.
  • Mr Gjorgievski then sent Mr Grant an email, (simply saying “Please see attached”), which attached a letter or direction, signed by Mr Gjorgievski. That letter/direction read in its entirety as follows: “Attn: Joe Grant - Fax: 1-705-745-6220 - Re: Money Held in trust. Please issue a cheque back to 2116656 Ontario Inc. in the sum of $135,000.00 and release to Craig Loucks. Thanks. Tom Gjorgievski. 416-910-9339”. In that regard:
    • Mr Grant testified and I accept that, at the time, he had absolutely no knowledge about any proposed involvement of the plaintiff corporation in the originally contemplated arrangements to complete the Clarington property purchase transaction.
    • Mr Grant also understood that Mr Gjorgievski’s instruction to “release” the relevant cheque to Mr Loucks meant that it was to be physically transferred and delivered through the assistance of Mr Loucks; e.g., by having it left at the desk of Mr Grant’s law firm for pick up by Mr Loucks.
  • At 10:36am, Mr Grant sent his assistant Ms DeWaard an email, attaching the letter/direction received from Mr Gjorgievski. The email reads, in its entirety, as follows: “Catherine, please see attached. Please cancel the cheque to Tom and issue to the numbered company.”
  • As confirmed by the client ledger maintained by Mr Grant’s law firm, the originally prepared cheque for $135,000.00, made payable to Mr Gjorgievski personally, was marked “Void”.
  • As also confirmed by the same client ledger, Howell Fleming LLP then issued a certified cheque for $135,000.00 to 2116656 Ontario Inc.; i.e., the plaintiff corporation. A typed notation on the relevant certified cheque, (a copy of which was presented in evidence), indicated that it was for the return of closing funds.[^13]
  • That same day, (as confirmed by the same client ledger), and before the initially provided $135,000 had been returned, a further $135,000.00 was deposited to the trust account of Mr Grant’s law firm; i.e., Howard Fleming LLP. Later investigation, (undertaken by Mr Grant in September of 2012, in response to demands and inquiries made by Ms Diana Riffert, a lawyer retained at the time by the plaintiff corporation to pursue claimed debts), would confirm that the further funds were deposited via two new bank drafts; i.e., one in the amount of $80,000 payable to Mr Loucks and one in the amount of $55,000 payable to Mr Grant in trust.
• On October 19, 2010, there were further developments, which included the following:
  • The cheque from Mr Grant’s law firm to the plaintiff corporation, (i.e., returning the $135,000.00 initially deposited to the trust account of Howard Fleming LLP on October 15, 2010), was formally certified by the George and Hunter CIBC branch in Peterborough, where Mr Grant’s law firm maintained its trust account.
  • Not yet aware that a further $135,000.00 had been deposited to his law firm’s trust account the previous day, Mr Grant sent Mr Loucks an email, at 3:27pm, (and noted above), saying: “Craig, has the money been deposited into our account from your bank account?”
  • At 6:04pm that evening, Mr Loucks responded with an email to Mr Grant, saying: “Yes, the money has been deposited into the Howell Fleming account.”
• On October 20, 2010, there were a number of further developments:
  • At 8:23am, Mr Grant sent Mr Loucks an email, thanking Mr Loucks for his email sent the previous evening, confirming that the expected “new” down payment funds had been deposited in the trust account of Mr Grant’s law firm. Mr Grant also recalled seeing a receipt confirming the deposit.
  • While not having seen the actual bank drafts used to make the deposit, Mr Grant and his staff knew that $135,000 had been deposited to the law firm’s trust account. In Mr Grant’s words: “We knew that we had $135,000”. Mr Grant candidly confirmed that, at the time, he knew that such an amount would result in his law firm having more funds than needed to complete the transaction; i.e., bearing in mind the additional mortgage financing to be provided by The Home Trust Company. However, the precise amount of the anticipated excess, (once there had been a final calculation of the balance due on closing, less the mortgage advance and expenses), was still unknown.
  • Mr Grant testified, and I accept, that he also made a further and final call to Mr Loucks that morning, before completion of the transaction, to ensure that Mr Loucks had not borrowed the newly deposited funds but had instead provided them from his own resources – and Mr Loucks confirmed that was the case. Mr Grant felt he needed that additional direct assurance before supplying The Home Trust Company with the solicitor confirmations that were required to complete the transaction.
  • Mr Grant then sent a letter with indicated attachments to the Home Trust Company, via email, regarding “Craig Loucks”, “3253 Concession Road 7, Orono, ON” and a specified loan number. The substantive text of the letter read as follows: “The above-noted transaction is scheduled to be completed today. This will confirm: no secondary financing is to be placed on closing; a minimum cash down payment in the amount of $108,250.00 is currently in our trust account; the full final tax bill has been paid in full and there are no outstanding tax arrears. This will also confirm that Craig Loucks does not own any other property and that the previous TD mortgages of approximately $247,000 showing on our client’s credit bureau report has been paid and discharged. – We are enclosing the Confirmation and Acknowledgment with ID attached, Statement of Adjustments, and title insurance certificate. – Please advise when the mortgage has been funded. Thank you for your assistance.”
  • Mr Grant testified and I accept that, at the time he sent the aforesaid confirmation letter to The Home Trust Company:
    • he believed Mr Loucks was the source of the new cash down payment funds;
    • he did not believe that any funds provided by Mr Gjorgievski or the plaintiff corporation were being used in the transaction;
    • he did not believe that Mr Gjorgievski had any involvement in the transaction being completed on October 20, 2010; and
    • he did not believe that there was any secondary financing involved in completing the transaction that day.
  • On the strength of Mr Grant’s aforesaid confirmation letter, The Home Trust Company then advanced the sum of $448,624.39 in mortgage financing to complete the contemplated purchase of the Clarington property by Mr Loucks on October 20, 2010. That sum was deposited into the trust account of Howell Fleming LLP.
  • The transaction, whereby the purchase property was purchased in the name of Mr Loucks, and the required first mortgage in favour of The Home Trust Company was registered on title, then was completed, leaving a related balance of excess funds in the trust account of Mr Grant’s law firm. Mr Grant’s assistant, Ms DeWaard, did a calculation in that regard, (reflected in a “FINAL CALCULATION OF CLOSING FUNDS” document found at Exhibit 1, Tab 38), indicating that the remaining excess or “difference” between funds received for the transaction and needed for the transaction came to $29,280.23.
• On October 28, 2010, Mr Grant sent Mr Loucks a formal reporting letter and attached “Trust Ledger Statement”. Amongst other things, the letter and attached statement indicated:
  • that the purchase transaction, whereby Mr Loucks purchased the Clarington property from the Taylors, had been completed on October 20, 2010;
  • that $135,000.00 in “Closing Funds” initially had been “Received from Tom Gjorgievski”;
  • that a “Return of Closing Funds” nevertheless then had been “Paid to 2116656 Ontario Inc.” by a $135,000.00 disbursement;
  • that $135,000.00 in “Closing Funds” had then been “Received from Craig Loucks”;
  • that, following receipt of the mortgage funds from the Home Trust Company, payment of the purchase price to the vendors, registration of the Transfer/Deed of Land, registration of the mortgage (in favour of The Home Trust Company), and payment of other expenses, (e.g., Land Transfer Tax, Title Insurance and the account of Howard Fleming LLP), the “Balance of Funds in Trust” had been “Paid to Craig Loucks” by a final disbursement in the amount of $29,190.96; and
  • that Mr Loucks had a “good and marketable title” in fee simple to the Clarington property, subject only to a “first mortgage in the principal amount of $459,675.00, in favour of [the] Home Trust Company”, and “any easement, encroachments or other defects of title, which a current survey of the subject premises may reveal”.
• Following the closing of Mr Loucks’ purchase of the Clarington property, Mr Grant and his law firm continued to do legal work for Mr Loucks, Mr Snow and their companies, including legal work done in relation to further real estate matters.[^14]
• Mr Grant testified and I accept that, in early January of 2011, Mr Grant had a further meeting with Mr Loucks, during which there was discussion of a number of different matters relating to his various companies and property. Those discussions included an indication by Mr Loucks that he intended to grant a further mortgage on the Clarington property, in favour of Mr Gjorgievski. In that regard:
  • Mr Loucks indicated that the intended mortgage related to a loan of $125,000, which Mr Gjorgievski’s company had made to assist with funding of the businesses being operated by Mr Loucks and Mr Snow;
  • Mr Loucks indicated that the loan was subject to an 18 percent interest rate; and
  • Mr Grant responded by advising Mr Loucks that was a “horrendous” rate of interest, specifically noting that “nobody should be paying credit card interest on a loan that size”.
• Mr Grant also testified, and I accept, that he made no mental connection between the instructions to place the contemplated further mortgage on the Clarington property and the proposed but aborted involvement of Mr Gjorgievski in the purchase of that property.
• On January 14, 2011, Mr Loucks sent Mr Grant a number of emails, copied to Mr Snow. The emails followed up on the aforesaid meeting discussions, providing detailed and confirmed instructions to Mr Grant concerning contemplated reorganization of various matters relating to the affairs of Mr Loucks, Mr Snow, and their business operations. Amongst other things, the emails indicated:
  • that shares in a number of corporations operated by Mr Loucks and Mr Snow, (e.g. Razor Industries Inc. and Shockwave Security & Defence Inc.), would be issued to Tom Gjorgievski;
  • that Mr Loucks acknowledged and agreed to a second mortgage in the amount of $125,000 CDN to be placed against the Clarington property, to be held by Tom Gjorgievski; and
  • that Mr Gjorgievski’s lawyer in relation to the contemplated Clarington property mortgage transaction would be Mr Mendo Petrovski, whose contact information was provided.[^15]
• Notwithstanding the aforesaid instructions from Mr Loucks to Mr Grant, the contemplated corporate-reorganization steps never took place, as Mr Loucks and Mr Snow changed their minds and embarked on other matters, and placement of a further mortgage on the Clarington property, in favour of Mr Gjorgievski, was similarly delayed.[^16] In particular:
  • In February of 2011, Mr Grant asked Mr Loucks if he was going to move forward with the contemplated further mortgage on the Clarington property, and was told it was “on hold”.
  • Mr Grant was asked to work instead on another reason estate transaction, whereby Razor Industries Inc. purchased a commercial property in Bowmanville, (known by its municipal address as 70 and 72 Mearns Court), from the plaintiff corporation. That transaction closed on March 25, 2011, with the plaintiff corporation receiving a “vendor take back mortgage” in the amount of $250,000. Universal Welding & Gases – another company owned by Mr Gjorgievski, and which had occupied the premises as a formal tenant of the plaintiff corporation prior to the transaction – thereafter became a tenant of Razor Industries Inc.
  • Mr Grant did not receive further instructions to proceed with the contemplated additional mortgage on the Clarington property until the beginning of April.
• On April 1, 2011, there were then a number of further developments, including the following:
  • From 8:40am to 11:19am that day, Mr Grant and Mr Loucks exchanged a number of emails relating to placement of the contemplated further mortgage on the Clarington property, in favour of Mr Gjorgievski. The messages began with Mr Grant asking Mr Loucks to check with Mr Gjorgievski, to see if Mr Gjorgievski wanted mortgage documentation directed to him or his lawyer for review.
  • In preparing to implement and register that further mortgage on the Clarington property, in favour of Mr Gjorgievski and in accordance with the instructions of Mr Loucks, Mr Grant sent an email to Mr Loucks at 9:59am. The substantive text of that email reads in part as follows: “Craig, can you come in on Monday to sign? Can you tell me what the $125,000 was for? When will this mortgage be discharged? In other words, is there actually going to be $125,000 repaid, or on what event will you be entitled to a discharge? Do you have [a] written agreement with this guy? Please advise. Joe.” Mr Grant testified, and I accept, that he sent the email trying to “flesh out” the terms of the arrangement between Mr Loucks and Mr Gjorgievski’s company, as he (Mr Grant) had been provided with little information apart from the amount of the indebtedness - $125,000 - to be secured by the mortgage.
  • Mr Loucks responded with an email sent to Mr Grant at 10:43am, the substantive text of which reads in part as follows: “These funds were a personal loan from Tom to me. There is no written agreement. It is interest only for 5 years, then cane (sic) reviewed at that time. If you have any other questions please let me know. Thanks. Craig.”
  • As Mr Loucks had not indicated what the particular interest rate would be, Mr Grant made a further inquiry about that via an email sent at 10:45am. He then received a responding email from Mr Loucks at 11:06am, indicating that the interest rate would be 3.25 percent.
• On April 21, 2011, there were a number of further developments, which included the following:
  • At 11:09am, Mr Loucks sent Mr Grant an email indicating that, although he had “tried to get the low rate” of interest on the contemplated further mortgage to Mr Gjorgievski, he had been obliged to accept a much higher rate. In particular, the interest rate on the mortgage was reverting to the 18 percent mentioned by Mr Loucks in his initial discussions with Mr Grant, in early January of 2011, about the contemplated mortgage.
  • At 11:58am, Mr Grant responded by sending an email to Mr Loucks which reads in part as follows: “Ok Craig, we can make the change. What are the payments going to be? Interest only would be $1,875/month (by my calculations). When did you get the money?” [Emphasis added.]
  • Mr Loucks responded with a further email, sent to Mr Grant at 12:27pm, the substantive text of which reads as follows: “Hi Joe. Yes, we will use a payment of $1,875.00. The money was received November 22, 2010. Thank you.” [Emphasis added.]
• Mr Grant testified and I accept that, at the time of receiving such additional information and implementing the further mortgage on the Clarington property, in favour of Mr Gjorgievski, he honestly made no connection between that mortgage and participation in the original purchase of the Clarington property that had been proposed and rejected. Again, although it was Mr Grant’s understanding that the funds to be secured by the further mortgage in favour of Mr Gjorgievski already had been advanced, Mr Grant also understood - based on passage of time between the original purchase and mention of the collateral mortgage, ongoing business dealings of Mr Loucks, and representations received from Mr Loucks himself, that the funds had been advanced at a date subsequent to the Clarington property purchase, (i.e., on November 22, 2010), and related to a different operational loan made by the plaintiff corporation. In particular, Mr Grant believed that the funds to be secured by the contemplated new mortgage on the Clarington property had something to do with a project to develop the Pembroke lands that had been purchased by Linear Leasing Inc., (another corporation controlled by Mr Loucks and Mr Snow), back in January of 2011. Mr Grant knew at the time that Mr Loucks and Mr Snow were “getting ready” to move forward with that project.
• On April 28, 2011, a further mortgage, prepared through consultations between Mr Grant and Mr Petrovski, was registered against title to the Clarington property by Mr Petrovski, and not Mr Grant. In that regard, terms of the mortgage included the following:
  • the principal amount secured by the mortgage was $125,000;
  • the specified interest rate was 18 percent per annum; and
  • the plaintiff corporation, (rather than Mr Gjorgievski), was the specified mortgagee.
• By the summer of 2011, relations between Mr Loucks, Mr Snow, Mr Gjorgievski and their respective companies appeared to be deteriorating. For example:
  • Universal Welding & Gases, (again, another company owned by Mr Gjorgievski and by then a tenant at the Mearns Court property owned by Razor Industries Inc., controlled by Mr Loucks and Mr Snow), apparently had failed to pay any rent. Mr Loucks retained the assistance of Mr Grant in preparation of an appropriate letter, sent on or about July 13, 2011, terminating the relevant tenancy.
  • At the same time, it appears that Mr Loucks, Mr Snow and/or Razor Industries Inc. were failing to make payments to the plaintiff corporation as contemplated by the promissory note, the vendor take back mortgage registered against the Mearns Court property, and/or the mortgage registered against the Clarington property.
• On or about September 27, 2011, a number of demand letters were sent by Ms Diana Riffert, a lawyer retained by the plaintiff corporation to pursue debts allegedly owed by Mr Loucks, Mr Snow and/or Razor Industries Inc. One of those letters, sent to Mr Loucks, indicated:
  • that Ms Riffert had been retained by her client, 2116656 Ontario Inc., in relation to an “outstanding and overdue debt” owed by Mr Loucks to the plaintiff corporation;
  • that the alleged debt, “in the amount of $125,000, plus accrued interest and costs from April 28, 2011”, was owed by Mr Loucks pursuant to the charge/mortgage registered against the Clarington property;
  • that Mr Loucks had failed to make payment as required, and therefore was “substantially in arrears”;
  • that the plaintiff corporation “required payment in full of the amount outstanding, together with all accrued interest, on or before October 12, 2011”; and
  • that the plaintiff corporation was amenable to discussing “acceptable alternate payment arrangements” with Mr Loucks, if he believed he was unable to pay the indicated debt in full on or before October 12, 2011.[^17]
• On October 12, 2011, Mr Grant sent a “without prejudice” letter on behalf of Mr Loucks and Razor Industries Inc. to Ms Riffert. Amongst other things, that letter:
  • indicated that Mr Grant was acting on behalf of Mr Loucks and Razor Industries Inc.;
  • indicated that Mr Grant was writing in relation to the two letters sent by Ms Riffert on September 27, 2011 – i.e., in relation to the mortgage debts registered in favour of the plaintiff corporation against the Clarington property and the Mearns Court property;
  • disputed Ms Riffert’s calculations regarding the amounts owed by Mr Loucks and Razor Industries Inc. to the plaintiff corporation pursuant to the two mortgage debts;
  • noted that Mr Grant had been advised a payment of $30,000.00 CDN had been made to the plaintiff corporation on April 11, 2011, pursuant to an agreement between Mr Loucks, Razor Industries Inc. and the plaintiff corporation, whereby the payment was to “cover future mortgage payments for both the properties”, such that the two mortgages were not in arrears; and
  • Mr Grant attached a copy of a cashed cheque for $30,000, which had been paid to the plaintiff corporation by Razor Routers Inc.[^18]
• On October 18, 2011, Ms Riffert sent Mr Grant a “without prejudice” letter responding to his letter of October 12, 2011. Amongst other things, the letter from Ms Riffert:
  • denied that the payment referred to by Mr Grant was applicable to the mortgages, including the mortgage on the Clarington property;
  • noted and explained why the payment was in fact intended to cover a series of recent smaller loans totaling $29,571.46, plus the cost of securing a mortgage on the Clarington property;
  • emphasized that no payments had been made “against any of the secured loans, as required or otherwise”; and
  • confirmed the plaintiff corporation’s position regarding the arrears on the mortgage debts that were said to be outstanding,
• On November 4, 2011, the plaintiff corporation issued a statement of claim, naming Mr Loucks, Mr Snow, Ms Langton and a numbered company, (7084421 Canada Ltd.), as defendants. In the action, the plaintiff corporation sought to enforce the equity of redemption in its mortgage on the Clarington property, obtain possession of the property, (said to be occupied by Mr Snow and Ms Langton), recove the $125,000 debt secured by the mortgage, and also recover the $165,000 debt said to have been created by the promissory note described above. (Ms Langton was named in the action because she was thought to be in joint possession of the property. The corporate defendant was named because it was a subsequent encumbrancer of the property.) Mr Loucks did not retain or consult Mr Grant in relation to the claim, once it had been served.
• On November 21, 2011, the Home Trust Company, through its solicitors, then issued a formal “Notice of Sale Under Charge”, indicating that payments on its Clarington property mortgage were in default, and an intention to enforce its security interest through sale of the property unless indicated sums were paid.
• On November 28, 2011, the Home Trust Company sent further “without prejudice” correspondence to Mr Loucks, (still the sole registered title holder to the Clarington property, despite the various mortgages), indicating that the Home Trust Company mortgage could be brought into good standing by a total payment of $10,921.78.
• However, it seems that neither Mr Loucks nor any other interested party, (including the plaintiff corporation, which still held a third mortgage on the Clarington property at that point), took any action in that regard. Mr Gjorgievski in particular admitted, during cross-examination, that neither he nor the new solicitor he engaged made any inquiries or took any action in that regard to prevent the Clarington property being sold under power of sale. Moreover, Mr Gjorgievski acknowledged that he was not in any financial position, at that point, to take any such action.
• On December 22, 2011, the plaintiff corporation obtained a judgment against Mr Loucks, Mr Snow, Ms Langton and 7084421 Canada Ltd. for, amongst other things, the sum of $166,475.05 and possession of the Clarington property – although the latter relief apparently was academic at that point, having regard to the aforesaid power of sale proceedings.
• On May 9, 2012, Ms Riffert wrote to Mr Grant again regarding “21166 Ontario Inc. Mortgage on 3253 Concession Road 7, Orono – PIN: 26723-0030(LT)”. The substantive text of that letter reads as follows: “Dear Sirs: On review, my client notes that he has not received proper documentation for the above-noted matter. You were provided with a bank draft, deposited to your trust account for the above noted transaction, which was to close on October 15, 2010. My client requires an explanation as to why: (a) The appropriate Transfer of Mortgage document was not registered immediately as anticipated; and (b) A mortgage in favour of 2116656 Ontario Inc. was not registered until April 28, 2011, over 6 months after closing, and after registration of another mortgage in favour of Citifinancial. I trust your immediate response to my client will allow us to close this matter promptly.” [Emphasis added.]
• On May 12, 2012, Mr Grant sent Ms Riffert a letter, responding to her aforesaid letter of May 9, 2012, in relation to “2116656 Ontario Inc. Mortgage – 3253 Concession 7, Orono – PIN: 26723-0030”. The substantive text of that letter reads as follows: “I acknowledge receipt of your letter dated May 9^th, 2012. Please be advised that I did not receive any indication that my client was going to grant your client a second mortgage against the above-mentioned property until late January, 2011. The terms of the mortgage were negotiated between our respective clients over the next couple of months. When the final terms were agreed upon, and I received instructions from my client, the mortgage was messaged to your client’s lawyer. Perhaps your client should discuss with Mendo Petrovski, the lawyer who represented your client in the transaction and who signed and registered the mortgage. I note that all the correspondence indicates that this was a second mortgage. If your client required a mortgage in October, 2010, then your client should have had their (sic) lawyer ensure that a mortgage was drafted and registered as a condition of funds being advanced. While I have no idea why your client would advance funds and not require security for those funds, I am sure you can appreciate that it is not my job to question your client’s business practices. I certainly will not, and cannot, draft and register private mortgages without proper instructions and involvement of a lawyer representing the lender.”
• In September of 2012, Mr Grant received further telephone inquiries from Ms Riffert, asking Mr Grant to look further into the matter, as there was a suspicion that Mr Loucks had engaged in fraud. In response:
  • On September 10, 2012, Mr Grant sent an email to Mr Loucks, (with whom he had not communicated for many months), explaining that he had been contacted by Ms Riffert, who was asking why the plaintiff corporation had not been placed on title to the Clarington property as a 50 percent owner when the purchase transaction closed in October of 2010, contrary to an alleged agreement in that regard. Mr Grant asked Mr Loucks if he could shed any light on such claims. In particular, Mr Grant noted that the plaintiff corporation had been granted a mortgage on the property in 2011, but Mr Grant wanted to know if it was supposed to “go on title”; i.e., as the holder of an ownership interest.
  • While waiting for a response from Mr Loucks, (who did not answer promptly), Mr Grant continued to look into the matter; e.g., by reviewing his file, and asking his law firm’s accounting department to retrieve documentation relating to payments received and disbursed in relation to the Clarington property transaction. In doing so, he then was reminded that Mr Gjorgievski initially had provided $135,000.00 to assist with purchasing the Clarington, but that $135,000.00 then had been returned to the plaintiff corporation, in accordance with Mr Gjorgievski’s direction. During the course of the same review, Mr Grant learned, for the first time, that the funds subsequently deposited to his firm’s trust account, providing the down payment for the purchase, had arrived via the two separate bank drafts described above; i.e., one for $80,000.00 initially made payable to Mr Loucks, and one for $55,000.00 made payable to Mr Grant in trust.
• On September 12, 2012, Mr Grant sent a further letter to Ms Riffert, regarding “2116656 Ontario Inc. – 3253 Concession Road 7, Orono”, with an indicated attachment. The substantive text of the letter reads as follows: “Further to our telephone conversation of yesterday’s date, I can advise you that I have looked into the matter and can advise you that our records indicate that the funds were returned to your client. After reviewing my file, I can advise you that there was at one point an arrangement whereby your client would provide part of the purchase price for the above-mentioned property and would be recognized as a registered owner of the property (as outlined in my letter of October 15, 2010). Your client provided $135,000 towards the purchase price and same was deposited into our trust account. The transaction did not proceed on this basis, however, and the funds were returned to your client by way of cheque (sic) certified cheque dated October 18, 2010. I enclose a copy of the returned cheque which shows that the funds were credited to your client’s account. My records do not indicate that any of the closing funds for the above-mentioned transaction ultimately came from your client. Please note that I have sent correspondence to my former client in an attempt to see if he can be of assistance. I trust the foregoing will be of some assistance to your client.”
• Sometime after Mr Grant sent that further letter to Ms Riffert, he received a belated telephone call from Mr Loucks, responding to the email sent to him by Mr Grant on September 10, 2012. Mr Loucks claimed to be looking into the matter, and contemplated retrieving some documentation from his corporate records in that regard. However, when specifically asked by Mr Grant if Mr Gjorgievski or his company were to have been placed on title to the Clarington property, (i.e., as an owner), Mr Loucks denied that was to happen, and said that “Mr Gjorgievski’s confused”.

Reasons for specific fact findings and preferences, including witness assessment

[13] In the course of setting forth my above findings of fact, I noted that I preferred and accepted certain evidence over other evidence.

[14] My reasons for doing – in addition to the particular reasons noted above - were varied. However, they included the following:

a. I was not impressed by Mr Gjorgievski as a witness, and did not believe he was being candid and truthful with me. In that regard:

• For reasons already noted above, I did not believe Mr Gjorgievski’s testimony denying his telephone conversation with Mr Grant on the morning of October 18, 2010. It was clear to me that Mr Gjorgievski knew the importance of his denials in that regard, as far as success of the plaintiff corporation’s claim was concerned.
• In my view, various other aspects of Mr Gjorgievski’s testimony were also notably self-serving and “outcome-oriented”. That seemed particularly obvious when, during cross-examination taking him to sensitive areas and/or highlighting suggested implausibilities and inherent contradictions in his testimony, (e.g., his failure to contact Mr Grant to ask that the letter’s reference to $125,000 be increased to $135,000 to reflect the funds actually being provided by the plaintiff corporation, his failure to make any inquiries about the details of mortgage financing for the Clarington property, and his failure to request any explanation for Mr Grant’s supposed instructions to prepare the two separate bank drafts for $80,000 and $55,000), Mr Gjorgievski’s answers repeatedly were unresponsive and instead involved repetition of similar comments emphasizing full and reasonable reliance on Mr Grant, the letter he had received from Mr Grant, and the indirect banking instructions supposedly provided by Mr Grant. At times, Mr Gjorgievski seemed remarkably focused on the sort of assertions that might need to be emphasized for the plaintiff corporation to succeed in the litigation.
• In the course of his testimony, Mr Gjorgievski also seemed intent on distancing himself from Mr Snow and Mr Loucks, and their confirmed or possible improprieties. In that regard, Mr Gjorgievski minimized the extent of his association and interaction with the two men in various ways. For example, he indicated and emphasized that he had not met them before July or August of 2010; i.e., less than 2-3 months before the Clarington property transaction. He stressed that he simply “would have seen them on occasion”, and no more than once a week or once every two weeks, before the Clarington property transaction. He insisted that was the case, despite the two men’s operation of a business, (Razor Industries Inc.), from premises owned and shared by Universal Welding & Gases, another company owned by Mr Gjorgievski. Mr Gjorgievski also denied having any discussions with Mr Loucks or Mr Snow, prior to the Clarington property transaction, about the possibility of Mr Gjorgievski becoming involved in any of their business ventures. In my view, all such assertions of distance and lack of familiarity with Mr Loucks and Mr Snow seem quite at odds with Mr Gjorgievski’s obvious willingness to readily and substantially invest in a real estate venture presented to him by Mr Loucks and Mr Snow just the day before its closing, and to do so in circumstances, (highlighted below), wherein Mr Gjorgievski inherently was placing significant trust in the two men. Mr Gjorgievski’s suggestion of mere acquaintance with Mr Loucks and Mr Snow also seems at odds with repeated indications that Mr Loucks and Mr Snow described Mr Gjorgievski to Mr Grant as one of Mr Snow’s friends, the instructions provided to Mr Grant in January of 2011 contemplating Mr Gjorgievski being granted shares in a number of corporations owned and operated by Mr Loucks and Mr snow, and email correspondence sent directly by Mr Gjorgievski to Mr Snow which employed a friendly nickname; i.e., “Snowman”.
• I similarly found Mr Gjorgievski’s assertions of an expectation that he was to be placed on title to the Clarington property without his executing any documentation, or otherwise having any direct participation whatsoever in the transactions – as well as his professed shock and surprise that was not done -- quite incredible, and was similarly dubious of his claim that he also expected the anticipated first mortgage to be placed on title without his direct involvement or participation; e.g., to authorize the charge as a titled owner of the proper. Mr Gjorgievski was an educated businessman with admitted personal experience in real estate transactions, during which he had been required to sign and execute documentation normally required in such circumstances. In my view, if Mr Gjorgievski had the expectations he claimed to have had, (i.e., regarding his being put on title to the Clarington property, along with registration of a first mortgage), he also would have known that his direct participation in such transactions would have been required.
• I also think it quite remarkable and significant that, throughout the initial communications and claims advanced by the plaintiff corporation in 2012 through Ms Riffert, (who no doubt was being instructed by Mr Gjorgievski), there was absolutely no mention of any supposed reliance by Mr Gjorgievski or his corporation on Mr Grant’s letter of October 15, 2010. That was the case despite Mr Gjorgievski’s repeated assertions, at trial, that he was “angry”, “upset” and “devastated”, as early as January 2011,[^19] when he supposedly learned from Mr Loucks and Mr Snow that Mr Grant had not placed Mr Gjorgievski on title, thereby causing Mr Gjorgievski to supposedly “lose all faith and trust” in Mr Grant for failing to fulfil his obligations supposedly set forth in the letter of October 15, 2010. Indeed, Mr Gjorgievski emphasized that he was so upset at the time that he could not even bring himself to contact Mr Grant about his failure to fulfil his obligations, instead feeling it necessary to retain Mr Petrovski in relation to placing a collateral mortgage on the property. In my view, such histrionic assertions of longstanding reliance on Mr Grant’s letter were quite at odds with the reality that concerns and claims based on the letter were raised only belatedly, and only after a further “review” of the matter by Mr Gjorgievski, as indicated in Ms Riffert’s correspondence. Such considerations strongly suggest, to me, that Mr Gjorgievski has manufactured his claims of reliance on Mr Grant’s letter long after the fact, in an effort to recover his company’s financial investment in a different fashion.

b. I had an equally dim view of the testimony presented by Mr Loucks, and similarly did not regard his testimony as credible in many important respects. In that regard:

• In the course of my factual findings noted above, I already have noted and explained a number of instances where Mr Loucks made factual assertions I found to be implausible and/or incredible; e.g., as to his assertions regarding comments and legalities conveyed by Mr Grant during meetings on October 15, 2010, and whether or not he personally had sent certain email instructions to Mr Grant from his acknowledged email address.
• More generally, in the course of cross-examination, Mr Loucks repeatedly acknowledged – albeit usually grudgingly and after initial denials - that he had lied repeatedly about various important matters. Even then, he usually did so only when confronted with information or documentation admittedly sent or signed by him, containing misrepresentations and false information. For example, that was the case in relation to the “gift letter” admittedly signed by Mr Loucks, indicating he had received an irrevocable $80,000.00 gift from Mr Snow and that Mr Snow was his brother-in-law - neither of which was true. It was also the case in relation to Mr Loucks’ similar supposed verification of $145,000 in annual employment income from Universal Welding & Gases – a statement he admittedly provided to the mortgage broker Mr Crowe, but which also admittedly was not true. Those acknowledged falsehoods clearly were provided by Mr Loucks with the knowledge they would be relayed to The Home Trust Company, for the purpose of intentionally deceiving that institutional lender into providing mortgage financing. In the circumstances, I find it hard to view Mr Loucks as anything other than an active participant in mortgage fraud.
• Mr Loucks also acknowledged that he blatantly lied when he admittedly told Mr Grant – in response to Mr Grant’s inquiries about the purpose of the collateral mortgage to be registered against the Clarington property in April of 2011 – that it was to secure a “personal loan” to Mr Loucks from Mr Gjorgievski, rather than the funds provided to assist with the purchase of the property. When pressed about such matters in cross-examination, Mr Loucks responded that “it was just easier” to lie to Mr Grant, instead of explaining the true situation.
• In other instances, Mr Loucks admittedly had no explanation whatsoever for obviously false information provided during the course of this matter. For example, when confronted with his admittedly false email indication to Mr Grant that funds to be secured by the contemplated April 2011 collateral mortgage on the Clarington property had been received on November 22, 2010, Mr Loucks somewhat desperately advanced the implausible assertion that the incorrect date must just have been a “typo” – even though it bore no relationship whatsoever, (by month or day of the month), to actual advancement of funds by Mr Gjorgievski and/or the plaintiff corporation on October 18, 2010.
• Mr Loucks also had no convincing explanation – or indeed any explanation whatsoever - for why he had made acknowledged statements on April 24, 2014, to the defendants’ investigator David Lord, (whose indirect testimony in that regard also was admitted without challenge, and which I have no reason to doubt), that were blatantly inconsistent with the testimony Mr Loucks provided at trial. In particular, in his statements to Mr Lord, Mr Loucks acknowledged and admitted:
  • that Mr Grant had told him that the money for the Clarington property purchase could not come from Mr Gjorgievski;
  • that unbeknownst to Mr Grant, Mr Loucks had gone back to Mr Gjorgievski claiming that the money had to “look like” it came from Mr Loucks, to avoid money laundering problems;
  • that Mr Snow and Mr Gjorgievski then made the arrangements whereby Mr Loucks was given the relevant two new “cheques” – i.e., for $80,000 and $55,000 – and was told to deposit them directly into Mr Grant’s trust account;
  • that Mr Loucks knew the purchase money was “still coming from Tom Gjorgievski, contrary to what Joe Grant had told him”; and
  • that Mr Loucks did not tell Mr Grant anything about where the money actually had come from.
• If not provable lies, I found various others assertions by Mr Loucks to be quite implausible. For example, he denied any knowledge of the promissory note described above and denied having signed it, claiming he had not seen it prior to this litigation. However, if that actually was the case, I find it very hard to believe that Mr Loucks would not have taken some form of steps to convey or register a formal denial in that regard when he was targeted with litigation asserting that he had a substantial unsecured debt arising from that promissory note. Mr Loucks nevertheless did nothing in that regard, and simply allowed a substantial claim, based in large measure on the promissory note, to proceed to default judgment.
• Other aspects of Mr Loucks’ testimony were simply inconsistent. For example:
  • Mr Loucks indicated early in his testimony that the down payment purchase funds for the Clarington property actually were being provided by Mr Snow, (albeit channeled through Mr Gjorgievski as a mere conduit), but then had no explanation for his subsequent assertion that Mr Gjorgievski needed to be placed on title to the Clarington property; i.e., to supposedly provide Mr Gjorgievski with security for funds that had not actually been his but had simply come through him.
  • In his later testimony, Mr Loucks also claimed to have let Mr Grant know that the final down payment purchase funds were “Tom Gjorgievski’s money coming back again”; an assertion that, to me, once again was completely at odds with the earlier testimony provided by Mr Loucks, acknowledging that Mr Loucks deliberately had lied to Mr Grant in April of 2011 to conceal the true reasons for the collateral mortgage then being registered. When confronted with such obvious contradictions, Mr Loucks effectively reverted to his assertions that he was merely focused on who was handling funds; i.e., suggesting he had only meant to say the funds received by him were “coming directly from Tom”, although they ultimately had been provided by Mr Snow.
  • Mr Loucks also claimed that he understood and believed, at the time of the transaction, that Mr Gjorgievski had been or would be placed on title to the Clarington property. However, during cross-examination, Mr Loucks was obliged to acknowledge his signed direction requiring title to be conveyed into his name alone, and the later reporting letter from Mr Grant indicating that Mr Loucks alone had a good and marketable title. In my view, Mr Loucks once again had no credible explanation for the significant inconsistencies in his assertions.
• Throughout his testimony, Mr Loucks essentially went to considerable lengths to indicate and emphasize, repeatedly, that Mr Snow was the driving force behind arrangements relating to the Clarington property, (albeit with occasional input and assistance from Mr Gjorgievski), while minimizing his own knowledge and involvement in the matter, repeatedly suggesting that he was kept relatively uninformed, and simply went along with instructions based on assurances received from others.[^20] In my view, such claims were quite inconsistent with the obvious intelligence of Mr Loucks, the formal corporate arrangements placing both Mr Loucks and Mr Snow in positions of control over their business operations, and the regular active and direct participation of Mr Loucks in meetings, communications and document execution relating to the Clarington property, as described by Mr Grant and confirmed in the documentary exhibits. When questioning touched on particular communications or instructions sent or provided by Mr Loucks himself, meetings Mr Loucks had attended, and communications Mr Loucks received or ought to have received, he often became noticeably vague and/or professed inability to recall such matters. On the whole, it seemed clear to me that Mr Loucks was engaged in a subtle but noticeable efforts to shield himself from possible recriminations, in a situation where he knew that various improprieties had come to light.
• In short, I found Mr Loucks to be an implausible, inconsistent, and self-serving liar. He was, moreover, someone who repeatedly and demonstrably had lied in relation to the very transaction at the heart of this dispute. I accordingly was not inclined to accept or place weight on his testimony, especially in relation to sensitive and disputed matters.

c. In contrast, Mr Grant struck me as a witness who was somewhat nervous, but nevertheless entirely honest and straightforward, and I found his testimony to be credible and generally reliable. In that regard:

• Despite prolonged and sometimes intense cross-examination, Mr Grant’s testimony and account of events and matters of central importance remained, in my view, remarkably consistent and unshaken. I think the strength of his testimony, especially in relation to matters of importance to this litigation, was not undermined in any significant way.
• Mr Grant candidly acknowledged that he did not recall some matters with absolute certainty. He also repeatedly indicated – when he reached the limits of confident memory and might have been tempted to fill memory gaps or uncertainties in a manner helpful to his case – that it would not be proper for him to speculate; e.g., in relation to particular negotiations or discussions that may have taken place between Mr Loucks, Mr Snow and/or Mr Gjorgievski. While readily accepting that certain possibilities suggested by plaintiff counsel during cross-examination might be reasonable, Mr Grant also was reluctant to speculate as to whether additional telephone calls to explain connections between certain emails may have taken place, or what he may or may not have done at various points during the underlying transactions if he had been provided with additional information.
• As noted above, Mr Grant was willing to acknowledge the limits of his current memory at trial, and that included a willingness to readily concede that his earlier answers given during oral discovery examination may have been more accurate; e.g., in relation to whether it was Mr Loucks or Mr Snow who called him on the morning of October 15, 2010, to advise him of the arrangement worked out with Mr Gjorgievski, and in relation to the possibility that he personally may have carried out an initial review of the mortgage documentation received from The Home Trust Company on the morning of October 15, 2010, before he definitely then reviewed the documentation in closer detail after learning that The Home Trust Company had concerns.
• In a number of instances, Mr Grant candidly and readily admitted things which arguably were not helpful to his case, and/or which portrayed him in a somewhat negative light, all of which suggested considerable honesty. In that regard, I have in mind matters such as:
  • Mr Grant’s admitted failings in relation to organizational measures employed by many lawyers;
  • his unexplained failure to open files in the sole, joint or corporate names to reflect the actual persons and/or corporation for which certain work principally was being done;
  • his failure to obtain information about the purpose or financing of companies he was incorporating for Mr Loucks and Mr Snow;
  • his mistaken indication in an earlier affidavit, (sworn in support of a motion for costs in this litigation), that he had been retained by Mr Loucks and Mr Snow in relation to the Clarington property purchase;
  • his occasional making of assumptions, (e.g., that Mr Loucks possibly was the owner of the Main Street property in Orono, based simply on Mr Grant’s reading of the original Agreement of Purchase and Sale), without making adequate inquiries;
  • his failure to make any inquiries at all about certain matters, (e.g., about Ms Langton, the existence of a written agreement with Mr Gjorgievski, or the precise manner in which funds were deposited to his firm’s trust account);
  • his failure to review The Home Trust Company mortgage documentation in more detail before writing his letter to Mr Gjorgievski on October 15, 2010, as well as his corresponding failure to recognize, that morning, that the proposed arrangement with Mr Gjorgievski involved prohibited secondary financing;
  • his similar failure, on October 15, 2010, or thereafter, to notice or read the provisions in the Home Trust Company mortgage documentation referring to an Agreement of Purchase and Sale relating to the Thornhill condominium property - which Mr Grant admittedly knew already had been sold, generating net proceeds of $55,000.00 rather than the $100,000.00 needed for the cash down payment; and
  • the fact that he rarely made contemporaneous notes of developments occurring in relation to his real estate transactions.
• In relation to the latter failing:
  • Mr Grant admitted, with a degree of apparent embarrassment, that he failed to create and/or maintain detailed notes of all developments relating to the relevant real estate transaction, apart from emails and more formal correspondence exchanged in relation to the matter. Although he occasionally would “doodle” something down on paper, he acknowledged that such things rarely made it into his files, (unless he was taking instructions for preparation of a will), and that his file for this particular real estate matter contained only a couple of handwritten notes.[^21]
  • Certainly, a solicitor’s creation and maintenance of detailed notes is preferable and helpful, after the fact, to assist in determinations of what did and did not happen, and what may or may not have been communicated, at relevant times. However, the absence of such notes does not mean that a solicitor’s evidence ought to be rejected, or given little weight by the court. It is simply a factor to be taken into consideration, along with other factors, in determining credibility issues.[^22]
  • In this case, while such a failure may have made it more difficult for Mr Grant to defend the action, (in the sense he thereby deprived himself of contemporaneous documentation that may have confirmed and reinforced the credibility and reliability of his testimony), in my view such a failure did not undermine Mr Grant’s credibility and general reliability in this particular case. There was no suggestion or evidence that Mr Grant deliberately failed to create or destroyed any such contemporaneous documentation to conceal the reality of what he was doing and/or what he was being told – as opposed to following his usual practice in relation to all such matters.[^23] Moreover, in this case, the actions unquestionably taken by Mr Grant at relevant times were entirely consistent with his testimony describing such conduct and what had prompted it.[^24]
• It was suggested, implicitly if not expressly by plaintiff counsel, that Mr Grant essentially agreed to facilitate or otherwise go along with various misrepresentations and mortgage fraud being perpetrated vis-à-vis The Home Trust Company; e.g., by suggesting it would be sufficient if the down payment funds were deposited directly from the bank account of Mr Loucks to the trust account of Mr Grant’s law firm, (i.e., to disguise the true source of the down payment funds received from Mr Gjorgievski), and/or that the deposits come in the form of two separate bank drafts for $80,000 and $55,000, (essentially consistent with a fiction that the purchase funds had come from the $80,000 supposedly gifted by Mr Snow to Mr Loucks, and from the $55,000 in net proceeds received by Mr Loucks from the sale of his Thornhill condominium. It also was suggested that Mr Grant had a strong motivation to be complicit in that fraud, insofar as he did not want - as a relatively new solicitor seeking to expand his practice - to displease and “lose” clients like Mr Loucks and Mr Snow who were retaining his services in relation to a growing number of matters. I reject such suggestions and arguments. Even leaving aside Mr Grant’s obvious professional and ethical duties as a lawyer, I think it entirely implausible that Mr Grant knowingly would have jeopardized, for the sake of maintaining new clients of 3-4 months standing, his entire reputation and future legal career as a real estate lawyer by knowingly providing false confirmations, to an institutional mortgage lender, whose officers already had identified - specifically and expressly - concerns about the source of the relevant down payment for the relevant real estate transaction. On the most basic calculation of self-interest, I think the scenario suggested by plaintiff counsel was entirely unrealistic.

[15] For the above reasons, where the testimony of Mr Grant was at odds with competing testimony from Mr Gjorgievski and/or Mr Loucks, as far as underlying facts were concerned, I accordingly preferred the testimony of Mr Grant.

[16] Even where Mr Grant offered no competing testimony in relation to certain matters, (i.e., matters which inherently would have occurred in his absence), I found it very difficult at times to accept the testimony of Mr Gjorgievski and/or Mr Loucks; e.g., insofar as it struck me as implausible, and their general credibility already had been undermined for the reasons outlined above.

Liability – Duties alleged at trial and general principles applied to determine their existence

[17] In approaching cases of this nature, it is fundamentally important to keep in mind proper distinctions between threshold issues concerning the possible existence of duties a solicitor may or may not owe to another depending on prevailing circumstances, (such as professional duties and other duties of care), and consequential issues relating to whether or not an established duty has been breached, (e.g., through failure to comply with the reasonable standard of care required to fulfil such duties).

[18] Questions relating to the existence of any “duty” allegedly owed by a solicitor are focused on whether the relationship between particular parties warrants the imposition, upon the solicitor, of an obligation of care or otherwise owed to the claimant.

[19] Questions relating to applicable standards of proper conduct and care, and whether or not there was a failure by the solicitor to comply with required reasonable standard of conduct, (e.g., through carelessness), frequently involve determinations as to whether there were any established professional rules or customary practices that a solicitor failed to follow, and/or whether or not there were “warning signs” or “red flags” that reasonably should have aroused the solicitor’s suspicion. If, on examination, the court is satisfied that a solicitor’s actions fell below that of a competent solicitor who owes a duty in the circumstances, and there is a demonstrated causal link between that substandard conduct and losses claimed by a plaintiff, liability will be imposed.

[20] However, questions relating to applicable standards of proper conduct and care generally are considered only after a solicitor’s duty of care vis-à-vis a plaintiff has been found. In other words, one focuses on the legal standard of conduct required to meet an obligation to a plaintiff only after it has been established that an obligation to the plaintiff exists.

[21] It is accordingly a fundamental error of law to conflate standard of care and “breach of standard” questions with separate and more fundamental questions focused on whether the solicitor in question owes any duty at all to a particular claimant.

[22] For example, it is not correct to argue that a solicitor must have owed a duty of care to a claimant simply because there were “warning signs” or “red flags” that reasonably should have alerted a solicitor to some form of potential impropriety relating to a transaction in which the claimant may have been involved.[^25]

[23] During the course of counsel submissions in this particular case, attention was focused principally on two possible types of duties which Mr Grant and his law firm may or may not have owed to the plaintiff corporation in the particular circumstances of this case:

i. duties based on the existence of an alleged solicitor-client relationship between the plaintiff corporation and Mr Grant and his firm; and ii. duties a solicitor may owe in limited circumstances to non-client third parties who reasonably rely on a solicitor’s special knowledge and skill where the solicitor knew or should have known that was the case.

[24] In the course of submissions, plaintiff counsel made additional reference to a third type of duty; i.e., duties that may be imposed on a solicitor as a “constructive trustee” because the solicitor is a “trustee de son tort”, knowingly assists or facilitates a breach of trust, and/or knowingly receives or applies trust property in breach of trust.

[25] As noted at the outset, there is a threshold dispute as to whether the amended statement of claim filed by the plaintiff corporation properly alleged all such duties, thereby permitting the plaintiff corporation to advance corresponding alternative claims at trial based on all such duties.

[26] Before turning to the specific wording of the amended statement of claim in that regard, and resolving that threshold pleading issue, I think it helpful, (in order to put that issue into context), to first outline the two types of duties which were the principal focus of counsel submissions, along with the general principles which courts have established to determine whether or not such duties exist in particular cases.

DUTIES OWED BY A SOLICITOR TO HIS OR HER CLIENT

[27] It is trite law that a solicitor owes duties of various kinds to his or her client, and may be held liable in contract and/or negligence, (and client damages resulting from that breach of contract and/or negligence), if those duties are breached.

[28] Again, the precise scope of such duties and what a solicitor is expected to do to fulfil them, (i.e., the applicable standard of care the solicitor must meet), obviously will depend on the precise circumstances and nature of the particular tasks the solicitor was expected to perform on his or her client’s behalf. In other words, the precise nature and scope of the solicitor’s duties and applicable standard of care will be shaped by the circumstances, and informed by relevant rules and standards of professional practice – in respect of which courts often hear from qualified experts such as Mr Fortis and Mr Pearlstein.

[29] However, all such solicitor-client duties obviously are premised and depend on the existence of a solicitor-client relationship, which must be established before any determination of the breach of such duties becomes relevant or required.

[30] Our courts have identified various factors or indicia for consideration, in making determinations as to whether or not such a solicitor-client relationship exists between a lawyer and a specified party in the particular circumstances of any given case.[^26] Such factors and indicia include the following:

• the relationship between the lawyer and that party (if any) before the alleged solicitor-client relationship;
• the existence of a contract or retainer agreement between the lawyer and the party in question;
• the lawyer’s opening of a file for that party;
• whether or not the lawyer held himself or herself out as acting for that party in relation to the matter in question;
• whether or not that party held the lawyer out as acting for that party in relation to the matter in question;
• that party’s making of appointments with the lawyer and/or meetings between the lawyer and the party;
• correspondence and other communications between the lawyer and that party;
• that party’s provision of instructions to the lawyer;
• the lawyer acting on that party’s instructions;
• a reasonable expectation by that party about the lawyer’s role;
• whether or not that party sought or obtained legal advice from the lawyer in relation to the matter in issue;
• the legal advice (if any) given by the lawyer to that party;
• the lawyer’s creation of legal documents for that party;
• the lawyer’s rendering of a bill to that party;
• that party’s payment of a bill rendered by the lawyer; and
• the relationship between the lawyer and that party (if any) after the alleged solicitor-client relationship.[^27]

[31] If no solicitor-client relationship is found to exist between a lawyer and a particular plaintiff, having regard to such factors and indicia, the question of whether or not the lawyer’s conduct would have fallen below the standard required to fulfil duties owed to a client per se is no longer relevant.

DUTIES OWED BY A SOLICITOR TO NON-CLIENT THIRD PARTIES

[32] A lawyer generally owes a duty of care only to his or her own client, and not to persons other than his or her client.[^28]

[33] Indeed, where liability for purely economic loss is sought to be imposed on a solicitor vis-à-vis a party other than his or her client, “courts have trod carefully”, recognizing that imposition of such a duty greatly hampers the conduct of commercial and private business, and interferes fundamentally with the operation of that economic system.[^29]

[34] Moreover, courts recognize that imposition of such a duty raises numerous concerns, including the following:

i. It makes a solicitor responsible to someone who neither retains nor pays him or her. ii. It is somewhat illogical to impose upon a solicitor, who is merely an agent for his or her own client, a duty to a third party which his or her client himself, herself or itself does not have. iii. It usually is not possible to disclaim or limit liability to such a non-client third party. iv. Making a solicitor assume such a duty to a non-client third party may potentially or actually place the solicitor in conflict with the interests of the solicitor’s own client.[^30]

[35] It accordingly will only be under “narrow”, “exceptional”, “very limited” and “well defined” circumstances that a lawyer can be held to owe a duty to a non-client third party to protect his, her or its economic interests.[^31]

[36] In particular, a solicitor who gives guidance to others may owe a duty of care not only to the client who employs him or her, but also to another party who the solicitor knows is relying on his or her skill to save that party from harm.[^32] However, having regard to all the circumstances, for such a duty to exist:

i. The solicitor must know – from placing himself or herself in a position of sufficient proximity with the non-client third party -- that the particular non-client third party is relying on his or her skill. Actual knowledge is a prerequisite for a finding of care.[^33] ii. The non-client third party must in fact rely on the solicitor’s guidance and skill. Reliance is the essence of the proposition.[^34] iii. The reliance must be reasonable.[^35]

[37] If no exceptional duty of care is found to exist between a lawyer and a non-client third party, the question of whether or not the lawyer’s conduct would have fallen below the standard required to fulfil such a duty, had it existed, is no longer relevant.

Pleadings issue – Duties and liabilities formally alleged by the plaintiff

[38] As noted at the outset, the defendants deny that the plaintiff corporation, in its amended statement of claim, has even pleaded or relied upon all of the duties the defendants are now said to have breached vis-à-vis the plaintiff corporation.

[39] In my view, the allegations of duty formally asserted by the plaintiff corporation essentially are contained within paragraphs 11 and 11(a) of its amended statement of claim, which read as follows:

11. The plaintiff states and the fact is that Grant was acting as its lawyer when he undertook to register the plaintiff as a co-owner of the property. As its lawyer, Grant had a duty to register the plaintiff as a co-owner of the property at the time of the closing of the transaction or immediately when it could be done or to advise the plaintiff, through Tom Gjorgievski, that he was not going to do so and the reason(s) therefore. Grant failed that duty and was negligent. [Emphasis added.]

11(a). In the alternative, the plaintiff states that Grant was negligent in undertaking to register the plaintiff as a co-owner of the property if he knew at the time of the (sic) giving the undertaking that it was a condition of the first mortgage financing that no secondary financing of the remainder of the purchase price was permitted. Had Grant informed the plaintiff that he was unable to register it on title to the property because of conditions contained in the first mortgage the plaintiff would not have made the loan to Loucks. [Emphasis added.]

[40] In paragraph 13 of the amended statement of claim, the alternative duties pleaded by the plaintiff corporation in relation to Grant are alleged to have been owed to the plaintiff corporation by Mr Grant’s law firm as well, through the doctrine of vicarious liability.

[41] There was no dispute that the wording of the amended statement of claim sufficiently alleged that the defendants owed a duty to the plaintiff corporation by virtue of an alleged solicitor-client relationship, and I independently agree. In my view, that conclusion clearly follows from the allegation in paragraph 11 of the plaintiff corporation’s pleading that Grant “was acting as its lawyer”, and breached the duty he was said to have owed in that regard “and was negligent”. The latter wording reflects trite law that a client’s lawyer may owe a duty to the client in contract and tort – with the latter possibility covering situations wherein no consideration may have been paid by the client for the lawyer’s services.

[42] Although it was disputed and denied by the defendants, in my view the wording of the amended statement of claim – and paragraph 11(a) in particular -- is broad enough to allege sufficiently, in the alternative, that the defendants owed a duty to the plaintiff corporation as a non-client third party. In that regard:

• I accept without hesitation that the amended statement of claim does not assert that alternative possible duty with elegance or precision, and that paragraph 11(a) is ambiguous insofar as it might fairly be read as simply pleading a different manner in which Mr Grant was said to have been negligent in performing duties emanating from the solicitor-client relationship alleged in the previous paragraph.
• In my view, however, paragraph 11(a) is equally capable of being read fairly as an indication that the plaintiff corporation was asserting -- as an alternative to a duty based on the solicitor-client relationship asserted in paragraph 11 -- the existence of a different negligence-based duty owed by solicitor Grant despite the absence of a solicitor-client relationship. The duty which may be owed in limited and exceptional cases by a solicitor to a non-client third party, described in detail above, is clearly such a duty. Numerous cases discussing the evolution of that limited and exceptional duty confirm that it is firmly rooted in the basic principles of common law negligence, (e.g., duties owed to a “neighbour” in sufficient “proximity” to an alleged tortfeasor), emphasized by classic decisions such as Donoghue v. Stevenson, 1932 CanLII 536 (FOREP), [1932] A.C. 562 (H.L.), Hedley Byrne & Co. v. Heller and Partners Ltd., [1963] 2 All E.R. 575 (H.L.), Dorset Yacht Co. v. Home Office, [1970] A.C. 1004 (H.L.), and Anns v. Merton London Borough Council (1979), [1978] A.C. 728 (H.L.), in turn confirmed by the Supreme Court of Canada in cases such as Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537.[^36] In other words, the exceptional duty occasionally owed by a solicitor to a non-client third party is but a specific form of negligence.
• The defendants apparently did not seek particulars of the plaintiff corporation’s amended statement of claim, in relation to paragraph 11(a) or otherwise. In the circumstances, I am not inclined to preclude the plaintiff corporation’s reliance, at trial, on one legitimate reading of paragraph 11(a) of its pleading.

[43] For such reasons, in my view the plaintiff corporation was entitled to argue, at trial, that the defendants owed a duty to the plaintiff corporation because:

i. there allegedly was a solicitor-client relationship between the plaintiff corporation and Mr Grant; or ii. in the alternative, the circumstances allegedly gave rise to the “exceptional” duty owed by a solicitor to a non-client third party – in this case, the plaintiff corporation.

[44] However, in my view the amended statement of claim did not permit the plaintiff corporation to argue, at trial, that the defendants owed any duty to the defendants by virtue of Mr Grant and/or his law firm allegedly having the status of a constructive trustee.[^37]

[45] Negligence, in its various forms, emanates from the court’s common law jurisdiction relating to torts.

[46] The court’s ability to impose a remedial constructive trust, (i.e., by characterizing a defendant as a “constructive trustee), has a quite different origin and nature. It is primarily rooted in the court’s equitable jurisdiction to enforce equitable obligations and prevent unjust enrichment; i.e., a concept of substantive law which imposes liability upon one person to make restitution to another. More to the point, for present purposes:

It is a separate head of obligation in law distinct from contract, tort, liability arising out of fiduciary obligations and others.[^38] [Emphasis added.]

[47] In my view, it accordingly is quite impossible to figuratively “shoehorn” what effectively are allegations of unjust enrichment and constructive trust into paragraphs which expressly plead and rely upon the tort concept of negligence.

[48] Pleadings are important, in terms of providing fair notice to litigation adversaries and defining issues for trial, and in my view the amended statement of claim filed by the plaintiff corporation narrowed the alternative bases of liability alleged by the plaintiff to the alternative duties identified above, in paragraph 43 herein.

Liability assessment

[49] With the above facts and legal principles in mind, I turn next to a determination of whether or not the defendants should be found liable to the plaintiff corporation, starting with an examination of whether or not the defendants owed duties to the plaintiff corporation as alleged in the statement of claim.

ALLEGATIONS OF SOLICITOR-CLIENT RELATIONSHIP

[50] In my view, the circumstances do not support a finding that there was a solicitor-client relationship between the plaintiff corporation and Mr Grant or his law firm. In that regard:

• Most indicia of such a solicitor-client relationship are completely absent in this case, as between the defendants and the plaintiff corporation. In particular:
  • Neither the plaintiff corporation nor its principal Mr Gjorgievski had any relationship whatsoever with Mr Grant or his law firm before or after the Clarington property transaction.
  • There was no contract or retainer agreement, (or “engagement letter”), between the defendants and the plaintiff corporation.
  • Mr Grant never opened a file for the plaintiff corporation.
  • Apart from the possible implications of the letter Mr Grant sent to Mr Gjorgievski on October 15, 2010, (addressed below), Mr Grant never held himself or his law firm out as acting for the plaintiff corporation or its principal Mr Gjorgievski.
  • There is no evidence to indicate that the plaintiff corporation or its principal Mr Gjorgievski ever held Mr Grant or his law firm out as acting for the plaintiff corporation in relation to the Clarington property transaction, prior to the onset of the current dispute.
  • The plaintiff corporation, through its principal Mr Gjorgievski, never requested, let alone had, any appointments or meetings with Mr Grant or anyone else at Mr Grant’s law firm.
  • In my view, the plaintiff corporation never provided any instructions to Mr Grant or his law firm. In particular, to the extent there was a request for Mr Gjorgievski to be placed on title to the Clarington property, or to be sent a letter in that regard, those instructions were provided by Mr Grant’s client Mr Loucks or Mr Snow calling on behalf of Mr Loucks.
  • For similar reasons, in my view Mr Grant and his law firm never acted on any instructions from the plaintiff corporation or its principal, Mr Gjorgievski.
  • For the reasons outlined below, in my view the plaintiff corporation, through its principal Mr Gjorgievski, had a completely unreasonable expectation about Mr Grant’s role in the Clarington property transaction, as far as protection of the plaintiff corporation’s interests was concerned.
  • The plaintiff corporation, through its principal Mr Gjorgievski or otherwise, never sought or received any legal advice from Mr Grant or his law firm in relation to the Clarington property transaction.
  • Mr Grant and his law firm created no “legal documents”, (i.e., documents such as transfer, charge or similar instruments, as opposed to mere correspondence sent to the party alleging a solicitor-client relationship), for the plaintiff corporation or its principal Mr Gjorgievski.
  • Mr Grant and his law firm rendered no bill to the plaintiff corporation or its principal Mr Gjorgievski.
  • Neither the plaintiff corporation nor its principal paid any bill rendered by Mr Grant or his law firm.
• Of the indicia of a possible solicitor-client relationship identified by the authorities, the only one marginally present in this case relates to “correspondence and other communications between the lawyer and the party”. In that regard:
  • For the reasons outlined above and more generally, I find that communications addressed by the defendants and the plaintiff corporation to each other, (i.e., as opposed to the unintended and indirect exchange of information that may have occurred by Mr Loucks and Mr Snow supposedly repeating what the lawyer and alleged party may have said to Mr Loucks and Mr Snow), were limited to one letter, (i.e., the letter sent to Mr Gjorgievski on October 15, 2010, assuming for the moment that Mr Gjorgievski received the letter on behalf of the plaintiff corporation), and one telephone call, (i.e., the telephone call made by Mr Gjorgievski to Mr Grant on the morning of October 18, 2010, assuming for the moment that Mr Gjorgievski placed the call on behalf of the plaintiff corporation).
  • As for the letter, I am not persuaded that Mr Grant’s comments therein, (e.g., informing Mr Gjorgievski “we will not be able to have you put on title before the close of the transaction”, indicating to Mr Gjorgievski “we will endeavor to do so before the end of next week”, and inviting Mr Gjorgievski to “Please feel free to contact me personally or have your legal counsel contact me to discuss this matter”), constitute any form of indication or acknowledgment that Mr Grant and his law firm were agreeing to act as legal counsel to the plaintiff, or to provide the plaintiff corporation with any form of binding legal undertaking to register Mr Gjorgievski on title. Without limiting the generality of the foregoing:
    • The legal rather than colloquial meaning of the term “undertaking” is an unequivocal binding promise to perform a certain act.[^39] In my view, the text of Mr Grant’s letter of October 15, 2010, falls far short of making any unequivocal binding promise to the plaintiff corporation that it would put Mr Gjorgievski on title to the Clarington property, without any further involvement of Mr Gjorgievski or a lawyer retained in that regard by Mr Gjorgievski and/or the plaintiff corporation.
    • There is no indication whatsoever that Mr Grant was intending to communicate with Mr Gjorgievski as the principal or representative of the plaintiff corporation, which is hardly surprising given that Mr Grant, at the time, had no idea of the plaintiff corporation’s existence.
    • The suggestion that someone would “endeavour” or try to perform a certain act is certainly not a binding promise that the relevant act definitely will be performed.
    • In this particular case, I think the suggested obligation of Mr Grand and his law firm suggested in Mr Gjorgievski’s testimony – i.e., to unilaterally ensure that Mr Gjorgievski was placed on title without his direct involvement, participation or signing of documentation – was legally something Mr Grant was incapable of doing. (At the very least, I think, Mr Gjorgievski would have been required to execute documentation agreeing to be placed on title and assume his share of responsibility for the anticipated first mortgage.) I am not inclined to think Mr Grant entered into a binding promise to do the impossible.
    • In my view, the statements made by Mr Grant to Mr Gjorgievski were more in the nature of a caution than an undertaking; i.e., with Mr Grant putting Mr Gjorgievski on notice that his name would not be placed on title prior to the closing, and that efforts to accomplish that would have to wait until the following week.
    • In my view, the text of the letter, considered as a whole, makes it clear – and should have made it clear to Mr Gjorgievski – that Mr Grant was not contemplating or indicating that he and his law firm definitely would be representing the interests of Mr Gjorgievski – as the representative of the plaintiff corporation or otherwise. To the contrary, the letter clearly indicates that Mr Grant contemplated that Mr Gjorgievski would be retaining and involving his own legal counsel – in turn indicating that, when Mr Grant indicated that “we will not be able to have you put on title before the close of the transaction”, and “we will endeavor to do so before the end of next week”, it was clearly contemplated that Mr Grant and his law firm would be working with Mr Gjorgievski and his counsel, and not for Mr Gjorgievski – in whatever capacity.
    • The final sentence of the letter, (i.e., “Please feel free to contact me personally…”), was in my view a “correspondent’s politeness, not an invitation to establish a relationship of lawyer and client”.[^40]
    • In my view, the absence of any intention on the part of Mr Grant and his law firm to establish a solicitor-client relationship with Mr Gjorgievski, in any capacity, and Mr Grant’s contemplation that Mr Gjorgievski would be retaining his own lawyer to protect his interests in relation to the contemplated transaction, is made crystal clear by the covering email, (also dated October 15, 2010), by which Mr Grant provided Mr Loucks and Mr Snow with the relevant letter for transmission to Mr Gjorgievski. Again, that email expressly included the following indication: “Please note that Mr Gjorgievski will have to have his own lawyer sign the transfer next week”. [Emphasis added.] If the email was not delivered to Mr Gjorgievski by Mr Loucks and Mr Snow, along with Mr Grant’s letter, (as alleged by Mr Gjorgievski), in my view that failure can hardly be attributed in fairness to Mr Grant and his law firm rather than Mr Gjorgievski and the plaintiff corporation. At the relevant time, it was Mr Gjorgievski who had decided on the method and channel of communication being used; i.e., with messages being relayed through Mr Loucks and Mr Snow.
    • I also think it very telling that Mr Gjorgievski apparently did not raise or suggest that Mr Grant and his law firm stood in any solicitor-client relationship with Mr Gjorgievski in any capacity, (either personally or as a representative of the plaintiff corporation), until the institution of these proceedings. In particular, even after the legal services of Ms Riffert had been enlisted long after the Clarington property purchase and registration of a mortgage against that property in favour of Mr Gjorgievski, to formally communicate concerns being raised by and/or through Mr Gjorgievski to Mr Grant and his law firm, the correspondence sent by Ms Riffert contains no suggestion that Mr Grant and his law firm stood in a solicitor-client relationship with anyone but Mr Loucks. That reinforces my impression that Mr Gjorgievski himself did not believe, at the time of the relevant transactions, that Mr Grant and his law firm stood in a solicitor-client relationship with Mr Gjorgievski, as a representative of the plaintiff corporation or otherwise. I believe the suggestion was instead manufactured by Mr Gjorgievski after the fact, in an attempt to establish an alternative basis that might allow his corporation to recover its lost investment.
  • As for the telephone call from Mr Gjorgievski to Mr Grant on the morning of October 18, 2010, in my view that certainly did not indicate or give rise to any solicitor-client relationship. To the contrary, Mr Grant used the opportunity of the telephone call to explain why Mr Gjorgievski would not be permitted to participate in the Clarington property transaction as contemplated, and to confirm that the funds supplied by Mr Gjorgievski were being returned. In other words, Mr Grant clearly was indicated that there would be no relationship with Mr Gjorgievski in relation to the Clarington property transaction – which in my view is the antithesis of suggesting the existence of a solicitor-client relationship.

[51] As the indicia of a solicitor-client relationship between the plaintiff corporation and Mr Grand and/or his law firm are inadequate, I find that no such relationship existed.

[52] There accordingly were no duties owed by the defendants in that regard to the plaintiff corporation on which to ground any finding of liability.

ALLEGATIONS OF SOLICITOR DUTIES OWED TO NON-CLIENT THIRD PARTY

[53] In my view, the circumstances also do not support a finding that Mr Grant and his law firm owed a duty of care to the plaintiff corporation as a non-client third party. Without limiting the generality of the foregoing:

a. I find that Mr Grant and his law firm neither knew nor ought to have known, (although in my view the latter finding is superfluous for the reasons outlined above), that the plaintiff corporation was relying upon Mr Grant and/or his law firm in the circumstances. In that regard:

• For the reasons outlined above, I specifically reject plaintiff counsel’s argument that Mr Grant undertook to carry out conveyance-related work that normally would be done by another party’s lawyer; i.e., that Mr Grant undertook to perform all aspects of legal work that might be needed to put Mr Gjorgievski “on title” to the Clarington property.[^41] Again, for the reasons outlined above, I think that is an inappropriate reading of the letter sent by Mr Grant to Mr Gjorgievski, which simply cautioned the latter that he could not be put on title before closing of the transaction and indicated – implicitly in the letter and expressly in the covering email – that Mr Grant contemplated working with but not for Mr Gjorgievski and his own lawyer. Moreover, that interpretation and conclusion is reinforced by the reality that Mr Grant subsequently did precisely that – i.e., work with Mr Gjorgievski’s own independent counsel – when later measures were taken to put the plaintiff corporation “on title” to the Clarington property as a mortgagee.
• In my view, there also was no other evidence to establish that Mr Grant had any knowledge – or should have had any knowledge – that the plaintiff corporation was placing any reliance upon him.
• More generally, in my view there was no contact, communication, instruction or “proximity” between the plaintiff corporation and Mr Grant (and/or his law firm) which gave any indication of reliance on which to found a duty of care owed by the defendants to the plaintiff corporation as a non-client.

b. I find that, at all material times, the plaintiff corporation was not in fact relying on Mr Grant or his law firm to protect its interests. In that regard:

• As a number of cases have noted, courts tend to impose a duty of care on solicitors vis-à-vis non-client third parties, on an “exceptional” or “extraordinary” basis, in situations where the third party in question is unsophisticated, uninformed and/or particularly vulnerable – which may go some way to suggesting the third party’s reliance on the solicitor.[^42] In my view, that was not the situation in relation to Mr Gjorgievski, as a representative of the plaintiff corporation or otherwise. In particular:
  • Mr Gjorgievski was clearly an intelligent and articulate person who was college educated, with a diploma in accounting.
  • Mr Gjorgievski also had managed to achieve considerable employment and business success, working his way up from employment with Service Master to owning and operating a number of corporations, (including the plaintiff corporation and Universal Welding & Gases), with corresponding property and finances.
  • Through his various activities, Mr Gjorgievski also had personal experience with real estate transactions.
  • In my view, Mr Gjorgievski certainly was not unsophisticated, uninformed or particularly vulnerable. To the contrary, he struck me as a skilled and experienced business person.
• In my view, the evidence indicates that, even if acting as a principal of the plaintiff corporation, Mr Gjorgievski was relying significantly and primarily on Mr Loucks and/or Mr Snow, rather than on Mr Grant and his law firm. In particular:
  • I found it striking that Mr Gjorgievski was quite willing and prepared, according to his testimony, to invest $135,000 in a real estate acquisition project, presented to him by Mr Loucks and Mr Snow just the day before its scheduled closing, without any confirmed information about the underlying property - such as its description, precise location, or who would reside in the property after its purchase. Nor did Mr Gjorgievski request or receive any information as to the property’s price or true value; e.g., to confirm whether it was really worth its purchase price, such that the anticipated mortgage in favour of the institutional lender, (the anticipated quantum of which also was not requested or provided), would leave sufficient equity to secure Mr Gjorgievski’s investment either as a titled owner or holder of a second mortgage. Mr Gjorgievski did not even ask Mr Loucks and Mr Snow to show or provide him with a copy of the relevant Agreement of Purchase and Sale.
  • Similarly, I think it quite noteworthy that, until he received word that the initially contemplated transaction had not been completed, Mr Gjorgievski was content to have all communications and information about the transaction channelled through Mr Loucks and Mr Snow, without making any attempt to establish a direct line of communication with Mr Grant. In the circumstances, Mr Gjorgievski knowingly and by choice made himself dependent on Mr Loucks and Mr Snow to provide him with accurate information and reports; e.g., about what Mr Grant was saying or writing to the two men, about what actually was happening in relation to the transaction, and about the additional understandings and communications, (including cover emails), that may have accompanied the letter provided by Mr Grant on October 15, 2010.
  • Perhaps most significantly, Mr Gjorgievski clearly was content to channel all of the funds he was supplying through Mr Loucks and/or Mr Snow; i.e., entrusting them with bank drafts or certified cheques without any guarantee that the two men would direct all of the supplied funds to Mr Grant’s trust account in the promised manner. Mr Gjorgievski also was willing to supply - and did supply - Mr Loucks and Mr Snow with the $135,000 initially provided by the plaintiff corporation for the contemplated purchase, before any arrangements discussed with Mr Loucks and Mr Snow had been reduced to writing, without consulting any lawyer, and before any direct contact or communication whatsoever from Mr Grant, including Mr Grant’s letter of October 15, 2010.
• Despite Mr Gjorgievski’s assertions to the contrary, there is no evidence I am prepared to accept that the plaintiff corporation relied upon Mr Grant and his law firm to protect the plaintiff corporation’s interests; e.g., in terms of ensuring that Mr Gjorgievski would be placed on title to secure funds loaned by the plaintiff corporation to Mr Loucks and/or Mr Snow or otherwise. Without limiting the generality of the foregoing:
  • For the reasons outlined above, I did not regard Mr Gjorgievski as a persuasive witness, and I am skeptical of his evidence in relation to reliance. In particular, as explained earlier and in more detail, it seems to me that the very belated raising of concerns relating to Mr Grant’s letter strongly suggest there was no contemporaneous reliance on its content by Mr Gjorgievski and/or the plaintiff corporation.
  • Given the time of events on October 15, 2018, and delays inherent in obtaining and depositing bank drafts or certified cheques, I think it likely that Mr Gjorgievski, personally and/or on behalf of the plaintiff corporation, had decided to provide the original $135,000.00 for the Clarington property purchase, and set arrangements in motion accordingly, even before the receipt of the letter prepared by Mr Grant on October 15, 2018.
  • Even if one assumes that the knowledge, understandings and reliance of Mr Gjorgievski should be imputed to the plaintiff corporation as well, (i.e., on the basis that Mr Gjorgievski was at all times acting in his capacity as the sole officer, director and principal of the plaintiff corporation, rather than his personal capacity), I find it quite impossible to believe that, following the telephone conversation between Mr Grant and Mr Gjorgievski on October 18, 2010, the latter could have been under any lingering impression whatsoever that Mr Grant was still intending to follow through with the originally contemplated transaction involving Mr Gjorgievski being placed on title to the Clarington property, as security for the purchase funds being contributed by Mr Gjorgievski personally or as an undisclosed principal of the plaintiff corporation. Mr Grant had clearly told Mr Gjorgievski that there could be no secondary financing for the purchase, that Mr Loucks could not borrow any money to provide the required down payment, and that the money initially deposited in the trust account of Mr Grant’s law firm, (whether by Mr Gjorgievski personally or by the plaintiff corporation), therefore would have to be returned. I fail to understand how, in the circumstances, Mr Gjorgievski or the plaintiff corporation through Mr Gjorgievski still could have expected Mr Grant and his law firm to place Mr Gjorgievski on title, pursuant to the originally contemplated arrangement, when Mr Grant himself was making it quite clear that the anticipated lending of funds requiring the security of Mr Gjorgievski being placed on title, (i.e., the lending of funds to Mr Loucks to fund the purchase), was not only impermissible, but necessitated a return of the relevant loaned funds. In my view, Mr Gjorgievski – and the plaintiff corporation through Mr Gjorgievski - clearly knew or ought to have known that the originally contemplated transaction and arrangements – including Mr Gjorgievski being placed on title to the Clarington property – were at an end.
  • Despite that knowledge, and the absence of any further letter from Mr Grant similar to the one he provided on October 15, 2010, Mr Gjorgievski and/or the plaintiff corporation were willing to provide a further $135,000.00 to fund the contemplated Clarington property purchase, on October 18, 2010, even before the original and returning $135,000.00 had been received by the plaintiff corporation. Again, the certified cheque returning those original funds was not certified until October 19, 2010, meaning that the plaintiff corporation could not have received a return of the original funds until sometime after its provision of a further $135,000 on October 18, 2010.

c. I find that, in any event, any such reliance by the plaintiff corporation would not have been reasonable in the circumstances. In that regard:

• For the reasons noted above, it was not reasonable for Mr Gjorgievski, for himself or on behalf of the plaintiff corporation, to think that the originally contemplated transaction, financing and corresponding security arrangements were permissible and continuing, when Mr Grant had explained they were not permissible and at an end.
• Even if I were to accept Mr Gjorgievski’s testimony that he never spoke with Mr Grant, in my view Mr Gjorgievski was remarkably and inappropriately “incurious” about the details of the land transactions he supposedly was expecting to occur; e.g., requesting no copies of mortgage, transfer or other documentation, nor any reporting letters, nor any accounting in relation to provided funds. Nor was he curious about the unusual instructions he supposedly was receiving from Mr Grant via Mr Loucks and Mr Snow; e.g., concerning the peculiar arrangements for return of the plaintiff corporation’s original funds, and arrangements specifying the manner in which the plaintiff corporation’s “new” or “replacement” funds were to be channelled through two separate bank drafts – again, with one for $80,000.00 payable to Mr Loucks personally and the other one for $55,000.00 payable to Mr Grant in trust. In my view, there was no apparent reason for such peculiar arrangements, apart from the obvious one of disguising the true origins of the funds the plaintiff corporation actually was contributing towards the purchase. If Mr Gjorgievski was not complicit in the mortgage fraud perpetrated in this case, he knew or ought to have known that further inquiries were necessary to ensure that the transaction in which he was participating was legal – failing which Mr Grant’s letter clearly would have provided little assurance.

[54] In my view, the circumstances accordingly do not give rise to the “exceptional” duty owed by a solicitor to a non-client third party, as far as the relationship between the defendants and the plaintiff corporation is concerned.

Allegations regarding breach of duties and damages

[55] I have found that the defendants did not owe duties to the plaintiff corporation, as alleged in the amended statement of claim.

[56] In the circumstances, it is not necessary to consider whether and how such non-existent duties may or may or may not have been breached; e.g., by sustained focus on the expert opinion evidence provided in that regard by Mr Fortis and Mr Pearlstein. Without a duty owed by the defendants to the plaintiff corporation, there can be no relevant breach of duty to support the claims advanced herein by the plaintiff corporation.

[57] Nor is it necessary to consider whether and how any such alleged breaches may or may not have caused the plaintiff corporation damages, as alleged in the amended statement of claim.

Conclusion

[58] For the reasons outlined above, the action herein brought by the plaintiff corporation is dismissed.

Costs

[59] Because my decision was reserved, the parties were unable to make any submissions regarding costs, having regard to the outcome of the litigation.

[60] It is always preferable for parties to discuss and agree on cost resolutions acceptable to all concerned.

[61] However, if the parties are unable to reach an agreement on entitlement and/or quantum in relation to outstanding cost issues:

a. the defendants may serve and file written cost submissions, not to exceed ten pages in length, (not including any bill of costs, settlement offers, authorities or other necessary attachments), within three weeks of the release of this decision; b. the plaintiff then may serve and file responding written cost submissions, also not to exceed ten pages in length, (not including any necessary attachments similar to those described in the previous sub-paragraph), within two weeks of service of the defendants’ written cost submissions; and c. the defendants then may serve and file, within one week of receiving any responding cost submissions from the plaintiff, reply cost submissions not exceeding three pages in length.

[62] If no written cost submissions are received within three weeks of the release of this decision, there shall be no costs awarded in relation to the action.

“Justice I.F. Leach”

Justice I.F. Leach

Released: January 8, 2019

COURT FILE NO.: 8408-12

DATE: 20019/01/08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

2116656 ONTARIO INC.

Plaintiff

– and –

JOSEPH A.G. GRANT and LLF LAWYERS LLP

Defendants

REASONS FOR JUDGMENT

Justice I.F. Leach

Released: January 8, 2019

[^1]: As noted below, Mr Grant never did make inquiries to confirm who Ms Langton was, or how Mr Loucks came to know her – and the need for such inquiries arguably became moot after Ms Langton “dropped out” of the contemplated purchase of the Clarington property, in the manner noted below. According to Mr Loucks, however, Ms Langton was the “common-law wife” of Mr Snow, and owner of the relevant Main Street property in Orono. [^2]: According to Mr Loucks, that happened because Ms Langton was unable to sell her Main Street property in Orono. [^3]: In the course of his testimony at trial, Mr Grant candidly indicated he was no longer certain whether Mr Snow had attended the meeting as well, although Mr Grant thought Mr Snow may have been there. However, Mr Snow’s attendance at the meeting was one of the facts agreed upon by the parties through the “Request to Admit” procedure. [^4]: At trial, Mr Grant had no specific memory of doing so, but agreed in cross-examination that he probably had done so, as suggested by answers given during his oral discovery examination. [^5]: At trial, Mr Grant initially testified that the caller was Mr Loucks. However, after being taken in cross-examination to an earlier answer given during his oral discovery examination, Mr Grant thought the caller may in fact have been Mr Snow. In the end, Mr Grant remained uncertain as to whether the caller had been Mr Loucks or Snow, but was certain that it definitely had been one of the two men. [^6]: Mr Grant testified and I accept that, at the time of his telephone call with Mr Loucks on the morning of October 15, 2010, no one had told him anything about any promissory note given by Mr Loucks and Mr Snow to Mr Gjorgievski, and that Mr Grant in fact would not learn of any such promissory note until almost a year later; i.e., when a lawyer retained by the plaintiff corporation, (Mr Gjorgievski’s company), sent Mr Loucks a letter demanding payment of a $165,000 debt said to have been created by a promissory note. [^7]: Mr Grant testified, and I accept, that he saw nothing unusual at the time about Mr Snow accompanying Mr Loucks, (with the apparent consent of Mr Loucks), to a meeting or meetings focused on the purchase of a residential property by Mr Loucks. By that time, Mr Grant knew that Mr Loucks and Mr Snow were close business partners, and Mr Grant also understood that Mr Snow was helping Mr Loucks with arrangements for the transaction; e.g., in dealing with the relevant mortgage broker, and securing possible financing from Mr Snow’s friend Mr Gjorgievski. [^8]: Although Mr Grant’s testimony in that regard was challenged by plaintiff counsel, I did not find the assertion incredible or unbelievable. Mr Grant had Mr Loucks and Mr Snow waiting in his office, was dealing with a transaction scheduled to close that afternoon, (making time of the essence if only to communicate further with the vendors and their lawyer, who at that point were still expecting Mr Loucks to comply with his contractual obligations), and was receiving pressing email communications from an institutional lender who also was under the impression that all concerned wanted the contemplated real estate transaction to close that day. In those pressing circumstances, I do not think it incredible that, in scrolling to read through the email chain, Mr Grant may have gone no further than the message and contact information for Mr Ciccarelli, whom Ms Fleguel had suggested he call if there were any questions. [^9]: Mr Grant testified, and I accept, that he actually did not see the relevant “gift letter” or learn of its precise content until much later, during the course of this litigation. [^10]: In his testimony, Mr Loucks claimed that, although Mr Grant admittedly had highlighted the Home Trust Company conditions prohibiting secondary financing, (a concept Mr Loucks admittedly understood, and conceded that Mr Grant probably had explained during the relevant meeting), as well as the requirement for the down payment to be provided by Mr Loucks personally, Mr Grant had then merely emphasized that the purchase funds had to “come from” Mr Loucks in the sense of being deposited directly from the bank account of Mr Loucks to the trust account of Mr Grant’s law firm, in order to make the proposed transaction arranged with Mr Gjorgievski acceptable. In that regard, Mr Loucks claimed that Mr Grant told him nothing “one way or the other” about who actually had to provide the funding. I did not believe or accept the testimony of Mr Loucks in that regard, and prefer instead the testimony of Mr Grant as to what was said during the relevant meeting or meetings between Mr Grant, Mr Loucks and Mr Snow on October 15, 2010. Beyond the other reasons noted below as to why I looked with disfavor on the testimony of Mr Loucks and favoured the testimony of Mr Grant:

• I think it entirely implausible that Mr Grant, after spending time during the meeting emphasizing the prohibition against secondary financing, and the need for the down payment to “come from” Mr Loucks personally, then left Mr Loucks and/or Mr Snow under the impression that such concerns could be satisfied by superficial banking and deposit arrangements alone. To the extent Mr Loucks and/or Mr Snow focused exclusively on words indicating that the purchase funds had to “come from” Mr Loucks, and somehow interpreted that as an indication that the arrangement would be permissible so long as provided funds simply were transferred directly from the bank account of Mr Loucks to the trust account of Mr Grant’s law firm, I think they were being wilfully blind – or, more accurately, wilfully deaf in hearing only what they wanted to hear, through no fault of Mr Grant.
• I also think it entirely implausible that Mr Grant would have been focused, during that meeting, on any supposed details or niceties of particularly banking and deposit arrangements. It seemed abundantly clear from the evidence, (e.g., not only Mr Grant’s testimony but contemporaneous and repeated emails from Mr Grant at various points throughout the transactions asking for updates as to when funds had been deposited into his law firm’s trust account), that Mr Grant had no immediate access to the details of deposits being made to his trust account or copies of documentation in that regard, and that he was unable to retrieve such information without the active assistance of his firm’s accounting department. There was no evidence whatsoever that Mr Grant, prior to September of 2012, ever called for or obtained such assistance. In the circumstances, at all material times Mr Grant had no reliable indications or assurances, (if any), as to when and how the original $135,000.00 had been deposited to his account, (i.e., whether or not they had come directly from the bank account of Mr Loucks), or as to when and how the subsequent $135,000 had been deposited. To me, it accordingly makes little sense to suggest such concerns were the focus of Mr Grant’s comments to Mr Loucks and Mr Snow on October 15, 2010, or what prompted Mr Grant’s confirmed immediate efforts thereafter to return the original funds to Mr Gjorgievski, insist on Mr Loucks obtaining and supplying new funds, and then give the required assurance of “no secondary financing” to the Home Trust Company without having the immediate ability to investigate and confirm such matters directly.
• Similarly, if Mr Grant, Mr Loucks, Mr Snow and Mr Gjorgievski were truly focused on simply ensuring that funds were deposited from the bank account of Mr Loucks directly to the trust account of Mr Grant’s law firm, it makes no sense that the initial funds were returned to the plaintiff corporation; i.e., instead of being given to Mr Loucks for immediate temporary deposit into his bank account.
• The testimony of Mr Loucks, suggesting that all concerned were focused on the simple need to ensure that the relevant down payment funds were deposited directly from the bank account of Mr Loucks to the trust account of Mr Grant’s law firm, is also inconsistent with the banking arrangements that actually then were made. In particular, of the two bank drafts used to channel the “new” purchase funds from the plaintiff corporation into the trust account of Mr Grant’s law firm, only one – i.e., the one for $80,000.00 – was made payable to Mr Loucks, so that it could be deposited by him into his bank account, and thereafter transferred by Mr Loucks from that bank account to the trust account of Mr Grant’s law firm. The other bank draft was made payable to Mr Grant in trust, so that it never passed through Mr Loucks’ bank account. When confronted with the obvious inconsistency between the arrangements actually employed and the supposed banking instructions/conditions Mr Loucks had alleged and emphasized, Mr Loucks attempted to revise his testimony by suggesting Mr Grant actually had not focused on banking arrangements but instead simply indicated that the down payment funds just had to “come from” Mr Loucks in the sense Mr Loucks was the one who physically handed over the bank drafts. In my view, that blatant attempt to revise testimony to conform with actual facts belatedly realized during cross-examination was almost laughable, and simply underscored Mr Loucks’ awareness that he had been caught in a lie.
• I also note that, if Mr Loucks truly believed and understood at the time of the relevant October 15^th meeting that Mr Grant was saying mere banking arrangements would suffice to make the contemplated transaction permissible, there would have been absolutely no need for the statement Mr Loucks admittedly made to Mr Grant that afternoon, at the end of the meeting, indicating that Mr Loucks did not have “all” the money needed for the down payment, but “would be able to have it in a few more days”. That obvious and deliberate effort to conceal the true intentions of Mr Loucks, (who actually had immediate access to the needed down payment funds via Mr Gjorgievski and the plaintiff corporation), makes it clear to me that Mr Loucks understood the true restrictions being emphasized by Mr Grant during the meeting, (i.e., prohibiting secondary financing and borrowing of funds that instead had to come from the personal resources of Mr Loucks), and that Mr Loucks knew Mr Grant would not condone efforts to conceal the true source of the funds through mere banking arrangements.
• In short, I think Mr Loucks knew perfectly well at the time that Mr Grant was emphasizing that the required down payment funds actually had to come from Mr Loucks personally, to make the contemplated transaction permissible, and that Mr Loucks nevertheless belatedly seized on the wording of the email sent to him by Mr Grant on October 20, 2010, (i.e., “Craig, has the money been deposited into our account from your bank account?”), in an improper effort, at trial, to elevate those words into the only literal condition supposedly emphasized by Mr Grant at the time of the meeting on October 15, 2010. In other words, I think Mr Loucks was attempting to twist, in false isolation, the literal meaning of certain words which may have been used by Mr Grant; i.e., in an attempt by Mr Loucks to “lower the bar” of what would was expected and required of Mr Loucks at the time. That seemed entirely consistent with a general effort on the part of Mr Loucks to provide an account of events suggesting that Mr Loucks was not guilty of any intentional impropriety in that regard. [^11]: Mr Grant testified, and I accept, that the provision of that income verification letter to The Home Trust Company was the direct responsibility of Mr Loucks, and not the responsibility of Mr Grant. In my view, that understanding accords with the wording of the documentation provided by The Home Trust Company, making clear what obligations were to be carried out by Mr Grant as the “solicitor” acting to implement the arrangement. I also accept Mr Grant’s testimony that he had no reason, at the time of reading that term, to doubt the indication that Mr Loucks was receiving employment income from Universal Welding & Gases. As Mr Grant emphasized, many of his clients were employed at income generating jobs while also operating numerous business operations “on the side”. [^12]: In his testimony, Mr Gjorgievski repeatedly denied that he ever spoke directly with Mr Grant by telephone or otherwise, and specifically denied that the said telephone call on October 18, 2018, ever took place. I reject Mr Gjorgievski’s testimony in that regard, and prefer instead the testimony of Mr Grant about the telephone call in question. In addition to generally preferring the testimony of Mr Grant to that of Mr Gjorgievski, for the additional reasons outlined below, there were numerous reasons for my doing so in relation to the disputed evidence concerning this particular telephone call. To cite but a few examples:
• In my view, the absence of a contemporaneous note of the relevant telephone call was of little import in this particular case, as there were numerous other unquestioned telephone conversations Mr Grant had in relation to the matter, (e.g., including his conversation with Mr Ciccarelli of The Home Trust Company, his conversation with the vendors’ solicitor Mr Lovekin to negotiate an extension of the closing deadline, and his 2012 telephone conversations with Ms Riffert that were mentioned in later correspondence), which all took place but similarly generated no contemporaneous notes. Mr Grant similarly made no contemporaneous notes of meetings that unquestionably took place; e.g., with Mr Loucks and Mr Snow. While such contemporaneous notes may have been helpful in retrospect, in my view their absence was consistent with Mr Grant’s general practice at the time, and not supportive of any suggestions of belated fabrication by Mr Grant as far as the relevant telephone call was concerned.
• Mr Grant had a firm and detailed memory of that telephone call and conversation, as it was the only direct interaction he ever had with Mr Gjorgievski. Mr Grant recalled the precise manner in which the call was received, and words that were and were not said.
• In my view, Mr Grant’s account of his telephone conversation with Mr Gjorgievski was balanced and fair, and therefore consistent with a reliable rather than fabricated account. For example:
  • Mr Grant candidly acknowledged that he had assumed he was speaking with Mr Gjorgievski, (i.e., based on the caller’s self-identification and apparent awareness of the transaction details relating to Mr Gjorgievski), despite the fact he had no prior direct dealings with Mr Gjorgievski and no way of definitely knowing who was on the other end of the telephone line. (I find, in any event, and for several reasons, that the caller was indeed Mr Gjorgievski. In particular: there was no evidence to suggest that anyone but Mr Grant, Mr Loucks, Mr Snow and Mr Gjorgievski knew of the latter’s possible involvement in the contemplated Clarington property transaction; the caller clearly was not Mr Loucks or Mr Snow, whose voices Mr Grant would have recognized; and no one but Mr Gjorgievski – the sole principal and shareholder of 2116656 Ontario Inc. – stood to benefit from the caller’s direction for the deposited funds to be returned to that corporation.)
  • Similarly, while Mr Grant recalled and emphasized the making of certain clear statements to Mr Gjorgievski, (e.g., the existence of The Home Trust Company’s condition that there was to be no secondary financing in relation to the transaction, and that Mr Loucks accordingly could not borrow any portion of the required down payment), Mr Grant also proactively corrected the wording of an initial comment made in his testimony – i.e., that he had let Mr Gjorgievski know the “the transaction with him going on title was not going ahead” – to indicate and acknowledge that, during the relevant telephone conversation, he actually had made no express reference to “title” or Mr Gjorgievski not going on title. As Mr Grant put it - despite having heard Mr Gjorgievski’s testimony emphasizing that he had never been told by Mr Grant, after receiving Mr Grant’s letter, that he would not be put on title: “I want to be clear. I don’t believe I told him that he would not be going on title. I don’t believe those words were ever uttered by me.” In my view, if Mr Grant was simply lying about the occurrence of a telephone conversation between himself and Mr Gjorgievski on October 18, 2010, there is no reason why he also would not have lied about making a clear reference, during the course of the call, to Mr Gjorgievski not going on title. Had he been intent on lying, Mr Grant similarly could have fabricated assertions of additional telephone conversations with Mr Gjorgievski, in an effort to undermine the plaintiff corporation’s claim. Mr Grant instead testified that he spoke with Mr Gjorgievski only once and, in that regard, candidly and proactively acknowledged limitations to the telephone conversation which may have undermined his own position in the litigation. To me, such actions are the hallmarks of a truthful witness.
• In cross-examination, it was emphasized by plaintiff counsel that, during Mr Grant’s oral discovery examination, Mr Grant made a number of statements using the word “believe”. Mr Grant’s use of that word was in turn used as the basis of a suggestion by plaintiff counsel that Mr Grant was embellishing a mere “belief” about the relevant call into a firm memory at trial. However, Mr Grant explained – in a manner that to me seemed genuine clarification rather than attempted at obfuscation – that he had not used the word “believe” intending to suggest any uncertainty of memory as far as his telephone conversation with Mr Gjorgievski was concerned. To the contrary, Mr Grant emphasized that he was quite sure the call from Mr Gjorgievski had taken place, as it had “stuck in his mind”. In particular, Mr Grant emphasized that he believed certain things because he had a definite recollection of certain things, and therefore was using those terms interchangeably. However, Mr Grant nevertheless also clarified – again to my satisfaction – that in one particular instance, he had been intending to make clear that he believed but could not be certain that the person, who definitely called Mr Grant on the morning of October 18, 2010, had in fact been Mr Gjorgievski. In that regard, Mr Grant emphasized that there were many reasons why he was “99 percent sure” the caller had been Mr Gjorgievski. (For example, and as noted above, the caller knew about the contemplated arrangements for the Clarington property transaction, was asking why it was not going ahead, and told Mr Grant to return $135,000 to Mr Gjorgievski’s corporation. Moreover, Mr Grant thereafter received an email, apparently from Mr Gjorgievski, attaching an instruction apparently signed Mr Gjorgievski.) However, the simple fact remained that Mr Grant had “never talked to Mr Gjorgievski before the telephone call”, and therefore could not be absolutely certain that the caller was indeed Mr Gjorgievski.
• In my view, the existence of such a telephone call by Mr Gjorgievski to Mr Grant on the morning of October 18, 2010, is also entirely consistent with immediately surrounding developments. In particular:
  • The sending of Mr Gjorgievski’s otherwise unheralded but required written direction caused Mr Grant to suddenly change direction, as far as return of the initially provided $135,000 was concerned.
  • Again, by the morning of October 18, 2010, Mr Grant already had taken steps to ensure that the relevant funds would be returned directly to Mr Gjorgievski.
  • New arrangements nevertheless then were made to cancel the firm’s cheque already issued in that regard, and to replace it with a new cheque payable to the plaintiff corporation, which had not previously been mentioned to Mr Grant in relation to the Clarington property transaction, as the transaction was being discussed and prepared. The new arrangements also called for the new cheque to be directed through Mr Loucks, instead of being sent to Mr Gjorgievski directly.
  • I think it highly improbable that Mr Gjorgievski somehow realized, independently and with a timing that coincided perfectly with the arrangements being undertaken to return the initially received $135,000, that a written direction might be required by Mr Grant in the circumstances.
  • In my view, a far more probable and sensible conclusion is that the sending and timing of the written direction were prompted by a telephone conversation between Mr Grant and Mr Gjorgievski on the morning in question, during which Mr Grant explained – as noted below - the need for such a direction before the funds could be returned to the plaintiff corporation rather than Mr Gjorgievski. [^13]: The parties agree that the said cheque eventually was received and deposited by the plaintiff corporation. While there was no evidence confirming the precise date on which that occurred, I find that it must have been sometime later than October 18, 2010, because, as noted again below, the cheque in question was not certified and marked accordingly, by the “George and Hunter” CIBC branch in Peterborough at which Mr Grant’s law firm maintained its trust account, until October 19, 2010. [^14]: For example, as reflected in a reporting letter from Mr Grant to Mr Loucks dated January 17, 2011, and found at Exhibit 1, Tab 41, Mr Grant assisted with the purchase of lands in Pembroke by Linear Leasing Inc.; another corporation of which Mr Loucks was president. That transaction closed on January 7, 2011. [^15]: A number of further comments and findings are appropriate and necessary, in relation to the emails sent by Mr Loucks to Mr Grant, and copied to Mr Snow, on January 14, 2011. In that regard:
• A number of the emails referring to an additional mortgage being placed on the Clarington property in favour of Mr Gjorgievski, and/or their content, were the subject of formal admissions requested by the defendants, (via paragraph 43 of admissions being requested, and items 36 and 37 in respect of which admissions of authenticity were requested), in their formal “Request to Admit” delivered on or about February 28, 2018, and marked as Exhibit B for identification.
• The formal response made in that regard by the plaintiff corporation, (via paragraph 1 of its formal “Response to Request to Admit” delivered on or about March 13, 2018, and marked as Exhibit C for identification), includes a formal admission of the matters outlined in paragraph 43 of the defendants’ Request to Admit, (concerning Mr Loucks’ sending of email instructions to Mr Grant indicating that Mr Loucks had acknowledged and agreed to grant a second mortgage on the Clarington property in the amount of $125,000 in favour of Mr Gjorgievski, and that Mr Gjorgievski’s lawyer was Mendo Petrovski, whose contact information was provided), and a formal admission as to the authenticity of the documents identified in item 37 of the defendants’ Request to Admit, (i.e., the “Email from Joseph Grant to Tom Gjorgievski with attached letter regarding collateral mortgage”, dated January 14, 2011), but refused to admit the authenticity of the documents identified in item 36 of the defendants’ Request to Admit, (i.e., “Emails between Craig Loucks, Joseph Grant and Michael Snow re: directions re: second mortgage to Tom Gjorgievski”, dated January 14, 2011), for the stated reason that the email contained in the document from Loucks to Grant sent January 14, 2011, at 2:24pm had not previously been produced to the Plaintiff.
• Although reference was made in paragraph 43 of the defendants’ “Request to Admit” to the email described therein sent by Mr Loucks to Mr Grant on “January 25^th, 2011”, I note that the actual date and time of the described email – i.e., wherein Mr Loucks acknowledged and agreed to a second mortgage on the property in the amount of $125,000 in favour of Mr Gjorgievski, identified Mr Petrovski as Mr Gjorgievski’s lawyer, and provided Mr Petrovski’s contact information, and found within the email chain filed in evidence at Tab 42 of Exhibit 1 – was January 14, 2011, at 2:47pm; i.e., the particular email in respect of which the plaintiff had declined to formally admit authenticity for the reason noted above.
• Moreover, I note that, despite the reference in paragraph 43 to the relevant email being sent by Mr Loucks to Mr Grant on January 25, 2011, (as formally admitted by the plaintiff), actual sending of the aforesaid email on January 14, 2011, corresponds to a related letter sent by Mr Grant to Mr Gjorgievski the same day (January 14, 2011), noted below and found at Exhibit 1, Tab 43, wherein Mr Grant refers to Mr Loucks advising Mr Grant that he wished to grant Mr Gjorgievski a collateral mortgage on the Clarington property in the amount of $125,000.
• In the circumstances, I think it clear that, in the course of the formal “Request to Admit” procedure, the defendants inadvertently made a mistaken reference to the relevant email being sent on January 25, 2011, (i.e., rather than the correct date of January 14, 2011), and that the plaintiff inadvertently failed to notice the incorrect date when making its corresponding formal admission that Mr Loucks had indeed emailed that information to Mr Grant. In the circumstances, I proceed on the basis that the relevant email was in fact sent by Mr Loucks to Mr Grant, as agreed by the parties, but on January 14, 2011.
• In the course of his testimony, Mr Loucks attempted to suggest that he actually had not been the author of the email sent to Mr Grant at 2:24pm on January 14, 2011, and that the email had in fact been sent to Mr Grant by Mr Snow, posing as Mr Loucks. Mr Loucks claimed that was possible because Mr Snow was the “IT” person responsible for maintenance of the email accounts maintained by the businesses operated by Mr Loucks and Mr Snow, and had the ability to access and send emails from Mr Loucks’ email address. With that explanation, Mr Loucks denied any contemporaneous knowledge of the particular email in question. Having regard to a number of considerations, however, I reject the testimony of Mr Loucks in that regard. In particular:
  • For the reasons outlined above, the suggestion that Mr Loucks did not email the information contained in the relevant message to Mr Grant is contrary to the formal agreement of the parties, pursuant to the Request to Admit procedure.
  • I generally found Mr Loucks to be a very poor and unbelievable witness, for the other reasons noted below.
  • I find the suggestion of Mr Snow temporarily “hijacking” the email address of Mr Loucks, to send a particular email in a supposedly clandestine manner that Mr Loucks would not quickly discover, to be especially incredible. For example:
    • I note that the email in question ends with an express request for Mr Grant to contact Mr Loucks if he had any questions about the message and instructions, which hardly seems conducive to any attempt by Mr Snow to engage in subterfuge that would escape the attention of Mr Loucks. Leaving aside email, Mr Grant obviously could have called Mr Loucks directly with questions.
    • I note that the email in question was replicated in later emails; i.e., incorporated into further responding emails being sent by Mr Grant to the email address of Mr Loucks. Of course, Mr Snow would have known of that possibility if not probability of an incorporated email “chain”, and would have had no way to anticipate precisely when Mr Grant may have sent such a responding email to Mr Loucks. Without constant monitoring of the email address for Mr Loucks, and without having any ability to control the times at which Mr Loucks would have been accessing his own email account, (which Mr Loucks admittedly had the ability to do at all times via his Blackberry), Mr Snow would have had no realistic means of keeping the email from coming to the attention of Mr Loucks.
    • The sending of such second mortgage instructions by Mr Loucks, via email, is entirely consistent with the earlier instructions Mr Loucks provided verbally to Mr Grant, and his later necessary participation, as the titled owner of the Clarington property, in registration of a further mortgage against the property in favour of Mr Gjorgievski. [^16]: There nevertheless was one particular aspect of the instructions sent to Mr Grant on January 14, 2011 – i.e., instructions contemplating declarations of trust in relation to the Clarington property in favour of Julie Langton and Mr Snow, and preparation of a corresponding contract imposing limitations on the ability of Mr Loucks to deal with that property -- that was rejected at the outset for other reasons. In particular, Mr Grant testified and I accept that, shortly after receiving those instructions, he informed both Mr Loucks and Mr Snow that he (Mr Grant) was not going to have anything to do with arrangements separating the beneficial ownership of the Clarington property from its legal ownership, that he accordingly would not be preparing the requested declarations of trust or contract in that regard, and that they would need to engage another lawyer if they wanted to pursue such options. Thereafter, nothing further was said to Mr Grant about such possibilities. [^17]: The relevant letter was the subject of another formal admission requested by the defendants, (via paragraph 50 of their formal “Request to Admit” delivered on or about February 28, 2018, marked as Exhibit B for identification), and made by the plaintiff corporation, (via paragraph 1 of its formal “Response to Request to Admit” delivered on or about March 13, 2018, marked as Exhibit C for identification). However, the specific date of the relevant letter, referred to therein, apparently was the subject of a further mutual inadvertent error by the parties and/or their counsel. In particular, although reference was made in the defendants’ “Request to Admit” to the relevant letter being sent by Ms Riffert to Mr Loucks on “September 21st, 2011”, I note that the actual date of the relevant letter – found at Tab 60 of Exhibit 1 – was September 27, 2011. The September 27^th date corresponds to the testimony I received at trial from Mr Loucks – during which there was no dispute that Ms Riffert’s letter to Mr Loucks containing the relevant substantive content was dated September 27, 2011. Moreover, I note that a similar letter, (noted below and found at Exhibit 1, Tab 61), also dated September 27, 2011, was sent by Ms Riffert to Mr Loucks and Mr Snow in relation to a debt of “165,000.00 plus accrued interest and costs from October 15, 2010”, which they were said to owe to the plaintiff corporation pursuant to the aforesaid promissory note and a vendor take back mortgage registered against the Mearns Court property, which had been sold by the plaintiff corporation to Razor Industries, and from which Mr Loucks and Mr Snow had operated that corporation’s business. Those exhibits clearly suggest that Ms Riffert drafted and sent both letters on the same date, (i.e., September 27, 2011), after receiving instructions about both debts said to be owed to the plaintiff corporation. Moreover, through the Request to Admit procedure, (i.e., via paragraph 51 of the aforesaid “Request To Admit” delivered by the defendants and paragraph 1 of the “Response to Request to Admit” delivered by the plaintiff corporation), it was agreed that Mr Grant responded to the relevant letter from Ms Riffert via a letter sent by Mr Grant on October 18, 2011. In that letter, found at Tab 62 of Exhibit 1, Mr Grant indicates and confirms that he was responding to correspondence sent by Ms Riffert on September 27, 2011. In the circumstances, I think it clear that, in the course of the formal “Request to Admit” procedure, the defendants inadvertently made a mistaken reference to the relevant letter directed by Ms Riffert to Mr Loucks alone, in relation to the mortgage debt, being sent on September 21, 2011, (i.e., rather than the correct date of September 27, 2011), and that the plaintiff inadvertently failed to notice the incorrect date when making its corresponding formal admission. In the circumstances, I proceed on the basis that the relevant letter mentioned in paragraph 50 of the defendants’ “Request to Admit”, and admitted by the plaintiff corporation in paragraph 1 of its “Response to Request to Admit”, was in fact sent by Ms Riffert to Mr Loucks, as agreed by the parties, but on September 27, 2011. [^18]: In cross-examination, Mr Grant explained that his letter was focused on the mortgage debts being claimed by the plaintiff corporation, because those were the matters in respect of which he had been supplied with information and instructions. In relation to the alleged promissory note dated October 15, 2010, (i.e., the same date as the originally contemplated closing on Mr Loucks’ purchase of the Clarington property), Mr Grant testified, and I accept, that Mr Loucks simply had told Mr Grant that “he had no idea what that was for”. [^19]: I note that Mr Gjorgievski’s assertions at trial that he learned about not being on title in January of 2011 are not consistent with his pleaded allegation, in paragraph 8 of his Amended Statement of claim, that “the plaintiff learned in April 2011 that Grant had failed to register its interest in the property”. [^20]: There were numerous examples of this. However, to cite just some of the many possible examples in that regard, assertions of Mr Loucks included the following: that the Clarington property was located by Mr Snow; that the purchase opportunity was brought to Mr Loucks by Mr Snow; that Mr Snow bore principal responsibility for the formulation and structure of all contemplated transactions in relation to the Clarington property, including the initial proposed involvement of Ms Langton, and arrangements from the outset to have Mr Gjorgievski provide funding for the required down payment; that Mr Snow and Mr Gjorgievski engaged in discussions and agreements in the absence of Mr Loucks; that Mr Snow would not allow Mr Loucks to have much direct contact with Mr Gjorgievski; that documents supposedly delivered to Mr Gjorgievski by Mr Loucks actually were channeled through Mr Snow; that it was Mr Snow’s “elaborate plan” to eventually provide Mr Grant’s law firm with two cheques consistent with an $80,000.00 gift and $55,000 of net proceeds from the sale of Mr Loucks’ Thornhill condominium; and that Mr Snow eventually took clandestine control of Mr Loucks’ email account to send messages in the name of Mr Loucks but without his knowledge or involvement. [^21]: The only handwritten notes of the matter made by Mr Grant and filed in evidence were made on August 30, 2010, and simply say, in their entirety: “New agreement. Julie Langton off agreement. Need copy of new Agreement. Main Street Orono OFF.” [^22]: See Rider v. Grant, 2015 ONSC 5456, [2015] O.J. No. 4786 (S.C.J.), at paragraph 93. [^23]: As noted above, Mr Grant’s failure to make contemporaneous notes of highly contentious matters, such as his much-disputed telephone conversation with Mr Gjorgievski, was entirely consistent with his apparent failure to make notes in relation to many other undisputed telephone conversations and meetings that happened in relation to the underlying transactions. [^24]: See Hoang v. Nguyen, 2013 ONSC 6242, [2013] O.J. No. 4537 (S.C.J.), at paragraphs 46 and 51. [^25]: For the propositions set forth in this and the preceding five paragraphs, see Esser v. Brown, [2004] B.C.J. No. 132 (C.A.), at paragraphs 26-30. Similarly, see Scott v. Valentine, [2012] O.J. No. 6240 (S.C.J.), at paragraphs 34-36, explaining and emphasizing that a breach of rules that help to define professional responsibilities and standards of conduct do not generate proximity and a duty of care where a duty does not otherwise exist. [^26]: I agree with decisions such as those of Justice McIntyre in 363440 Alberta Ltd. V. Clark, [2010] A.J. No. 1479 (Q.B.), for the reasons set out therein at paragraphs 40-45, that courts do not require expert opinion to determine the existence of a solicitor-client relationship, as opposed to the standard of care such a relationship may require in particular circumstances. In this case, the admitted expert opinion testimony of Messieurs Fortis and Pearlstein was restricted to standard of care issues. [^27]: See, for example: Weitzman v. Hendin (1989), 1989 CanLII 4185 (ON CA), 69 O.R. (2d) 678 (C.A.), at paragraphs 53-55, application for leave to appeal dismissed [1989] S.C.C.A. No. 377; Scott v. Sinotte Estate, [1998] A.J. No. 900 (Q.B.), at paragraph 43; Jeffers v. Calico Compression Systems, 2002 ABQB 72, [2002] A.J. No. 79 (Q.B.), at paragraph 8; Rizi v. Sinardee, [2008] O.J. No. 299 (S.C.J.), at paragraph 16; and 1054954 Alberta Ltd. v. Jean, [2014] A.J. No. 145 (Q.B.), at paragraphs 83-85; Chand Morningside Plaza Inc. v. Badhawar, 2015 ONSC 293, [2015] O.J. No. 192 (S.C.J.), at paragraph 23. [^28]: See, for example: Baypark Investments Inc. v. Royal Bank, 2002 CanLII 49402 (ON SC), [2002] O.J. No. 58 (S.C.J.), at paragraph 23, affirmed on appeal [2002] O.J. No. 4377; Scott v. Valentine, supra, at paragraph 21; 1054954 Alberta Ltd. v. Jean, supra, at paragraph 86; and Chand Morningside Plaza Inc. v. Badhawar, 2015 ONSC 293, supra, at paragraph 26. [^29]: See Esser v. Brown, supra, at paragraph 32, quoting with approval from Kamahap Enterprises Ltd. v. Chu’s Central Market Ltd., [1989] B.C.J. No. 2018 (C.A.). [^30]: See, for example: Kamahap Enterprises Ltd., v. Chu’s Central Market Ltd., supra, cited with approval in Budrewicz v. Stojanowski, 1998 CanLII 14688 (ON SC), [1998] O.J. No. 2986 (Gen.Div.), at paragraph 72. [^31]: See, for example, Baypark Investments Inc. v. Royal Bank, supra, (S.C.J.), at paragraph 23; Scott v. Valentine, supra, at paragraphs 21 and 36; 1054954 Alberta Ltd. v. Jean, supra, at paragraph 86; and Chand Morningside Plaza Inc. v. Badhawar, supra, at paragraph 26. [^32]: See Dutton v. Bognor Regis Urban District Council, [1972] 1 Q.B. 373 (C.A), at pp.394-395; Kamahap Enterprises Ltd. v. Chu’s Central Market, supra; and 1054954 Alberta Ltd. v. Jean, supra, at paragraph 86. [^33]: See Dutton v. Bognor Regis Urban District Council, supra, at p.395; Kamahap Enterprises Ltd. v. Chu’s Central Market Ltd., supra, at paragraph 32; and Scott v. Valentine, supra, at paragraphs 29-30. In that regard, I note that some court decisions and academic commentary, in paraphrasing the originally stated prerequisites for the duty, use wording that would tend to relax those prerequisites to some extent. For example, Tracy v. Atkins, 1979 CanLII 760 (BC CA), [1979] B.C.J. No. 12 (C.A.), at paragraph 10, refers to the duty being imposed in situations where the solicitor “knew or ought to have known” that non-client third parties “were or might be relying on him” to protect their interests. [Emphasis added.] Similarly, in an article entitled “Solicitors’ Liability to Non-Clients in Negligence” written by Debra Rolph and published in the Advocates Quarterly, Volume 15, No. 2 from June of 1993, at pp.129-171, the writer summarized the British Columbia Court of Appeal’s decision in Kamahap Enterprises Ltd. v. Chu’s Central Market Ltd., supra, as follows: “The essence of the Kamahap case is this – a solicitor cannot be expected to protect the economic interests of a non-client unless, in all the circumstances, the non-client reasonably relied upon him to do so and the solicitor knew or should have known of this reliance.” [Emphasis added.] That comment and interpretation has since been replicated and adopted in cases such as Budrewicz v. Stojanowski, 1998 CanLII 14688 (ON SC), supra, at paragraph 73 However, the aforesaid decision in Tracy v. Atkins, supra, predates Lord Denning’s authoritative restatement and clarification of the circumstances in which this “narrow” and “exceptional” solicitor duty to non-client third parties may arise, (i.e., in the 1982 decision of Dutton v. Bognor Regis Urban District Council, supra), which the British Columbia Court of Appeal itself expressly adopted and followed, in Kamahap Enterprises Ltd. v. Chu’s Central Market Ltd., supra, by saying “The matter could not, of course, have been better stated than by Lord Denning”. As noted by my colleague Justice Goldstein in Scott v. Valentine, supra, at paragraph 30, Lord Denning emphasized that actual knowledge is a prerequisite for a finding of care in such cases. In my view, requiring a solicitor’s actual knowledge that the non-client third party is relying upon him or her is not only consistent with the seminal authorities establishing and confirming the existence of such a “narrow” and “exceptional” duty, but also with corresponding judicial emphasis in this area that imposition of such a duty should be strictly confined to limited circumstances; circumstances which therefore should not be easily relaxed or expanded. [^34]: See Dutton v. Bognor Regis Urban District Council, supra, at pp.394-395; Kamahap Enterprises Ltd. v. Chu’s Central Market Ltd., supra; Esser v. Brown, supra, at paragraphs 32 and 37; and 1054954 Alberta Ltd. v. Jean, supra, at paragraph 86. [^35]: See Dutton v. Bognor Regis Urban District Council, supra, at pp.394-395; Esser v. Brown, supra, at paragraph 32; Scott v. Valentine, supra, at paragraph 30; and Chand Morningside Plaza Inc. v. Badhawar, supra, at paragraph 26. [^36]: For examples of decisions outlining and confirming the source and nature of the exceptional duty occasionally owed by a solicitor to a non-client third party, see: Dutton v. Bognor Regis Urban District Council, supra, at pp.394-395; Tracy v. Atkins, supra, at paragraphs 9-10; Budrewicz v. Stojanowski, supra, at paragraphs 68-72; and Esser v. Brown, supra, at paragraphs 10-17, 31 and 37. [^37]: In that regard, plaintiff counsel made reference to the various bases on which the court might find a defendant to be a constructive trustee, (e.g., as a trustee “de son tort”, through knowing assistance to a breach of trust, or through knowing receipt of property in breach of trust), as outlined by the Supreme Court of Canada in authorities such as Air Canada v. M&L Travel Ltd. (1993), 1993 CanLII 33 (SCC), 108 D.L.R. (4^th) 592 (S.C.C.), and academic writing such as “A Lawyer’s Duty to Non-Clients – The Budrewicz case revisited”, written by Richard Wong and Harry Herskowitz, apparently in relation to the “Return of the Six-Minute Real Estate Lawyer 2001 program” held on December 5, 2001. [^38]: See Oosterhoff & Gillese, Text, Commentary and Cases on Trusts (4^th ed.), at p.372. [^39]: See Towne v. Miller, 2001 CanLII 28006 (ON SC), [2001] O.J. No. 4241 (S.C.J.), at paragraph 9. [^40]: See Scott v. Sinotte Estate, supra, at paragraph 43. [^41]: In other words, I do not think this case involves circumstances comparable to that addressed in Clarence Construction Ltd. v. Lavallee, [1980] B.C.J. No. 2440 (S.C.), affirmed [1981] B.C.J. No. 17 (C.A.). [^42]: See, for example, 363440 Alberta Ltd. v. Clark, supra, at paragraphs 63-70.