COURT FILE NO.: CV-10-22598
DATE: 2020-01-30
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BAZAR MCBEAN LLP, S.D. BAZAR PROFESSIONAL CORPORATION, DAVID BAZAR AND MONIQUE DEGUIRE
M. Girard, for the Plaintiffs
Plaintiffs
- and -
STEPHEN CHISHOLM, JOHN HAMMOND AND INCH HAMMOND PROFESSIONAL CORPORATION
S. Lawlor, for the Defendants
Defendants
HEARD: May 22, 23, 24, 27, 28, 29, 30, June 6, and October 3, 2019.
A. J. Goodman J.:
REASONS FOR JUDGMENT
[1] This trial relates to a claim of professional negligence against the plaintiffs’ former solicitor, Stephen Chisholm (“Chisholm”) and his law firm brought by the plaintiffs David Bazar (“Bazar”) and Monique Deguire (“Deguire”).
[2] The plaintiffs, Bazar McBean LLP, is a limited liability partnership carrying on business as chartered accountants in Oakville. S.D. Bazar is a professional corporation. Bazar is a chartered accountant, a partner of Bazar McBean and owner and president of S.D. Bazar. Deguire is the spouse of Bazar and is a chartered accountant and director of audit for a public company.
[3] At the relevant time, the defendant, Inch Hammond Professional Corporation, carried on business as a law firm and provided legal services. The defendant, Chisholm, is a lawyer who provided legal services to the plaintiffs on behalf of Inch Hammond. John Hammond is the managing partner and sole owner of the Inch Hammond law firm.
[4] In their statement of claim, the plaintiffs’ claim general damages of $500,000, special damages of $250,000, aggravated, punitive and exemplary damages of $200,000, as well as pre and post-judgment interest.
[5] The trial commenced with a jury and continued with a judge sitting alone, which extended over a significant period of time with an adjournment to allow for written and oral submissions.
[6] There were several underlying actions that formed the basis for the alleged professional negligence. For the ease of reference, they will be referred to as the “OPB” litigation, the “Muldoon” action and the “Albazi” claim.
Position of the Plaintiffs:
[7] The plaintiffs’ principal claim in the OPB litigation is that Chisholm breached the standard of care of a reasonably prudent lawyer and was negligent.
[8] At its core, the plaintiffs’ say that the OPB action was really not complex and a reasonably competent lawyer would have determined the problems with OPB's claims at an early point in the proceedings. Yet, as a result of a protracted series of events that resulted in procrastination and a failure to act, in breach of his professional and ethical duties, Chisholm not only failed to properly defend the claims, he made the situation much worse.
[9] The plaintiffs submit that a reasonably prudent lawyer would have obtained relevant evidence early in the OPB litigation, prior to discovery, and would have brought a motion to strike out the Certificate of Pending Litigation (“CPL”) due to OPB’s failure to make full and frank disclosure. The evidence obtained from these two steps would have resulted in either a successful motion to strike OPB's claim for prospective rent or a settlement similar to the final settlement OPB entered into when faced with the same evidence and the relevant law.
[10] Chisholm waived or failed to make use of legal tools to obtain relevant evidence early in the action, he failed to properly understand the nature of the claim and the relevant law. Chisholm brought and continued with an ill-advised summary judgment motion which failed, he made misrepresentations to a judge, he did not prepare his clients for cross-examination or discovery, he did not address documentary production, he gave extensive undertakings to questions which were overly broad or irrelevant, he failed to respond to undertakings, he ignored and alienated opposing counsel, and he failed to attend in response to a motion which ended in a default order and a garnishment against Deguire.
[11] The plaintiffs’ claim damages on the basis that they lost the chance to resolve the OPB litigation on a successful basis early in the litigation. Hence, the plaintiffs incurred substantial and unwarranted costs. The plaintiffs’ claim all of counsel, Roger Campbell’s (“Campbell”) legal fees in addressing and eventually resolving the OPB claim, responding to the undertakings, the motion to strike out the statement of defence for failure to respond to those undertakings and other related expenses incurred by him and other counsel hired to respond to the litigation. The plaintiffs’ claim reimbursement of the costs award of $19,196.67 arising out of the failure of the motion.
[12] Chisholm was in breach of his duty of care in failing to attend on the October 20, 2008 motion, resulting in the Notice of Garnishment served on Deguire's employer. Overall, the plaintiffs submit that Chisholm breached his professional and fiduciary duty. The plaintiffs’ claim restitution or repayment of all fees paid to Chisholm and Inch Hammond relating to the summary judgment motion and the collateral litigation on the basis that they received no value for fees paid.
[13] With regards to the Muldoon action, Bazar claims damages relating to the loss of a chance to defend the Muldoon action and recover on his crossclaim and an order requiring Chisholm and Inch Hammond to repay all fees received by them in the Muldoon matter.
[14] With respect to the Albazi claim, Bazar McBean LLP claims damages representing the amount that would have been received as a dividend had the claim not been improperly withdrawn, along with damages for recovery of the balance of their claim when the proposal of Albazi was set aside due to misrepresentation. The plaintiffs also seek an order requiring Chisholm and Inch Hammond to repay all fees received by them.
[15] The plaintiffs’ claim aggravated damages for Chisholm's breach of fiduciary duty by knowingly, repeatedly and intentionally protecting his own personal interests to the detriment of his clients. This includes Chisholm's intentional failure to send a letter to Deguire's employer to explain that the garnishment was his fault and to ameliorate the damage he had caused to her reputation as well as emotional distress. Further, it is claimed that Chisholm intentionally failed to respond to Bazar or to address the various issues raised by his client in a timely manner.
[16] The plaintiffs’ submit that Inch Hammond and John Hammond failed to adequately supervise Chisholm as an employee and are vicariously liable. As a result of the defendants’ negligence, the plaintiffs argue that they would have avoided almost all of the substantial legal fees, costs and disbursements incurred by Bazar and Deguire subsequent to the termination of Chisholm's retainer, which totalled $447,987.
Position of the Defendants:
[17] The defendants submit that the plaintiff, Bazar had a long, expensive, fight with his former landlord, OPB and OPB Realty (“Realty”). In the end, Bazar obtained the results that he wanted; a dismissal of the action without costs. Yet, he now claims that he could have obtained this result quicker and cheaper if Chisholm had done things differently. OPB offered to settle the lawsuit on March 30, 2009. It offered to accept a payment of $150,000 inclusive of interests and costs. Bazar rejected this offer and made no offers thereafter until the October, 2013 pre-trial.
[18] The defendants say that Bazar could have saved himself the vast majority of the legal fees he incurred by accepting the Offer to Settle. Instead, he thought his reputation would be threatened by settling with OPB, a concern that was unsubstantiated by evidence other than Bazar's own self-serving statement to that effect.
[19] The defendants argue that it was OPB that alleged fraud and dishonesty against Bazar, his wife, and his companies. It was OPB that caused Bazar to spend so much on lawyers. While the rules allowed Bazar to pursue his opponent for his costs, yet he chose not to do so. Instead, he compromised and settled for a dismissal of the action without costs.
[20] The defendants submit that Chisholm acted reasonably and met the standard of care expected of him when he brought the motion in March 2007 to remove the CPL and seek summary judgment. The motion failed because OPB alleged that Bazar lied. The real problem that Bazar faced when he brought his motion for summary judgment was that the responding record contradicted what Bazar said. The evidence in OPB's responding record was that Bazar had not made an agreement with Erin Mills to continue to lease the premises month-to-month after July 31, 2005. OPB said that it did not agree to let Bazar leave at the end of April, 2006. The affidavits accused Bazar of dishonesty.
[21] Bazar says that Chisholm should have immediately, upon being retained, brought a motion to remove the CPL on the basis of non-disclosure, and demanded certain documents from OPB, which would have undermined OPB's case; and brought a motion using these documents to dismiss the litigation. The defendants respond that the argument that such an approach would have worked or that it would have resulted in a favourable outcome for Bazar and his companies at modest expense is speculative at best. The OPB case, with its allegations of dishonesty and its implacable, ruthless, plaintiff was never going to be resolved quickly or cheaply. Even if Bazar had gotten the evidence he now says he should have obtained, he still would not have been able to dispose of the lawsuit.
[22] The defendants submit that even if Chisholm had persuaded a judge to remove the CPL, it would not have affected the outcome of the litigation. OPB would still have had its lawsuit against Deguire for damages and would still have pursued all its claims against Bazar. There is no evidence that losing the CPL motion would have deterred OPB. Mr. Keefe's opinion was that neither the facts nor the law supported a substantial and legitimate chance of successfully obtaining summary judgment even with the documents and evidence that Weston said that Chisholm should have obtained.
[23] Moreover, the plaintiffs' say that productions of documents would have been a straight-forward matter. The defendants respond that this entirely ignores Bazar’s and Campbell’s experience in dealing with OPB and its lawyers. OPB was an aggressive, determined, well financed litigant who was seemingly indifferent to the cost or risk of litigation. Even the plaintiffs’ expert acknowledged that just because a document should be produced under any of these pre-pleading procedures, it did not mean that such a document would be produced. This is exactly what happened with several of the important documents that Campbell tried to obtain from OPB.
[24] The defendants submit that Bazar spent over $400,000 in fees on a case that could have settled for $150,000. OPB incurred legal fees to pursue a claim that after seven years of litigation got them nothing. It is apparent that cost-effectiveness of the litigation was not important to either side. Each wanted to be proven right and were prepared to use the litigation process to get what they wanted.
[25] The defendants also say that before Deguire was served with a Notice of Garnishment she was a senior employee with a publicly-listed company. That was true after she was served with a Notice of Garnishment and continues to be true today. In any event, it was OPB who placed the CPL on the plaintiffs’ home. It was OPB who caused Deguire’s damages and it was OPB who should have paid damages and Deguire's legal fees arising from the CPL. Deguire chose to walk away from that claim at the October 2013 pre-trial.
[26] The defendants submit that Chisholm did not breach his fiduciary duty to Bazar, or the named plaintiffs. Chisholm met the standard of care expected of him. It cannot be said that the clients received no value for his work.
[27] The defendants dispute that Chisholm was not adequately prepared for the Muldoon trial and Albazi claim and that Chisholm fell below the standard of care expected of him. This includes Chisholm's alleged failure to learn about the contractor's witnesses before trial. In 2008, Rule 76 prohibited the examinations for discovery. The plaintiffs’ also assert that there were expert reports that Chisholm could have obtained for trial. The defendants respond that there was no trial and there were no examinations for discovery. Any criticisms about the effect of how Chisholm handled the litigation or the Alabzi claim are entirely remote and speculative.
[28] In summary, the defendants submit that the plaintiffs have not met their burden to demonstrate negligence or any of the claims advanced in this trial. In the alternative, should liability be established, the damages sought by the plaintiffs are excessive and unsubstantiated.
Background Facts to the Litigation:
[29] Bazar became involved with a company Transport North American Express Inc. (“Transport”) when he was asked by its legal counsel to review a loan agreement that it had entered into with New Solutions Financial Corporation. Bazar determined that the effective interest rate on the loan was 90%, well above a criminal rate of interest. Bazar believed that Transport would ultimately be successful in the litigation to recover the interest paid.
[30] Transport needed to refinance to survive while the litigation was proceeding. Bazar entered into a business arrangement with the owners and managers of Transport, the Dragosits, which involved Bazar and Deguire guaranteeing the replacement financing (“GSA”) from the Bank of Montreal (“BMO”) in return for shares and guarantee fees from Transport.
[31] Transport shared space with TNA Logistics (“Logistics”) in premises at 4055 Sladeview Crescent in Mississauga (“the premises”). Transport and Logistics were both owned and continued to be managed by persons known as the Dragosits. When Bazar first became involved, Transport and Logistics were occupying the premises under a sublease with Erin Mills Development Corporation (“Erin Mills”) that had been assigned to them.
[32] On June 25, 2002, the Bank of Montreal made demand on the $500,000 GSA and called on the guarantees. A receiver was then appointed under the BMO security. With the agreement of the Dragosits, the assets and undertakings of Transport were valued and sold by the receiver to Logistics. The Bill of Sale was between the receiver and the Dragosits. Transport’s trucking licences were not transferrable, so Transport was required to continue business in conjunction with Logistics. Subsequently, the receivership was concluded and the Dragosits continued to manage the business. Concerned over his exposure on the guarantees, Bazar negotiated with BMO to pay off the Bank and take over the Bank's position and security. Bazar and Deguire were able to pay the Bank in full to the tune of $550,000.
[33] Bazar was not involved in the day-to-day management or operations of the trucking business. Unbeknownst to Bazar, on September 18, 2002, Karen Dragosits signed a lease on behalf of Transport for the Sladeview premises. This lease was signed back by the landlord, Erin Mills, on September 24, 2002.
[34] On November 11, 2002, Bazar became a director of Transport and the Dragosits were removed as officers and directors on that date. Transport hired people to manage the company, Bazar was not directly involved.
[35] In 2004, Erin Mills began to object to the parking of trucks and trailers at the lot of the leased premises. This was discussed with Bazar and eventually lead to an alleged agreement of March 23, 2005. Erin Mills agreed that the lease was to be terminated and that Transport was to vacate by July 2005. Bazar deposed that Erin Mills agreed that his company could remove the dock levellers. Transport did not vacate the premises and continued to pay rent on a month-to-month basis. While Erin Mills was not able to locate a copy of the agreement in their files, Bazar asserted that he had, in fact, signed the agreement.
[36] On November 1, 2005, Elgin Mills sold the premises to OPB, which was acquired effective December 30, 2005. An assignment of the lease was executed on the same day. Transport continued to pay the rent for the months of December 2005 to April 2006, inclusive.
[37] On January 31, 2006, Bazar, through Steel Matrix, made an offer to purchase a suitable building on Lanark Street in Hamilton. This eventually was accepted at a purchase price of $710,000. Contrary to subsequent allegations of Bazar being insolvent and stripping himself of assets, the title documents demonstrate that it was purchased without a mortgage.
[38] On March 8, 2006, Bazar sent a letter to the new owner, Realty, advising that Transport was moving. Realty appointed “20 Vic” as property manager as of November 1, 2005. While OBP or 20 Vic, deny receiving the letter, on April 12, 2006, they requested distraint documents from their bailiff along with instruction letters; at the same time when they alleged they were unaware that the premises was being vacated until April 24, 2006.
[39] On April 24, 2006, one of the employees found the Sladeview premises locked and he was unable to access the building. There was no Notice of Distraint posted. Later that day, the Notice of Distraint was found posted on the door.
[40] While the Notice alleged rent from November 2005 was owing, the parties agree that all rent had been paid, up to and including April, 2006. In addition, OPB held a security deposit.
[41] On October 15, 2006, Realty obtained an ex parte CPL against the plaintiffs’ residence. It was asserted that Bazar had fraudulently conveyed the matrimonial home to Deguire. Thus, a CPL was filed against the family home with an affidavit in support from Chris Innes (“Innes”), the property manager. The affidavit made no mention of OPB’s or Realty’s rights of assignment under the lease. The action made serious allegations of fraud against Bazar and Deguire and claimed substantial amounts in damages.
[42] On discovery, OPB was shown the May 3, 2006 letter from Mr. Wolf, then-solicitor for OPB which purported to suggest, inter alia, that the lease was terminated. Mr. Laverence, litigation counsel on behalf of OPB, claimed that no letter was ever sent as to acceptance of Transport’s repudiation or termination of the lease. Five years later, Mr. Laverence clarified that the lease was not terminated and no notice was provided. Mr. Innes’ affidavit of October 26, 2012 referred to the May 3, 2006 letter.
[43] On November 17, 2006, Bazar was served with the Statement of Claim suing for oppression, unjust enrichment, fraud and inducing breach of contract. OPB claimed that Bazar had masterminded a scheme to strip Transport of its assets and to surreptitiously remove its chattel from the leased premises.
[44] Faced with these serious claims, Bazar sought advice from a senior lawyer at Inch Hammond for a litigation lawyer. That lawyer recommended Chisholm, who retained carriage of the file on December 22, 2006.
Legal Principles:
[45] As mentioned, there are several underlying actions that formed the subject matters of this trial. There is no dispute that if liability is established as against Chisholm, both defendants, Inch Hammond and John Hammond are vicariously liable in damages.
[46] The parties agree that cases of Jarbeau v. McLean 2017 ONCA 115, 410 D.L.R. (4th) 246 and Folland v. Reardon (2005), 2005 CanLII 1403 (ON CA), 74 O.R. (3d) 688, [2005] O.J. No. 216, govern the law of solicitor’s negligence. The 'but for' test is the appropriate standard for causation in negligence in all but rare cases: Clements v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181, at para. 8.
[47] In a lawyer's negligence case, the authorities discuss the concept of a “trial within a trial” in order to determine what would have happened but for the solicitor’s negligence in relation to what damages arise, if any. In Jarbeau, Pardu J.A. explains at para. 26:
In Folland this court discussed the elements of a cause of action for breach of contract based on solicitor's negligence. I extract the following principles from that decision, using the language used by Doherty J.A., at paras. 72-76:
In most cases of solicitor's negligence, liability rests on both a tort and contractual basis.
The imposition of liability grounded in the loss of a chance of avoiding a harm or gaining a benefit is controversial in tort law, particularly where the harm alleged is not purely economic.
Whatever the scope of the lost chance analysis in fixing liability for torts claims based on personal injuries, lost chance is well recognized as a basis for assessing damages in contract. In contract, proof of damage is not part of the liability inquiry. If a defendant breaches his contract with the plaintiff and as a result the plaintiff loses the opportunity to gain a benefit or avoid harm, that lost opportunity may be compensable.
The plaintiff must establish on a balance of probabilities that but for the defendant's wrongful conduct, the plaintiff had a chance to obtain a benefit or avoid a loss.
The plaintiff must show that the chance lost was sufficiently real and significant to rise above mere speculation; The plaintiff must demonstrate that the outcome, that is, whether the plaintiff would have avoided the loss or made the gain, depended on someone or something other than the plaintiff himself or herself; and the plaintiff must show that the lost chance had some practical value.
[48] At paras. 27 to 32, Pardu J.A. goes on to state:
Where a plaintiff in a tort action arising out of solicitor's negligence can establish on the balance of probabilities that but for the negligence he or she would have avoided the loss, he or she should be fully compensated for that loss.
Where a plaintiff can only establish that but for the solicitor's negligence he or she lost a chance to avoid a loss, a claim for breach of contract may permit recovery for the value of that chance.
The case law is clear that a plaintiff in a solicitor's negligence case can fully recover her loss in appropriate circumstances. The British Columbia Court of Appeal expressed it this way, in Nichols v. Warner, Scarborough, Herman & Harvey, 2009 BCCA 277, 95 B.C.L.R. (4th) 133, leave to appeal refused, [2009] S.C.C.A. No. 355, at para. 26:
In Folland, this court rejected the appellant's alternative loss of chance claim for several reasons, including that public policy would not countenance a damage award based on a lost chance in a criminal case. If Mr. Folland could only establish a less-than-50% chance of acquittal, by implication the trier of fact would have found that it was more likely than not that he had been properly convicted: at para. 92.
Where a plaintiff advances a tort claim for damages founded on the "but for" causation test, Folland does not support Mr. McLean's argument that some degree of probability between 50% and 100% should reduce a defendant's liability.
In short, none of the cases cited to us involved a defendant attempting to reframe a plaintiff's case as a loss of chance, where the loss the plaintiff claims is the opportunity successfully litigate or settle a claim in full and the "trial within a trial" approach allows the plaintiff to test that claim. In such circumstances the plaintiff is entitled to advance the trial within a trial on the balance of probabilities standard, and to fully recover if that standard is met.
The Expert Evidence:
[49] Ronald Weston (“Weston”) was qualified as an expert for the plaintiffs’ while John Keefe (“Keefe”) was qualified as an expert witness for the defendants. Both experts testified at trial along with having provided their written reports. Weston opined, in part, that:
The statement of claim that Chisholm received in the Bazar case specified that the plaintiff in the action was OPB Realty Inc. and OPB Realty Inc. had no privity to any lease or other contract with any of the defendants as it was not the landlord in the lease. On what legal basis did OPB Realty Inc. have to sue for recovery of rents? The lease was between Transport North American Express Inc., as tenant, and The Erin Mills Development Corporation, as landlord. OPB Realty Inc., the plaintiff, was not mentioned anywhere in the lease. OPB Realty Inc. had to be relying on an assignment of lease. Consideration of this issue ought to have caused Chisolm to review and analyze the assignment documentation and the conduct of the Plaintiff in taking enforcement actions. That evidence, once illuminated, provided a complete defence in the action in recovery of rents which was ultimately recognized by the plaintiff when it agreed to a settlement entirely in favour of the Defendants.
Competent counsel would have requested the lease assignment to see whether OPB Realty Inc. actually had any right to make a claim for rents against Transport North American Express Inc. and to cross examine on the subsisting affidavits to determine the facts or the status of lease and rent payments after the assignment as well as the plaintiff s enforcement activities. Chisholm did none of those things.
Had Chisholm requested such documents and made a demand for particulars, all of which he could have done prior to filing a statement of defense and well before any full production or discovery, he would have found out that: OPB Realty Inc. gained none of the rights of Erin Mills in the lease that existed prior to the date of the assignment and consequently no right to claim for any alleged breaches of the lease that occurred prior to the date of assignment; the tenant was not in arrears of the rent; the tenant gave no termination of lease notice; the landlord never provided notice that it was going to claim prospective rent; the distress was continuing; and Bazar made no misrepresentations.
[50] Weston stated that he had reviewed the relevant cases provided by counsel in relation to obtaining a CPL in an action claiming to set aside an alleged fraudulent. In seeking a CPL where there is no direct claim of an interest in the property, Weston opined that courts have applied the leading case of Highway Properties Ltd. v. Kelly, Douglas and Company Limited, 1971 CanLII 123 (SCC), [1971] S.C.J. No. 55, [1971] S.C.R. 562.
[51] Based on his review, the motion to set aside the CPL should have been brought separately and quickly as the laws requires that it be made forthwith. In Weston's opinion, the motion was likely to succeed and would result in a cost award against OPB. This would have swung momentum to the defendants and would likely have resulted in the early production of the relevant evidence required to defend the case and potentially support a motion for summary judgment.
[52] Weston opined that Chisholm breached the standard of care by failing to perform legal services to the standard of a competent lawyer by failing to identify his deficiency of experience in these proceedings. Chisholm had not dealt with obtaining a CPL or motions to lift or remove a CPL; Chisholm had not been involved in litigation involving the assignment of leases; Chisholm had not been involved in a situation where a debtor had taken over the position and security of a creditor; Chisholm had not been involved in advising receivers or in cases where a receivership transaction was being challenged.
[53] Weston’s opinion is that a reasonably prudent lawyer would have brought a summary judgment motion on this evidence and that such a motion would likely succeed.
[54] Keefe acknowledged that the assignment was relevant and subject to production on a request to inspect documents. Keefe agreed that under the assignment, OPB realty had no right to make claims under the lease for any period prior to December 30, 2005. Keefe opined that based on the facts relating to these corporate transactions, Erin Mills' agreement to terminate the Lease, and the sale of the matrimonial home had a chance of success for the summary judgment motion and motion to vacate the CPL. Even though the issues were fact driven, he believed that a judge hearing the motions could very well have concluded that the plaintiff was overreaching in pursuing claims against the individuals based on these rarely used legal theories without any real evidence to support the allegations of fraud and dishonesty. Similarly, the plaintiffs’ claim to set aside the transfer of the matrimonial home together with an ex parte CPL could have been viewed by a judge as going too far if it was not supported by any real supporting evidence.
[55] Keefe noted that Bazar wrote an email to Chisholm on April 28, 2007 responding to the points made in the affidavits. Prior to receiving this affidavit, Bazar had been pressing Chisholm to refuse to adjourn the May 11, 2007 hearing date. On April 28, Bazar did not ask Chisholm whether they should adjourn or abandon the motions. Instead, he made comments on the affidavits that demonstrated his resolve to proceed with the motions.
[56] Keefe says that another key premise of the Weston Report is that if all the necessary information and documents had been obtained, there would have been a "significant opportunity" or "a substantial and legitimate chance" to win a summary judgment motion. In Keefe’s experience, it is very difficult to predict, with any certainty, the likely outcome of any court proceeding. This is particularly true in the case of motions such as summary judgment motions or motions to vacate a CPL. In 2007, summary judgment motions were limited to clear cases where there were no serious facts in dispute, particularly if they involved credibility. In this case, even with all the facts and documents gathered by Campbell, the facts remained complicated and disputed and they continued to involve issues of credibility. The legal issues were also contested and unclear, they involved the interpretation of the Lease and they also involved disputed facts.
[57] Keefe says that, in this case, the landlord initially changed the locks, purported to distrain and did not give a formal notice of its intention to claim future rent. This raises the issue of whether the Landlord may have lost its right to claim future rent. The technical requirements to allow a landlord to claim future rent were initially established by the decision of the Supreme Court in Highway Properties. Keefe opines that there are many cases following this case that deal with these formalities. Following these decisions, commercial parties often deal with these formalities in the lease itself. The Lease in this case, at para. 10, allowed the Landlord to claim future rent without any formal notice. There are several decisions of the courts in Canada holding that notice in the Statement of Claim is sufficient to meet the formal requirements to claim future rent. In this case, the Landlord stated in the Statement of Claim that the Landlord terminated the Lease and that it was claiming for future rent.
[58] Further, Keefe opines that the law dealing with the technical formalities for a landlord to claim future rent is by no means clear. In 2012, Campbell brought a second motion for summary judgment which dealt directly with the legal issue of whether the Landlord lost its right to claim for future rent. Master Glustein concluded that the legal issue was unclear. In doing so he appears to have accepted the Landlord's position that notice of such a claim may be given in the Statement of Claim, as it was in this case.
[59] Keefe did not agree with the premise of the Weston Report that there was a substantial and legitimate chance that the motions would have been successful if all the facts and all the documents had been obtained.
[60] Keefe says that even after all the legal expenses were incurred to obtain all the facts and the documents, neither the facts nor the law were clear enough to support Weston’s premise. Keefe gave an opinion that "it would be fair to conclude that Bazar was well aware of the important tactical decisions that were being made in the litigation and that he was directly controlling the strategy."
[61] In Keefe’s opinion, Chisholm did not fall below the standard of a reasonably competent litigation lawyer in bringing the summary judgment motion and the motion to vacate the CPL as instructed. If those facts had been accepted as true or were not seriously disputed by Realty with solid evidence to support them, the motions could have been successful.
[62] Keefe concludes that the plaintiffs were not prejudiced by the failed summary judgment motion (apart from the cost award). The legal expenses that the plaintiffs’ incurred to obtain production and to conduct discoveries in the OPB case had to be incurred by them whether or not the unsuccessful motions were brought. In his opinion, Chisholm did not cause these costs to be incurred through any act or omission on his part.
[63] In response Weston quotes from Keefe’s report, where it states that a case is not a good candidate for summary judgment where the facts will require extensive investigation. The report also acknowledges that the background facts of the case are "quite complicated"…. Nevertheless, even though Keefe repeatedly acknowledges the complexity of the case, it somehow still asserts that the initial summary judgment motion had some chance of success. Weston says that this premise is made all the more dubious when the facts show that Chisholm undertook no investigation to discover and understand the underlying facts.
[64] Weston opines that the Keefe report suggests a false dichotomy. Chisholm had to consider and avail himself of the various tools he could use to obtain more information about the case by reviewing the documents mentioned in the Statement of Claim. Depending on the information that Chisholm gained from those two exercises, Chisholm would have been in a better position to make decisions in the defence of the claim and determine whether it was necessary to use other legal tools to obtain more information such as through cross-examination during the discovery process.
[65] The Keefe Report also states that Bazar did not ask Chisholm to adjourn the summary judgment motion on April 28, 2007, after the affidavits had been received. There is no evidence that Chisholm himself ever suggested a reconsideration of pursuing the initial summary judgment motions at any stage of the proceedings including after the affidavits containing conflicting evidence were received.
[66] Weston asks what did Chisholm do once he received the affidavits that changed everything? The evidence shows that Chisholm did not consider a change in strategy. Once Chisholm became aware of the conflicting versions of the facts in the affidavits, Chisholm had a duty to reassess the situation, make Bazar aware of how the content of the OPB affidavits affected the likelihood of success in the summary judgment motions in light of the OPB affidavits, and to inform Bazar about the possibility of cross- examining on the affidavits to reduce their influence, withdrawing the motion, or seeking an adjournment.
[67] Keefe opines that because all the legal expenses associated with normal litigation had to be incurred in order to bring a summary judgment motion, then the failed summary judgment motion did not cause these costs to be incurred. Weston responds that Bazar certainly incurred great costs, wasted time, and legal costs and expenses related to the matters surrounding the unsuccessful initial summary judgment motion. This included a failure to seek and review relevant productions, failing to instruct his client to refuse to give overly broad and irrelevant undertakings at the examinations of Bazar and Deguire - a motion that Chisholm did not attend – eventually resulting in a court order to be issued against Bazar, along with costs and the Notice of Garnishment against Deguire. This emboldened Realty’s resolve after their success on the initial motions.
[68] Furthermore, Weston opines that had Chisholm taken the steps that a competent lawyer would have, there would only have been the need for one summary judgment motion. Instead as a result of Chisholm's actions, it was necessary to file two summary judgment motions and carry the action to the pre-trial thereby incurring significantly greater time and expenses, which far exceeded the costs and expenses Bazar would have incurred had Chisholm pursued the initial summary judgment motions in the appropriate manner.
[69] Weston testified that while Bazar was very involved in the defence of the file, it is Chisholm’s duty to be an expert on the law, not his clients’. Bazar is a skilled accountant, but he is not a sophisticated litigator and needed to be advised of the likelihood of success and alternative strategies by his lawyer.
[70] I am not persuaded that Bazar was directly controlling the litigation and strategy. While it may be that Bazar was a very engaged and active client, he was relying on Chisholm's legal advice and recommendations.
[71] Keefe also opined that OPB and its counsel approached the litigation in an extremely aggressive manner and this lead to the costs of the litigation being so high. It is true that Realty eventually refused to be cooperative. Counsel refused to provide documents as the defendants were in breach of a court order for compliance with undertakings and attendance on discovery. There was a refusal to permit OPB to be examined until the discovery of the defendants was completed.
[72] However, it seems that Keefe overlooks the fact that OPB's counsel was not "extremely aggressive" early in the litigation . It was only after months of Chisholm failing to respond to emails, telephone calls, undertakings, letters and threats of motions that OPB's counsel became "extremely aggressive". Much of the additional, wasted costs of the litigation were caused by Chisholm's own conduct or inaction. Unfortunately, Campbell bore the brunt of the problems caused by Chisholm's conduct.
[73] While Keefe was retained by the solicitors for the defendants and had unrestricted access to Chisholm, he prepared his expert report in relation to Chisholm's actions without ever speaking to the defendant.
[74] I observe that, at times during cross-examination, Keefe could not concede common sense points raised by Mr. Girard. His opinion in relation to the legal effect and scope of the Highways Properties case as it applied in the underlying action, was equivocal. Overall, I reject his analysis of the Highways Properties case as it applies here, (including the suggestion that the parties can contract out of the Highway Properties case by incorporating clauses in the lease itself) and his interpretation of the relevant evidence as a basis for substantiating his opinion.
[75] While Keefe presented well in court and is, undoubtedly, very knowledgeable in his field of expertise; where there is a dispute or disagreement between the experts, I prefer and accept Weston’s report, analysis and conclusions.
Chisholm’s evidence:
[76] Briefly, when I refer to Chisholm’s examination for discovery, he conceded many points advanced by plaintiffs’ counsel. For example, he did not seek advice from other litigation lawyers in the firm; he never had been involved in prior motions to lift a CPL; he was not involved in assignment of leases to the extent that had transpired in this case; Innes had not been cross-examined at any time; he did not make enquires about when Transport signed the lease document.
[77] Chisholm identified the date of assignment as an issue, but he never followed up on this matter. He did not recall if Realty was granted assignment rights; he did not recall if he obtained any information whether the distress had been terminated or if the lease was signed after the receivership was concluded; or if OPB had any right to challenge the alleged lease breaches prior to any assignment. He did not know whether he obtained OPB’s acceptance of the repudiation. He did not recall providing a specific opinion to his client to set aside the CPL; he never delivered a request to inspect documents or a demand for particulars; he never requested OPB’s “Schedule A” productions; he did not research or had been involved with receivers where the actions of the receiver is challenged; he does not recall having a conversation with his client to obtain the plaintiffs’ productions. He did not recall the reason why he decided not to cross-examine the plaintiffs’ deponents. He admitted that no one attended the motion returnable on October 20, 2008.
[78] At trial, Chisholm admitted that he recognized that the file was more than he could handle. Chisholm testified that (at times), "I was over my head ... I was struggling with the file". He conceded that Bazar had not been properly prepared by him for the cross-examination; that he had indecisiveness. The file was a very complex commercial file that "was probably larger and more complex than I ought to have been handling at the time".
[79] Chisholm testified: “I acknowledge that my responsibility in the circumstances, if I was unable to properly manage the file or the client, I was to refer it out to somebody who could and I did not do that”. When asked why he did not do so, Chisholm’s explained that given where he was at in his career, as well as having a client that had been referred to him by another lawyer at the firm, he didn't have the will or the strength to refer the case. He admitted that he ought to have advised Bazar, but he did not. He testified: "I think I was certainly worried that this was a client who had been referred to me by another lawyer in the firm, that turning away work, potentially large litigation like that is a difficult thing to do for a young lawyer at that stage of my career."
Analysis Related to the OPB Litigation:
[80] While OPB provided a Notice of Assignment with subsequent rent cheques out to them, there was no Notice of Assignment to Realty. The underlying statement of claim gave no particulars as to OPB's right to claim against the defendants other than the allegation that it is an assignee of the rights of Erin Mills. None of the defendants have any knowledge of the assignment, when it occurred or what rights may have been assigned.
[81] The defendants claim that Realty would not produce documents or provide particulars in view of OPB's conduct at the time and subsequent to Chisholm's retainer. This position, however, overlooks the fact that, had the request to inspect documents and demand for particulars been delivered in a timely manner, OPB's action would likely have ground to a halt until the production issues were addressed. If OPB failed to respond, a motion could be brought. There can be no avoidance of production of documents referenced in a pleading. Keefe agreed with this proposition.
[82] The principal difference between the opinions of Weston and Keefe is Keefe's suggestion that, in order to bring the summary judgment motion articulated by Weston and brought by Campbell, full discovery would have to take place and the costs incurred in the OPB action would have been incurred in any event. He calls this the "Summary Judgment Dilemma". I agree with the plaintiffs that the problem with Keefe's approach is that he overlooked the importance of key facts and did not consider the procedural tools available to a competent lawyer to obtain documents and testimony early in an action, before the costs of formal discovery are incurred.
[83] As discussed, under the assignment, the acceptance of the tenant's repudiation and the intention to claim prospective rent were specifically pleaded in the Statement of Claim and would be obtained, either by a request to inspect documents or a demand for particulars. Of course, the acceptance of the tenant's repudiation and the intention to claim prospective rent could not be obtained as they never occurred.
[84] Keefe says that he cannot predict what might happen on a summary judgment motion. He does not say that Campbell's motion would likely fail. Nor does he say that the motion would likely fail. I find that his criticism of Weston is unwarranted. Lawyers provide advice to their clients all the time and assess the probability of success of the motion in making their recommendations. While no lawyer can guarantee the outcome of a motion, they can certainly make a conclusion based on the facts and the law. Both Campbell and Weston asserted that the summary judgment motion to strike the claim for prospective rent would likely have been successful.
THE CPL:
[85] A claimant must show that there is a high probability that he or she will obtain judgment against the transferor in the main action before a CPL will be issued in a subsequent action to set aside an alleged fraudulent transfer. It is settled law that a party seeking a CPL must only demonstrate that a triable issue has been raised and there is a reasonable claim to an interest in the land made in the main action. The basic obligation of full and frank disclosure on a motion without notice was articulated by the Court of Appeal in Chitel et al. v. Rothbart (1983), 1982 CanLII 1956 (ON CA), 39 O.R. (2d) 513:
There is no necessity for citation of any authority to state the obvious that the plaintiff must, in securing ex parte interim injunction, make full and frank disclosure of the relevant facts, including facts which may explain the defendant's position if known to the plaintiff. If there is less than this full and accurate disclosure in a material way or if there is a misleading of the court on material facts in the original application, the court will not exercise its discretion in favour of the plaintiff and continue the injunction.
[86] Master Egan comprehensively summarized the principles regarding the practical requirement to make full and frank disclosure in Euro United Corp. (Interim Receiver of) v. Rehani, [2003] O.J. No. 242 at para. 11:
The following principles apply on a motion to set aside an ex parte CPL order for misrepresentation or non-disclosure: There must be full and fair disclosure of all material facts when an ex parte motion is brought, pursuant to Rule 39.01(6). Material facts are those of which the court must be made aware in arriving at a decision, non-disclosure of which may affect the outcome of the motion ...
[87] It is trite law that the onus on the plaintiff to make full and complete disclosure is not discharged by disclosing only what is the most limited basis of information that may be relevant. Full disclosure may and often will require a plaintiff to advise the court of matters of both fact and of law which form the position of the other side. This duty of a balanced presentation of facts and law extends not only to absent parties but also to those who may be affected by the order.
[88] To be entitled to a CPL, OPB or Realty was required to establish that it had a '"high probability" that it would obtain judgment against Bazar in the action. To obtain judgment, Realty would have to first succeed against Transport and then succeed against Bazar on oppression, conspiracy, misrepresentation, or fraud, and then address the issue of whether the transfer of the home was made with the general intent to defraud creditors.
Failure to Bring a Motion to Strike the CPL:
[89] Weston opined that Chisholm breached the standard of care by failing to perform legal services to the standard of a competent lawyer by failing to bring a separate motion to vacate the CPL, which the plaintiffs had a significant chance to win because OPB had not disclosed all relevant information in obtaining the CPL under an ex parte motion; OPB had no claim to an interest in the land against which the certificate was registered; and OPB relied on the affidavit and evidence of a project manager who was not associated with the project and times of relevant facts.
[90] The evidence on this issue includes that Chisholm was aware that Erin Mills’ March 23, 2005 letter regarding termination of the tenancy and that the date of assignment to OPB was not stated in Innes' affidavit. The Innes affidavit did not state that distress was continuing. Chisholm does not recall giving Bazar a recommendation that the CPL be set aside due to failure to provide full and frank disclosure. Bazar, in fact, instructed Chisholm to bring an urgent motion to strike the CPL because it was obtained fraudulently and that it was obtained under false pretences.
[91] On a review of the documents and the sequence of events it seems that the Innes’ affidavit did not provide full and frank disclosure and was contradicted by OPB's own documents. Campbell advised that in his view, it was too late to seek to have the CPL vacated due to lack of full and frank disclosure.
[92] Weston testified that these non-disclosures should have been enough to persuade a motion judge to remove the CPL. As Keefe pointed out, OPB's statement of claim says, at para. 9, that it is the "assignee of the rights of the Erin Mills Development Corporation". Keefe said that OPB's witnesses relied on public documents with respect to the allegations relating to the July, 2002, receivership and relating to the companies operating at the premises. The tenant was in arrears of rent. The lease was dated September 24, 2002 not May 3, 2002. Keefe pointed out that the lease was attached as an Exhibit to the Chris Innes (“Innes”) affidavit. It contained the correct dates. However, Realty did not say that it only became the landlord as a result of the assignment.
[93] Keefe testified that even on a 'stand-alone' motion to lift the CPL, Bazar would have to file an affidavit setting out his evidence, on which he would likely have been cross-examined. It is true that, as of July, 2002, Bazar was not an officer or director of Transport. However, Bazar would not, on a motion to remove the CPL, be able to distance himself from OPB's allegations of dishonesty.
[94] When distilled to its essential elements, and for the purposes of this trial, I am satisfied that on this record, OPB fell far short of full and frank disclosure in its motion for a CPL. Thus, a reasonably prudent lawyer would have recommended that a motion to set aside the CPL should be brought on the basis of a failure to make full and frank disclosure.
[95] Regardless of whether a reasonably prudent lawyer would have brought a motion to set aside the CPL, Chisholm was specifically instructed by Bazar to bring such a motion on the basis that the CPL had been obtained fraudulently or under false pretenses. On February 6, 2007, Bazar emailed Chisholm accepting his advice on the summary judgment motion and instructed "have the certificate of pending litigation lifted on the basis that it was obtained fraudulently". On March 4, 2007, Bazar emailed Chisholm stating "Having a lien on our home is a significant hardship and very embarrassing. As you know it was obtained under false pretenses."
[96] In the notice of examination or on cross-examination, a request for all correspondence between the landlord and the tenant would have provided additional evidence that, contrary to Innes affidavit, the lease was not entered into on May 3, 2002. Rather, it was signed by Karen Dragosits on September 18, 2002 and signed back by Erin Mills on September 24, 2002, after the receivership had been concluded. As such, the receivership could not be a breach of the lease as it entirely predated the lease. Contrary to the Innes affidavit, Erin Mills was aware that Logistics shared space with Transport and the insurance certificate reflected that both resided in the premises. Wolf had written to Bazar on May 3, 2006, requesting payment of the May, 2006 rent thereby confirming the continuation of the lease.
[97] On February 27, 2009, Campbell provided the following information to his client:
In the summary judgment motion, Mr. Chisholm sought an Order vacating the Certificate of Pending Litigation. Mr. Chisholm did not, however, argue that, in obtaining the Order granting the issuance of the Certificate, OPB had not provided the degree of full and frank disclosure required on a motion made without notice. This is a much easier motion to succeed on and lack of success on such a motion does not involve the almost automatic award of substantial indemnity costs which are granted when a motion for summary judgment is unsuccessful. The Certificate of Pending Litigation had been obtained based on the affidavit of Chris Innes which, in my view based on my review of the documents and the sequence of events, did not provide full and frank disclosure, was contradicted by OPB's own documents, and did not comply with the Rules as to affidavits (particularly as to summary judgment motions). It is now too late, in my view, to seek to have the Certificate of Pending Litigation vacated due to lack of full and frank disclosure.
[98] Unfortunately, Chisholm did not proceed on the basis of failure to make full and frank disclosure. He did not seek to establish this fact and neither raised it as an issue in the notice of motion nor in his factum. That issue was not advanced before the motions judge. Chisholm admitted this problem in his evidence at trial. Chisholm also admitted that he ought to have cross examined Innes. In any event, I prefer the plaintiff’s evidence and accept Weston’s opinion on this issue.
Relevant Documents:
[99] The principal difference between the expert opinions is Keefe's suggestion that, in order to bring the summary judgment motion articulated by Weston and brought by Campbell, full discovery would have to occur and the costs in the OPB action would have been incurred in any event.
[100] There are only a handful of documents and admissions that are required for a successful summary judgment motion: The lease; the assignment; the acceptance of the tenant's repudiation; the Highway Properties notice of the intention to claim prospective rent; the notice of distress; and Mr. Wolf’s May 3, 2006 letter.
[101] A review of the statement of claim would also have alerted counsel to the principal causes of action being alleged. The main claim was for prospective rent.
[102] In view of the requirements under Highway Properties, the cross- examination of lnnes would have entailed questioning about the acceptance of the tenant's repudiation and the Highway Properties notice of the intention to claim prospective rent. This would establish that there was no acceptance of the tenant's repudiation and no mandatory notice of the intention to claim prospective rent other than, perhaps, service of the statement of claim. I accept that all of this evidence ought to have been sought, before the motion to strike the CPL was even brought.
[103] The discussion of the CPL issue identified other evidence and information that would have come out in the course of Innes’ cross-examination. While this evidence is not necessary for a successful summary judgment motion, it would be supportive to Bazar’s defence. Evidence could include the receivership documents; the documents confirming the dates of signing of the lease; the Insurance Certificate; the letter regarding agreement that Transport could vacate; the rent cheques showing all rent was paid to the end of April, 2006; the confirmation that OPB had no information that Bazar's net worth was not accurate.
[104] As observed by Weston, all of the evidence relied on by Campbell in his pre-trial conference brief could have been obtained through the use of available legal tools at the very early stages of the litigation. As these documents and questions are relevant, there can be no issue that they would be ordered answered or produced on a motion.
[105] I accept that all of the facts relied on for Campbell 's summary judgment motion would have been obtained by a reasonably prudent lawyer by the time the motion to lift the CPL was argued. Had Campbell been able to obtain this evidence earlier in the proceedings, the motion could have been brought earlier. Unfortunately, Chisholm’s negligence lost the opportunity to obtain relevant evidence early in the proceedings.
Commercial Tenancy:
[106] The relevant commercial tenancy law relating to the OPB case is not overly complex. I accept that there has not been significant changes in the law over the almost 50 years since the decision of the Supreme Court of Canada in the Highway Properties case. It is, however, an area of law that would have to be reviewed if a lawyer was not familiar with this area.
[107] OPB’s claim also alleges a distress and forfeiture of a lease. These issues would have to be researched by counsel before pleading. There were only three principal cases that governed the OPB litigation: Tsoukalas v. Domgroup Properties Ltd. [1993] O.J. No. 4378, 33 R.P.R. (2d) 317, 962789 Ontario Ltd. v. Newmarket Plaza Ltd. 2014 ONSC 2254, (2014), 119 O.R. (3d) 610 and Highway Properties.
[108] I accept that Realty or OPB alleged unpaid rent and several non-rent breaches of the lease. While OPB's action focused on its claim for prospective rent under Highway Properties, its first enforcement steps against Transport were by way of distress for non-payment of rent. The law with respect to distress must first be considered. With respect to distress, Tsoukalas v. Domgroup Properties Ltd. is the relevant authority.
[109] OPB's main claim against Transport was for prospective rent which is only available under the fourth option. Before going further, it is critical to note that the options are mutually exclusive. Distress is an affirmation of the lease; therefore, a landlord cannot terminate a lease while distress is ongoing. Furthermore, when faced with a tenant's breach of a lease, the landlord must make an election. In TNG Acquisition Inc. (Re), 2011 ONCA 535, 107 O.R. (3d) 304, the Court of Appeal held at para. 26:
As the motion judge observed, Highway Properties is the seminal Canadian case on repudiation of commercial leases. In Highway Properties, a major tenant in a shopping centre repudiated its lease. The landlord resumed possession and notified the tenant that it would be held liable for damages it (the landlord) suffered as a result of the repudiation. The landlord sued for damages not only for the losses suffered to the date of repudiation but also for prospective losses resulting from the tenant's failure to carry on business in the shopping centre for the full term of the lease.
[110] At p. 570 of Highway Properties, Laskin J. set out three remedies that a landlord may take when a tenant has repudiated the lease entirely: (1) the landlord may insist on performance and sue for rent or damages on the footing that the lease remains in force; (2) the landlord may elect to terminate the lease, retaining the right to sue for rent accrued due or for damages to the date of termination for previous breaches of covenant; or (3) the landlord may advise the tenant that it proposes to re-let the property on the tenant's account and enter into possession on that basis.
[111] Thus, as Highway Properties makes clear, termination and repudiation are distinct legal concepts. Repudiation occurs when one party indicates, by words or conduct, that they no longer intend to honour their obligations when they fall due in the future. It confers on the innocent party a right of election to, among other things, treat the lease as at an end, thereby relieving the parties of further performance, though not relieving the repudiating party from its liabilities for breach.
[112] Accordingly, I agree with the plaintiffs that a distress for rents suspends the landlord's right of action for recovery of the rent, and the suspension continues so long as the goods distrained remain in the landlord's hands. A landlord may not terminate a lease and then distrain for the arrears; nor may a landlord terminate a lease while a distress is in progress, unless the landlord first abandons the distress. To pursue the fourth option under Highway Properties, there are two requirements: The lease must be terminated; and there must be notice to the tenant of the reservation of the right to claim damages for the balance of the rent payable under the lease.
[113] From the evidence filed, it seems that the landlord never made an election after receiving the repudiation letter. Realty appeared to have made the election to continue the lease and continue the distress as reiterated by Mr. Wolf in his letter of May 3, 2006.
[114] While I remind the reader that I am not here to judge the underlying case, per se, it seems to me that based on this evidence, OPB could not succeed under the fourth option in Highway Properties. The Master, in his reasons on Campbell's summary judgment motion, focused on the second requirement of notice to the tenant. I agree with the plaintiffs, that on a full assessment of the facts and jurisprudence, a judge hearing the motion would likely have concluded that the lease was never terminated, precluded the claim for prospective rent.
[115] As mentioned, Chisholm had not utilized the appropriate legal measures at his disposal. Thus, Campbell was forced to go through lengthy discovery to obtain this evidence. When relevant documents were obtained, Campbell brought a summary judgment motion.
[116] As Weston opines, this motion would likely have been successful in striking out Realty's claim for prospective rent. I accept that all of this highly relevant evidence should have been obtained early in the litigation. Chisholm admitted not being familiar with this area of commercial tenancy and did not take steps to educate himself appropriately and reasonably.
Fiduciary Duty:
[117] At trial, Chisholm admitted that he knowingly breached his professional and ethical obligations in representing them because he wanted to protect himself and his position at his firm. He felt that referring Bazar and Deguire to competent counsel would reflect badly on him and affect referral of work from other lawyers in his firm even though he knew this was his duty.
[118] While there was substantial evidence about Chisholm's repeated breaches of his duty of care, Keefe testified that: "Mr. Chisholm did not fall below the standard of a reasonably competent litigation lawyer in bringing the summary judgment motion and the motion to vacate the CPL”. The defendants also maintain that, in spite of the many and repeated breaches of Chisholm's duty of care and fiduciary duties, his breaches did not cause the plaintiffs any damages.
[119] Again, I prefer and accept Weston’s expert opinion that Chisholm breached the standard of care by failing to perform legal services to the standard of a competent lawyer by failing to identify his deficiency of experience in these proceedings.
[120] Without sounding unduly repetitive, the evidence on this issue included Chisholm’s own testimony. He admitted in his testimony in-chief that, "I was over my head ... I was struggling with the file"; that Bazar had not been properly prepared by him for the cross- examination. This complex commercial file "was probably larger and more complex than I ought to have been handling at the time".
[121] In spite of Chisholm acknowledging that Bazar had urgently instructed him to move to set aside the CPL on the basis that it had been obtained fraudulently or on erroneous information, Chisholm did not act to set aside the CPL on this basis.
[122] Further, Chisholm did not recall what was discussed with his client about the summary judgment motion. Chisholm did not recall meeting with Bazar to discuss the responding affidavits filed by OPB. Chisholm acknowledged that it was his responsibility as counsel to prepare Bazar but that he did not do so. Chisholm admitted that "we ought to have" cross-examined Realty and OPB witnesses on their affidavits. Chisholm agreed that he produced the November 2005 rent cheque to the plaintiff in response to undertakings provided on Bazar's cross-examination, but he did not cross-examine Innes to confirm receipt of the rent cheque. Chisholm agreed that he produced documentation relating to Bazar's assets and net worth being in excess of $1,000,000 to the plaintiff in response to Bazar’s undertakings, but he did not cross-examine Innes to confirm that OPB did not have any evidence to contradict the assets and net worth.
[123] In Chisholm’s evidence-in-chief, while admitting that his opinion on the likelihood of success of the motion had weakened after receipt of the responding affidavits, he did not communicate this to Bazar, particularly in view of his prior advice with respect to the success of the motion. He testified "I didn't do anything; we simply proceeded to argue the motion."
[124] With respect, I cannot accept the defendants’ assertions or Keefe’s opinion that Chisholm did not fall below the standard of a reasonably competent litigation lawyer in bringing the summary judgment motion and the motion to vacate the CPL." Such opinion is contrary to Chisholm’s own admissions.
Failure to Conduct Proper Research or Seek Advice:
[125] Weston opined that Chisholm breached the standard of care by failing to perform legal services to the standard of a competent lawyer by failing to conduct proper research or seek advice concerning the substantive law. Chisholm was a general practice civil litigator, yet he understood that an applicant on a “without notice” motion was under an obligation to make full and frank disclosure. Chisholm neither conducted research nor sought advice from any other litigators at his firm with respect to the matters implicating Bazar. Chisholm provided no opinion on liability or damages.
[126] Mr. Campbell, in his initial opinion regarding Chisholm's defence to the statement of claim noted: "... it appears that Mr. Chisholm had not raised the significant issues as to the failure to provide a Highway Properties notice or a notice under s. 19(2) of the Commercial Tenancies Act and as to the rights of OPB as assignee." It appears that Chisholm did not review the law with respect to the relevant jurisprudence, termination of leases, assignments, forfeiture and the law of distraint.
[127] It is accepted that a reasonably prudent lawyer is obligated to know the law relating to legal issues raised in an action.
Failure to Obtain Relevant Evidence Before Bringing Motion:
[128] Weston opined that Chisholm breached the standard of care by failing to perform legal services to the standard of a competent lawyer by failing to obtain additional information before bringing the motion for summary judgment, such as a demand for particulars, cross-examinations on affidavits, and requesting an Affidavit of Documents, which would have provided Chisholm with pertinent uncontested facts and documents necessary to make his client's best case to contest the validity of the CPL, and the motion for summary judgment.
[129] The evidence on this issue has already been canvassed earlier in these Reasons. A reasonably prudent lawyer would have obtained a copy of the assignment, sought to obtain a copy of the document or particulars of the acceptance of repudiation, the termination of the lease and the notice with respect to prospective rent, obtained particulars of the misrepresentations Bazar was alleged to have made.
[130] Further, Bazar sent an email dated October 18, 2008 suggesting that witnesses from Erin Mills and Vic 20 be examined. While claiming to be aware that the landlord's distraint prevented them from terminating the tenancy, Chisholm did not determine if the distress had concluded. Chisholm did not determine if Realty had any right to claim that the writs of execution, the transfer of the premises or the chattels and fixtures at the premises were a breach of the lease. Chisholm did not request or obtain the Erin Mills' file with respect to Transport. Chisholm did not request or obtain any information from Erin Mills or OPB dealing with rental payments or arrears.
[131] Shortly after taking over the file, Campbell raised the issue that "a great many relevant documents had not been listed on Schedule 'A' to Innes’ unsworn Affidavit of Documents.
[132] Campbell testified that obtaining a copy of the opposing party's productions is a necessary element of preparing a party to be examined and is also essential to understanding the entire case and to an analysis of whether full disclosure has been made. Weston supports this assertion.
[133] Chisholm admitted that his summary judgment motion did not raise the issue of the lack of full and frank disclosure. He admitted that his opinion on the likelihood of success of the motion had weakened after receipt of the responding affidavits, yet, did not raise this with Bazar. He testified "I didn't do anything; we simply proceeded to argue the motion."
Undertakings to Overly Broad and Irrelevant Discovery Requests:
[134] Weston opined that Chisholm failed to instruct his client to refuse to give overly broad and irrelevant undertakings at their respective examinations.
[135] At trial, Chisholm agreed with the counsel that Bazar was concerned about the extent of documents that were being requested by OPB. He did not provide any advice with respect to the documents that were being sought as to their relevance.
[136] While Chisholm admitted to being aware of the options of refusing to answer questions, taking questions under advisement and qualifying or limiting the extent of undertakings, he did not use these tools at Bazar’s examination for discovery. Chisholm provided 63 undertakings at the examination. At trial, he agreed with counsel that he was fairly agreeable in producing whatever OPB requested. Chisholm did not deny that he was a "deer in the headlights" and agreed that he did not give due consideration as to the relevance and propriety of all of those undertakings.
[137] Campbell, who became tasked with the obligation to comply with the undertakings and the default court order, advised "The undertakings provided at your January, 2008 examination are quite extensive and will take a great deal of time and effort [and] work to answer. It is my view that these undertakings amount to 'fishing' in many instances, and I would surmise that a number of the undertakings were sought because of the [defendants’] failure to provide an Affidavit of Documents... The problem is that, once an undertaking has been given, compliance is required, regardless of whether the undertakings should have been provided or not".
[138] Keefe did not provide an opinion on this issue. I accept Campbell’s and Weston's statements and opinions on this issue respectively.
Failure to Attend on the Discovery and Motion:
[139] Weston opined that Chisholm failed to perform legal services to the standard of a competent lawyer by neglecting to appear or have other counsel attend the motion brought by OPB to compel the plaintiffs to fulfil undertakings and to properly answer questions asked on examination.
[140] There is no dispute that Chisholm failed to attend on this motion. There was no viable explanation. This is so clearly a breach of a lawyer's duty. Chisholm testified that after the summary judgment motion, "I was in over my head with the file and I did not know how to properly proceed and so the response at the time was simply to do nothing."
Failure to Communicate with his Client and Opposing Counsel:
[141] Bazar sent an email to Chisholm dated November 14, 2008 advising, inter alia, that Chisholm failed to communicate with him or Deguire about attending the examinations in relation to the garnishment. Chisholm did not respond. At the time, Bazar demanded that Chisholm pay the costs of the motion and contact Deguire’s employer to explain the error.
[142] Weston opined that Chisholm breached the duty of care by not performing legal services to the standard of a competent lawyer by failing to communicate with his clients and opposing counsel during each step of the litigation process. Chisholm failed to prepare the plaintiffs for a cross-examination on their respective affidavits, failing to advise them about the likelihood of success and the cost consequences of an unsuccessful motion for summary judgment, did not notify the plaintiffs about OPB's interest in mediation, and failed to communicate with opposing counsel concerning the undertakings motion, which resulted in costs awarded against the plaintiffs.
[143] Chisholm claimed that Bazar was demanding and he felt overwhelmed. Yet, he testified that he had a responsibility to his client to manage the files or to refer him elsewhere. Chisholm agreed with the following statements:
I have been advised by Blaney McMurtry and verily believe that he and his assistant attempted to arrange a mediation with Mr. Chisholm and his assistant through numerous telephone conversations and voicemails. However, Mr. Chisholm's office never provided confirmation as to when Mr. Chisholm and his clients were available. Blaney McMurtry wrote to Mr. Chisholm setting out various dates that were convenient for himself and the mediator as well as providing a list of the undertakings given by Mr. Bazar.
I am advised by Blaney McMurtry and verily believe that no response was received to this letter. Blaney McMurtry therefore wrote to Mr. Chisholm and advised that he had scheduled the examination for discovery of Ms. Deguire for May 12, 2008, in Oakville, and requesting the answers to the undertakings provided by Mr. Bazar prior to Ms. Deguire's examination.
This letter is further to our correspondence of March 28, 2008, and numerous messages left for you by the writer and his assistant. At the conclusion of our examination of Mr. Bazar you advised that you recommend to your clients that the parties mediate that matter. Since that time we have requested confirmation of your instructions and we have also proposed both mediators and tentative mediation dates; we have not had any response. Our client believes that a mediation would be worthwhile. However, it's not prepared to allow this matter to sit dormant in the face of your client's unwillingness to cooperate in this regard.
Accordingly, we served the notice of examination requiring Ms. Deguire to attend on May 12, 2008. We ask that you advise whether you will be attending on that date with your client. If you are not, we ask that you advise in advance of the date in order that we can avoid incurring costs thrown away including time for preparation and attendance and fees payable to the examiner. If the examination does not proceed for any reason our client will have no alternative but to seek an order compelling Ms. Deguire to attend at an examination for discovery. Further, he will seek an order that your client answer all undertakings if they are not received within 20 days of the motion brought. Such a motion will also seek costs thrown away.
[144] While Bazar’s undertaking chart was provided to Chisholm on April 18, 2008, Chisholm admitted that it was not sent to Bazar until November 2008, after OPB had brought the motion to compel responses.
[145] On October 10, 2008, Chisholm was served with a motion record for a failure to respond to undertakings and produce the defendants for their continued discovery. As no one attended on the return date of the motion on behalf of the defendants, a default order was obtained with costs. The costs of the motion were not paid. As a result, a Notice of Garnishment was served on Deguire’s employer.
[146] At trial, Chisholm admitted that he did not respond to any of these requests from the conclusion of the examination for discovery in January, 2008, up until the time following the garnishment order in December 2008, when his firm offered to pay the costs of OPB's motion. Chisholm admitted that he did not recall discussing with Bazar any desire for mediation or obtaining any instructions from him, even though his client had raised concerns about his failure to respond to emails and telephone messages.
[147] It seems that Chisholm spent most of 2008 ignoring all OPB's counsel's requests for mediation, responses to undertakings and requests to arrange discoveries. He also neglected to advise Deguire of a scheduled examination for discovery. By his inaction, I am persuaded that Chisholm appeared to have turned OPB's counsel into a highly aggressive and antagonistic adversary.
[148] Again, I must reiterate my disagreement with Keefe’s opinion that "it would be fair to conclude that Mr. Bazar was well aware of the important tactical decisions that were being made in the litigation and that he was directly controlling the strategy." As mentioned, Bazar was very involved in the defence of the file. However, I accept that he relied on Chisholm for advice and recommendations and deferred to Chisholm. Keefe did not provide an opinion on Chisholm's conduct post-summary judgment. Campbell’s statements and Weston's opinions on this issue are not challenged.
[149] Indeed, Chisholm owed his clients a fiduciary duty. He admittedly, knowingly, and repeatedly breached his fiduciary duty because he wanted to protect himself and his reputation at his law firm.
[150] With regards to the OPB litigation, there is overwhelming evidence to support the plaintiff’s position that Chisholm breached his professional duty of care to his clients. I find that Chisholm was negligent and he did not act to the standard of a reasonably prudent and competent lawyer, to the plaintiffs’ detriment in the underlying action.
Muldoon Action:
[151] Muldoon claimed that he was owed money for the renovations and for “extras”. Bazar counterclaimed for Muldoon’s failure to complete the renovations and for deficiencies. Chisholm was not involved in the action until after pleadings and discovery were completed. Bazar obtained a report from Frontline Home Inspectors dated July 20, 2005, which detailed the deficiencies in the Muldoon construction.
[152] The pre-trial conference was held on January 16, 2008. In his report on the pre-trial conference, Chisholm advised that consideration should be given to hiring an expert. Apparently, Chisholm did not put forward the Frontline expert report at the pre-trial.
[153] On June 17, 2008 Chisholm made notes about Jarvis Insulation and the insulation deficiencies. At trial, Chisholm admitted that he did not take any steps to obtain an expert report from Jarvis Insulation. He admitted he understood that an expert report had to be served on the other party to entitle an expert to give testimony at trial. He admitted that he did not discuss obtaining an expert report from Jarvis Insulation with Bazar.
[154] On July 2, 2008 Bazar provided Chisholm with thermal scans of the house with commentary demonstrating insulation deficiencies in the construction. Chisholm admitted that he did not take any steps to obtain an expert report on the thermal scans so that expert testimony could be provided at the trial. He further admitted that he did not serve an expert’s report on Muldoon. Chisholm testified that he was ready for trial but on cross-examination he admitted that he had no witnesses in attendance, no experts in attendance and no reports from either the thermal imaging company or Jarvis Insulation.
[155] While Weston could not give an opinion on the outcome had Chisholm been properly prepared, he did state that Bazar was in a difficult position and was negotiating from a position of weakness. Muldoon would also know that witnesses were not in attendance. Bazar had no choice but to settle as there is no possibility of being successful on a construction deficiency counterclaim without expert testimony.
[156] In consideration of the equivocal evidence, I am not satisfied that Chisholm acted negligently or inclined to find liability. In any event, I agree with the defendants that there are no quantifiable damages arising from Chisholm’s conduct. This includes any legal fees incurred by the plaintiffs.
Albazi claim:
[157] Bazar McBean LLP had a judgment against Albazi on January 16, 2008 for $10,392.38 in damages, prejudgment interest at 16.1% per year, costs of $2,500 and post judgment interest at 16.1% percent per year.
[158] Bazar and Chisholm attended a meeting with the trustee. At that meeting Bazar objected to the proposal due to the fact that Albzai had not disclosed ownership in his company which had a substantial civil claim outstanding that was likely to be successful. Bazar instructed Chisholm to attend the next meeting and withdraw the objection to the proposal. Both Chisholm and Bazar agree that these were Chisholm’s instructions. Chisholm did attend the meeting. He testified that he advised the trustee that Bazar McBean was withdrawing the objection.
[159] Either Chisholm, in breach of his instructions, agreed to withdraw the claim or he advised that he was withdrawing the objection and the trustee misconstrued him. If the former, Bazar McBean is stuck with the withdrawal. If the latter - which is likely the case - then the only person who could correct the problem was Chisholm by advising the trustee that he was in error and request reinstatement of the claim. In any event, as a result, Bazar McBean lost its claim against Albazi. The proposal had advised that there would be a dividend of 25% to 26%. The plaintiffs says that Bazar McBean’s total claim was for $19,414.35, and they submit that they would have received a dividend of $4,853.59 to $5,047.73.
[160] The plaintiffs’ argue that the loss of the claim had larger consequences, as the Albazi proposal was later set aside due to the fact that “the approval of the proposal by the court was obtained by misrepresentation.” The only thing that could have been misrepresented were Albazi’s assets. Due to Chisholm’s negligence, Bazar was not able to participate in any further recovery of monies. Neither he nor his firm took any action to correct the withdrawal of the claim despite being sent relevant information. Even if the trustee misconstrued Chisholm’s representations, neither Chisholm nor his law firm ever attempted to correct the record.
[161] I am persuaded that Bazar McBean would likely have been entitled to some dividend under the trusteeship In oral submissions, the plaintiffs’ suggests an amount of $5000. However, based on the evidence, I am left to speculate as to what that amount of the dividend might be. In this case, I decline to do so. However, given Chisholm’s misrepresentations or inaction in respect of this claim, I am prepared to reimburse the plaintiffs a portion of their legal fees paid to the defendant.
Damages:
[162] Having found for the plaintiffs with respect to the OPB litigation and the Albazi claim, it is incumbent on me to assess the scope and quantum of damages to be awarded.
[163] As mentioned, a leading case on the assessment of damage in a claim against a lawyer arising out of the lawyer's defence of a civil action is Jarbeau v. Maclean. Where a plaintiff in a tort action arising out of solicitor's negligence can establish on a balance of probabilities that but for the negligence he or she would have avoided the loss, he or she should be fully compensated for that loss. A law firm can be found liable in both tort and contract law. A plaintiff in a solicitor's negligence case can recover a loss in appropriate circumstances: Nichols v. Warner, Scarborough, Herman & Harvey, 2009 BCCA 277, 95 B.C.L.R. (4th) 133, leave to appeal refused, [2009] S.C.C.A. No. 355, at para. 26:
In a case of this kind, the court is required to essentially conduct a trial within a trial to the extent possible: the first to determine whether the solicitor has been negligent in respect of the litigation undertaken; the second to determine, if so, what loss the solicitor's negligence has caused the client. In some instances, whether there has been a loss and what it was can be readily established. In others, however, the prospect of success and recovery may not be easily shown due to uncertainties of proof and perhaps legal consequences inherent in any given case. Indeed, the mere passage of time may render the conduct of a trial within a trial virtually impossible. What the court must do in such circumstances where the prospect of recovery in the original action is inconclusive is to quantify as best it can the value of what the authorities regard a lost opportunity.
[164] The Alberta Court of Appeal summarized the approach to be taken in Fisher v. Knibbe, 1992 ABCA 121 at pp. 7-8:
After conducting the "trial within a trial" to determine what damages, if any, a negligent solicitor is liable for missing a limitation period, three results are possible. First, the trial judge could find that had the case gone to trial the plaintiff would have been successful and in such case 100 per cent of the lost damages would be awarded against the solicitor. Second, the trial judge could find that the plaintiff would not have been successful therefore only nominal damages may be awarded against the solicitor. Finally, where time has passed to such an extent that a "trial within a trial" would be impossible, then the court must to the best of its ability calculate the value of the opportunity lost to the plaintiff and award damages against the solicitor on that basis.
The Plaintiffs' Principal Damage Claim:
[165] In this action, I am satisfied that the plaintiffs have tendered evidence sufficient to conduct a "trial within a trial” in order to assess damages.
[166] The defendants submit that Bazar did not have a real chance of having the OPB lawsuit dismissed against him at an early stage. It is speculative at best to say that Chisholm would have be successful for the summary judgment motion and to vacate the CPL. The defendants respond that Bazar would not have been better off even if Chisholm had obtained the chance to bring a motion to remove the CPL and bring a 'properly constituted' motion for summary judgment. In order to obtain what Bazar says are the necessary documents, he would have spent what he paid to Campbell and the other lawyers.
[167] Regarding the OPB litigation, the defendants’ submit that in respect of the amount of $407,987 of unnecessary legal fees and costs subsequent to Chisholm’s termination, - even if Chisholm fell below the requisite standard of care - he did not cause the plaintiffs to incur the scope or excessive quantum of damages now being claimed to resolve the litigation.
[168] In respect of the claim for $19,196 re-imbursement for adverse costs award on the motion for summary judgment, the defendants argue that Chisholm met the standard of care by bringing the motion. With regards to the $56,800 in fees for Deguire to hire independent counsel, MacDonald, it was Deguire who chose to engage her own lawyer on the advice of Campbell. The defendants submit that this entire claim is remote as there is no nexus for those costs in relation to defending the underlying substantive litigation brought by OPB. As to the overall damages, the defendants also dispute the amounts proffered by Mr. Girard, including the sum of $40,000 for his estimate as to the reasonable costs of litigation.
[169] With respect, I cannot agree with the defendants’ assertions.
[170] Based on the evidence and expert opinion, I accept that damages arise from the underlying litigation in the OPB matter. I am persuaded that the plaintiffs would likely have been successful on a fully prepared and documented summary judgment motion, even back in 2007. In either case, I accept the plaintiffs’ position that the substantial legal fees incurred in defending the OPB action subsequent to Chisholm's retainer would have been avoided.
[171] As mentioned, a reasonably prudent lawyer would have obtained relevant evidence or productions early in the litigation and would have brought a motion to strike out the CPL due to the failure to make full and frank disclosure. If the CPL was struck out and a successful motion for summary judgment on prospective rent was brought, OPB would only have the specific claims against Transport. For example, OPB was potentially entitled to recover accelerated rent or the claim for replacement of the dock levelers, cleanup and damage to premises which OPB valued at $22,036.68. Bazar’s evidence was that he was prepared to pay at least $40,000 to settle the action. This amount would likely have settled OPB's remaining claims.
[172] In my consideration of damages, I have had the benefit of Weston’s expert opinion about the success of the various motions. Similarly, I have Campbell's summary judgment motion, factum, and the responding record and factum of OPB’s counsel in the underlying action. Again, the facts relied on by Campbell all come from admissions made by OPB under oath at discovery or in sworn affidavits. These facts are uncontroverted.
[173] Indeed, there is evidence as to the costs of the initial summary judgment motion brought by Chisholm. The law firm, Blaney McMurtry, prepared a responding motion record, two supporting affidavits, prepared and conducted two examinations of witnesses, prepared a factum and a brief of authorities and attended and argued the motion. They submitted an unchallenged bill of costs and were awarded substantial indemnity costs in the amount of $19,195.67, which included disbursements of $1,695.67.
[174] I accept the plaintiffs’ submissions that the reasonable costs of a summary judgment motion is what Blaney McMurtry detailed to the motions judge in this case, of approximately $20,000. I also accept that a motion to strike a CPL would not have cost any more than $20,000. Aside from the costs of preparing the statement of defence, a request to admit and a demand for particulars, the two motions would have cost $40,000.
[175] I adopt Mr. Girard’s submissions and calculations on the appropriate measure of general damages in the OPB case without reservation. I accept the plaintiffs’ claim of damages taking into account the reasonable costs of litigation to defend the CPL and advance the litigation against OPB, which eventually settled.
[176] I conclude that, but for Chisholm’s negligence, the plaintiffs would have avoided almost all of the legal and expert fees and expenses incurred by them subsequent to the termination of Chisholm's retainer. I conclude that this amount totals $447,987.[1] This also includes $56,800 paid to MacDonald for Deguire’s cross-claim against OPB, which I have determined was foreseeable in these circumstances.
[177] Premised on the evidence adduced by the plaintiffs, I also agree with Mr. Girard’s calculation of $40,000 in support of the costs of the motions as appropriate deductions to be made from the overall amount of damages awarded in relation to the OPB litigation. I also deduct an additional $5,000 for initial fees related to preparation of originating pleadings in the action, correspondence, research, related fees and disbursements.
[178] The plaintiffs’ also claim $19,195 as reimbursement of the adverse cost award on the failed motion for summary judgment. However, I am not prepared to award damages of an amount that would potentially have been recovered at a successful summary judgment motion, even on a partial indemnity basis. Whether this award actually reflects what the plaintiffs would have received premised on the adverse cost award is conjecture.
[179] In addressing both the OPB and Albazi actions, the plaintiffs’ seek reimbursement of $33,131, which are the fees paid to Inch Hammond. From this amount, the plaintiffs submit that I should deduct $3,000 for the initial work provided by Chisholm on the files. While I find that there was negligence with respect to both OPB and the Albazi matters, to a limited extent, the plaintiffs’ received some value for fees paid.
[180] From the total fees rendered of $26,650 - excluding the Muldoon action - I am prepared to reimburse $23,000 to the plaintiffs for legal fees paid to Inch Hammond.
Punitive Damages:
[181] While pleaded in the Statement of Claim, in oral submissions, plaintiffs’ counsel advised that his clients were effectively abandoning their claim for punitive and exemplary damages.
Aggravated Damages:
[182] Aggravated damages were pleaded in the Statement of Claim. Aggravated damages may be warranted where the defendant's actions have been "particularly high-handed or oppressive", thereby increasing a plaintiff's "humiliation, anxiety, grief, fear and the like". Such damages are compensatory in nature, and "take into account the additional harm caused to the plaintiff's feelings". Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130, at para. 188. It is true that general damages normally are assessed taking into account any aggravating features of the case.
[183] In oral submissions, the plaintiffs claim damages of $5,000 for Chisholm's intentional failure to send a letter to Deguire's employer to explain that the Notice of Garnishment was his fault and to ameliorate the damage he had caused to her reputation. Aggravated damages are also claimed with respect to Chisholm’s handling of the Albazi claim.
[184] The defendants respond that damages for Deguire's reputation and mental distress ought to be denied. There is no evidence in support of the claim for aggravated damages. Deguire has the same job now that she had when she received the Notice of Garnishment. There is no evidence of how this affected her emotionally or on her reputation being negatively impacted. There is no cogent medical evidence. The defendants say that there is no evidence that the CPL impaired the title to Deguire’s home or caused any loss. In any event, this is exactly her cause of action raised in her counterclaim against OPB. As such, it is an abuse of process for Deguire to pursue Chisholm for that same cause of action.
[185] The defendants assert that a similar analysis can be applied with regards to the Albazi claim. In summary, the defendants submit that all claims for aggravated damages are without evidential foundation or based on pure conjecture and ought to be denied.
[186] In this case, I agree entirely with Mr. Lawlor’s submissions. I am of the opinion that no aggravated damages ought to be awarded.
Conclusion:
[187] For all of the aforementioned reasons, the plaintiffs have established the defendants’ liability on a balance of probabilities. In my opinion, the plaintiffs’ incurred additional, necessary and substantial legal fees and expense that ought to have been avoided but for Chisholm’s negligence and breach of his professional duty of care to his clients.
[188] Judgment shall issue, jointly and severally, in favour of the plaintiffs in accordance with the following award of damages.
[189] With respect to the OPB litigation, I award $402,987 for general damages. Regarding the plaintiffs’ request for the recovery of legal fees paid to the defendant law firm in relation to both the OPB litigation and Albazi claim, reimbursement is fixed at $23,000.
[190] The total damages award in favour of the plaintiffs is $425,987 with interest, in accordance with the Courts of Justice Act.
[191] If the parties cannot agree on the issue of costs, I will consider brief written submissions. These cost memoranda shall not exceed five pages in length, (not including any bill of costs or offers to settle). The plaintiffs shall file their costs submissions within 15 days of the date of this judgment. The defendants shall file their costs submissions within 15 days of the receipt of the plaintiffs’ materials. The plaintiffs may file a brief reply within five days thereafter. If submissions are not received by February 28, 2020, the file will be closed and the issue of costs considered settled.
A.J. Goodman J.
Released: January 30, 2020
COURT FILE NO.: CV-10-22598
DATE: 2020-01-30
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BAZAR MCBEAN LLP, S.D. BAZAR PROFESSIONAL CORPORATION, DAVID BAZAR AND MONIQUE DEGUIRE
Plaintiffs
- and -
STEPHEN CHISHOLM, JOHN HAMMOND AND INCH HAMMOND PROFESSIONAL CORPORATION
Defendants
REASONS FOR JUDGMENT
A.J. Goodman J.
Released: January 30, 2020
[1] Schedule D, Tab 12 of the plaintiffs’ brief. (Exhibit 5).