COURT FILE NO.: CV-13-555
DATE: 2022/03/17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DELMER MARTIN
Plaintiff
– and –
GIESBRECHT GRIFFIN FUNK & IRVINE LLP (formerly known as "Giesbrecht Griffin and Funk") and
THE ESTATE OF D. KIM LAVERGNE, Deceased
Defendants
Matthew Lerner and Mitchell Brown, Counsel for the Plaintiff
Angus McKinnon and Spencer Jones, Counsel for the Defendants
HEARD: April 6, 7, 8, 9, 12, 13, 14, 15, 16 and June 22, 2021
REASONS FOR DECISION
GIBSON J.
Overview
[1] This is a solicitor’s negligence action. The plaintiff Delmer Martin (“Martin”), sues the law firm of his former solicitor Ted Giesbrecht (“Giesbrecht”), Giesbrecht Griffin Funk & Irvine LLP (“GGF&I”) on concurrent grounds of negligence, breach of contract, and breach of fiduciary duty in relation to the legal advice that Giesbrecht provided to Martin regarding Martin’s purchase of a family farm property in 2000, and the advice that Giesbrecht’s firm provided in respect of a Marriage Contract with Martin’s then spouse Linda Sansome (“Sansome”). Mr. Martin and Ms. Sansome subsequently separated and divorced, and at the divorce trial Campbell J. set aside the Marriage Contract based on the circumstances surrounding its preparation and signing. This portion of the decision at trial was subsequently upheld by the Court of Appeal for Ontario pursuant to s.56(4) of the Family Law Act (Martin v. Sansome 2014 ONCA 14) on the basis that Ms. Sansome did not understand the nature and consequences of the domestic contract.
[2] Martin asserts that as a direct result of the Marriage Contract being set aside he has incurred significant losses, consisting primarily of the equalization payment to Sansome, associated legal fees and costs awards, and ongoing interest on the private mortgage required to fund all of this. He seeks damages in the amount of $945,389.40.
[3] The defendants resist the plaintiff’s claim. They say that Martin is attempting to re-litigate issues primarily determined in the divorce proceedings and seeks to reverse the causation onus. They submit that the action is an abuse of process and statute barred, and question whether, but for the defendants’ breach of their duty to Martin, Sansome would have signed the contract and it would have been enforced; alternatively, question whether Martin was denied a real and significant opportunity to successfully negotiate the marriage contract; question whether the defendants are responsible for the consequences of Martin choosing to contest the divorce proceedings and to represent himself at trial; and whether the defendants are liable to reimburse Martin the nearly $260,000 in financing and associated legal costs he incurred in financing payments and this litigation. The defendants submit that, regardless of the legal basis, the claim must fail as Martin cannot demonstrate that the breach led to his loss.
[4] The trial in this action was conducted virtually on the Zoom platform on April 6, 7, 8, 9, 12, 13, 14, 15 and 16, 2021. At the end of the trial, counsel made written submissions, which were supplemented by oral argument on June 22, 2021.
[5] Two witnesses gave evidence in the plaintiff’s case: the plaintiff Delmer Martin himself, and Gerald Sadvari, who was qualified by the Court as an expert witness and permitted to give opinion evidence. Three witnesses gave evidence during the defendants’ case: Ted Giesbrecht, Martin’s solicitor whose actions are the focus of the trial; Thomas Dart, who was qualified by the Court as an expert witness and permitted to give opinion evidence; and Margaret Voll, a lawyer who was retained to act for Martin before the family trial in 2012, but who did not represent him at that trial.
Background
[6] Delmer Martin, now 59 years old, has lived most of his life in the rural portions of Waterloo Region, Ontario, and is a member of a Mennonite community. In early 2000, he and his then wife Linda Sansome were in negotiations with Mr. Martin’s parents regarding the potential purchase of the family farm near Elmira, which had been in the Martin family since the 1830’s and where the couple had lived and worked for the previous three years. These negotiations were led by various elders in the Mennonite community who acted as separate advisory “Committees” on behalf of each of Delmer Martin, his parents, and his siblings, as is the custom and practice in some Mennonite communities. This was a friendly transaction - essentially a negotiated inheritance. Notwithstanding this, there had been some tension and acrimony within the family in the period before conclusion of the negotiations.
Evidence
[7] On January 24, 2000, the parties and their Committees reached an agreement that the family farm would be sold to Mr. Martin and Ms. Sansome for $500,000, funded as follows: $119,000 as a gift to Martin from his parents on account of their recent sale of the farm’s cows and dairy quota; $90,000 as an advanced inheritance for Delmer Martin; $90,000 as advanced payment for the parents’ “living rights” to remain living on the farm until their death; and a further $201,000. The closing date was to be March 1, 2000.
[8] Soon after this agreement was reached, Ms. Sansome declined to contribute to the $201,000 or participate with Mr. Martin in borrowing the funds. Given Mr. Martin’s chequered financial history and previous bankruptcy, it was understandable why she so chose. As a result, and following further discussions and Committee meetings, Ms. Sansome was removed as a purchaser on this transaction and signed a full and final release of Mr. Martin’s parents and their other children for any rights that could have accrued from the couple’s time living and working on the farm. On March 17, 2000, all of the parties and their Committee members signed and executed this amended version of the Agreement of Purchase and Sale (“APS”) which further extended the closing date to April 14, 2000.
[9] Mr. Martin and Ms. Sansome retained and met with Mr. Giesbrecht to discuss both the farm transaction as well as the couple’s possible employment law claim against Mr. Martin’s parents for unpaid wages in February 2000. The couple had lived and worked on the farm for the preceding three years as a trial period before their taking over the farm was agreed upon, and there was a dispute regarding their wages.
[10] While Mr. Giesbrecht was on vacation for most of March 2000, Mr. Martin and Ms. Sansome met with Steven Funk, another lawyer at the defendant law firm, to discuss the pending farm transaction. While the firm had first been retained to act for the “purchasers” (i.e. plural, being both husband and wife), following the executed March 17 amendments, the firm was ultimately acting for only Mr. Martin as the sole purchaser.
[11] At no point after this change did Mr. Giesbrecht say anything to Mr. Martin or Ms. Sansome about a potential conflict of interest regarding the farm transaction or the Marriage Contract.
[12] On April 3, 2000, Mr. Martin met with Mr. Giesbrecht and Howard Shuh (a member of Delmer Martin’s Committee and the mortgage lender) at Mr. Giesbrecht’s office to execute the mortgage commitment required for the remaining $201,000 purchase price which Mr. Martin was borrowing. During this meeting, Mr. Martin and Mr. Giesbrecht discussed what was required to protect Mr. Martin’s forthcoming interest in the farm in the event of a separation (namely, the gifted and inherited property in the family farm) and his parents’ living rights. Mr. Giesbrecht recommended a Marriage Contract with Ms. Sansome to serve those purposes, and agreed he would take care of it. In breach of his duty of care and in breach of his fiduciary duty, he never disclosed to Mr. Martin that in accepting this mandate: (i) he was “completely incapable and incompetent to advise anyone in Ontario on family law matters” (as he subsequently agreed at trial), including marriage contracts, and that he had never done a marriage contract before; and (ii) he was in a conflict of interest by accepting a mandate.
[13] Importantly, Mr. Giesbrecht confirmed in cross-examination that he cannot dispute Mr. Martin’s account of what occurred at the April 3, 2000 meeting.
[14] Mr. Giesbrecht took no steps between April 3 and April 11 to ensure the Marriage Contract mandate was prepared competently or that the conflict was addressed.
[15] Not much further occurred between April 11 and April 13. Mr. Giesbrecht gave instructions to draft the Marriage Contract to his junior, Kim Lavergne, on April 11 and she spent a cumulative total of only 1.4 hours drafting the agreement. No one ever communicated with Mr. Martin or Ms. Sansome in any fashion until April 13 at 9 a.m. when they attended Mr. Giesbrecht’s office to sign (and for the first time see) the Marriage Contract.
[16] Ms. Lavergne passed away in 2003.
[17] On April 13, 2000, Mr. Giesbrecht brought both Mr. Martin and Ms. Sansome to his office at 9 a.m. to sign a variety of closing documents for the farm transaction set to close the next day. Among these was the Marriage Contract, which neither party had seen before.
[18] The plaintiff relies on the findings of Justice Campbell (the trial judge at the later family law trial) regarding what did (and did not) take place at this meeting: namely, that “[t]he whole sham that occurred on April 13, 2000 regarding Ms. Sansome represents a gross dereliction of duty and a complete dereliction of professional responsibility” and that nothing even close to resembling real independent legal advice (“ILA”) took place. Matters were rushed since the farm transaction was closing the next day. Despite having seen the document for the first time minutes earlier, and despite Mr. Giesbrecht having never even read the document himself, Mr. Martin signed it.
[19] Mr. Giesbrecht appears to have somehow first realized that morning that Ms. Sansome needed ILA and urgently had his assistant call Colleen Winn – a nearby sole-practitioner – to make an appointment for Ms. Sansome to see her about the Marriage Contract at 11:30 a.m.
[20] Mr. Giesbrecht sent Ms. Sansome to Ms. Winn carrying an original of the Marriage Contract (already signed by Mr. Martin) that she had seen for the first time minutes before, that Mr. Giesbrecht had not read, to a lawyer that Mr. Giesbrecht knew also could not read it given the time provided due to her significant visual impairment, to receive an ILA certificate for a “Separation Agreement”.
[21] Ms. Winn knew nothing about the parties, this transaction, or the Marriage Contract; as a result, as subsequently described by Justice Campbell, Ms. Sansome “paid nothing and she received nothing” in exchange for Ms. Winn’s signature.
[22] Ms. Sansome was prepared to sign whatever was required to close the farm transaction the next day. In tears throughout the 20 minute meeting with Ms. Winn, Ms. Sansome signed the certificate of ILA.
[23] Mr. Giesbrecht could not provide any evidence regarding what occurred at the meeting with Mr. Martin and Ms. Sansome in his office on April 13, 2000.
[24] It was clear from the records, however, that he thought it was at least important to have Ms. Sansome re-sign her full and final release of all claims as against Mr. Martin’s parents. The farm transaction closed the next day.
[25] Mr. Martin’s evidence was that if Ms. Sansome had refused to sign the Marriage Contract, or had requested revisions (after obtaining legal advice), he would have sought advice from Mr. Giesbrecht and negotiated and done anything required to get the deal done properly – that is, inheriting the family farm from his parents and excluding it from any family law sharing with Ms. Sansome on separation. Mr. Martin was adamant that, if he had known that the circumstances surrounding the preparation and negotiation of the Marriage Contract jeopardized its enforceability, he would have deferred the friendly closing of the farm transaction so that an enforceable marriage contract could be prepared, discussed and finalized properly.
[26] On cross-examination Mr. Giesbrecht admitted that he and Ms. Lavergne were well-aware that a marriage contract was needed before Mr. Martin would close the farm transaction in order to protect the interest he was about to acquire from family law sharing.
[27] Mr. Martin and Ms. Sansome continued to live on and enjoy the farm with their daughter for the next several years.
[28] Mr. Martin and Ms. Sansome separated in 2007 and Mr. Martin later filed an application for divorce. Ms. Sansome responded and sought to set aside the Marriage Contract.
[29] Shortly thereafter, Mr. Martin retained Margaret Voll to act for him in the divorce proceedings. Part of her mandate was to assist him in upholding the Marriage Contract. Ms. Voll’s initial opinion was that the Marriage Contract was “legal and binding”. This was consistent with what Mr. Giesbrecht told Mr. Martin around this time – that the contract was valid and enforceable – which Mr. Giesbrecht confirmed after being told that Ms. Sansome was challenging its enforceability.
[30] Ms. Voll’s assessment of the file only began to change after completing her questioning of Ms. Sansome. Ms. Voll had concerns arising from Ms. Sansome’s testimony, but she advised Mr. Martin that she had to “wait and see” what Mr. Giesbrecht had to say about the allegations surrounding the execution of the Marriage Contract.
[31] Even after reviewing matters extensively with Mr. Giesbrecht, Ms. Voll emphasized to Mr. Martin on July 13, 2011 that, despite the risk that the Marriage Contract could be set aside, “the legal onus is on Linda to prove undue influence, duress, compulsion, etc., and that may be an uphill battle. What I stressed with the client is simply there is absolutely no guarantee in the litigation process.”
[32] Ms. Voll’s unchallenged evidence, consistent with the records tendered from her file, was that her subsequent decision to withdraw as counsel before trial was due to having inadequate resources and infrastructure as a sole practitioner to handle a complex trial.
[33] On December 19, 2011, Mr. Martin attended a settlement conference self-represented before Justice Gordon. After this settlement conference, Mr. Martin understood that: (i) the problems with Mr. Giesbrecht’s work were serious enough that Mr. Giesbrecht (and LawPro) would have to be involved in any settlement discussions with Ms. Sansome; (ii) any claim against Mr. Giesbrecht was “premature” pending the outcome of the divorce trial; and (iii) a trial date was set for June 2012.
[34] Following the settlement conference, Mr. Martin made efforts to retain new counsel but was repeatedly rebuffed. After finally securing new trial counsel (Ted Oldfield), Mr. Martin’s repeated requests for an adjournment to facilitate representation at trial were rejected. A junior counsel from Mr. Oldfield’s firm brought a motion for an adjournment on the first day of trial on June 11, 2012. This motion was denied. Mr. Martin proceeded to trial self-represented before Justice Campbell.
[35] The trial lasted 11 days. Things did not go well for Mr. Martin. He did not succeed in vindicating the defendants’ work at the divorce trial. Justice Campbell set aside the Marriage Contract “based on the circumstances surrounding its preparation and signing and all of the case law presented,” and made an order of substantial indemnity costs from the bench.
[36] On appeal, the Court of Appeal for Ontario upheld this decision on January 10, 2014 (2014 ONCA 14) and explicitly found that the Marriage Contract was set aside pursuant to s. 56(4)(b) of the Family Law Act – “that [Ms. Sansome] ‘did not understand the nature and consequences of the domestic contract’”. The Marriage Contract was not set aside on the basis of either of the other two means for setting aside domestic contracts under the FLA (i.e. s.56(4)(a) or 56(4)(c)).
[37] The chronology of the relevant dates, and the significant evidence pertaining to them, is set out in more detail in the following table:
| Date | Fact |
|---|---|
| January 24, 2000 | Initial Agreement of Purchase and Sale (“APS”). Delmer Martin’s parents to “sell” the family farm to Delmer Martin and Linda Sansome for: • $119,000 gift to Delmer from the parents’ sale of dairy quota; • $90,000 gift of advanced inheritance to Delmer; • $90,000 advanced payment for parents’ “living rights”; and • $201,000 to be financed or paid by the purchasers. |
| February 3, 2000 – February 26, 2000 | Ongoing negotiation of APS. Linda Sansome chooses not to contribute or participate in the required financing. Ted Giesbrecht begins meeting with both Delmer and Linda re: the potential employment claim and farm transaction, which he admits are inter-related. |
| March 7, 2000 – March 8, 2000 | Ted Giesbrecht corresponds with Art Woods (lawyer for Delmer’s parents) regarding both the employment claim and the farm transaction and on behalf of both Delmer Martina and Linda Sansome as clients. |
| March 10, 2000 | Delmer and Linda meet with Delmer’s parents and Mennonite Committees to amend the draft APS, removing Linda as purchaser, extending financing condition deadline and closing date. |
| March 16, 2000 | Delmer and Linda both meet Steven Funk at the Giesbrecht firm office to discuss the amendments to the draft APS. Mr. Funk was acting on behalf of the Giesbrecht firm while Mr. Giesbrecht was on vacation. Mr. Funk notes that he reviewed further amendments to the APS with both Delmer and Linda (including the removal of Linda as co-purchaser), and “all parties are meeting tomorrow evening to hopefully complete [agreement]”. |
| March 17, 2000 | Amended APS signed by Delmer (as Purchaser), his parents (as Vendors), Linda (as spouse to purchaser/mortgagee), and all Mennonite Committee members. Delmer signs release of his parents and siblings, conditional on closing. Linda signs a separate non-conditional release of Delmer’s parents and all of their children. |
| April 3, 2000 | Delmer meets with Ted Giesbrecht and Howard Shuh to finalize his mortgage for the farm transaction. Ted Giesbrecht recommends the Marriage Contract to Delmer to protect his interest in the family farm. Ted Giesbrecht accepts the mandate for this Marriage Contract and confirms that it will be “air-tight”. Ted Giesbrecht admits that as of this day he knows Linda requires ILA. Ted Giesbrecht admits he cannot recall or dispute Delmer’s recollection of what occurred at this meeting. Cannot say one way or the other who first raised the Marriage Contract. Ted Giesbrecht admits that his office had no contact with either Delmer or Ms. Sansome after this meeting and before April 13 when they attended to sign the closing documents. |
| April 11, 2000 | Ted Giesbrecht first gives instructions to Kim Lavergne to start drafting Marriage Contract, who spends 1.4 hours on this work over two days. Ted Giesbrecht and Kim Lavergne both understand that the simple mandate for the Marriage Contract was to exclude Delmer’s interest in the farm from family law sharing with Linda. Ted Giesbrecht and Kim Lavergne both understand this Marriage Contract was required before the farm transaction could close. |
| April 13, 2000 | Delmer and Linda meet with Ted Giesbrecht at 9 a.m. to sign farm transaction documents and Marriage Contract. Campbell J.: “[A] gross dereliction of duty and a complete dereliction of professional responsibility”: • Neither Delmer nor Linda had seen the Marriage Contract before this day, and no one had spoken to either of them about it after the mandate was accepted on April 3, 2000; • Neither Delmer nor Linda understood the nature and consequences of the Marriage Contract: • Delmer signed without real ILA. Ted Giesbrecht knew nothing about family law and had not even read the Marriage Contract, and Kim Lavergne did not explain it; • Linda signed without real ILA. Linda learned for the first time that Ted Giesbrecht could not be her lawyer. At 11:30 a.m. she was sent to Colleen Winn, a lawyer chosen by Ted Giesbrecht who could not read the Marriage Contract due to a visual impairment, with the originals already signed by Delmer. • Both ILA certificates are riddled with errors due to Mr. Giesbrecht’s rush to complete the Marriage Contract before closing of the APS re the farm: • Delmer’s certificate contained a false sworn affirmation by Ted Giesbrecht that he had advised Delmer and made Delmer “fully aware of the nature and effect of the Agreement”, which was impossible for him to do with zero knowledge of family law (and having never read it). • Linda’s certificate: (i) spelled her name incorrectly; (ii) was provided for the execution of “Separation Agreement”; (iii) was dated April 14, 2000. • Giesbrecht admits at trial that the “whole thing” was a “colossal mess” caused by him. Ted Giesbrecht has no independent recollection of anything that occurred on April 13, 2000. He admits, however, that the Marriage Contract was “rushed” and that this was a “colossal mess” due to his conduct. |
| April 14, 2000 | The farm transaction closes. Delmer Martin was unequivocal that he would have deferred closing if Giesbrecht had disclosed that more time was required to ensure an enforceable Marriage Contract. Ted Giesbrecht admits that he should have recommended a deferral of completion of agreements because more time “would have fixed all of this.” Delmer Martin could have deferred the closing, since this was a friendly transaction, years in progress, that was not urgent. His parents would have been prohibited by their Mennonite Old Order faith from litigating to “force” a closing against Delmer in any event. |
| March 2, 2007 | Delmer Martin writes to Ted Giesbrecht asking him to review the Marriage Contract and his file because Linda is challenging its validity in their upcoming divorce proceedings. Ted Giesbrecht confirms to Delmer that the Marriage Contract is valid and enforceable. |
| July 24, 2009 | Linda Sansome delivers her reply pleadings in the divorce proceeding. |
| January 12, 2011 | Margaret Voll (Delmer’s lawyer) conducts her examination for discovery of Linda Sansome in the divorce proceeding. |
| January 25, 2011 – February 18, 2011 | Margaret Voll reports to Delmer that there could be risks to the Marriage Contract based on Linda’s purported evidence. Margaret Voll advises Delmer that she needs to review the transcript carefully and “wait and see” what Ted Giesbrecht has to say. |
| April 26, 2011 – June 7, 2011 | Margaret Voll interviews Ted Giesbrecht regarding the Marriage Contract and Sansome’s discovery evidence about what occurred on April 13, 2000. |
| July 13, 2011 | Margaret Voll reports to Delmer on her ultimate opinion on the Marriage Contract, having completed her investigations and interviews with Ted Giesbrecht. Margaret Voll advises Delmer that she believes Ted Giesbrecht compromised the Marriage Contract, but notes that the evidence had not yet been subject to cross-examination and Linda had the legal onus in seeking to set aside the Marriage Contract which could be “an uphill battle.” |
| December 19, 2011 | Delmer attends the settlement conference before Justice Gordon. After this conference, a trial date was set for June 2012 and Delmer understood that any claim against Ted Giesbrecht would be “premature” pending the divorce proceeding. |
| December 20, 2011 – December 22, 2011 | Delmer writes “desperate” emails to LawPro and Ted Giesbrecht asking for assistance in defending the Marriage Contract or alternatively to help him settle the matter. They both ignore him and let him “drive off a cliff”. Ted Giesbrecht admits to knowing by this date that he had been negligent and self-reports to LawPro. Notwithstanding this, he ignores Martin. Despite being in ongoing discussions with LawPro, Ted Giesbrecht never corrects his prior representations to Delmer that the Marriage Contract was enforceable. |
| June 11, 2012 | Delmer Martin attends the divorce trial with counsel retained and counsel is denied an adjournment. Trial commences later that afternoon before Justice Campbell with Delmer Martin a self-represented litigant. |
| June 26, 2012 | One day after the completion of evidence, Justice Campbell delivers oral reasons at the conclusion of the divorce trial, setting aside the Marriage Contract. Costs order made from the bench. |
| June 27, 2013 | Delmer Martin commences this solicitor’s negligence action against Ted Giesbrecht. |
| January 10, 2014 | The Court of Appeal for Ontario releases their reasons, affirming Justice Campbell’s decision to set aside the Marriage Contract under s. 56(4)(b) of the FLA on account of Linda Sansome not understanding its nature and consequences. Delmer is ordered to make an equalization payment to Linda Sansome because of the failed Marriage Contract. |
| January 2014 – April 2021 | Delmer remortgages the farm property in order to pay the equalization payment and accompanying adverse costs awards. |
Law
[38] Subsection 56(4) of the Family Law Act provides:
Setting aside domestic contract
(4) A court may, on application, set aside a domestic contract or a provision in it,
(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
(b) if a party did not understand the nature or consequences of the domestic contract; or
(c) otherwise in accordance with the law of contract. R.S.O. 1990, c. F.3, s. 56 (4).
[39] Sections 4 and 5 of the Limitations Act provide:
Basic limitation period
4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 2002, c. 24, Sched. B, s. 4.
Discovery
5 (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).
[40] Justice Campbell’s findings in the divorce trial are binding upon the plaintiff. In addition, regardless of whether a given factual finding is binding or not in relation to the defendants, who were not a party to the trial before Campbell J., the factual findings and determinations made by Justice Campbell are admissible as evidence in this proceeding to prove those facts, subject to this Court’s determination of weight: British Columbia (Attorney General) v. Malik, 2011 SCC 18 at paras. 37-48.
Issues
[41] The Issues before the Court on this trial are thus:
(i) Has the plaintiff demonstrated a breach of the standard of care and of fiduciary duties?
(ii) Causation: Has the plaintiff demonstrated that “but for” Mr. Giesbrecht’s failures, the Marriage Contract would have been enforceable?
(iii) Do the defendants have a legal onus to disprove causation?
(iv) Is the claim an abuse of process and statute barred by the expiry of a limitation period?
(v) Is the claim an impermissible collateral attack on the findings of Justice Campbell?
(vi) Is a “lost opportunity” analysis required?
(vii) Has the plaintiff failed to mitigate his damages? and,
(viii) Has the plaintiff demonstrated all of his claimed damages?
Analysis
Witnesses
[42] I start with some observations about the credibility of the witnesses at this trial.
[43] The plaintiff Delmer Martin was frequently evasive, obfuscating and verbose in his evidence, primarily about the circumstances of his life prior to the trial in 2012. Indeed, the defendants’ counsel clearly sought to highlight the less admirable aspects of Mr. Martin’s life and his treatment of Linda Sansome. These were commented upon by Justice Campbell and, to a certain extent, by the Court of Appeal. Defendants’ counsel took him as a witness on an extended detour, canvassing in detail his less-than-admirable life history before the events at issue. But this was ultimately of marginal relevance to the issues in this trial, which is a solicitor’s negligence trial. To succeed in his claim, Mr. Martin does not have to be a likeable or virtuous person. Rather, he has to demonstrate the elements of his claim of solicitor’s negligence. That is what this trial was about. The defendants sought to shift responsibility onto Mr. Martin for his actions in representing himself at trial, and what they said was unreasonable behaviour since the trial. They were not successful in this. A trier of fact may accept all, none or some of the evidence of any witness. In that portion of his evidence regarding the events pertaining to his interaction with Mr. Giesbrecht and his firm, I found Delmer Martin to be credible and I accept his evidence.
[44] Mr. Giesbrecht was a credible witness. He was forthright in admitting his negligence and his failings in dealing with the Marriage Contract, and I have no doubt that he was endeavouring to be truthful. But the reliability of his evidence was compromised by his inability to recall in any detail most of the events that transpired in 2000.
[45] Margaret Voll was a credible witness who was clearly trying to assist the Court as best she could.
[46] I turn now to the two expert witnesses, Gerald Sadvari and Thomas Dart. Both were credible and accomplished experts. But in my assessment, in this trial the opinion evidence of one deserves greater weight than that of the other.
[47] Mr. Sadvari’s unchallenged opinion was that Mr. Giesbrecht: (i) was incompetent to even accept the mandate for the Marriage Contract and should have referred that mandate to someone else; (ii) was in a clear conflict of interest, having recently acted for both parties to the contract on a related matter; (iii) failed to properly advise Mr. Martin on the nature and consequences of the Marriage Contract; (iv) failed to take steps to postpone the farm transfer so that the minimum necessary requirements for proper ILA for both sides could be provided to ensure an enforceable marriage contract; and (v) failed to disclose to Mr. Martin that, due to his breaches of fiduciary duty and all of his failings in properly advising Mr. Martin, the Marriage Contract was extremely vulnerable to being set aside.
[48] In summary, Mr. Sadvari opined that Mr. Giesbrecht had failed in discharging his duties to Mr. Martin in just about every way possible – which is not surprising given Mr. Giesbrecht’s own candid admissions about all of his failings.
[49] On causation, Mr. Sadvari noted that there was nothing “unusual” about this simple Marriage Contract – it excluded a gifted and inherited asset from family law sharing. As affirmed in the authorities reviewed by Mr. Sadvari, couples are free to create any regime with respect to property that deviates from the default rights and obligations under the FLA – that is the very purpose of a marriage contract.
[50] Mr. Sadvari explained that unless one of the three statutory prerequisites under section 56(4) is met, the Court has no ability to interfere with a domestic contract regarding the division of property on the basis of fairness; specifically, “a deal is a deal with respect to property, if you’ve done it right.”
[51] Mr. Sadvari emphasized that: (i) the contract was typical in that it allowed Mr. Martin to keep his gifts and inheritance (which amounted to a significant portion of the purchase price) from equalization; (ii) this was not a “bad deal” even in economic terms, since neither Mr. Martin nor Ms. Sansome had any family law rights in the farm before the contract was signed since they had already signed releases for all claims against Mr. Martin’s parents (the vendors); (iii) by her husband acquiring the farm, Ms. Sansome obtained rights that she didn’t have previously; namely “Part 2” rights under the FLA and the right to veto any further encumbrance; and (iv) with proper ILA there is no reason why the contract would have been set aside. As a result, Mr. Sadvari’s opinion was that this contract would have been enforceable “but for” Mr. Giesbrecht’s actions.
[52] Mr. Dart agreed that the standard of care was “not even close” to having been met in this case – and that none of those failings were Mr. Martin’s fault. On causation, Mr. Dart’s opinion does not assist the defendant. Mr. Dart’s opinion was that it remained possible that this contract could be set aside even if the parties had received proper ILA given Justice Campbell’s comments about the unfair outcome or result of the contract. Not only is this mere possibility irrelevant to the legal question at issue, but even this possibility was called into question when Mr. Dart was pressed on cross-examination: (a) Mr. Dart erroneously stated that Justice Campbell had made a finding of undue influence; and (b) None of the caselaw relied on by Mr. Dart withstood scrutiny on cross-examination. The facts of this case pale in comparison to the egregious types of circumstances cited by Mr. Dart where the Courts have set aside domestic contracts for unconscionability under s. 56(4)(c).
[53] It was not persuasive for Mr. Dart to maintain that, even with fulsome ILA for both parties, there could still be sufficient residual inequality or pressure to warrant a finding of unconscionability similar to the authorities he relied on.
[54] Mr. Dart’s entire causation opinion on what “would have” happened in these circumstances must be given less weight, since he admitted to “knowing nothing about this couple” other than what was contained in Justice Campbell’s reasons. To the extent that his analysis relies upon the “fact specific” circumstances of this case, he did not have as complete an understanding of the facts as Mr. Sadvari who reviewed (in addition to the trial and appeal reasons), the parties’ productions, discovery transcripts and trial transcripts.
[55] Accordingly, I accept the opinion evidence of Mr. Sadvari, and give little weight to that of Mr. Dart.
Assessment
[56] I turn now to an assessment of the arguments made by the parties.
[57] For the reasons explained below, I conclude that the plaintiff’s claim succeeds because Mr. Giesbrecht’s handling of the Marriage Contract constitutes both a breach of the standard of care, and a breach of fiduciary duty.
[58] Mr. Giesbrecht’s conduct caused or contributed to the Marriage Contract being set aside. As a result, Mr. Martin suffered the following damages: the equalization payment to Ms. Sansome, legal costs in the matrimonial proceedings which attempted to vindicate the Marriage Contract, and the cost of the debt to finance the orders made.
Standard of Care
[59] Mr. Giesbrecht acknowledged that he was incompetent to accept the mandate because of his inexperience and lack of expertise in family law. He was in a conflict of interest - he owed fiduciary duties to both Delmer Martin and Linda Sansome. He caused the “colossal mess” which arose from the events of April 13, 2000 because he was rushed, he did not show the couple the Marriage Contract before 9 a.m. on that day, he had not read the Marriage Contract drafted by Kim Lavergne and did not explain it to the couple, he made a last-minute and essentially useless referral to Colleen Winn at 11:30 a.m. as a hurriedly-contrived band-aid, and the Marriage Contract was signed within three hours of the parties first seeing it.
[60] Mr. Giesbrecht failed in his fiduciary duty to disclose material facts. He did not disclose that he was not competent to accept the mandate. He did not disclose that he was in a conflict of interest and could not act for either party. He did not disclose to Delmer Martin that the enforceability of the Marriage Contract was compromised, and that the 14 April closing date ought to be deferred so that the parties would have time to properly review the Marriage Contract and understand its nature and consequences.
Causation
[61] The “but for” causation analysis is applicable in negligence actions to determine what would have happened “but for” the breach. It requires the Court to compare the outcome in the “real world” (that created by the breach) and what it would have been in the “but for” world (what would have occurred but for the breach): Clements v. Clements, 2012 SCC 33, and Alliance v. Gardiner Roberts, 2020 ONSC 68.
[62] The defendants submit that the plaintiff has failed to establish causation: not closing the farm purchase would have left him in the same position he was in prior to the breach - no farm, no marriage contract, and no equalization payment. They submit that the plaintiff has failed to establish that proper representation and informed negotiations would have led to Ms. Sansome signing the contract and him owning the farm free of any equalization payment upon subsequent breakdown of the marriage.
[63] I do not accept the defendant’s arguments regarding causation. It is clear that “but for” the defendants’ conduct, the Marriage Contract would not have been set aside: Athey v. Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R. 458 at para. 17. So long as Mr. Martin has proven that Mr. Giesbrecht’s conduct was part of the cause of the Marriage Contract failing, he will prevail. The plaintiff does not need to prove causation with scientific precision. It is a practical question of fact which can best be answered by ordinary common sense and inferences: Athey, para. 16. The Court can and must make inferences from the evidence, since the defendants’ conduct has made it impossible to know what would have happened: C.M. Callow Inc. v. Zollinger, 2020 SCC 45, paras. 116 and 149.
[64] It is clear that “but for” the defendants’ conduct, the Marriage Contract would not have been set aside. It was set aside by Campbell J. (and affirmed on this point by the Court of Appeal at para. 44 of its reasons) pursuant to s. 56(4)(b) of the FLA. Mr. Giesbrecht caused the “colossal mess” that enabled Ms. Sansome to satisfy this criterion. This Marriage Contract was not complex or unusual. It had essentially one issue: the preservation of the Martin family farm as gifted or inherited property.
[65] The plaintiff has demonstrated that Martin would have (and could have) deferred the closing to give more time for the Marriage Contract to be finalized properly had Mr. Giesbrecht disclosed the deficiencies. Ms. Sansome would have signed the Marriage Contract because she wanted her husband to acquire the farm and was ready to sign whatever was necessary to facilitate this highly anticipated event. She did in fact sign while knowing she was giving up her interest in the farm, and that it was “not good for her.” As Mr. Sadvari adverted to in his evidence, there are often many non-economic factors inherent in willingness to sign domestic agreements.
Reverse Onus
[66] In any event, the defendants face a reverse onus on the issue of causation. Where a defendant proves a breach of fiduciary duty, a reverse onus arises for the defendant to disprove causation (Alliance v. Gardiner Roberts, 2020 ONSC 68 at para. 128). The plaintiff only must show “a causal link” between the breaches of fiduciary duty and their damages. The onus then falls on the defendants to prove their hypothetical to break the chain of causation. In so doing, they must do more than raise mere speculation.
[67] The plaintiff has established a causal link. The Marriage Contract was set aside because Linda did not understand the nature and consequences (FLA s. 56(4)(b).) This was because Mr. Giesbrecht failed to explain it to them, causing Justice Campbell to describe the “sham” of April 13, 2000 as “a complete dereliction of duty and a complete dereliction of professional responsibility.”
[68] The defendants have not proven their alternative hypotheticals. The defendants had the onus to prove, and did not prove, that Mr. Martin would have closed the farm even without the Marriage Contract, that he could not have deferred closing to give more time for the Marriage Contract to be finalized properly, and that Ms. Sansome would not have signed the Marriage Contract if given more time.
Loss of Chance
[69] The defendants are not entitled to a loss of chance discount where the plaintiff has proven “but for” causation. In Jarbeau v. McLean, 2017 ONCA 115, the Court of Appeal dismissed precisely this sort of “defensive” raising of loss of chance. The Court confirmed that plaintiffs in solicitor’s negligence cases are entitled to full compensation where they can establish standard but -for causation on a balance of probabilities, and that the mere availability of other inferences or contingencies on causation does not trigger a loss of chance analysis. The plaintiff does not have to prove on a balance of probabilities what Ms. Sansome would have done had she received proper ILA. The defendants had the burden to call Ms. Sansome if they wished to assert a counter-factual.
Limitation Period
[70] The defendants assert that the plaintiff’s claim is barred as being out of time because it was started beyond the two year limitation period set out in the Limitations Act. I do not accept this submission. There were two main reasons why the plaintiff’s claim was not discoverable: it was both speculative, and an inappropriate means.
[71] Regarding the claim being speculative, the evidence of Mr. Martin and Ms. Voll was consistent: while Ms. Voll’s January 25, 2011 memo reflected her concern about the validity of the contract arising from her questioning of Ms. Sansome, she advised Mr. Martin that they had to “wait and see” what was revealed through her upcoming discussions with Mr. Giesbrecht. I accept that the earliest time that the potential claim against Mr. Giesbrecht and his firm was no longer speculative was July 13, 2011, after Ms. Voll had completed her discussions with Mr. Giesbrecht and reported to Mr. Martin. Using this date, the claim issued in this action on June 27, 2013 was not out of time.
[72] The question of whether a claim is appropriate depends on what a reasonable person in the claimant’s circumstances ought to have known: s. 5(1)(b) of the Limitations Act. In this regard, the following must be noted: Mr. Martin was trying to defend and vindicate Mr. Giesbrecht’s work on the Marriage Contract in the divorce proceeding; Mr. Martin was told and understood that it would have been premature to commence a claim against Mr. Giesbrecht for that same work while the divorce proceeding was pending; and Ms. Voll said that it would have been inappropriate to commence such a claim while concurrently litigating to defend Mr. Giesbrecht’s work in the divorce proceeding.
Mitigation
[73] The defendants submit that it was unreasonable for Mr. Martin to litigate the divorce proceeding, and that he should have settled. It does not lie in the mouth of solicitors to blame clients for relying upon their advice. This argument amounts to the defendants saying that Delmer Martin should not have relied upon Mr. Giesbrecht’s assurances about his work. Moreover, Mr. Martin did express some willingness to consider settling, when he sought to enlist Mr. Giesbrecht’s assistance in settling the matter prior to trial in his letter of December 22, 2011, which was ignored.
Collateral Attack
[74] This action does not constitute a collateral attack on the reasons and finding of Justice Campbell at the divorce trial in 2012. Justice Campbell was asked to consider the actual Marriage Contract prepared by the defendants. In respect of causation, this Court is asked to consider this Marriage Contract in hypothetical circumstances cured of the defendants’ failings.
Damages
[75] The defendants submit that the claim for a portion of the damages sought by the plaintiff is inapt. I do not concur.
[76] Concerning the interest portion of his claim, the plaintiff is only seeking as damages the interest on the Witzel mortgage he obtained attributable to the principal payment of $549,500 paid to Ms. Sansome following the divorce proceeding and the appeal. This interest is properly part of the principal or actual loss that the plaintiff has actually incurred as a result of the Marriage Contract being set aside. It is not a claim for the time value of money associated with being without a sum of damages prior to judgment.
Conclusion
[77] The plaintiff Delmer Martin has proven on a balance of probabilities that the defendants failed to meet the applicable standard of care and breached their fiduciary duties in preparing the Marriage Contract signed on April 13, 2000. They were not competent, were in conflict, and failed to disclose material risks. Their failures caused Justice Campbell to set aside the Marriage Contract. Had this not occurred, the plaintiff would not have been liable to share the property sought to have been protected by the Marriage Contract. As a direct consequence of this, the plaintiff has incurred damages for the equalization payment, associated legal fees and costs awards, and interest from continuous remortgaging of the family farm required to fund all this, in the amount of $945,389.40. He is entitled to damages for that amount.
Order
[78] The defendants are liable to the plaintiff and shall pay damages to the plaintiff of $945,389.40.
Costs
[79] The parties are encouraged to agree upon appropriate costs. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs) by email to my judicial assistant at mona.goodwin@ontario.ca and to Kitchener.SCJJA@ontario.ca. The plaintiff may have 14 days from the release of this decision to provide his submissions, with a copy to the defendants; the defendants a further 14 days to respond; and the plaintiff a further 7 days for a reply, if any. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves. If I have not received any response or reply submissions within the specified timeframes after the plaintiff’s initial submissions, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.
M. Gibson, J.
Date: March 17, 2022
COURT FILE NO.: CV-13-555
DATE: 2022/03/17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DELMER MARTIN
Plaintiff
– and –
GIESBRECHT GRIFFIN FUNK & IRVINE LLP (formerly known as "Giesbrecht Griffin and Funk") and
THE ESTATE OF D. KIM LAVERGNE, Deceased
Defendants
REASONS FOR DECISION
M. Gibson J.
Released: March 17, 2022