LINDSAY COURT FILE NO.: CV-13-44

DATE: 2024-01-16

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Doug Jones and Beverley Jones, Plaintiffs

AND:

C. Ian Keay, Defendant

BEFORE: Justice V. Christie

COUNSEL: Don Rollo and Kateryna Borodenko, Counsel for the Plaintiffs Robert Macdonald, Counsel for the Defendant

HEARD: December 6, 7, 8, 12, 2023

REASONS FOR DECISION

Overview

[1] This action involves clients suing their lawyer for faulty advice the lawyer gave in relation to a piece of property they were in the process of buying.

[2] It is admitted that the lawyer owed a duty of care to the clients, the Plaintiffs. It is admitted that the lawyer fell below the standard of care required of a prudent lawyer in the circumstances, specifically, in the faulty advice given in relation to Planning Act consent stamps and the bearing this may have on the ability to sever a cottage property that they were interested in purchasing, and did in fact purchase, in 2010. The focus of this litigation is on whether there has been any loss resulting from the actions of the lawyer.

[3] To answer this question, it is necessary to complete a careful examination of the factual circumstances and leading legal authorities. To a great extent, neither the facts nor the law is in serious dispute.

Facts

[4] The Plaintiffs, Doug and Beverley Jones, have been married for 47 years. They live at a home in Whitby, where they have resided for over 35 years. Doug Jones was a long-time employee of Ontario Power Generation (“OPG”). He started as a technician and worked his way up. He retired as a department manager with OPG, at the Pickering Nuclear Station, in the Scheduling and Planning Department. After retiring from OPG in 2013, he was recruited and hired as a Site Manager Representative for the construction company, Black & McDonald, acting as a liaison between OPG and Black & McDonald, as well as running the site. Beverley Jones had a lengthy career in banking and retired in 2018.

[5] At the relevant time, 2010-2011, the Plaintiffs were unsophisticated in real estate. They had no experience buying and selling real estate as a commercial venture. They had only modest history buying and selling real estate, having purchased their current matrimonial home, and one prior matrimonial home, prior to this cottage property.

[6] The Plaintiffs have been active cottagers their whole lives. Prior to purchasing the subject cottage property, they had been going to and spending time on Chandos Lake. Chandos Lake is said to be a “premier” location in which to own a cottage property, as compared to many other lakes in the Lake of Bays region. Friends of theirs, who were neighbours on their street in Whitby, had purchased a cottage on Chandos Lake a few years prior, 8 or 10 years prior to 2010, and they would invite the Plaintiffs to come up and enjoy the lake with them. The Plaintiffs went to Chandos Lake on many occasions throughout those years and even trailered their own boat up to Chandos on occasion. The Plaintiffs had also helped their friends with some ongoing cottage association things. The Plaintiffs had become quite familiar with Chandos Lake. Whenever the Plaintiffs would go up to Chandos Lake, they would grab a local real estate paper and always kept an eye on the local market, thinking it would be nice to buy there one day.

[7] At the same time, Doug Jones explained that his parents had a camp in Sudbury. As his parents became older, it would be him and his son who would go up to open and close the camp and use it for a couple of weeks. However, as he and his son became older, this became more and more unworkable. Mr. Jones had a conversation with his father to express to him that this was becoming too much. Mr. Jones suggested that it might be best for his father to sell the camp so that his father would not have to worry about it anymore and Mr. Jones would then look for a cottage in Southern Ontario, closer to where they lived. The camp in Sudbury was ultimately sold, at which time the Plaintiffs decided to get more serious about looking for cottage property, with their focus on Chandos Lake.

[8] In the spring of 2010, the Plaintiffs were actively seeking to purchase a cottage on Chandos Lake. They looked through real estate papers, looked on the internet, and chose a real estate agent in the local area in Apsley, Rick French of Bowes & Cocks, and asked him to take them out to view some cottages. The Plaintiffs told the agent what they were looking for, including something in the $250,000 to $300,000 range, with lake front, indoor plumbing, and preferably with four bedrooms to accommodate them and their three children. As for location on Chandos Lake, they advised their agent that they were more interested in being on the main part of the lake, where the water was deeper, as they were boaters and wanted boat access onto the lake from their cottage. Chandos Lake is a large open body of water, but also has a lot of smaller bays, where the water is shallower.

[9] Through email exchange and phone calls, the Plaintiffs set up a meeting with Rick French in early April 2010. The Plaintiffs went to the area. Mr. French had a number of cottages – approximately 6 – to show them. Although they were more interested in the deeper water portions of Chandos Lake, they looked at what was available. One of the listings that they went to see, in fact a listing of Rick French, was the property at 385 Haggis Cove Lane, Apsley, in the County of Peterborough, located on Chandos Lake. The recreational cottage property featured 300 feet of shoreline along Chandos Lake.

[10] According to the listing, the property had originally been listed for sale in the amount of $449,000, but had been reduced to $399,900. The property was said to be a total of 1.43 acres. The overview description stated: CHANDOS LAKE: SUPER PRIVACY-300 FT OF WATERFRONT. THIS PROPERTY HAS SEVERANCE POTENTIAL. (WAS 3 SEPARATE PROPERTIES). FACING SOUTH IN SHELTERED BAY, THE THREE BEDROOM, 2 BATH COTTAGE SHOW PRIDE OF OWNERSHIP WITH AN ATTACHED GARAGE TO STORE THE COTTAGE TOYS. APPLIANCE & MOST FURNITURE INCLUDED. The sale was also said to include an aluminum boat, canoe, and paddleboat. The property was reported to be assessed at $269,750.

[11] After seeing Haggis and other properties, the Plaintiffs went home and chatted about what they had seen. They discussed Haggis. They agreed that Haggis was over their budget, but considered that the vendors, Bruce and Beverley Adams, had the property listed for over a year, and the price had dropped over the time it had been on the market. Mr. Jones suggested that if they could sever the property back to the original state of three nearly equal lots (each with approximately 100’ of waterfront), they could sell the properties, making money off the sales, and then take the profit and look for a nicer place on the main part of the lake. Mrs. Jones was not sold on the idea, but they agreed they had nothing to lose so decided to pursue the idea. They continued to keep an eye out for other properties.

[12] Before making any offer on Haggis, Doug Jones started to investigate his chances of obtaining severance and building permits for the severed properties.

[13] On April 5, 2010, Doug Jones sent an email to Tim Powell, the Chief Building Official at the Township of North Kawartha. He explained that he was looking to purchase the cottage on Haggis Cove Lane on Chandos Lake and that he had “been told that the property has severance potential as it used to be 3 separate properties that are now one”. Mr. Jones stated that he “would like to know if it is possible to re-instate the properties back to their original state without going through the formal severance process and if so what would need to be done” asking whether there was any way to “get confirmation that the property can be severed back into 3 properties with the potential to sell 2 of the 3 for future cottage building prior to purchasing the property.”

[14] On April 6, 2010, Tim Powell responded that he was “not aware of the property” but “if these are properties that merged due to common ownership the owner at the time of merging is the only person who can recreate them through the Consent process (this is an Official Plan Provision)”. Mr. Powell advised that he was not aware that there was ever a formal plan of Sub-Division for the creation of this property or properties, therefore, he could not really provide any information on what may be possible. Mr. Powell stated, “I do know that no one has inquired at this office about severance potential at this property, so I am just a little curious as to how someone could advise you that there is severance potential.”

[15] On the same day, April 6, 2010, Mr. Jones responded to Tim Powell to provide more information about his understanding of how the properties were merged. Mr. Jones indicated that he wanted to be “sure” about this issue before putting in an offer. Mr. Jones expressed his understanding as follows:

Am I to understand that only the present owner can recreate the 3 properties through the Consent process? Is this easier to recreate the 3 properties by the existing owner than what I would have to go through if I were to purchase the property then try to sub-divide through the consent process?

If I were to purchase the cottage and then apply for the sub-division through the consent process, is your confidence low or high that I would be able to sub-divide into 3 properties through the normal Official Plan Provision based on what you have experienced. I understand if you are not allowed to make that type of comment.

I am not surprised that no-one has inquired about the severance potential of this property as a lot of people trust what they are told but don't verify or have not been interested.

[16] On April 7, 2010, Mr. Powell responded, and repeated that, under provisions of the Official Plan, “the only person who can recreate properties that merged on title is the person who owned the property when they merged on title due to common ownership.” Mr. Powell stated that he had “reviewed all Municipal files in respect to this property and can find no information that it was ever several properties that may have merged.” Mr. Powell went on to explain:

For the creation of properties under provisions of the Zoning By-Laws in a Recreation Residential Zone each created property and the retained property must be 1.2 acres in area with 150 feet of Lake Frontage, if the proposed properties do not conform to that minimum standard then my thought is that you will not be successful with Severance Applications. You may wish to have the County of Peterborough Planning Department complete a preliminary Severance review in respect to your proposal and this may give you a better idea of potential problems and issues with the creation of additional lots at this location.

Mr. Jones acknowledged this response.

[17] That evening, April 7, 2010, Mr. Jones sent an email to Rick French to advise him of the information he had received, including that “under provisions of the Official Plan, the only person who can recreate properties merged on title is the person who owned the property when they merged…” Mr. Jones asked whether it was possible that the present owner “was not the person that merged the property but maybe the owner prior…” Mr. Jones also pointed out to Mr. French that, for him to subdivide the properties under provisions of the Zoning By-Laws, each created property must be a minimum of 1.2 acres with 150 feet of waterfront, which “would be difficult with the cottage built across the middle…of the property.” Mr. Jones asked Mr. French to shed some light on the severance potential. Later that night, Mr. French responded in an email to say he was also having discussions with Tim Powell. Mr. French provided his understanding of the history of the property and confirmed that “Yes, there were 3 separate lots according to the present owner”. Mr. French also referred to a property in Gilmour Bay, for which a new owner was able to achieve severance but had to go to the Ontario Municipal Board to do it. Mr. French stated that he had contacted a local lawyer to get clarification; in fact, the lawyer, the Defendant, Ian Keay, was copied on the email. Mr. Jones testified that the email was somewhat confusing to him and did not give him a whole lot of information – “just some hope maybe”. Mr. Jones had not spoken to Mr. Keay and had no knowledge of him prior to this.

[18] On April 8, 2010, the Defendant, Ian Keay, sent an email to Rick French and Doug Jones, in response to an inquiry made by Rick French, indicating that he was going to do a “little research on this matter to see if this is a hill worth dying on.” Mr. Jones testified that he understood by this that there were some challenges that they needed to overcome, and that Mr. Keay was inquiring as to whether this was important to them. Mr. Jones had not asked Mr. Keay to do any research but he assumed Mr. French asked him to do this and this was why Mr. Keay was coming back with these comments. In the email, the Defendant questioned whether, even if separated, would the Township issue building permits for those vacant lots. Mr. Keay stated:

Typically, municipalities would allow land owners to restore historic lots of record with a severance application. The rationale being, we're not creating new lots, just restoring the status quo. This was known as a "technical severance". Under the Planning Act, there is no such thing as a "technical severance". It was more of a practical way of treating this type of matter.

It seems now that the municipalities aren't interested in treating these as favourably as they had treated the technical severances of previous years. That seems to be the kind of answer that Rick has gotten from Tim Powell at the Township. So our only hope is to find some jurisprudence that supports our position and take a rejection of the application by North Kawartha to the OMB.

Mr. Keay then asked the question: “Do we know whether we could even get building permits for those lots?” and, if yes, he would try to find some support for their position through case law, and then they could determine whether to proceed with an application. Mr. Jones testified that, when he first started all of this, he had no idea of legal terminology or real estate terminology, as it was all new to him. As for his understanding of what part Mr. Keay was going to play, Mr. Jones testified that his perspective was that this was a lawyer that worked with Mr. French and that he was going to help with his opinion to clear some of the challenges that they had come across in trying to understand how to go about severing this property. It sounded to Mr. Jones that the municipalities were not as open to doing this type of severance as they had been in the past and there were going to be some challenges. Mr. Jones did not discuss or clarify what research Mr. Keay would be doing and there was no discussion about who would pay Mr. Keay. Mr. Jones believed that Mr. Keay would be doing it “out of the goodness of his heart”. Mr. Jones did not hear back about the research. Mr. Jones testified that this email from Mr. Keay introduced him to the idea that he needed to consider whether building permits would be possible. Mr. Jones stated that this was important to him because, if they severed, the lots would not be worth anything if a person could not build on them. At this point, Mr. Jones had not retained Mr. Keay. Mr. Jones understood that Mr. Keay had not yet investigated title to the property. Mr. Jones agreed that in this email Mr. Keay suggested that severance may or may not be possible.

[19] Later that evening, Mr. French asked Mr. Jones, by email, whether this issue, of being able to sever and obtain building permits for those vacant lots, would be important to him and, if so, Mr. French would make inquiries of Tim Powell. Doug Jones responded a couple of hours later, “This would be a condition of considering the property.” Mr. French acknowledged the response and said he would advise as he knew more. Mr. Jones testified that he understood that Mr. French was going to speak to Tim Powell to try to get further information.

[20] On April 14, 2010, the Defendant followed up with Rick French and Doug Jones to see if there was any further information, as he was “curious whether N. Kawartha would issue building permits for these lots in the event they were still separate.”

[21] On April 15, 2010, Doug Jones sent an email to Rick French, copied to the Defendant, indicating that he “did not fully understand” Mr. French’s email from April 7, 2010, specifically, whether the information about the history of the property was obtained from the owner or from Tim Powell. Mr. Jones asked Mr. French if he had had a chance to speak to Tim Powell yet. On the same day, Rick French responded in part:

If I understand the complete situation - I would say that there is still a small chance that the lots could be taken back to there original form BUT I would not buy the property and count on this!! I have been doing quite a bit of email discussion with a lawyer that I know and this is his response. I really think that if the township try's to stop an existing lot from being developed then the township will be in for a lot of legal problem. Essentially they are making some lots worthless - through no fault of the owners!

Mr. French provided the text of a message he received from the Defendant, stating that Mr. Powell was suggesting that there would have to be an application for an Official Plan Amendment in order to excuse the violation of the Official Plan. The Defendant had further advised Mr. French that the “client” would need to apply for a severance and an Official Plan Amendment at the same time, both of which may be refused. The Defendant suggested contacting a private planner to produce an opinion on the new Official Plan and the likelihood of success. The Defendant stated, “I still think the first step is to determine whether there is any supporting case law for a severance app. when we're just trying to restore lots of record.” Mr. French also relayed information he received from the property owner and from Tim Powell. As for Tim Powell, the information received was:

A property with 100 feet of frontage and a depth of 130 feet would not be able to support a new cottage as it exists ie. a 100 ft. water yard setback and a rear yard setback, planning relief would be required to be able to place a cottage on a property such as you have described.

Mr. Jones did not feel that this was a good example because the property at Haggis was 300 feet wide by 200 feet deep. Therefore, if divided into three properties, each would be around 100 foot of water frontage with 200-foot depth. Therefore, with his understanding of the rules, that a person could only build 100 feet back from the waterline, it would still leave a lot of room within the setback rules to build a cottage.

[22] On April 16, 2010, Doug Jones sent an email to Rick French in response to the information received. He stated in part:

It sounds to me that Ian is saying that we could take the first step to determine in there is precedence of restoring lots of record. I find it insufficient that Tim Powell can't find records of the three lots merged into one regardless of the Polaris system. I am going to see if I can find any information regarding records prior to the Polaris system.

If we can't resolve this then it will be time to move on.

As an FYI here is the North Kawartha Building Information wrt how close to the property boundaries one can build. I don't have the lot size other then 1.43 Acres (1.43 acre = 62290.8 ft2), but based on the frontage being 300' the depth should be ~ 200'. Therefore a building could fit on a 100' x 200' lot as long as it's 100' from the water, 15' from the sides, and 20 from the rear. The owner stated that he did purchase the shore lines.

Mr. Jones testified that he was surprised and disappointed that Tim Powell, an official at the Township, was not able to find any record of the property on the lake. At that time, Mr. Jones had a very limited understanding that the Polaris system had caused the properties to merge as they were all under the same ownership. Mr. Jones stated that by “if we can’t resolve this” he meant that, if he could not get supporting information that demonstrated “fully” that he could sever the lots, there was no point in pursuing this any further, as he was only interested in the purchase if he could sever the lots. As for the availability of building permits on the three lots, based on the information he had come across, Mr. Jones was confident that, indeed, they should be able to get a building permit to ensure the lots they were looking to sever were “buildable”.

[23] On April 22, 2010, Doug Jones reached out to Tim Powell by email, quoting from the Official Plan that “existing lots that inadvertently merged due to common ownership may be separated to reflect the original lot configuration provided the subject property is still in the same ownership as when such merging occurred and it is permissible in local official plans. The above technical severances do not necessarily represent the creation of a new lot when considering the number of new lots that can be created by consent from a land holding." Mr. Jones provided information about the history of the lots that had been received by the owner and then asked Mr. Powell a number of questions. Mr. Jones offered to meet the following week if it would be more convenient.

[24] On April 23, 2010, Mr. Powell answered some specific questions from Mr. Jones, including where to possibly find evidence that the property was originally three separate lots. The email stated:

1. If this information is available it will be at the registry office in Peterborough, as well it would appear that the current owner should be in possession of 3 deeds and plans to reflect 3 separate properties?

2. The Official Plan does recognize the ability of the owner as long as that person/persons were the owners when the property merged to recreate the subject property, based on O.P. Provisions.

3. This process would be through the County of Peterborough Land Division process, if the property was 3 separate properties they would be eligible for Consent, they would have to comply with Health Unit requirements and if they did not comply with the minimum frontages and areas required under provisions of the Zoning By-Laws the owner would have to be successful with an amendment to the Zoning By-Laws to recognize any deficiencies.

4. If the properties were not capable of supporting buildings/cottages they will not be created /re-created so to answer your question a Building Permit would be available on an undersized property as long as all setbacks can be adhered to and you have other approvals as required and of course they are separate properties.

[25] Based on this information, Doug Jones called the County of Peterborough and explained his situation.

[26] On April 26, 2010, Doug Jones received a Severance Proposal Form and Land Severance Guide from a Planner at the County. This provided him with the contact name at the County – Laura Jackson. Later the same day, he submitted a severance proposal to Laura Jackson, Planning Technician at the County of Peterborough, to inquire whether severance was possible from the County’s perspective. This was the first contact Mr. Jones had had with Laura Jackson. In the cover email, he stated that, as a potential purchaser, he would “like to determine if the proposal will conform to the County Official Plan, Local Official Plan and any Local Zoning By-Laws prior to purchasing the property.” He also stated:

…I would like to fully understand if the property can be returned to its original state of 3 individual properties and comply with the current requirements, including any minimum frontages, under the present owner prior to me purchasing the property(3 lots merger into1).

I will need to understand that the 2 vacant lots will be capable of supporting buildings/cottages so they will comply with all requirements when applying for a Building Permit potentially in the future. I understand the North Kawartha setback requirements of a building being 100' from the water, 15' from the sides, and 20 from the rear.

The proposal attached an aerial view of the property with lines drawn where the severance was proposed.

[27] On April 27, 2010, Ms. Jackson responded that she was having some trouble with the attachments to the email. On April 28, 2010, Mr. Jones re-sent the proposal, including reference in his email to the County of Peterborough Official Plan and the Land Severance (Consent) Guide. He asked the following:

The question I have, is since the present owner did not ask for the 3 properties under their common ownership to be merged, but was merged through the use of the Polaris application, does this request not fall under the technical severances criteria? We are not asking for the creation of new properties but only to separate "to reflect the original lot configuration provided the subject property is still in the same ownership as when such merging occurred and it is permissible in local official plans".

Does this request not fall under a technical severance? How does one apply for a technical severance? Who has the authority to determine whether this is a technical severance requesting a correction of title or not and under what basis? What does "technical severances.....shall be evaluated based on site specific considerations established in local official plans" mean?

Mr. Jones testified that he included extensive narrative in his email because he was trying to understand the rules and regulations. He stated that the term “technical severance” came from documentation on the County’s website, but he now understands that this may have been outdated terminology. His understanding of the merger process at that time was that, when the property was in the same name and abutted, the new Polaris system would merge the property into one, regardless of whether the owner agreed or disagreed. He understood that the properties were automatically merged. He wanted to explain in this email that he was not creating new lots, but rather simply wanting to revert them back to what they were. He was asking whether he needed to go through the whole process as this “seemed pretty straight forward”. Mr. Jones explained in his testimony that the lots were merged under a process with no opportunity to agree or disagree, and he found it hard to believe that a person could not “turn them back if you so choose”.

[28] On May 3, 2010, Laura Jackson responded by email that the “proposal may fall under a technical severance but I won't be sure until I get looking at it.” She asked if Mr. Jones could provide proof that the parcels were still in the same ownership as when they merged. Mr. Jones obtained the various deeds from the owner through Rick French and forwarded those to Laura Jackson on May 10, 2010 and May 16, 2010.

[29] On May 20, 2010, Mr. French sent an email to Mr. Jones stating that he had spoken to “the Adams…the other day and I really think that they are motivated to sell – why not try an offer – you might get a deal!”

[30] On May 27, 2010, Mr. Jones responded that they were interested in putting in an offer, but that one of the conditions would have to be the severance and another viewing. Mr. Jones asked for Mr. French’s recommendation on putting in an offer with this condition or waiting for feedback from the planning department. Mr. Jones also stated that they were interested in other “good listings” in the meantime. Mr. French responded within a few minutes asking for more information about the proposed severance condition, such as whether Mr. Jones would want the severance before closing or just conditional upon determining that severance can happen. On May 28, 2010, Mr. Jones responded:

I am thinking that we would need a condition for ~ 2-3 weeks which should provide the planning department the time to complete their initial review and tell us what will be required to severe the property. I sense that the severance will need to occur in the Adams' name; otherwise I think it could get lengthy and costly but I'm only speculating at this time.

[31] On May 29, 2010, Mr. French sent an email to Mr. Jones stating:

Heads up! A rep just showed the property and is showing it for the second time tomorrow!! I think that we should pull the trigger on an offer as soon as possible!!

[32] It had now been a number of weeks since the Plaintiffs viewed the property. Mr. Jones explained that properties were being bought up in the area, so there were other people looking to buy on the lake – in other words, there was a market. He was aware that someone could come along and put an offer on Haggis, therefore, he thought the best thing he could do would be to put a conditional offer in, to tie up the property, so that he could continue with the application and get the information he needed about being able to sever. Therefore, a few hours later, on May 29, 2010, Mr. Jones responded to Mr. French and stated:

Ok, let's put an offer in for $349,000 conditional on finance, cottage inspection, property severance, including furniture, appliances, & window covering as well as any of the other conditions you mentioned when we talked last time we were up.

Later that night, Mr. French sent Mr. Jones a “first draft” of the offer.

[33] While the proposal with the County was still pending, the Plaintiffs finalized and made an offer to buy 385 Haggis Cove from Bruce and Beverley Adams on May 30, 2010 in the early afternoon. The offer was for $349,000, with a $25,000 deposit, irrevocable by the Buyer until 11:59 a.m. on May 31, 2010, and with a completion date of August 13, 2010. The offer included the following conditions:

This Offer is conditional upon the Buyer obtaining, at the Seller’s expense, a consent to sever the property as follows: to return the property to the original 3 lots that have merged on title. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than 6:00 p.m. on July 30, 2010 that this condition is fulfilled, this Offer shall become null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to sign any requisite documents required for the above condition and do all things reasonably necessary in support of the satisfaction of the condition.

The Seller understands and acknowledges that the Seller shall be responsible for satisfying any conditions imposed for approval of the severance, and if such conditions give the Seller options in the manner of compliance, the Buyer shall determine which option will be selected. The Seller shall obtain a reference plan prepared by an Ontario Land Surveyor suitable for registration purposes in the Land Registry Office in which the said property is located.

The offer was also conditional upon arranging financing and inspection.

[34] On May 31, 2010, at 10:45 a.m., Rick French sent an email to Doug Jones stating as follows:

No competing offers yet!! The Adam's are on their way to Apsley now so I will be presenting the offer to them directly and will advise as soon as I know the response. Just wanted to keep you in the loop here!!

[35] On May 31, 2010, at 4:51 p.m., Rick French sent a signed back offer from the Adams’ to Doug Jones. The purchase price was changed to $385,000, irrevocable by the buyer until 11:59 a.m. on June 1, 2010. The severance conditions were changed as follows:

This Offer is conditional upon the Buyer obtaining, at the Buyer’s expense, a consent to sever the property as follows: to return the property to the original 3 lots that have merged on title. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than 6:00 p.m. on July 30, 2010 that this condition is fulfilled, this Offer shall become null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to sign any requisite documents required for the above condition and do all things reasonably necessary in support of the satisfaction of the condition.

The Seller understands and acknowledges that the Buyer shall be responsible for satisfying any conditions imposed for approval of the severance, and if such conditions give the Seller options in the manner of compliance, the Buyer shall determine which option will be selected. The Buyer shall obtain a reference plan prepared by an Ontario Land Surveyor suitable for registration purposes in the Land Registry Office in which the said property is located.

The seller also added a proposed condition:

The Buyer and Seller hereby agree that this property will remain on the market and for sale. In the event that the Sellers receive another offer that they wish to accept, the buyer as indicated herein will be given 48 hours to waive all conditions to make this agreement firm. Failure to waive the within conditions by the 48 hours will make this Agreement null and void and the Seller will be at liberty to sell the property to the new Buyer. In this event the Buyer (Douglas Jones) will have his deposit returned in full.

[36] The Plaintiffs made a further counteroffer on May 31, 2010 at 10:37 p.m., which was irrevocable until 5:00 p.m. the following day. The only change to the offer the Adams had made was to reduce the purchase price to $380,000. This became the final Agreement of Purchase and Sale. The deposit was paid within the next few days. Mr. Jones explained that the real important condition was that they would be able to sever the property back to the three original building lots. They set a closing date of August 13, 2010, believing this would give enough time to get a response from Laura Jackson at the County.

[37] On June 1, 2010, Mr. Jones advised Laura Jackson that he had placed a conditional offer on the property and would appreciate anything she could do to help progress the review. On June 2, 2010, Laura Jackson indicated that she hoped to have a response by the following week but asked whether the current owner would be retaining ownership for the duration of the formal application process or would Mr. Jones be intending to purchase the property and then undergo the severance. On the same day, Mr. Jones responded in an email:

I am not familiar with the planning process other than reading the county plan. I think you could help me understand what the process is moving forward as I was hoping that this request would not have go through a formal application process as we are only requesting the property to be return to what is shown on the owners deeds.

He referred to the Official Plan and then stated, “So to answer your question, it will be based on what process we apply and how long it will take to complete it. I have built time into the offer on the property, but if someone puts an offer in I could lose the deal.” The next morning, Mr. Jones responded to Ms. Jackson again, stating, “To better answer your question, the current owner will be retaining ownership for the duration of the formal application process. This of course is dependent on how long it will take.”

[38] Also on June 3, 2010, Ms. Jackson responded to Mr. Jones and stated in part:

The formal application process can take anywhere from 3-6 months and, in the event of any objectors, could possibly take a bit longer than that. I tell people to expect probably at least six months. Even a technical severance, such as the separation of merged parcels, would still need to go through the formal application process.

The accuracy of my review depends on how you and the current owner are going to apply for the property. Should the property change hands and you become the owner, than the subject property would no longer be considered the separation of merged parcels, as it would no longer be under the same ownership as it was when the merger occurred. At that point, I would have to review the proposal as the creation of two new lots.

I am just concerned about reviewing the proposal under a set of policies if they will not be the same ones that apply when the time for formal severance application comes. I want to make sure that I am giving you accurate information based on your situation.

Mr. Jones responded on the same day and told Ms. Jackson to “continue to proceed with the separation of merged parcels.”

[39] It appears that, on June 10, 2010, the Plaintiffs waived the condition for inspection and finance.

[40] On June 14, 2010, the County responded to the Plaintiffs, providing a “Preliminary Severance Review” dated June 4, 2010. This Review is not a formal order of the County, but rather an indication of hurdles an applicant might face if they decided to apply to have a particular piece of property severed. The covering email stated in part:

The review, attached, indicates that the Severance Proposal does not appear to conform to the Official Plans until such time that the Municipality has indicated that there is support for the size of the lots proposed.

Additionally, the applicant should be aware that the Township, in consultation with the Ministry of the Environment (MOE), may require a lake capacity study for new development on Chandos Lake.

Should the applicant proceed with a formal application for consent, please be aware that the applicant should provide legal documentation outlining how the properties became merged and evidence that the merger happened under the current owner.

[41] The attached Review stated that the “Intent” was to “separate merged parcels” and stated in part as follows:

County Official Plan Policy Review: The subject property is described as Shoreland area in the County Official Plan. Although there are policies specific to those areas described as Shoreland, Section 2.6.3.1 of the Plan states that "existing lots which inadvertently merged due to common ownership may be separated to reflect the original lot configuration provided the subject property is still in the same ownership as when such merging occurred and it is permissible in local official plans." Along with the 'Application for Consent', the applicant should provide legal documentation (ie. a lawyer's letter) outlining how the properties became merged and evidence that the merger happened under the current owner….

However, since the subject parcel is to be divided and the severed parcels will not have existed as of this date, they will be required to conform to the 30 metre setback requirement.

Municipal Official Plan Policy Review:… Section 7.12.21 of the Plan state that "existing lots that merged inadvertently due to common ownership may be separated to reflect the original lot configuration provided that the subject property is still in the same ownership as when such merging occurred." Along with the 'Application for Consent' the applicant should provide legal documentation outlining how the properties became merged and evidence that the merger happened under the current owner.

However, since the severed and retained parcels are half the size required by the Township's Zoning By-Law, the Proposal should be discussed with the Municipality to determine if there is support for the size of the lots proposed.

Municipal Zoning By-Law Review: … The severed parcels appear to be deficient with an approximate lot area of 0.23 hectares (0.56 acres) and a lot frontage of 30.48 metres (100 feet); therefore a rezoning or minor variance will be required…. (S.6.2.1.1). The retained parcel appears to be deficient with an approximate lot area of 0.22 hectares (0.54 acres) and a lot frontage of 30.48 metres (100 feet); therefore a rezoning or minor variance will be required.

Additional Notes: MNR Special Features Mapping indicates the subject parcel has environmental sensitivity of provincial significance…. The County of Peterborough Planning Department has contacted the Ministry of Natural Resources (MNR) to determine what species, if any, are located on or adjacent to the subject property. Future correspondence from the Planning Department will indicate whether a Species at Risk Assessment will be required…. The Township, in consultation with the Ministry of the Environment (MOE), may require a lake capacity study for new development on Chandos Lake.

Application requires confirmation from the Township or identified agency regarding policy conformity. Please note that the landowner should be aware that members of the local council may not support a rezoning or minor variance to create a lot that is not in compliance with the provisions of the zoning by-law .

[42] Mr. Jones testified that Laura Jackson had mentioned in her email and in the Review, with bold and underlining, that severance had to be done in the original owner’s name. He believed that Laura Jackson wanted to make sure he was clear on that point. Mr. Jones read the Review, but stated he remained unclear on whether he would be able to sever the lots.

[43] On June 15, 2010, Mr. Jones asked Ms. Jackson some follow up questions relating to the need for legal documents. On June 17, 2010, she stated:

In response to your question indicating the need for legal documentation, we would need a letter from a lawyer explaining when and why the lots merged. Unfortunately, being able to produce the deeds for each of the parcels does not necessarily indicate that the merging was inadvertent. The letter will confirm that these parcels merged under the new system and will provide us with the appropriate background and information necessary to write our report.

[44] On June 18, 2010, Mr. Jones reached out to Kevin Duguay, a planning consultant based in Peterborough, for assistance. Mr. Jones testified that he got to a point where it was not clear to him how this process truly worked because the Municipality was telling him one thing and the County was telling him another. He understood that Mr. Duguay was an expert in the field of property planning. Mr. Jones had not received a clear indication of what was required between the Municipality and the County, so he wanted to get an expert involved, someone who knew the language, to be able to guide him through how this all came together. Mr. Jones expected that Mr. Duguay knew how and who to talk to at the County and Township. Mr. Jones also stated that Mr. Keay had identified this in his April email as something Mr. Jones might want to consider. Mr. Jones searched on the internet and found someone who looked like he would fit the needs. Mr. Jones’ introductory email to Mr. Duguay was extensive, providing all of the information that Mr. Jones believed was required for Mr. Duguay to understand the request. The email stated in part as follows:

I would like to purchase the cottage with the criteria that the properties be severed or returned to the original 3 - 100' lots prior to the property being sold to me. I have submitted a conditional offer based on this and the owner has agreed with time restrictions. I understand that the Municipal zoning by-laws call for a minimum lot area of 1.2 acres and frontage of 150'. This would not work well in this case because by dividing the property into 2 - 150' frontage lots would divide the cottage, which is located in the center, in half.

Before committing to anything formal with Mr. Duguay, Mr. Jones asked Mr. Duguay whether he could “support this” and to advise of the cost and duration.

[45] On June 21, 2010, Mr. Jones sent an email to Kevin Duguay stating that he “would like to move forward on this issue” but then asked a number of questions. He stated, “So Kevin, lets get started with the caveat that some issues need to be resolved before we get into any significant costs.”

[46] On June 23, 2010, Mr. Duguay sent Mr. Jones a fee proposal for his review, authorization and return. He indicated that he could commence work on June 28, 2010. Mr. Jones then asked whether Mr. Duguay would be providing the legal documentation outlining how the properties became merged, to which Mr. Duguay responded and clarified that this would be produced by Mr. Jones’ lawyer.

[47] On June 25, 2010, Mr. Jones sent an email to Mr. Duguay stating that they were waiting for the owner to get back to them with a decision regarding an extension of the condition on the offer, which they expected to come the following week. He also asked for clarification on some issues, specifically, relating to the size of the proposed lots not being in compliance with zoning by-laws. Mr. Jones stated:

Also, one item that has not been identified is that I not only want to return the property back to its original 3 x 100' frontage lots, but want to be assured the the municipality will support a building permit on the vacant lots if requested. Understanding that the criteria is 100' from the water, 15' from the sides, and 20' from the rear.

Mr. Jones asked Mr. Duguay to “break out” the costs for addressing these issues out of the estimate given.

[48] On the same day, June 25, 2010, Mr. Duguay responded in an email to say that he would meet with the Township Staff to discuss the issue of lot size and building feasibility prior to moving forward with the preparation of the severance application. He stated: “If the meeting result is positive then you should proceed with the application. If however, the result is negative, then you would have to decide whether or not to proceed.” He explained that the cost for the meeting would be $300 plus disbursements and tax.

[49] Around this same time, toward the end of June 2010, Mr. French advised Mr. Jones that Mr. Adams, the owner of the property, was observing all of this go on, felt this was a simple process, and had indicated that he (Adams) would like to pursue severance on his own and list the properties for sale individually. Mr. Jones was surprised by this and decided to seek more information and advice.

[50] On June 28, 2010, at 10:34 a.m., Mr. Jones made contact with the Defendant, to whom he had been referred by his real estate agent. Mr. Jones sought to retain the Defendant for the explicit purpose of “acquiring a title search on the 3 lots as the review identified that we will need legal documentation (ie. a lawyer's letter) outlining how the properties became merged.” Mr. Jones explained to Mr. Keay that he was also working with Kevin Duguay, a community planner, who was looking into the position the North Kawartha Township would take on severance to see whether they should progress into the formal severance application. Mr. Jones stated: “If the information we receive from yourself and Kevin are positive then I will progress with waving the condition on the property and purchase it, however if the information is not positive then I will have time to back out of the deal.” Mr. Jones stated that he would need this “turned around quickly”, asked Mr. Keay to let him know whether he could support this and what the fee would be, and stated that if the information was positive he would “progress the purchase” and use Mr. Keay’s services.

[51] Also on June 28, 2010, at 10:43 a.m., Mr. Jones sent an email to Mr. Duguay stating in part as follows:

The owner of the property at 385 Haggis Cove Lane on Chandos Lake has advised me that he would like to pursue the severing of his property on his own and then, if he is successful, he will list the 3 lots separately. As you can imagine, I am displeased with his change of mind.

However, there is still an option for me to purchase the 300' frontage property without the severing prior to July 30th, 2010 as the conditional offer I made with him to serve the property does not expire until July 30th, 2010. If I wave the condition prior to July 30, I can still make the purchase.

I assume that the risk to severe the property into 3 - 100' lots in my name has now increased.

With this change in mind I would like you to let me know what my options, risks, and costs, if any in addition to the File 2010-37 are, if I was to purchase the property prior to July 30th, 2010 and then purse severing the 300' frontage into 3 - 100' lots or does not process not change much?

Mr. Jones seemed to be fully aware of an increased risk, and stated he assumed Mr. Duguay would know the extent of the risk and have the answer.

[52] On June 29, 2010, Mr. Keay responded to Mr. Jones by email advising that he did recall talking to Mr. French and Mr. Jones about this issue earlier. Mr. Keay stated:

From my perspective, the work you're asking me to do is very simple and will not take a great amount of my time (presumably) and therefore won't cost you a pile of money.

I will have my conveyancer attend at the Registry Office in Peterborough and perform a title search for the original (centre) lot. That will provide me the history of the centre lot and the adjacent lots. It will be obvious when title to the adjacent lots was taken and when/if they merged in title.

Upon my review of the title search, I will be happy to provide you with my written opinion based upon what I find in the search.

The Defendant estimated that his cost would be around $750.00 and asked: “Has the Township advised that they want my opinion that the three lots were previously existing lots of record?” Mr. Jones responded to Mr. Keay that he assumed the township would want the written opinion and asked that the Defendant support Mr. Dugay as required. Mr. Jones testified that he understood they would have to identify that there were three separate properties and how they had been merged. Mr. Jones told the Defendant to “progress the request”. Clearly, by the time that Mr. Jones retained Mr. Keay in late June 2010, the Agreement of Purchase and Sale for the Property had already been entered into and remained conditional on severance. There was no written retainer at this time or, frankly, at any time. In his Examination for Discovery, as read in at the trial, Ian Keay stated that he was being retained to search title, review it, and then arrive at some type of conclusion whether a severance would be possible. Mr. Jones did not speak to Mr. Keay in person – only through email.

[53] In the mind of Mr. Jones, he, Mr. Keay and Mr. Duguay were all working together. Mr. Duguay needed to go and get a commitment from the Township on whether or not they would be able to get building permits on the undersized lots, and Mr. Keay would go and do a title search to determine the reason the property got merged.

[54] On July 5, 2010, Mr. Jones followed up with the Defendant and Kevin Duguay to see if they had any information regarding his previous emails from June 28, 2010. On the same day, Mr. Duguay responded to both Doug Jones and Ian Keay that he had spoken with County staff and advised Mr. Jones that his purchase of the property would “void the forgoing policy provisions even though the net effect of the severance application would be identical if initiated by the current owner of land”. Mr. Duguay indicated that the County had recommended that he speak with Tim Powell with the Township of North Kawartha, and he was endeavouring to do so.

[55] On July 6, 2010, the Defendant responded to Mr. Duguay and Mr. Jones stating in an email as follows:

I prepared a memo to my conveyancer to search title to the subject property so that we can provide you with an opinion relating to the details of the merger. That was last week. I'm expecting the title search back any day now. Upon receipt of same, I will produce my opinion to you.

Kevin: If the current owner commences the severance application, can we inherit the application and continue on or would the current owner have to see it through to the end and THEN Mr. Jones could complete the purchase of three separate lots?

On July 6, 2010, Mr. Duguay responded “that is possible”, but that he was still trying to speak to the Township and would keep pressing them for a reply. On the same day, Mr. Jones asked Mr. Keay to hold off on the title search until they heard back from Kevin Duguay. On July 7, 2010, Mr. Keay confirmed that his conveyancer had not completed the title search and they would hold off until there was word from the Township about whether “we can purchase the severance application without prejudice from the current owners”. By July 9, 2010, Mr. Duguay had still not received a response from the Township and indicated that he would try again that day, failing which, he would call a “Township Councilor to exert some pressure for a response”. Mr. Jones advised Mr. Duguay that he had asked the Defendant to hold off on the title search until they heard from him and reminded him that the conditional offer was due to expire on July 30, 2010.

[56] On July 12, 2010, Mr. Duguay emailed Mr. Jones and Mr. Keay to advise that he had chatted with Tim Powell, Chief Building Official of the Township, and learned the following information:

1. The Township has no record of the subject lands being three individual lots. If satisfactory evidence can be produced confirming same, the Township would likely approve a severance application to re-establish the lots, subject to setbacks and other planning regulatory provisions.

2. If no evidence can be produced regarding the former lot configuration, then the Township and County would not support a severance application to create three lots. However an application to create two lots, each having the required 150 feet of lot frontage along the waterline, may be possible. No outcome can be assured at this time.

[57] On July 13, 2010, the Defendant asked Mr. Jones, copying Mr. Duguay, if he would like to proceed with the title search and Mr. Jones confirmed that this should proceed.

[58] Also on July 13, 2010, Mr. Jones followed up with Kevin Duguay, not copied to Mr. Keay, to ask whether there were any concerns flowing from the fact that they would now be seeking severance with the property ownership changing to his hands. Mr. Duguay responded, again not copied to Mr. Keay, “The only issue I can foresee is the policy relating to ownership.”

[59] On July 15, 2010, Mr. Jones advised Mr. Keay that he was going to go ahead and ask his bank to begin the preparation of the paperwork to purchase the cottage while the Defendant worked on the title search. Mr. Jones stated in the email, “I see the title search as a risk, but a low risk.” Mr. Keay responded that he hoped to be able to advise Mr. Jones of the results that day but would let him know as soon as he could.

[60] The Defendant admits in the Statement of Defence that he obtained a parcel register for the property which disclosed a transfer, dated January 13, 1987, which appended a Planning Act approval of the creation of separate lots from the main property, indicating to him the availability of severance. In other words, in Mr. Keay’s view at the time, the transfer included a consent under the Planning Act to the creation of separate lots from the main property. In Mr. Keay’s view, the Planning Act consent indicated the availability of severance. Based upon the title search, and in particular the attachments to the January 13, 1987 transfer registered on title to the property, Mr. Keay was prepared to advise the Plaintiff that it was possible that the property was severable.

[61] Mr. Keay first provided his opinion to Mr. Jones verbally during a telephone call on Friday July 16, 2010. Up to this point, there had been no contact other than through email between the Plaintiffs and Defendant. The particulars of precisely what Mr. Keay said to Mr. Jones during that call are disputed. However, there does not appear to be any dispute that such a call took place.

[62] According to Mr. Jones, he was on Highway 401 driving home from work on a Friday and received a phone call from Mr. Keay on his cell phone. Mr. Jones stated that this was an important call. He put it on speaker. In describing the conversation, he stated:

He said something to the effect of ‘I’ve got some good news for you…I’ve done my title search and I can confirm that we can go ahead and there would be no problem, we can sever the properties’….

Mr. Jones agreed this was not the complete content of the conversation. Mr. Jones stated that he was surprised to have Mr. Keay call, as they had been only talking over email up to that point. Mr. Jones testified that Mr. Keay “jumped right to ‘we can do the severance’”, although he was expecting to hear from him that he did the title search and that he had evidence that they could now demonstrate that the lots were merged under common ownership as a result of the new program. Mr. Jones stated he was “a little excited to hear this news that we could go ahead and sever.”

[63] Given that they had been told by the County, Tim Powell, and Kevin Duguay that they had to be careful and make sure this was severed in the owner’s name, Mr. Jones testified that he stated to Mr. Keay, “You’re telling me that I can go ahead and purchase this property….I can remove the conditional offer, purchase the property, and we can sever later…like we can go right to the severance?” Mr. Jones stated that Mr. Key’s response was, “Absolutely, no problem.” Mr. Jones then said that he stated, “Well are we…are you not concerned about what everybody has been telling us about that it has to be severed under the current ownership?” According to Mr. Jones, Mr. Keay said, “Well I’ve reviewed the documents and there’s a stamp on lot 7 and the stamp tells me that it’s a stand alone….or something to that effect….a stand alone piece of property that will always be stand alone. It doesn’t have to be severed. So it’s a stand alone building property. You can go ahead and close the deal.”

[64] Mr. Jones explained that, in his line of work, he would always ask a couple of different ways to ensure he was clear on what was being said, so he did that on this occasion to make sure he was clear. Mr. Jones then repeated what he recalled about the conversation. Mr. Jones stated that he then said, “Well what about the County saying that you have to have severance in the owner’s name?” According to Mr. Jones, Mr. Keay then said what he had just explained. Mr. Jones then said again, “So you’re saying that I can purchase the property, close the deal…in my name, and then after we’re going to sever the property.” According to Mr. Jones, Mr. Keay stated, “Yep. Absolutely. No problem. Listen, I know you’ve been looking to get this thing solved and you want to get this closed and you want to bring closure to this….I am telling you to go ahead and close the deal and we’ll work through the severance later.” They agreed to talk in the future and that was the end of the call.

[65] In cross-examination, Mr. Jones admitted that he was not reciting this conversation word for word, and acknowledged this conversation was more than 13 years ago. Mr. Jones acknowledged that this was a summary of what he recalled and understood Mr. Keay said to him. Mr. Jones acknowledged that this was a conversation a long time ago with a lawyer about a legal issue, and it was possible, in fact likely, that he did not recall every single word said during that discussion. Mr. Jones acknowledged his limitations of his understanding about the technical aspects of severance at that time. Mr. Jones acknowledged that there were words used at the time by the County, Mr. Duguay, and Mr. Keay that he did not fully understand and was unfamiliar with. At that time, he was unfamiliar with how land merges under the Planning Act, unfamiliar with the legal descriptions for different pieces of property, unfamiliar with how land can be severed in Ontario, and unfamiliar with the Planning Act itself. During the call, Mr. Jones acknowledged that it was likely that Mr. Keay used words with which he was unfamiliar. Mr. Jones acknowledged that he was driving at the time of the conversation and so his attention was divided between driving and the call. Mr. Jones estimated that the call was no more than five minutes, just a quick call, to say “I’ve got this and we’re good to go.”

[66] With that information in mind, Mr. Jones went home and told his wife what had occurred. He explained they could now close the deal and sever later, based on Mr. Keay’s advice. Mr. Jones stated that it “was good news all around”.

[67] In his Examination for Discovery on April 5, 2017, Mr. Keay testified that he did not have any independent recollection of having any telephone conversations with Doug Jones about the severance issue. He specifically did not remember calling Doug Jones at this time and giving him a verbal opinion. He did not recall anything that might have been said during that conversation.

[68] According to Beverley Jones, her husband came home on that Friday and told her that there was some good news, that he had just been in touch with Mr. Keay on a phone call, and Mr. Keay said there was good news, they could sever the property, and should go ahead remove the conditions and buy it.

[69] That weekend, Mr. Jones emailed Rick French and let him know that Mr. Keay advised that they could sever the property and he wanted to remove the condition on the offer and close the deal. Specifically, the Plaintiffs waived the severance condition in the Agreement of Purchase and Sale on July 17, 2010, notably prior to any written correspondence from Mr. Keay – obviously on the strength of what was said during this conversation. Doug Jones was prepared to close the deal and apply for severance afterward. At that time, Mr. Jones testified that he assumed that Mr. Keay would be acting for them on the closing.

[70] As previously stated, while there is some debate over exactly what was said during that phone call, there does not appear to be any dispute that a conversation occurred on July 16, 2010 between Mr. Keay and Mr. Jones, and that based on that conversation, and with reliance on the professional advice provided, the Plaintiffs waived the severance conditions in the Agreement of Purchase and Sale. The dispute lies in how strongly Mr. Keay conveyed the likelihood of severance. In closing submissions, counsel for the Plaintiffs asserted that Mr. Keay told Mr. Jones that severance was a “certainty”. This court notes that Mr. Jones never used the word “certainty” when describing this conversation. Having said that, Mr. Jones did say that Mr. Keay stated it would be “no problem”. This court does find it a bit curious that Mr. Jones would be willing to waive the condition on the basis of this one short phone call, given the consistent information he had been provided for months about the fact that this severance would need to be done by the person who owned the property at the time of the merger. However, perhaps this speaks to how strongly Mr. Keay conveyed his opinion on the likelihood of severance. Quite frankly, in this court’s view, nothing really turns on this, as Mr. Keay admits that he fell below the standard of care required of a prudent lawyer in the circumstances, specifically, in the faulty advice given in relation to Planning Act consent stamps and the bearing this may have on the ability to sever the cottage property.

[71] On July 18, 2010, Mr. French provided Mr. Jones with the acknowledged waiver. Mr. Jones then asked Mr. French whether he asked about a closing date of August 6, 2010, and whether he could ask if the owners had a copy of the WETT certificate for the wood stove and if they could consider leaving the lawn mower. Mr. French confirmed that the owners were agreeable with the closing date and that he would ask about the lawnmower and WETT certificate.

[72] On July 20, 2010, Mr. Jones emailed the Defendant as follows:

Thanks for getting back to me Friday regarding the title search. We have waved the final condition on the offer and will work towards a closing of Aug 6.

My wife and I are going on vacation from July 23 - August 9 but will be available via email or phone to close the deal. Is this ok?

If I understood our conversation correctly on Friday, we can put the 2 outside properties in one name and the middle property in another name along with the water front. Will we be able to put the properties in different names on the closing of this offer or will we have to wait until the severing is complete?

I don't know if we can do the following in the future but since I intend on selling off the 2 adjacent properties once we finalise the severance issue, would there be an advantage to creating a numbered company and putting some or all of the property in the companies name? I have never owned or run a business, but I can retire from my current job in about 2 years and believe I'll find something to get into to show some activity in the company.

Mr. Jones testified in cross-examination that his assumption was that severance was going to happen after closing, but the process was still not clear to him. He then clarified that he did not understand on closing whether he would have three separate properties or one – which was the reason he was asking the questions of Mr. Keay in this email.

[73] Mr. Keay confirmed his opinion about the severability of the property in an email to Mr. Jones dated July 20, 2010, and in a formal opinion letter dated July 19, 2010 (but received some days after the email).

[74] In the email of July 20, 2010, which was received first, the Defendant responded to Mr. Jones’ email of the same date, set out above, and stated as follows:

I've completed my opinion letter to you. It will be getting mailed shortly.

The closing of the transaction requires you to sign up in my office. So long as you can make it in to my office a day or two prior to closing, then we will be fine. If you would like your spouse to go on title, then I will need her full name and date of birth.

As for a corporation, it certainly isn't necessary from my perspective. You may want to get an opinion from your accountant. If there is an advantage to be had, it would be in delaying tax payable. The accountant is the guy for that question.

Upon reviewing the title search, there is only one property that has Planning Act Consent stamped in the deed, and that's (what you and I referred to as) Lot 1. So the merger that has taken place is 2-6. However, 1 & 3 are both lots of record and only merged once title was taken identically by Mr. & Mrs. Adams. So the argument remains the same: this is a technical severance to restore previously existing lots of record. Lot 1 can continue to be dealt with as a separate lot.

Mr. Jones felt that this email was “more good news”, as Mr. Keay was not taking any exception with anything Mr. Jones had said in his email summarizing what they talked about. Mr. Jones stated that he did not fully understand the terminology, but understood that they could sever the lots. In cross-examination, Mr. Jones acknowledged that many of the terms used in this email were part of Mr. Keay’s expertise, not Mr. Jones’ expertise. Mr. Jones acknowledged in cross-examination that he understood that getting the property severed was not automatic. Mr. Jones agreed that he did not respond to Mr. Keay to say this information was different from what he had said on the phone. According to Mr. Jones, while this email was more in depth than what was discussed on the call, he agreed that this email was generally consistent with what Mr. Keay said on the phone on July 16, 2010.

[75] In his Examination for Discovery on April 5, 2017, read in at this trial, Mr. Keay explained that in this email he was suggesting to Mr. Jones that if there was Planning Act consent stamped, then they could treat that as a re-severable lot without going through the consent application process through the municipality. He went on to say:

But that there are other lots that are merged and do not have Planning Act consent stamped in their deed, so there is a merger and the only way to create independent lots then would be to go through a consent application process with the municipality having jurisdiction, save and except for what I believe at the time was a lot that would not need to be subject to an application.

[76] The opinion letter from Mr. Keay to Mr. Jones dated July 19, 2010 was not received by Doug Jones until a few days after it was mailed, and after the email. It stated in part as follows:

You had previously advised me of your interest in purchasing the above-noted property. However, your interest was contingent upon the likelihood of success of restoring the lots of record to their original state, since the current owners' ownership of the subject lands have resulted in a merger.

You instructed me to proceed with a title search to determine whether we can establish that the merged lots were, previously, lots of record (notwithstanding that the Township of North Kawartha does not have records that these were separate cottage lots on Chandos Lake).

The next transaction, the Adams' purchased the two adjoining cottage lots. Instrument No. 460373 was registered on January 13, 1987. These two lots flank either side of the centre lot. These lots are more particularly identified as Parts 7 and 8 on Plan 45R-2823.

The interesting part of this conveyance is that the deed to Part 7 has Planning Act Consent stamped on it. What this means is that in order for the sellers to sell Part 7 (the lot to the West of the centre lot) to the Adams, the Township had to consent to a severance. Once the stamp is placed in the deed, Part 7 can forever be dealt with as a separate and individual building lot.

Taking title to each of the six (6) parcels has led to a merger in title pursuant to the Planning Act.

However, as I was mentioning previously, the fact that there is Planning Act Consent stamped on the deed for Part 7 means that Part 7 can forever after be conveyed as a stand- alone lot. However, the three Shore Road Allowance parcels, as well as the centre lot and Part 8 have all merged in title. This means that a severance will absolutely be required in order to re-establish the three building lots.

What I would propose is for you to apply for an Application for Consent for the Shore Road Allowance that is located directly in front of the centre lot and for Part 8 on Plan 45R-2823. By obtaining severances for these two lots, you will effectively sever each parcel from every other parcel.

The added benefit of applying for a severance for these lots is that there are already pre- existing reference plans in place:

1. Part 8 on Plan 45R-2823; and,

2. Part 2 on Plan 45R-9194.

By relying on previously registered reference plans, you are effectively saving yourself approximately $2,000-$2,500 in fees relating to the commissioning of a new reference plan (which is always needed to complete and finalize a severance application).

Once a severance is obtained for these two lots, you will then have separated the three Shore Road Allowance lots from each other as well as from the centre lot and Part 8. It may be a condition of the Municipality that the Shore Road Allowance parcels be re- merged to the adjacent cottage lots, but that should not pose a problem.

CONCLUSION

It is my office's position that Part 7 has Planning Act Consent stamped in the deed and is an original lot of record. Part 8 is also an original lot of record and but for Mr. & Mrs. Adams taking title identically to the abutting properties, would remain as such.

The merger in title is as follows:

1. The original, centre lot;

2. Part 8 on Plan 45R-2823;

3. Part 1 on Plan 45R-4978;

4. Part 1 on Plan 45R-9194; and,

5. Part 2 on Plan 45R-9194.

A severance of Part 8 on Plan 45R-2823 and Part 1 on Plan 45R-4978 will effectively sever every parcel from every other parcel.

As for whether there was any substantial difference between this written opinion and the conversation on July 16, 2010, Mr. Jones testified that the conversation on the phone was “lighter, to the point”. This letter had more detail about the history of the property. Mr. Jones agreed that he did not write to Mr. Keay to say that the information in the letter was different from the phone call because it was generally consistent with what he said on the phone on July 16, 2010.

[77] On July 20, 2010, on the basis of Mr. Jones’ email, Mr. Keay was aware that the severance condition had been waived by the Plaintiffs. Mr. Keay did not question Mr. Jones about why he had done this or express any potential difficulties or complications with proceeding to sever under new ownership. He provided his written opinion knowing that the condition was waived.

[78] On their face, the written opinions, either in the email or letter, do not go as far as Mr. Jones suggested Mr. Keay’s opinion went on the phone call on July 16, 2010. At one point in cross-examination, Mr. Jones agreed that if one wants to get the best evidence of what Mr. Keay’s opinion was to him, one would look at the July 20 email and July 19 letter. This causes this court to question the strength in which Mr. Keay expressed his opinion on July 16, 2010. However, as earlier discussed, nothing really turns on this, as Mr. Keay admits that he fell below the standard of care required of a prudent lawyer in the circumstances, specifically, in the faulty advice given in relation to Planning Act consent stamps and the bearing this may have on the ability to sever the cottage property. Something was clearly said during that phone call which caused Mr. Jones to ignore all earlier advice and guidance and to immediately waive the severance condition. Clearly severance was important to the Plaintiffs, as acknowledged by Mr. Keay during his Examination for Discovery on April 5, 2017, as read in at the trial. Regardless of the strength of which it was expressed, or the precise language used, the message from Mr. Keay to Mr. Jones was the same on all occasions – that due to the Planning Act consent stamp, severance would be easily achievable, and upon that advice, Mr. Jones waived the condition.

[79] On July 22, 2010, Mr. Jones confirmed with Mr. Keay that he would like his wife’s name on title and provided her information. He also advised Mr. Keay that he should have the financial information from TD Bank, as they had already signed the paperwork. In response to some inquiries from Mr. Keay, Mr. Jones confirmed that they were using some equity from their Whitby residence in addition to a mortgage against the cottage for the purchase, which he stated was all approved. In summary, the mortgage on the cottage was $228,000 and the remainder came from a home line of credit. Mr. Jones also obtained insurance on the cottage on July 22, 2010.

[80] There were various emails between Mr. Jones and Mr. Keay leading up to closing.

[81] On August 9, 2010, the Plaintiffs, Doug and Beverley Jones, attended at the Defendant's office to finalize all paperwork for the closing. At the pre-closing meeting, after signing everything, Mr. Jones testified that he said to Mr. Keay that they needed to talk about severance and that he asked Mr. Keay what they should do. Mr. Keay knew that Mr. Jones was using the planner, Kevin Duguay. Mr. Jones testified that Mr. Keay then stated, “Well you know, I’m pretty much an expert in this field. I did this when I practiced down in Toronto. I did a number of these activities…the severances and the consent…and this is all pretty simple straightforward stuff. I can help you out with this.” Mr. Jones stated this was good to know, asked what he would charge, and whether he was confident he could do this because Mr. Jones thought they needed a planner. According to Mr. Jones, Mr. Keay responded, “No, no…in fact…I can do this a whole lot cheaper than what your planner was going to charge you.” At that time, Mr. Jones testified that the rough estimate from the planner was about $9000. Mr. Keay claimed he could do it for around $3000. Mr. Jones thought this was a “no-brainer”, given that Mr. Keay said this is simple and he stood out as an expert in the field who knew his stuff. According to Mr. Jones, Mr. Keay told Mr. Jones he practically grew up on Chandos Lake, had family on the lake, and knew the area well. Mr. Jones said that Mr. Keay was “really promoting himself”. Mr. Jones then said, “I guess I don’t need a planner” to which Mr. Keay is said to have responded, “No, if you want to use me, I can do it a whole lot cheaper”. Mr. Jones agreed and understood that Mr. Keay was speaking about having the lots severed back to three individual lots, including a formal application to the County of Peterborough.

[82] According to Beverley Jones, at this meeting, Mr. Keay assured them that he could take care of the severance, he could do it a lot cheaper than the planner, and he assured them he knew Chandos Lake very well. She understood that Mr. Keay would be dealing with the severance.

[83] The purchase of the property successfully closed on August 13, 2010 for the purchase price of $380,000.00. Under cross-examination, Mr. Jones acknowledged that the purchase of the property was successful and that they acquired exactly what they had contracted for in the Agreement of Purchase and Sale – the entire property at 385 Haggis Cove Lane as it was described in the Agreement of Purchase and Sale. In cross-examination, Mr. Jones confirmed that Mr. Keay had completed the tasks for his retainer. The Parcel Register demonstrates the transfer.

[84] Ultimately, Mr. Jones did not retain Mr. Duguay. He stated that, as they were going through the process, Mr. Duguay was not making much progress, as it seemed to take him forever to get a hold of Tim Powell, and he was simply not being as effective as Mr. Jones expected. On September 1, 2010, Mr. Duguay sent an invoice for service to Mr. Jones and stated, “I am assuming you are not proceeding with the property purchase-severance”. The total cost was $409.50 for work performed from June 12 to July 15, 2010.

[85] On September 2, 2010, Mr. Jones emailed the Defendant to ask whether he would be “interested in taking on the severance of the 3 lots + lake front”, referring to the fact that at the closing of the property, Mr. Keay had mentioned that land severance was part of his “area of expertise”. Mr. Jones also asked for a break down of costs for this exercise. This email suggests that things had not been finalized on August 9, 2010 for Mr. Keay to take on this work. In cross-examination, Mr. Jones agreed that taking on the work to have the property severed was not something he had previously formally asked Mr. Keay to undertake, but he explained that there was a discussion at the pre-closing meeting about this, during which Mr. Keay had explained this was an area of his expertise, this was a fairly simple process, and he would be cheaper than the planner. Mr. Jones agreed that there was no agreement on a retainer at that meeting, but there was a “good discussion around a path forward.” Mr. Jones agreed that these conversations occurred over 13 years ago, memories fade with time, and he had no contemporaneous notes of the conversation. He acknowledged that he was not quoting the conversation word for word. He agreed that there was no reference in the email to Mr. Keay having previously provided a cost estimate, rather the email asked for a breakdown of costs.

[86] On September 3, 2010, Mr. Keay wrote a responding email to Mr. Jones, providing a cost estimate and the steps involved, stating in part as follows:

The severance application is somewhere in the $950 range (I think that includes a $250 fee to the Conservation Authority). You won't have to pay for reference plans, since there are already plans registered on the subject property that we can rely on. That will save you about $1,800-$3,000. My fees for this will hinge on how much you want me involved. There will be an attendance before the Land Division Committee which either I could do or your could attend. My rate is $250/hr. The typical cost for something like is is in the $2,000-$3,000 range. But it could always be less depending on whether I attend the public hearings.

You should be aware that if we run into opposition from the County planners, it may be necessary to retain the services of a private planning consultant. That private planning consultant would then potentially prepare a report to contradict the County planners' report. We each present to the Land Division Committee and then they decide who they agree with. If they say "no", there is always an appeal to the Ontario Municipal Board (OMB).

I figure your total cost (if the County planners are on side) would be in the $3,000-$4,000 range.

Mr. Jones agreed that Mr. Keay made no reference to having previously provided this information at the meeting in August 2010.

[87] On September 17, 2010, Mr. Jones responded to Mr. Keay that he was going to look into the information he had gathered so that he could summarize the questions that he had in order to get a sense of what he needed to ask Mr. Keay before moving forward. Mr. Jones stated that he would get back to Mr. Keay the following week.

[88] On October 4, 2010, Mr. Jones wrote to Laura Jackson at the County to advise that, since their last correspondence, he had now purchased the property. In the earlier review in June, there was reference to the fact that the County Planning Department had contacted the Ministry of Natural Resources to determine what if any species were located in or around the subject property and that further correspondence from the Planning Department would indicate whether a Species at Risk Assessment would be required. Mr. Jones asked whether Ms. Jackson had heard back from MNR and whether she had any information about this that could be forwarded to him.

[89] On October 6, 2010, Ms. Jackson responded as follows:

The review was completed for the separation of merged parcels, the policies of which only apply provided that the parcels are still under the same ownership as such a time when they merged. If you have purchased the property, then those policies would not apply anymore for the severance application. I am thinking that we should revise your review for the creation of a new parcel and ensure that it complies with the Official Plan.

I will look and see if I can find more details regarding whether we received correspondence from the MNR, and will e-mail you back.

[90] On October 7, 2010, Mr. Jones responded to Ms. Jackson asking how long it would take to revise the review and also advising Ms. Jackson that he has a letter from his lawyer identifying the properties were merged under the previous owner. A few minutes later, Ms. Jackson responded that:

They may have been merged under the previous owner, but the problem is that they must also be under the same ownership as such time when the merging occurred to be eligible under those policies. So when you purchased the property from the previous owner, that requirement can no longer be met.

I'm going to be out of the office until next Wednesday, but I will try to have things revised for you the beginning of the week of the 18th. Would we still be looking at the same lot configuration?

[91] On November 1, 2010, Ms. Jackson stated in an email that she had the revised review drafted but was trying to find the Rare Species comments before sending it out. She came to the conclusion that they had never received them, so she sent another request to MNR. She stated that she would send the revised review and would later follow up with comments from MNR. Later that same day, Mr. Jones received a revised Preliminary Severance Review dated October 28, 2010 from the Peterborough County Planning Department. The Review stated that the “Intent” was to “sever two seasonal residential lots”. There was now no reference to lots which had inadvertently merged due to common ownership being separated to reflect the original configuration when the property remained in the same ownership. The Review concluded:

Application appears to not conform to County Official Plan policies. The Severance Proposal does not appear to conform to the County Plan until such time that the Municipality has indicated that there is support for the size of the lots proposed.

Application appears to not conform to Township Official Plan policies.

The Severance Proposal does not appear to conform to the local component of the County Plan until such time that the Municipality has indicated that there is support for the size of the lots proposed. The applicant should be aware that the Township, in consultation with the Ministry of the Environment (MOE), may require a lake capacity study for new development on Chandos Lake.

Application requires confirmation from the Township or identified agency regarding policy conformity. ** Please note that the landowner should be aware that members of the local council may not support a rezoning or minor variance to create a lot that is not in compliance with the provisions of the zoning by-law .**

Mr. Jones testified that the biggest change from the earlier review was the ability to sever the properties had now gone to the “new rules”, which was two lots at 150 feet rather than three lots at 100 feet, because the ownership was now in the Plaintiffs’ name. Mr. Jones thought that the planners did not have all the information, that Mr. Keay was the expert who had assured Mr. Jones that they could sever, and that Mr. Keay would just need to demonstrate to the County that they could sever.

[92] On December 2, 2010, Mr. Jones sent an email to Mr. Keay advising him of this second Preliminary Severance Review and asked Mr. Keay to represent him in relation to the severance. He stated:

It sound like the Peterborough planning department is directing us to get concurrence from the township. I was working with a consultant planner back in July and he spoke with the planner Tim Powell of North Kawartha and Tim indicated that the township had no issues with the severance as long as we could show the present 300' lot was previously 3 - 100' frontage lots. However, I didn't get anything I writing.

When I spoke to you in Aug during our closing, you indicated that we could work out how much I could do and how much you could do. Please let me know how you think we can beak this down to help keep the costs down.

Mr. Jones agreed that this was the second retainer of Mr. Keay which was just under four months after the closing. There was no written retainer agreement, however, there does not appear to be any dispute that Mr. Keay was being retained to apply to have the property severed into three separate lots, each with an approximate shoreline of 100 feet.

[93] On December 13, 2010, Mr. Keay prepared a reporting letter to Doug and Beverley Jones following their purchase of the property, along with a Statement of Adjustments and appropriate enclosures. The reporting letter notes that the purchase price was $380,000. The principal mortgage for the property was in the amount of $228,000 with a variable interest rate at 1.9% with a maturity date of September 1, 2015. Total fees and disbursements were $2,515.91. The letter also responded to the December 2, 2010 email from Mr. Jones and stated in part as follows:

The lots were absolutely 3 separate parcels at one time. The process from here is to complete an Application for Consent to the County of Peterborough with enough background information that the County will recognize that this is what is typically referred to as a "technical severance" (that is, a severance to restore the previous status quo).

If the County/Township insists on rejecting the application, then the next step after we've confirmed receipt of the denial is to file an appeal with the OMB.

As far as dividing up the work, it is up to you how much you would like to carry. Completing the Consent Applications typically isn't very difficult work. If you wanted to attempt to complete the application and have me review, that would be one way to keep costs low. Here's a link to the Consent Application for the County of Peterborough:

http://www.county.peterborough.on.ca/files/pdf/2010_severance_application.pdf

And a link to all Planning Department forms at the County:

http://www.county.peterborough.on.ca/documents/index.php?sec=index&d=9

The Applications would get submitted along with the appropriate fee and the process will be started. Let me know how you would like to proceed.

When asked whether he believed there were any issues in getting severance after receiving this email, Mr. Jones stated that he was trusting in Mr. Keay who said there were three separate parcels, and they would have to complete the application for consent through the County with enough information so that the county would recognize this as a technical severance. In cross-examination, Mr. Jones agreed that the information contained in this letter was true and he had no issues with Mr. Keay or his performance of his retainer in relation to the purchase of the property. Mr. Jones did not know that Mr. Keay had made an error in his opinion at that time, but with the exception of that, Mr. Jones was content with the job Mr. Keay had done, he had acquired the property that he intended to acquire in the form that he intended to acquire it. As for Mr. Keay’s reference to a “Consent Application”, Mr. Jones understood that such an application would be asking for permission for something. He agreed that Mr. Keay was not telling him that he had an automatic right to sever the property.

[94] According to Mr. Keay during his Examination for Discovery on April 5, 2017, he did not bill for the title search independently, but rather increased what his usual fee would have been for the conveyancing work into a higher amount. He explained that the usual fee on the real estate transaction then would have been around $850, therefore, the severance opinion and title search – “anything out of the ordinary” – would have been around $620.

[95] On December 15, 2010, Mr. Jones responded to Mr. Keay and said he would take a stab at completing the application. Mr. Jones testified that they agreed that he (Mr. Jones) was going to fill out the application and that Mr. Keay would then review it and submit it. In cross-examination, Mr. Jones agreed that he did not suggest to Mr. Keay that anything he said in the December 13 email was different from what he said in the July 16 email, although Mr. Jones testified that the December 13 email was in fact different from the phone call, as he did not recall Mr. Keay saying anything about an Application for Consent on the phone call. Mr. Jones agreed that Mr. Keay was giving more detail than he did on July 16. It is worth noting that Mr. Keay did make reference to an Application for Consent in his opinion letter dated July 19, 2010, so this concept would not have been foreign to Mr. Jones.

[96] On December 15, 2010, Mr. Jones emailed Laura Jackson to clarify some information in the Preliminary Review. The Review stated, “Until such time that the Municipality indicates their support for the size of the severed and retained parcels, the Proposal does not appear to conform to the Official Plans." Mr. Jones asked whether this was referring to the North Kawartha Township as the Municipality and what form of response was required from the Municipality. On December 23, 2010, Ms. Jackson confirmed that the Municipality would be the Township of North Kawartha. She stated, “We don't need any written correspondence indicating their support at this time, but I would suggest that you meet with the Township to discuss your Proposal. At this point, you can inquire whether the Township would support the size of the parcels.”

[97] On January 30, 2011, Mr. Jones sent an email to Mr. Keay with a PDF drawing he had prepared of the proposed severance and a copy of Mr. Keay’s July 19, 2010 letter attached. The email stated in part:

I have the following question;

Is Instrument No.460373 the deed you refer to in the 2nd paragraph above?

If so, I noticed that page 2 identifies Part 7 as Planning Act Consent with the Certificate of Secretary Treasurer signature and page 3 identifies Part 8 as Planning Act Consent with the Certificate of Secretary Treasurer signature. Is the Certificate of Secretary Treasurer signature the stamp you referred to?

If both Part 7 & 8 are identified with the Planning Act Consent with the Certificate of Secretary Treasurer stamp in Instrument No.460373, would we still have to apply for severance of Part 8?

If not, would you propose that we only need to apply to sever the Shore Road Allowance lots.

Please advise so that I can adjust the Application for Consent and the PDF drawing.

Once you get back to me, I will complete the Application for Consent form and send them to you for your review prior to submitting to the Peterborough Land Division.

Another question I do have is, if we still need to apply to sever both Part 8 Plan 45R-2823 & Part 2 on Plan 45R-9194 as you identified in your letter dated July 19, 2010, do I need to complete an Application for Consent for each Part or can they be covered in one Application.

Also do we need to apply to sever Part 7(Plan 45R-2823) & Part 1(Plan 45R-9194) at this time or will that be dealt with differently as identified in paragraph 2 above?

[98] On February 3, 2011, Mr. Keay responded that he needed to get the file pulled and would need to review the title search to remind himself of what had occurred. On March 3, 2011, Mr. Keay responded that he had reviewed the title search from the purchase transaction. He stated in part as follows:

Both of Parts 7 and 8 on 45R-2823 have Planning Act Consent. I'm not sure how I missed the fact that Part 8 also has PAC. The fact that Part 8 also has PAC only makes life easier. Here's what it means:

• the only part we actually need to sever in order to restore each of the 3 separate lots is Part 1 on 45R-4978 (which is the SRA lot directly in front of the centre lot)

Because the centre lot and the other two SRA lots only meet at a point, they are not considered at law to "abut" and therefore cannot merge with one another.

Let me know when you are back from your holiday so we can discuss.

Mr. Jones took this as more good news about severance.

[99] Mr. Jones and Mr. Keay arranged to speak by telephone on March 9, 2011.

[100] On March 10, 2011, Mr. Jones sent the Application for Consent, along with sketches detailing the lots, to Mr. Keay for review. On March 11, 2011, Mr. Keay sent the documents back to Mr. Jones for review and signature, which was responded to that day and re-sent on March 25, 2011.

[101] On April 18, 2011, Mr. Keay advised Mr. Jones that the fee for the Consent Application would be $900, with the possible addition of an ORCA fee. Mr. Keay requested $2900 be sent to his trust account. Mr. Keay also advised that he was putting the Application together and as soon as he received the money, he would get it submitted to the County. On April 19, 2011, Mr. Jones advised that the money had been deposited. The Application for Consent was then filed with the County around this time. Mr. Jones understood that the processing of this Application would be 3-6 months.

[102] On April 29, 2011, Mr. Keay advised Mr. Jones by email as follows:

I had received a call yesterday … from Christine Lang, who is the Secretary-Treasurer for the Land Division Committee. Ms. Lang advised a few things:

1. Firstly, and most importantly, there is "no problem" completing your severance application. Your type of application is sometimes referred to as a "technical severance" because we are not creating new lots of record, rather, we're trying to restore previously existing lots of record that have merged. So this is very good news;

2. Secondly, we made reference to the Preliminary Severance Review in your application. Ms. Lang can't find the file. I haven't yet searched my file for a copy, but I'm almost certain I have a copy of same. If not, I'll contact you to get a copy form you;

3. I had my bookkeeper confirm receipt of the $2,900.00 retainer.

Most important is 1), above. That is terrific news. But you should be aware that the County will not agree to the severance unless the SRA lot immediately in front of the back lot is merged to create one lot. To give you an idea, the County does not want someone to be able to sell the back lot and the SRA lot separately. I can't imagine that this will be a problem for you, but please advise if you have any comments.

In the immediate term, I will search my file for the Preliminary Severance Review and send a copy off to Ms. Lang. Otherwise, we await the staff report. I have diarized this matter for 4 weeks hence and I will follow up with Ms. Lang/staff planner to determine how far along they are in the process.

A short time later, on the same day, Mr. Jones sent along the Preliminary Severance Review to Mr. Keay and confirmed that the SRA lot immediately in front of the back lot is to be merged to create one lot.

[103] On May 24, 2011, Mr. Keay provided a further update to Mr. Jones by email. Mr. Keay had had a further conversation with Christine Lang, and she had advised of a “couple of things”, specifically:

1. The township planner for North Kawartha, Mr. Tim Powell, may be trying to request changes to the application. One change that he requested is that, as the designated severed lots, we include the centre-back lot. I didn't think that would be a problem. Could you prepare a new sketch reflecting same?

2. She advised that the County's GIS mapping does not show the subject properties as ever having been separate lots. This is certainly not indicative of the history of the property. So I've sent off a copy of the instrument that separated Lots 7 & 8 (back left and back right). The fact that there is Planning Act consent stamped in the deed resolves any debate.

Mr. Keay stated that he would forward on the amended application once he received a revised sketch and would keep Mr. Jones apprised of any developments. On the same day, Mr. Jones revised the sketch and forwarded it back to Mr. Keay.

[104] On May 25, 2011, Mr. Jones advised Mr. Keay that he had received a call from Christine Lang who asked for permission to speak to the Registry Office as she believed that the application to sever should go through that office since she believed “the consent was an oversight of the registry office”. Mr. Jones had given permission. Ms. Lang had advised Mr. Jones that she would follow up with Mr. Keay regarding a path forward and what she recommends.

[105] On May 28, 2011, Mr. Keay emailed Mr. Jones to advise that, for some reason, the County had no records of the severance of Parts 7 & 8 which was creating problems. Mr. Keay stated:

Ms. Lang and I have been playing a little bit of phone tag, but I hope to speak with her on Monday. From my perspective, this is not our problem. I don't care if the GIS mapping at the County shows these two lots or not. That's not determinative. The bottom line is we have stamped and signed Planning Act consent in the deeds. So the County will have to sort their issues out on their own time.

[106] On June 3, 2011, Mr. Keay provided an update to Mr. Jones as follows:

Because there is no record of these lots existing (which means taxes haven't been paid on these lots separately), we have to get MPAC on board. Ms. Lang advises this can be done one of two ways:

1. Attend at MPAC and deliver over copies of the deed with the Planning Act consent stamped in there as well as the reference plans; or

2. Make an Application to Validate Title;

We'll start with #1 and try and get MPAC on board. Failing which, we'll go to #2.

I'll attend to this as soon as I'm back in on Monday morning.

[107] On June 8, 2011, Mr. Keay advised Mr. Jones that he was attempting to set up a meeting with the Peterborough MPAC office, but the person he needed to meet with (Becky Bolton) was out of the office on training. He stated:

I advised the Assessor I did speak with (Jackie) about the situation. I provided her the reference plan number and the instrument number where the two lots were created. So hopefully I can get in to see Becky next week and explain it all. Then MPAC can update the mapping and hopefully we can proceed from there.

[108] On June 10, 2011, Mr. Keay forwarded to Mr. Jones a letter from Crowe Valley Conservation Authority (“CVCA”) confirming that the Property was within their regulated area, but that the CVCA had no issues with the correction of title to the six separate and distinct lots of record, however, future development would require an application to CVCA prior to any work being done.

[109] On June 27, 2011, Mr. Keay sent a letter to Christine Lang, a copy of which was forwarded to Mr. Jones on the same day. The letter stated in part as follows:

Please be advised that I have had a meeting with Ms. Rebecca Bolton, a Property Assessment Office with the Municipal Property Assessment Corporation ("MPAC").

Ms. Bolton attended at my office on June 22nd, 2011 in order to discuss the problems with the GIS mapping. Of course, my office does not have access to GIS mapping and I am not 100% certain what exactly needed to be done to correct the problem with said mapping. What I have done is I have advised Ms. Bolton that the mapping that the County of Peterborough relies on to assist with the processing of Consent Applications did not reflect the history of Doug Jones' property at 385 Haggis Cove Lane, Apsley, Ontario.

This has created problems for the County, to the point that the County was unable to continue with the processing of Mr. Jones' Consent Application unless the GIS mapping is corrected to accurately reflect the history of the subject property.

I further advised Ms. Bolton that a portion of the lot, specifically the parts identified as Parts 7 & 8 on reference plan 45R-2823 were severed effective January 13, 1987. The instrument by which Parts 7 & 8 were created is Instrument No. 60373.

I provided Ms. Bolton with a copy of same.

I can also confirm that I previously provided the County with a copy of this instrument as well. There is Planning Act Consent stamped into the deeds for Part 7 and Part 8. These should be existing lots of record.

Ms. Bolton suggested a solution to the dilemma. She advised that she would forward this matter on to the Land Parcel Unit of MPAC, which is located in Scarborough, Ontario. It is my understanding that this branch of MPAC should be able to correct the GIS mapping to the satisfaction of all parties. Ms. Bolton advised that this problem with the GIS mapping is no longer an issue that can be resolved in the local office.

Ms. Bolton further advised that the Land Parcel Unit does have a fairly quick turn-around time and she anticipates having a response from them within approximately 1 week. Once there is a reply from the Land Parcel Unit, Ms. Bolton will be contacting me to advise. I, of course, will relay whatever information I hear from them on to your office.

[110] On July 12, 2011, Mr. Keay provided a further update to Mr. Jones, stating in an email in part as follows:

I've been playing a bit of phone tag with Rebecca Bolton from MPAC. She has left me a rather cryptic voicemail message stating, to the effect, that the mapping was never updated because the severances creating Lots 7 & 8 were "one-time deals". I've left Ms. Bolton another VM message and I'm awaiting her return call so that I can get more information.

From your perspective, I'll be curious to see how the County reacts to this. There is nothing on registered title indicating that this severance was anything other than a regular severance. Instrument 460373, which created Lots 7 & 8, have no restrictions or other limitations contained therein. So our reliance on this document was in good faith.

That is the position I intend to take with the County. If they resist at all, you and I will have to discuss about the how you will want to proceed. One option is to abandon the application. The other is to proceed with the application, have the County reject, and proceed with an appeal to the Ontario Municipal Board (OMB) based on the fact that there is no restrictions contained in the creating instrument.

I will be having a conversation with Ms. Bolton, and then Ms. Lang (from the County) and I will report back to you.

Mr. Jones did not fully understand what was occurring but this “starts to make him wonder”.

[111] A little later on July 12, 2011, Mr. Keay did make contact with Ms. Bolton. Mr. Keay then provided a further update to Mr. Jones stating:

I've spoken with Ms. Bolton from MPAC. She had little else to tell me other than what she stated in her VM message to me. The Land Parcel Unit advised Ms. Bolton that it was a one-time only severance and that any future separate use of the land would require a new severance.

I advised Ms. Bolton that the principal, "once a severance, always a severance" is the default position unless there is something to contradict it on title. A merger-agreement? Something right in the creating deed? Etc. I asked Ms. Bolton whether the LPU produced anything to her to support their position. She advised they did not. I've asked her to follow up with the LPU to produce to you something to support their position. Ms. Bolton stated she would do so and would produce to me whatever the LPU produces to her. I've diarized this matter for 1 week.

Mr. Jones inquired as to whether there were similar cases like this where a “precedence has already been set”. On July 14, 2011, Mr. Keay advised Mr. Jones that dealing with MPAC in this regard was unusual and that he had never had the County re-direct him to MPAC to sort out a mapping issue. He was going to speak to his partner about it, who had been practicing for more than 30 years.

[112] On July 20, 2011, Mr. Keay wrote a letter to Christine Lang, which he copied to Mr. Jones by email on the same day. The letter stated in part as follows:

Ms. Bolton had previously referred this matter of the not-up-to-date GIS mapping to the Land Parcel Unit within MPAC. The LPU have since returned their position to Ms. Bolton, who in turn has advised me. The LPU have indicated that the Planning Act consent stamped in the Schedules to instrument 460373 for both Parts 7 & 8 are "qualified Planning Act consents". By this, the LPU states that the Planning Act consents are specific to the people, not the land.

The only documentation produced to Ms. Bolton by the LPU was the actual Schedules attached to the said instrument. I am certain I have produced said instrument including the Schedules to your office in previous correspondence.

Based upon my own review of the Schedules attached to the above-referenced instrument, I see no reference to the fact that the Planning Act consents were qualified or in any way limited. In fact, I can see nothing out-of-the-ordinary about them at all.

Now, I am unclear about the effect of this on the County of Peterborough. You had previously advised my office that the GIS mapping, which I am not privy to, had to be updated and same had to be updated by MPAC. MPAC, it does not appear, will be updating the mapping to reflect Lots 7 & 8 since the LPU takes the position that the Planning Act consents were "qualified".

My client's position on all of this is that he will not suffer any prejudice as a result of this. If the Planning Act consent was to have been qualified or limited somehow, then there was a duty to disclose this fact in the schedule to the deed. The obvious reason for this is to avoid the very situation we find ourselves in now: a successor in title with no knowledge of the foregoing suffering prejudice as a result of the failure to disclose the "qualification".

Perhaps we should have a meeting once you have had an opportunity to review this matter. Please contact my office to advise. I will diarize this matter for one week hence.

In response to receiving this letter, Mr. Jones stated, “I’ll look forward to hearing what the response is so that we can determine the next actions required to bring this to a satisfactory closure”.

[113] On July 22, 2011, Mr. Keay received a voice mail message from Christine Lang, which he reported to Mr. Jones on the same day by email. Essentially, Ms. Lang confirmed that neither she nor the other planners had ever heard of “qualified” Planning Act consent or heard of Planning Act consent being attached to the people rather than the land. Ms. Lang was not sure what this would mean for Mr. Jones’ application, but that a meeting with the county planning staff would likely be of no utility. Ms. Lang wanted Mr. Keay to call her back the following week. Mr. Keay expressed some frustration in having to deal with MPAC, stating that this was the responsibility of the County. His thoughts were that Mr. Jones needed a decision. If the application were approved, then that would be a successful end. However, if rejected on these grounds, an appeal to the OMB would be highly recommended.

[114] By August 29, 2011, Mr. Jones was clearly demonstrating some frustration in his email to Mr. Keay, asking to understand the issues. Mr. Jones expressed uncertainty as to what the outcome or resolution had been with the County. Mr. Jones stated, “I would like to understand what it is that the county believes we need to do to help resolve their concerns and if we resolve their concerns will that then bring this to closure or are we just dealing with distractions from the county?” Mr. Jones asked whether Mr. Keay spoke with his partner and whether he was able to provide any further information. Mr. Jones stated, “Lets see what we can do to work with them to understand what is required to resolve this.” Mr. Jones testified that it was pretty clear to him by then that there seemed to be issues between Mr. Keay and the authorities and it sounded like “roadblocks” coming up. Mr. Jones did not feel that Mr. Keay was being fulsome about the information he was providing and Mr. Jones wanted to get this solved.

[115] By this time, Mr. Keay had become aware that the 1987 Planning Act consents were qualified such that they were only issued for the benefit of the people who owned the property in 1987. That meant that the Planning Act consents that had formed the basis of Mr. Keay's opinion to Mr. Jones about the severability of the property were of no benefit and that the application to sever the property would be treated as a "new" application, like any other. Therefore, Mr. Keay’s opinion in July 2010 was in error.

[116] On September 1, 2011, Mr. Keay emailed Mr. Jones to advise him that his opinion about the severability of the property may have been incorrect. The Plaintiffs claim that this correspondence was the first time the Defendant had made them aware of any potential problems with the application for severance. This is surely not the case. While there does appear to have been some delays in responding, the Plaintiffs were most certainly aware of the problems that were occurring through the email updates from Mr. Keay. However, this correspondence was the first time that the Defendant acknowledged having "made a mistake" with respect to his opinion on severability of the property. The email stated:

The issue isn't with Haggis Cove Lane's non-compliance with today's minimum standards. It's clear that under today's standards, the Haggis Cove property doesn't comply and you wouldn't be granted a severance.

The issue is with the GIS mapping. When the County viewed their mapping, it didn't show the two lots (Parts 7 & 8) as lots of record. So the County passed the issue to me to deal with MPAC to get MPAC to update the GIS mapping (since, apparently that is who updates the mapping used by the County).

In dealing with MPAC, they advised that Parts 7 & 8 are not lots of record due to the fact that the stamps on the deeds were "qualified Planning Act consent", meaning the originals severances applied only to the people who originally applied for it, and not for any subsequent owners.

Now, this is where I regret to have to advise you that I suspect that I have made a mistake in my opinion to you regarding Parts 7 & 8 being existing lots of record. I have put my errors & omissions insurer (LawPRO) on notice and must advise you that you should retain new counsel in light of this new information. I don't think I can explain further, but these matters will get resolved.

Once my E&O insurer is in touch with me, I will provide your contact information and that process will start.

With sincere regrets,

Ian Keay.

Mr. Jones testified that he had become familiar with GIS mapping and this email did not “add up” in his mind. He understood that Mr. Keay was advising that he suspected he had made a mistake in his opinion on Part 7 and 8 lots, and was referring to LawPro and the fact that Mr. Jones had to retain new counsel, but he did not understand what MPAC had to do with anything. Mr. Jones did not understand whether he needed someone else to pick up and carry on, or whether severance could not be done, and he was not clear about what he had to do next other than retaining new counsel. He had believed, up to that point, that he had a severable property. Mr. Jones was disappointed.

[117] In his Examination for Discovery, read-in at this trial, Mr. Keay admitted that he made a mistake in his opinion to the Plaintiffs in July 2010. He stated as follows:

Okay. Normally when I see properties that are formally separate but have been merged together, there’s – I, I see one of two things: I either see a merger agreement registered on title or I see a Planning Act consent stamped in a deed which has explicit conditions, usually handwritten in. I didn’t see any of those things in the, in the instrument in question being the, the deed with the Planning Act consent stamp. I had believed at the time that it was your usual, but what any lawyer would see is a Planning Act consent stamp which would then allow you to treat that lot as forever after conveyable all, all on its own whether there’s a, a merger with the joining lots, right, with title being identical. As, as we ran into problems with the – like repeated it seemed there was a stumbling block we couldn’t just get over with the consent application. It came back from a, a department at MPAC the land, the, the land unit – or I’m getting that wrong, but something like that. They said it was a stamp which was, if I recall correctly, it was only for the people and not for the land. Now I think that’s the wrong way of saying it, but what they were suggesting was that it was a limited Planning Act consent stamp and the result being what I had thought was a lot that could be conveyed again subsequently forever after, because the stamp exist in the deed, was not the case, that that consent stamp was effectively for –I would assume, was for a lot addition. And then once that lot addition, once that conveyance was done, that Planning Act stamp didn’t function as a Planning Act stamp anymore in the way I just described….it would be what I would call a qualified Planning Act stamp.

….the lots which had Planning Act consent stamped in their deeds, I had said that those were conveyable lots or a conveyable lot. I, I don’t recall which of these had Planning Act consent and which did not…If there was one or if there was. However many there were, they could not be re-conveyed as standalone lots or a lot.

[118] On September 2, 2011, Mr. Jones asked Mr. Keay if it was possible for him to recommend new counsel with expertise in the area of severance for the Peterborough area to help get these matters resolved. There was no response.

[119] On September 22, 2011, Mr. Jones emailed Bob McGillen, Ian Keay’s partner, to ask for assistance. Mr. McGillen did not respond. On the same day, however, Mr. Keay responded to Mr. Jones advising him that his partner would not be able to act because it would be a conflict and directed Mr. Jones to the lawyer appointed by his E&O carrier, LawPRO, who was Mario Merocchi in Toronto.

[120] Mr. Jones reached out to Philip Aldrich, another lawyer, to ask for assistance with the severance, who agreed to meet. On October 6, 2011, Mr. Jones asked Mr. Aldrich to reach out to Mr. Merocchi to discuss the matter. Mr. Aldrich agreed to do so, although there was some delay due to other obligations. On October 20, 2011, Mr. Aldrich spoke to Mr. Merocchi who advised Mr. Aldrich he was still in the “investigation stage” and would be in touch in about two weeks. By December, there was still no answer from Mr. Merocchi. Mr. Jones started to get concerned about limitation periods. Mr. Aldrich advised that if things were getting close to the end of the two year limitation period, Mr. Jones would need to consider “getting more aggressive” such as filing a formal complaint or commencing an action.

[121] On January 24, 2012, Mr. Aldrich provided a letter to Mr. Jones received earlier that day. The letter dated January 23, 2012 from Mr. Merocchi to Mr. Aldrich stated that Mr. Merocchi had recommended to LawPRO and Mr. Keay that Mr. Keay continue with the severance application at his own expense, but without prejudice to anyone’s rights and without admission of liability. He was awaiting instructions. Mr. Aldrich had not yet opened a file to represent Mr. Jones. He suggested that Mr. Jones might want to consider forwarding a response to ensure that they agreed that his rights to compensation would not lapse should the severance not be finalized within the 2-year limitation period. Mr. Aldrich agreed to being retained and suggested he would require a $1000 retainer.

[122] On January 29, 2012, Mr. Jones responded to Mr. Aldrich, expressing his sense that there had been no progress since Mr. Keay had informed him of the error on September 1, 2011. Mr. Jones stated, “I fail to understand what Mario expects to happen with the continued severance application when Ian stated that I would not be granted a severance. I have asked to be presented with a commitment identifying what would be done to resolve this issue by when, but have not seen any evidence.” Mr. Jones stated that he would be seeking to understand what his rights were, and looking for representation that may put Mr. Aldrich in conflict of his working relationship with Mr. Keay. Mr. Jones indicated that if Mr. Aldrich were willing to represent him on the “2-year limitation period response” and “any additional action to bring this to a satisfactory conclusion”, and would not be in any conflict of interest, then Mr. Jones suggested that they move ahead. However, before doing so, Mr. Jones stated that he needed to understand what the process and plan would be to address the issue and to understand his rights.

[123] On February 1, 2012, Mr. Aldrich agreed to make another call to LawPro to see if an action needed to be commenced. Mr. Aldrich agreed to act if no action was commenced, however, recommended a lawyer outside of Peterborough if an action was pursued.

[124] On March 21, 2012, Mr. Aldrich responded to Mr. Jones to advise that, based on the information at that point, Mr. Jones should seek litigation counsel due to an expiring limitation period, and that counsel could either negotiate a “tolling agreement” to extend the limitation period or could commence an action.

[125] As to what happened with the severance application, Mr. Jones testified that he really did not know 100%, but he was pretty sure the County determined that he could only sever into two 150-foot properties, not three 100-foot properties. Mr. Jones never did get written confirmation of this information. Mr. Jones was asked whether LawPro continued to use the Application for Consent to try to repair the situation, to which he stated that LawPro approached his litigation counsel, Mr. Rollo, asking for a continuance, as they had encouraged Mr. Keay to “try again”. Mr. Jones authorized Mr. Keay to make another attempt at severance. Mr. Jones thought that it might have been at that point that the County came back and said the property could only be severed into two lots.

[126] As for information received about LawPro’s efforts to continue the severance application, Mr. Jones stated that he received virtually no information. Mr. Jones believed that the repair effort ended at the end of 2015 or early 2016. He did not believe that he received any further correspondence from Mr. Keay or LawPro to advise of what happened to the severance application.

[127] After the repair effort ended, Mr. Jones testified that he did not take any steps to do anything with the property. He explained that they were waiting to hear what the resolution was going to be, anticipating with Mr. Keay’s efforts that they would be able to sever the properties. They “hung onto” the property into 2016 and had not tried to do anything with the property because they were trying to get this solved.

[128] From 2016 to the time of trial, Mr. Jones explained that he had completed a lot of work to improve the cottage which needed a number of repairs. He explained he had spent a fair amount of money. He also improved the property with better grading and built new docks. Mr. Jones stated that without the profits of the severed lots, it had “left me hanging”.

[129] Mr. Jones agreed that the property, as he acquired it, did not suit their needs as per their plan at the time, but he agreed that they had not sold the property and they still own the entire piece of property to this day. The Parcel Register demonstrates that there are no other entries after the transfer to the Plaintiffs in 2010. The Plaintiffs continue to own the property in the same form as they bought it in 2010. Mr. Jones agreed that they have been using the property. Mr. Jones acknowledged that the property is worth more today than what they paid back in 2010.

[130] In cross-examination, Mr. Jones acknowledged that it was the legal system, generally, that determines whether his property can be severed. He agreed that it was not Mr. Keay that got to decide whether or how the property could be severed. Mr. Jones agreed that Mr. Keay’s job was to provide an opinion, but he did not have the ability to change the law on whether the property could be severed.

[131] It must be noted that whether or not the property can be legally severed was not proven at trial.

[132] Mr. Jones stated that, as a result of these events with Mr. Keay, he had lost $100,000 or $110,000 by not being able to sever and sell the two outside lots. In cross-examination, he clarified that he meant this cost per lot – for each of the two outside lots. Mr. Jones explained that he was claiming for the value of the two lots and that was “just a start”. His intent from the beginning was that they would buy the property, sever, and sell the two outside lots. He was nearing retirement, and one of the options, as he was handy, was that he could have built a couple of starter cottages and sold the lots with cottages. Ultimately, the goal was to sell all three lots, take the profits, and move onto the larger part of the lake. Mr. Jones testified that he had not sold the property in the last number of years because, in his mind, he would not be able to move onto the bigger part of the lake, as he was “maxed out” with what he has, and they were just accepting what they have. He stated that they will not have “that dream of being able to get out into the bigger part of the lake”.

[133] The Plaintiffs do not claim for any resale value of the lots with improvements, such as cottages on them. Further, the Plaintiffs do not claim any losses accumulated beyond 2018, when they acknowledge a duty to mitigate most certainly would kick in. The Plaintiffs acknowledge that, at some reasonable point after the repair effort by LawPro ended, and with some reasonable amount of time to prepare for a sale, they could have sold the entire property in order to mitigate their losses.

[134] In addition to a claim for the value of the lots as severed, Doug Jones was recalled to provide evidence in relation to special damages claimed. In summary the special damages claimed by him were as follows:

a. $2900 retainer paid to Ian Keay - $2154.30 which was invoiced on May 4, 2011 and the remainder which is still held in trust.

b. $200 paid to Crowe Valley Conservation as part of the review conducted in relation to the Application for Consent.

c. Interest on the mortgage for the entire cottage property from 2011 to 2018, totalling more than $38,000.

d. Interest on the line of credit utilized for the cottage purchase, totalling $12,375.00.

[135] In relation to the retainer and fees paid to Mr. Keay, in cross-examination, Mr. Jones agreed that Mr. Keay particularized the work he performed. Further, Mr. Jones did not dispute that Mr. Keay had performed the activities particularized and paid the disbursements set out. Mr. Jones did not dispute that he received the value of Mr. Keay’s services as set out in the invoice.

[136] In relation to the fee paid to Crowe Valley Conservation, Mr. Jones did not dispute that the review was conducted as outlined. Mr. Jones agreed that he could have produced evidence of proof of payment but had not done so.

[137] In relation to the interest on the mortgage and line of credit, Mr. Jones acknowledged that, of the documents he provided, none referenced the fact that this relates to the cottage property at issue in these proceedings as opposed to their home in Whitby. Mr. Jones also acknowledged that the interest amounts claimed relate to the whole cottage property, not just the two outside lots.

[138] Mr. Jones agreed that Chandos Lake is a premier location for a cottage. He agreed that the cottage property was a good investment. Mr. Jones also agreed that, after the closing of the property in August 2010, he could have listed it for sale the very next day or any day since.

Litigation History

[139] A Statement of Claim was issued on February 15, 2013, with only Doug Jones as the Plaintiff.

[140] On February 3, 2014, the Defendant provided a Notice of Intent to Defend. At that time, he was represented by John Rowinski.

[141] On April 29, 2014, the County of Peterborough planning department sent a notice to Doug Jones to advise him that if a Consent file remains inactive for a period of two years, the Applicant is notified and given 120 days to advance the application. The letter advised that, if there was no response by July 29, 2014, the file would be placed on an agenda for a Land Division Committee hearing in order to obtain a decision based on the information provided in the file to date. Doug Jones forwarded this to his litigation counsel, Mr. Rollo. It is not clear what, if anything occurred.

[142] On February 29, 2016, the Defendant provided a Statement of Defence. At that time, the Defendant made a number of admissions (which were also part of the Amended Statement of Defence), including that:

a. On or about June 28, 2010, the Plaintiff made contact with the Defendant, to whom he had been referred by his real estate agent. The Plaintiff formally retained the Defendant for the explicit purpose of conducting a title search and to obtain an opinion as to whether or nor the Property could be severed.

b. Upon receiving the Defendant’s opinion on the severability of the property in the July 16, 2010 telephone conversation, the Plaintiff advised the Defendant that based upon the Plaintiff's opinion, he would be waiving the condition of severance included in the Agreement. The Defendant did not object to the Plaintiff taking this course of action.

c. On or about July 19, 2010, the Defendant delivered to the Plaintiff a written opinion letter on the issue of severance, confirming in writing the verbal opinion he had given a few days prior.

d. On or about August 9, 2010, the Plaintiff and his wife attended at the Defendant's office to close the Agreement. The Defendant once again emphasized that property severance was his area of expertise, and that he would be able to act on the Plaintiff's behalf to obtain the severance. The Plaintiff agreed to extend the retainer with the Defendant to include completion of the severance of the property. The Plaintiff completed the purchase of the property.

e. On or about March 25, 2011, the Defendant submitted an Application for Consent for the severance and entered into discussions with the relevant regulatory authorities on how to achieve it.

[143] On February 7, 2020, Justice Smith granted leave for the Plaintiff to amend the Statement of Claim, specifically to add Beverley Jones as a Plaintiff.

[144] On August 10, 2020, the Defendant provided a Notice of Change of Lawyer indicating that Robert Macdonald would be counsel of record.

[145] An Amended Statement of Claim and Amended Statement of Defence were subsequently prepared to include Beverley Jones.

Valuation Evidence at Trial

[146] Royce Williamson was qualified to give expert opinion evidence at trial as to the appraisal of residential properties, specifically cottage properties, and to be able to provide an opinion on the subject property at the heart of this litigation, or portions of it, at various specific points in time. His report dated April 7, 2020 was included in the Joint Document Brief, marked as Exhibit 4 at trial, specifically Tab 6. At trial, he described the methods that he used to determine valuation, which was mainly based on a comparable sale approach. His valuations for the property as a whole were as follows:

The total property as of July 30, 2010 $380,000

The total property as of August 4, 2016 $494,000

The total property as of Nov. 22, 2018 $572,000

There was no significance to the dates utilized, other than the fact that those were the dates given to him for this assignment. He was also asked to value the property based on the proposed severance into three vacant lots – with A being the most westerly, B being the centre, and C being the most easterly. His valuations for the property as hypothetically severed were as follows:

July 30, 2010 - (A) $125,000, (B) $125,000, and (C) $115,000;

August 4, 2016 - (A) $170,000, (B) $170,000, and (C) $160,000

Nov. 22, 2018 - (A) $180,000, (B) $180,000, and (C) $170,000

Ultimately, neither these values nor the methods used to come to these conclusions were significantly challenged.

[147] In cross-examination, Mr. Williamson agreed that, based on his valuation of the property in July 2010 and the actual price paid by the Plaintiffs in July 2010 – both being $380,000 – it was his opinion that the Plaintiffs paid market value for the property, as a whole unsevered property.

[148] Based on his valuations, Mr. Williamson agreed that, from the time they bought the property in the summer of 2010 to November 2018, the property as a whole increased in value by $192,000. Mr. Williamson also added, unprompted, that the property was probably double that value now, being over $1 million. He explained that waterfront residential has “absolutely exploded”, due to supply and demand. He explained that since the COVID-19 pandemic, there had been virtually zero supply of waterfront residential property of any significance, and if anything came on the market, there were multiple offers. He had seen sales for $200,000 to $250,000 over value. He explained that, while the market today for some properties is decreasing in value, or at least demonstrating steadiness in value, the situation with waterfront properties is different and there continue to be multiple offers and sales over list price due to the fact that there is no supply. Mr. Williamson said, “I would absolutely tell anyone in this room…if you want an investment in real estate, buy waterfront residential.” Mr. Williamson also referred to Chandos Lake being a premier lake, however, he explained that just about any waterfront residential property had seen increasing pressure on price because people cannot get a severance anymore. He stated, “The land that’s out there is there. You want it, you’re gonna pay for it”. This court accepts that there is no proper current valuation provided by Mr. Williamson.

[149] As for the hypothetical severance of the lots, Mr. Williamson agreed that he did not ask why this particular hypothetical was presented. He made no inquiries as to whether this potential severance was possible. He was simply providing values based on instructions given. Mr. Williamson explained that, when giving these valuations, he also kept in mind the values relative to one another. He agreed that this is not an exact science, but testified that he tries to remove as much opinion and art as possible, rather relying on the science and do the due diligence to reach conclusions based on fact. He agreed that, inherently, appraisal of real estate involves some aspect of subjective judgment, using common sense and due diligence.

[150] Mr. Williamson acknowledged that values given are approximations and that small variability is reasonable. He acknowledged that a few thousand dollars one way or the other is insignificant.

[151] Looking at the values provided for 2010, Mr. Williamson agreed that the value as a whole was provided as $380,000, while the value of the three lots, as vacant, was a total of $365,000. Therefore, the property, with the improvements, was worth more as an unsevered lot than as vacant severed lots. There was no value provided for the structure in the hypothetical, as the values were for vacant land.

[152] Looking at the values provided for 2018, Mr. Williamson agreed that the value as a whole was provided as $572,000, while the value of the combined three lots, as vacant, was a total of $530,000. Therefore, the property, with the improvements, was worth more as an unsevered lot than as vacant severed lots. Again, there was no value provided for the structure in the hypothetical as the values were for vacant land.

[153] Looking at the values provided for 2016, Mr. Williamson agreed that the value as a whole was provided as $494,000, while the value of the three lots, as vacant, was a total of $500,000. Mr. Williamson agreed that his 2016 appraisal was the only point in time where the combined value of the three severed lots exceeded the value of the one unsevered improved lot. Mr. Williamson explained that the valuations were based on the information available at the time and the market is not perfect. Mr. Williamson agreed that he arrived at the result based on data available, and therefore did not address this outlier. He explained that the market is not a perfect reflection of what logic might suggest. Mr. Williamson agreed that this outlier is not analyzed or explained in the report as the difference between the combined value of the three severed lots versus the value of the one lot is insignificant – it is $6000. He said that this is no real difference.

Analysis

Failure of the Defendant to Testify

[154] The Plaintiffs requested that this court draw an adverse inference against the Defendant from his failure to testify. The Plaintiffs relied on Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 6th ed (Canada, Lexis Nexis Canada, July 2022), section 6.509, where it is indicated that, in civil cases, the failure of a party litigant to testify may result in an unfavourable inference being drawn. The suggestion is that the failure to call a material witness will result in an “implied admission” that the absent witness would not be favourable to the defense case. In other words, the Plaintiffs submitted that this court should infer that Mr. Keay's evidence would support Doug Jones and Beverly Jones in their recollections of what they were told by Mr. Keay in the two important discussions - the July 16, 2010 telephone call and at the closing meeting.

[155] However, The Law of Evidence in Canada also points out that “an adverse inference should not be drawn if either party could have called the witness if they thought it was important.” There is no adverse inference to be drawn where the Plaintiffs could have, but chose not to, summon the Defendant. Rule 53 of the Rules of Civil Procedure sets out the process for calling an adverse party as a witness. Further, the Plaintiffs had the benefit of relying on the Examination for Discovery transcripts which they took advantage of. Based on the read ins, there would seem to be nothing gained from calling the Defendant at trial, as he had no recollection of the July 16 telephone call.

[156] Quite frankly, given the admission by the Defendant that he made an error and fell below the standard of care required of a prudent lawyer in the circumstances, there is nothing at issue that needs to be demonstrated or determined by this court.

[157] It is of no consequence whether this court believes everything that Mr. Jones reported about the telephone conversation on July 16, 2010. This court is willing to accept that Mr. Jones was doing his best to recall and report the details of the conversation that took place on July 16, 2010. Mr. Keay has no memory whatsoever of the conversation or even of the phone call. Mr. Jones acknowledged that he was not able to report verbatim what was said, agreed that the conversation occurred many years ago, and agreed that his attention was divided between driving and the conversation – a conversation that may have included legal terminology with which he was not entirely comfortable. However, the precise details of this conversation do not matter.

[158] There is no question that this was an important telephone call for Doug Jones – a telephone call that caused him to waive the severance condition in the Agreement of Purchase and Sale. Whatever the language was that was used, it gave Mr. Jones the confidence to take this significant step, a step he had clearly not been previously willing to take during the preceding weeks of investigation. Mr. Jones demonstrates as having an eye for detail and wanting to be clear about the information being received. Based on what he was told, Mr. Jones went home and had a discussion with his wife, and within 24 hours, they had waived the severance condition that they had been holding onto for almost 2 months. The fact that the email and follow up letter are somewhat different from what Mr. Jones reported about the call is also irrelevant. It makes perfect sense that some of the details would be different or at least stated in different terms. However, the message in all three was the same. Regardless of the strength of which it was expressed, or the precise language used, the message from Mr. Keay to Mr. Jones was the same on all occasions – that due to the Planning Act consent stamp, severance would be easily achievable, and upon that advice, Mr. Jones waived the condition.

[159] Significantly, Mr. Keay acknowledges his error and that he fell below the standard of care required.

Losses / Damages

[160] According to the Plaintiffs, they are entitled to reliance interest damages, specifically the value of the two outside lots as severed. According to the Plaintiffs, if Mr. Keay’s advice was different, or even qualified, they could have done a number of things, including:

a. The Plaintiffs could have had the property owner, Adams, complete the application to the County;

b. The Plaintiffs could have walked away from the deal, rather than completing a transaction that they otherwise would not have completed;

c. The Plaintiffs could have asked Kevin Duguay, Laura Jackson, or Tim Powell to weigh in and perhaps work with the Plaintiffs;

d. The Plaintiffs could have attempted to negotiate a different purchase price;

e. The Plaintiffs could have negotiated an extension of time to allow them to get more information.

[161] The Plaintiffs argued that part of the damages is the value of the two outside lots, as severed vacant building lots, because that is what Mr. Keay promised – severed vacant building lots. As for this damage claimed, the Plaintiffs relied on the valuations provided by Royce Williamson relating to the value of the three hypothetical severed lots at three points in time:

a. 2010 – the two outside lots were valued at $125,000 and $115,000, for a total of $240,000

b. 2016 – the two outside lots were valued at $170,000 and $160,000, for a total of $330,000

c. 2018 – the two outside lots were valued at $180,000 and $170,000, for a total of $350,000.

The Plaintiffs argued that the value they are entitled to would be the value as determined in either 2016 or 2018, as 2016 was after the repair efforts by LawPro ended, and 2018 would provide for a reasonable time to have sold the property, if they so chose, after the repair efforts were complete.

[162] The Plaintiffs also claim for a number of special damages, including:

a. $2900 retainer paid to Ian Keay - $2154.30 which was invoiced on May 4, 2011 and the remainder which is still held in trust.

b. $200 paid to Crowe Valley Conservation as part of the review conducted in relation to the Application for Consent.

c. Interest on the mortgage for the entire cottage property from 2011 to 2018, totalling more than $38,000.

d. Interest on the line of credit utilized for the cottage purchase, totalling $12,375.00.

[163] The parties do not disagree about the law applicable to this case. However, the parties offer somewhat different interpretations of the cases provided. This law has been reviewed and considered in detail and will be summarized below.

[164] In On the Measure of Damages in Solicitor’s Negligence Cases, 2012 Docs 117, the author reviews a trilogy of cases on the measure of damages in cases involving a solicitor’s negligence in real estate matters and summarizes many of the guiding principles. The author points out that simply meeting the “but for” causation test in a solicitor’s negligence claim does not result in the Plaintiff recovering any and all damages suffered as a result of the Defendant’s breach of duty. Rather, the court will rely on various policy considerations to limit damages and have demonstrated a “conservative tendency”. While a client faced with an error by their lawyer may assert a claim in either contract or tort, it will be very difficult for a client to obtain an award of damages that includes the amount of their expectation interest. The author points out that the lawyer’s advice or opinion is not a warranty, and therefore, the court will only award the client’s reliance interest – the amount the client lost by relying on the erroneous advice or opinion. For success, the client must prove that they suffered damages as a result of the lawyer’s error – damages that will be measured objectively.

[165] The first case in the trilogy is Messineo v. Beale, 1978 1570 (ON CA) ("Messineo"). In Messineo, the Plaintiff purchased a waterfront cottage property. As part of his purchase, he believed that they were buying Murch's Point, a point of land adjoining the subject property with significant acreage and shoreline. Messineo's lawyer, Beale, failed to tell Messineo that the vendor did not have title to Murch's Point and could therefore not convey it to Messineo. In other words, the lawyer could not convey it because the vendor did not own it. When, post-closing, Messineo learned that he had not acquired Murch's Point, he sued Beale. He claimed the value of Murch's Point as his damages as the actual conveyance fell short of the expectation. It is interesting to note that, in Messineo, in his contract with the clients, the lawyer undertook to search and certify title, which he charged a fee for, but, in fact, he did not do a reporting letter and did not certify good marketable title. The Court stated in part as follows:

In my view it is obvious that the defendant's breach of duty was not the cause of the plaintiffs getting no title to Murch's Point. The vendor had no title to Murch's Point, and could give none. Nothing the defendant could have done would have changed the situation.

It is to be observed that if the defendant had discovered, before closing, that Miss Finley had no title to Murch's Point, it would have been his duty to communicate the fact at once to his clients. Their options then would have been to refuse to close, to close and take title to what Miss Finley could convey, or to try to negotiate, once more, for a lower price. In the circumstances it would not, I think, have been a case for specific performance with abatement.

There was evidence that the plaintiffs got a "pretty good buy" at $43,500 for what they actually got title to. This was stated by the plaintiffs' own expert witness, in answer to a question from the trial Judge. (Of course the plaintiffs have actually paid only $35,500.) A few months later they listed the property for sale at $125,000, but have not sold it; it was listed only once, and apparently for a short period only.

After reviewing the authorities in Ontario and England, the trial Judge came to the conclusion that the measure of damages was the actual loss sustained by the plaintiffs arising from the defendant's negligence. He has referred to virtually all of the relevant cases. I agree with his result, but would state the principle in these words. The measure of damages is the difference in money between the amount paid by the client to the vendor, and the market value of the land to which the client received a good title.

The principle applies to a situation where the vendor and purchaser have simply agreed on one lump-sum price for several parcels. Where the parties themselves have agreed upon a specific amount to be paid for each separate parcel, and the total purchase price is merely the sum of those amounts, the proper measure of damages, where the vendor has no title to one parcel, may well be the amount the parties themselves have agreed upon as the price of that parcel. That is not this case.

In this case the trial Judge has accepted and acted upon evidence that the market value of what the plaintiffs received was $43,500, and they have paid out only $35,500. He therefore held that the plaintiffs had suffered no loss from closing the transaction. I agree with him.

The Court dismissed the appeal without costs to express “disapproval of the conduct of the defendant”.

[166] The Defendant in the case at bar argued that Messineo is directly on point as: 1) Mr. Keay’s breach of duty was not the cause of the Plaintiffs not getting severance as this was not within his power to give; 2) The property has always been worth more as a whole than as three vacant lots, according to their own expert evidence; and 3) The property was purchased for fair market value at the time and has significantly increased in value since that time, leading to the conclusion that it was a “pretty good buy” as described in Messineo.

[167] The Plaintiffs suggested that Messineo is the relatively rare situation where the Plaintiff cannot prove a loss. In Messineo, the Plaintiff's own expert admitted that the property, even without Murch’s Point, was worth what was agreed to be paid for it. In addition, the purchasers held back $8,000 from the purchase price to reflect the loss of the anticipated parcel, and the vendor did not succeed in obtaining this payment. There was simply no evidence of any financial loss.

[168] Based on this, the Court of Appeal held that the correct measure of damages in such circumstances is as follows:

The measure of damages is the difference in money between the amount paid by the client to the vendor, and the market value of the land to which the client received a good title.

[169] Given that Messineo's evidence showed that the property he acquired was worth at least as much as he had agreed to pay, the court held that Messineo had not suffered any damages because of Beale's negligence. Rather, Messineo acquired a property that was worth what he had paid, and maybe more. Given that Beale had breached the standard of care, but Messineo had failed to prove that he had suffered any damages, the court awarded Messineo nominal damages of $500.

[170] It is clear from Messineo that the Plaintiffs must establish an actual financial loss flowing from the lawyer’s error, based on the difference between what was paid versus the market value of what was acquired.

[171] It is the view of this court that Messineo is directly on point with the case at bar, considering the following:

a. In Messineo, the Court of Appeal observed that Messineo's loss was the lost opportunity to decline to complete the transaction or to try to negotiate an abatement to the purchase price. Because of Beale's negligence, those opportunities were not available to Messineo. Put simply, Beale's negligence caused Messineo to complete a transaction that he otherwise could have, or would have, avoided. The loss to the Plaintiffs is the same in the case at bar.

b. Both at trial and on appeal, the court found that Messineo had not suffered a loss because the property, even without Murch's Point, was worth at least as much as Messineo had agreed to pay for it. In the case at bar, the Plaintiffs own expert evidence established, unquestionably, that the property, with or without severance, was worth at least as much as the Plaintiffs paid for it. It may be a “relatively rare situation” where a Plaintiff cannot prove a loss when they did not get what they thought. However, the evidence is the evidence. In the case at bar, the Plaintiffs own expert acknowledged that the Plaintiffs paid fair market value for the property at the time of purchase – in other words, they paid exactly what it was worth. Even at that time, and in 2018, the combined value of the parcels as hypothetically severed, as provided by the Plaintiffs own expert, were worth less than the parcel as a whole. In 2016, the values were nearly equal, relatively speaking. Further, the property has significantly increased in value, as the Plaintiffs own expert testified that by 2018, the property had increased in value by nearly $200,000 and would be worth much more today. Rare or not, the Plaintiffs have simply failed to establish that the property is, or ever was, worth more as a severed property as compared to the property as a whole. While Mr. Williamson stated that the building / improvements was not part of the value of the lots, as these values were as vacant, this court has no evidence as to what the value of the three severed lots would be with the cottage on the middle lot.

c. In Messineo, both the trial judge and the Court of Appeal noted that Beale did not cause Messineo to lose Murch's Point. In fact, Messineo never had the opportunity to acquire Murch's Point because it was not the vendor's to convey. There was nothing Beale could have done to cause Messineo to acquire Murch's Point from the vendor. Similarly, Mr. Keay’s negligence did not cause the property to be difficult or impossible to sever. This was not in Mr. Keay’s power. He simply gave an incorrect opinion about the viability of severance. While the Plaintiffs claim that one of the losses was their loss of ability to sell the severed lots, the reality is that Mr. Keay did not cause this loss.

Frankly, Messineo would seemingly be in a better position to recover damages as compared to the Plaintiffs in this case, given that Messineo believed he was getting Murch’s Point but did not get it. In this case, the Plaintiffs received exactly what they were expecting to receive – 385 Haggis in its entirety.

[172] The second in the trilogy of cases is Kienzle v. Stringer, 1981 1851 (ONCA) ("Kienzle"). Kienzle’s parents owned a farm (the Oxford farm). His mother died in 1943 leaving her husband and their children, the Plaintiff and his two sisters. In 1973, letters of administration in respect of the mother's estate were issued to the father. He died in 1974. In 1977, letters of administration were issued to one of the sisters. Kienzle had operated the Oxford farm with his father and thereafter. He rented adjoining land to make the operation more economical. Kienzle agreed to buy the Oxford farm in 1977 and to pay $55,000. This was accepted by the administratrix sister. The deed was prepared by the Defendant Stringer, a lawyer. The deed was from the sister as administratrix of her parents' estates to Kienzle. Neither sister joined in the conveyance in their personal capacity. Unbeknownst to the Plaintiff, at the time of the conveyance, title to the farm had already vested in the Plaintiff and his two sisters, since the conveyance occurred more than three years after the death of the father. Therefore, the lawyer had mistakenly advised the Plaintiff that, on payment to the estate, he had acquired the sisters’ interest in the farm, when in fact, because of faulty conveyancing, he had not acquired the interest of either sister. In 1978, Kienzle agreed to buy another farm (the Kincardine farm). The agreement was conditional on his selling the Oxford farm. He accepted an offer for the Oxford farm of $76,000. In anticipation of the sales, the lease for the adjoining land was not renewed. The sale of the Oxford farm could not be completed, because one of the sisters refused to convey her interest. Kienzle could not complete the purchase of the Kincardine farm and claimed as damages: 1) the amount necessary to buy out the sister’s interest; 2) the legal fees paid to the Defendant and to another lawyer; 3) damages for loss of income arising from the fact that, without the leasehold land, the Oxford farm was not economically viable; and 4) the additional cost of now buying the Kincardine farm. The trial judge awarded the first and second heads of damage. The Plaintiff appealed.

[173] Distinguishing Messineo, the Court found that the actions of the lawyer had actually caused Kienzle to lose something that he would have acquired but for the error. In those circumstances, the damages were not limited to the difference between the contract price (what Kienzle had paid his parents' estate) and the value of what was ultimately received (nothing). The Court noted:

The learned trial judge was of the view that he was bound by the case of Messineo v. Beale (1978), 1978 1570 (ON CA), 20 O.R. (2d) 49, 86 D.L.R. (3d) 713, 5 C.C.L.T. 235, and that his award of damages was therefore limited to the difference between the contract price and the market value of what was received. I take it to be clear as well that the market value spoken of is the market value at the time of the transaction, otherwise rising values would wipe out the plaintiff's damages but leave him with his problems unresolved. On this premise the trial judge calculated the plaintiff's damages to be $15,509.48. In addition, he awarded a certain amount for legal costs already described.

In my respectful view, Messineo v. Beale is not authority for such a broad proposition...

In my respectful opinion, Messineo v. Beale decides only that the defendant did not cause the plaintiff any damage. Since the vendor did not own Murch's Point, the defendant's solicitor did not cause its loss. The solicitor caused the plaintiff to complete a transaction that he would otherwise have avoided but no loss resulted from this. The plaintiff could have resold as soon as he discovered that he had not obtained Murch's Point and would have suffered no loss at all. It would have been far different if the vendor had owned Murch's Point and the solicitor had omitted the property from the deed or in some other way had caused the plaintiff to lose the property. In that case, the plaintiff's damage would have been the value of the missing property despite the fact that the value of what he had received was greater than the purchase price.

It appears that in many of the cases, as a matter of fact, the damages amount to no more than the difference between the purchase price and the market value of what is received, but I find no case binding on this Court compelling the acceptance of such a measure as a rule of law.

In my view the law should not support a rule which gives exceptional protection to solicitors from the general principles of damages which flow from either contractual or tortious responsibilities.

For the purpose of simplicity, I shall use the term "reasonable forseeability" as embracing the test in both tort and contract.

Kienzle was ultimately awarded the amount needed to buy out his objecting sister, the legal fees paid, and his lost profits for one year, said to be the period sufficient to extricate himself from the problem. The Court of Appeal found that the lost profits were “directly and immediately connected to the defective title and consequent lack of marketability of the Oxford farm, and would have occurred if the plaintiff had chosen only to sell the Oxford farm without any plan to purchase another farm.” The court declined to award Kienzle damages for lost profits related to the Kincardine farm on the basis that such damages were not reasonably foreseeable. The Court stated:

In the ordinary course, a client relies on his solicitor to guarantee the title that he certifies. The fee charged is calculated upon the sale price of the title certified and arguably the size of the risk assumed. It is not unreasonable to add to that risk consequential damages immediately concerned with the failure of marketability.

This reliance, however, does not or should not extend to the loss of profits from secondary transactions which may be fuelled by funds expected from the marketing of the subject real property. This range of secondary transactions is unpredictable and limitless and so are the losses that may flow therefrom. If the ambit of reasonable foreseeability takes us into this area of secondary transactions it is difficult, if not impossible, to know where a boundary may be found. In my view, the damages that flow from the loss of profits from a secondary bargain lie on the far side of a Rubicon that should not be crossed; reasonable foreseeability takes us only to the shore. I except again those cases in which particular disclosure may lead to the assumption of additional risks. In this case, of course, there was no such disclosure that the Oxford farm was to be the basis of future purchases.

[174] While the court in Kienzle went further than it did in Messineo as to what damages will be awarded, the court made it clear that it will still only award damages based on a loss actually caused by the lawyer’s error.

[175] The facts in the case at bar are very different than Kienzle. The Plaintiffs in the case at bar acquired title to the exact property intended – exactly what was indicated on the Agreement of Purchase and Sale. In Kienzle, the Plaintiff paid for something and got nothing. While there is no question that Mr. Keay, admittedly, overstated the future ability to sever the property, there was no faultiness in the conveyance itself and no misunderstanding on the part of the Plaintiffs as to what they were acquiring. Mr. Keay never had any ability to grant or refuse severance. Mr. Jones himself acknowledged this as well as agreeing that he understood that severance was not automatic. Mr. Keay did not cause any loss to the Plaintiffs, apart from a lost hope of severance. This is not quantifiable or recoverable.

[176] The third in the trilogy of cases is Toronto Industrial Leaseholds Ltd. v. Posesorski, 1994 7199 (ON CA) (“TILCO”). In TILCO, the lawyer acted on the purchase and sale of an industrial property in 1979, but neglected to tell his clients that TILCO had an option to lease the property for 10 years at a rent substantially below market rates. The clients learned about the option in 1981 when TILCO notified them that it intended to exercise the option and later sued the clients for a declaration that the option was valid. The clients joined the lawyer as a third-party claiming contribution and indemnity based on his negligence. The clients settled the main action with TILCO for $260,000. The lawyer’s insurer funded the settlement and paid the judgment, with a mortgage being held in trust pending the determination of the third-party issues between lawyer and clients. The lawyer admitted his negligence and the parties agreed that the clients would not have purchased the property had they known about the option. The trial judge found that, because of the option, the property had a true market value in 1979 that was $100,000 less than the price paid by the clients. She also found that, during the two years when the clients owned the property before learning of the option, the real market value of the property declined by a further $5,000. The trial judge held that the measure of the clients' damages was the difference between the price paid for the property and its market value at the time of purchase. She adjusted the difference by $5,000 to compensate the clients for the further diminution in the property's value until 1981 when they learned of the option. She therefore assessed the clients' damages at $105,000 and ordered them to pay the lawyer the sum of $155,000, being the excess of the funding provided by the lawyer’s insurer over their assessed damages. The clients appealed.

[177] Justice Doherty, writing for the majority, held that “damages should, to the extent possible, restore the clients to the position they would have been in had the solicitor properly discharged his duty” where the claim is for breach of contract or negligent performance. He distinguished Kienzle, stating in part:

I distinguish a case like this one from one in which the solicitor's error results in an encumbrance remaining on title. In those cases, had the solicitor not been negligent, the client would have acquired the property without the encumbrance and his or her damages should include the cost of removing the encumbrance. Kienzle v. Stringer (1980), 14 R.P.R. 29 (Ont. H.C.J.), varied (1981), 1981 1851 (ON CA), 35 O.R. (2d) 85, 130 D.L.R. (3d) 272 (C.A.), is such a case. As a result of the solicitor's negligence in that case, property was mistakenly conveyed from an estate to the client, when in fact by the time of the conveyance the beneficiaries of the estate owned the property in their personal capacities. As a result of the solicitor's error, the deed conveyed nothing to the client. Had the solicitor drawn the deed properly, the client would have acquired the entire interest in the property. …

The trial judge's approach in Kienzle, which is in fact the approach used by Galligan J.A. in this case, was appropriate in Kienzle because as a result of the solicitor's error, the client did not acquire a property interest which he would have acquired but for that error. In my view, it does not apply where the property interest acquired by the client is the very property interest offered for sale by the vendor, but had the solicitor not been negligent the client would not have purchased that interest. Indeed, Zuber J.A. in Kienzle, supra, at p. 88 makes that very distinction. In distinguishing the former type of case as represented by Kienzle, supra, from the latter type of case as represented by Messineo….

I, therefore, conclude that the approach adopted by Galligan J.A., while appropriate, had the solicitor's error caused the option to remain on title is not appropriate where the error did not go to the continued existence of the option, but rather caused the clients to enter into a transaction which they otherwise would not have entered into.

Justice Doherty clarified that Messineo and Kienzle were not contradictory and reconciled the cases. Justice Doherty determined that the loss flowing from the lawyer’s negligence fell under three heads, the first head being that the clients paid more for the property then it was actually worth, given that unbeknownst to them the property was encumbered by a ten-year lease option at reduced rates. Therefore, as per Messineo, the clients were entitled to recover the overpayment, if any, resulting from the solicitor’s failure to alert them to the “defect” in the property – the difference between the price paid and the market value of the property with the option. Justice Doherty made it clear that Messineo was not the only method of assessing damages in such circumstances and other approaches may “more effectively achieve a full restoration”. However, he held that Messineo was the appropriate method “absent some basis in the evidence for holding that some other means more effectively restores the wronged party…” Justice Doherty also made it clear that the measure of damages in Messineo “is not necessarily exhaustive of the full measure of damages suffered by clients in every case” and that there may be consequential damages owing if those were reasonably foreseeable in line with the guidance of Kienzle. Justice Doherty stated:

…I do not regard Kienzle as a departure from Messineo. As indicated above, the two cases demonstrate that the initial measure of damages will depend in part on the nature of the solicitor's error. If the error caused the client to lose an interest in property he or she otherwise would have had, Kienzle is the appropriate starting point. If the error did not cause the client to lose an interest in property, but instead caused the client to enter into a transaction he or she would otherwise not have entered into, then Messineo is the appropriate starting point in the assessment of the client's damages. Further, as the Court of Appeal in Kienzle indicates, even where Messineo is the appropriate starting point, that measure of damages does not necessarily exhaust the client's claim. Consequential damages are recoverable if they were reasonably foreseeable. The Court of Appeal judgments in Messineo and Kienzle work together to describe the client's measure of damages. Messineo addresses the loss suffered by the initial overpayment, and Kienzle speaks to the solicitor's liability for reasonably foreseeable consequential losses caused by the solicitor's negligence and occurring subsequent to the ill- advised purchase…..

[178] The other two heads of damage considered appropriate by Justice Doherty were:

a. They lost the use of the funds represented by the overpayment for a period of five years. The clients were entitled to be paid the amount they could have earned by investing the overpayment. The Court applied a 15% interest rate based on the variable rates during that time.

b. They incurred certain additional costs and expenses which were a reasonably foreseeable consequence of the negligence (the Kienzle principle). Those costs included:

i. Legal costs associated with retaining new counsel and challenging the validity of the lease option.

ii. Portion of the legal costs incurred by the option holder, as dictated by the settlement.

iii. Costs associated with maintaining the vacant property for several months.

[179] The TILCO decision has been widely applied in later cases involving lawyers' errors in the purchase and sale of land, and title issues. For example, in 789538 Ontario Ltd. v. Gambin Associates, 1999 9287 (ONCA) ("Gambin"), the purchasers of a commercial property, who purchased the site as an income-producing property with the intention of further development in accordance with representations made by the vendor, were not advised of the presence of two easements and a right of way over the property. The solicitor admitted liability for negligence and the trial judge was only called upon to quantify the resulting damages. The court found that, in situations where the solicitor did not cause or fail to get rid of an encumbrance, but rather failed to discover and report it to his client, thus denying the client the opportunity to avoid the deal or negotiate a lower price, the damages should be calculated in accordance with the guidance in TILCO. In Gambin, the Court stated in part:

[17] In Tilco v. Posesorski (1994), 1994 7199 (ON CA), 21 O.R. (3d) 1, Doherty J.A. for the majority held that in cases such as this, where the solicitor's negligence lies not in causing the impediment to title or failing to remove it but in failing to discover and report it to the client, thereby denying the client the opportunity to avoid the transaction or reduce the purchase price, damages should, as a general rule, be assessed in accordance with the "diminution in value" model. Doherty J.A. made it clear, however, that the "diminution in value" approach need not be followed if there is some basis in the evidence for holding that a different approach would more effectively restore the injured party to the position it would have been in but for the solicitor's error.

[18] The appellants submit that in this case, the economic loss model proposed by them was a more effective means of restoring the respondent to the position it would have been in had they discharged their duty properly because unlike the "diminution in value" approach, it represented the true losses suffered by the respondent after it had mitigated its losses by buying out the Firestone Lease. Expressed somewhat differently, the appellants contend that the "diminution in value" approach used by the trial judge ignores the fact that the respondent mitigated it losses and resulted in a windfall to the respondent. With respect, I am unable to give effect to the appellants' submission.

[19] In my view, no adequate basis has been shown for departing from the "diminution in value" approach directed by Tilco v. Posesorski, supra. Without going into detail, suffice it to say that based on the evidence, I am far from satisfied that the economic loss model proposed by the appellants accurately reflected the true losses sustained by the respondent. Indeed, if anything, the preponderance of evidence would appear to favour the much more substantial losses proposed by the respondent if the economic loss model were to be followed.

[20] In the final analysis, far from being a more effective means of measuring the respondent's damages, the complexities and uncertainties surrounding the economic loss approach rendered it a poor substitute and the trial judge cannot be faulted for using the "diminution in value" approach. In my view, that approach, which included fixing pre-judgment interest at compensatory rates, was the correct one.

In Gambin, there appears to have been evidence of a significant diminution in value (difference between purchase price and fair market value) and such was awarded, as well as pre-judgment interest, and “various incidental expenses”.

[180] In Harela v. Powell, 1998 14924 (ONSC), the action arose out of the purchase by the Plaintiffs of a cottage lot in the District of Parry Sound. The agent for the vendor was Alvin Boucher. The Plaintiffs were represented by an associate, Fraser, with the Powell law firm. The action was brought against Boucher and his real estate firm on the basis that the Plaintiffs claimed to rely upon Boucher’s representation that a three-bedroom, two bathroom cottage could be constructed at a certain location on the lot. The action was brought against the lawyer and the law firm based on the Plaintiffs’ reliance on the lawyer and his failure to meet the standard of care. It was the position of the Plaintiffs that, as a result of the misrepresentations of Boucher and the professional negligence of Fraser, they purchased a property which did not have the qualities and potential which they expected and were put to the expense of applying for and obtaining minor variances from the Committee of Adjustment. They had to build the cottage at a site where the building costs were substantial because of the steep incline of the property and the necessity to blast a considerable amount of rock, and where the cottage lacked privacy from the road at the back of the property, which detrimentally affected the use and enjoyment of the property. The Plaintiffs also maintained that the delay occasioned by the need to obtain minor variances resulted in additional construction costs due to the increase in the price of various materials and services between the summer of 1992 when they intended to build, and the summer of 1994 when they were able to build.

[181] The damages claimed by the Plaintiffs fell into three categories: 1) the diminution in value of the lot as a result of the restricted building envelope and the difficulties in building within that envelope; 2) damages for loss of use of the property for the two-year period of delay before the Plaintiffs were able to commence construction of the cottage; 3) consequential damages composed of the increases in building costs between 1992 and 1994, discounts and rebates missed, and expenses incurred in connection with the applications for minor variances, all as substantiated by invoices and oral testimony at trial.

[182] Based on the evidence at trial, the court found as a fact that there was a difference between the purchase price of the lot ($103,000) and the fair market value ($83,120) of $20,780. Based on the evidence accepted by the court as to the fair market value, the damages for loss of use of the property for the two-year delay period were calculated as $9,728.36. As for increased costs, the court considered the lost Viceroy Homes and Ontario Hydro discounts and rebates, totalling $4,376.99 as a result of the delay, incurred expenses of $1,105.39 in connection with the minor variance applications, and increased building costs of $11,431.55. The real estate agent and firm were responsible for all three heads of damages. As for the law firm Defendants, the Court relied on TILCO and stated:

[35]… In my view, the case at bar is analogous to the situation in Toronto Industrial Leaseholds Ltd., supra. If properly advised by Fraser, the plaintiffs would not have purchased the Lot at the price they paid for it. Their options would have been to walk away from the deal and lose their deposit, to try to get out of the deal based upon the condition in the offer with respect to building permit and septic permit, which would, in my view, have been problematic, to attempt to sell the Lot to a third party and minimize their loss, or to negotiate a lower purchase price or a postponement of the closing date and to seek the minor variances required. In my view, based on the evidence, it is reasonable to assume that the plaintiffs would have negotiated a postponement of the closing date and would have applied for and received, presumably with the assistance of Fraser, the minor variances required to permit the construction of the cottage as ultimately constructed. The failure of Fraser to properly advise and represent the plaintiffs resulted in none of such options being available and the plaintiffs, having completed the purchase of the Lot before becoming aware of the restricted building envelope, took reasonable steps to mitigate their losses by proceeding to obtain the required minor variances and constructing the cottage when and where they were able to pursuant to such minor variances.

[36] Accordingly, in my view, the overpayment for the Lot, the loss of use of the Lot for the sixteen‑month period, and the consequential damages incurred by the plaintiff as a result of the delay in building, were all reasonably foreseeable results of the negligence of Fraser.

Conclusion

[183] In the case at bar, the parties seem to agree that the court will only award damages based on a loss actually caused by the lawyer’s error. Further, the parties seem to agree that losses that are too remote, or where not reasonably foreseeable, will not form part of the damages awarded. The disagreement between the parties arises in the question of whether in fact the losses were caused by the lawyer’s error and were reasonably foreseeable.

[184] Applying these legal authorities to the facts of this case, the Plaintiffs argued that, as with Fraser in Harela, Mr. Keay was well aware of severance being a critically important issue for the clients’ plans for the property, and that, in fact, it was a prerequisite for the purchase. There is no question that, even prior to being retained, Mr. Keay was aware of this important issue for the Plaintiffs, having been brought into the discussion by Rick French, the real estate agent. Mr. Keay was aware that the County had been taking the position that existing lots that inadvertently merged due to common ownership may be separated to reflect the original lot configuration provided the subject property was still in the same ownership. Notwithstanding this, Mr. Keay advised the Plaintiffs that that the Planning Act consent stamp provided evidence that the lots could be severed. He was admittedly mistaken. The Plaintiffs waived the severance condition in the Agreement of Purchase and Sale and closed the deal on the strength of his opinion. According to the Plaintiffs, the damages occurred when that advice was given. Relying upon the advice, the Plaintiffs waived the condition and proceeded under the assumption the lots could be severed – that it would be no problem.

[185] The Plaintiffs argued that the error caused them to make a decision to purchase that they would not have made if the opinion had been correct. A proper and qualified opinion would have given the Plaintiffs options, such as:

a. Ask the property owner, Adams, to apply for the severance. It is worth noting that, while this may have resulted in severance, this could also have resulted in the deal being abandoned and Adams proceeding with this on his own, which was the risk at the time the initial offer was made;

b. Negotiate a different purchase price - it had been on the market for awhile already and the original selling price had been reduced;

c. Walk away from the deal;

d. Extend the closing to do more investigation.

[186] According to the Plaintiffs, the case law establishes that, where the lawyer causes the loss, such as in this case, and the result of the mistake is that the client completes a transaction they would not otherwise have completed, damages are measured by the difference in market value of the land from the purchase price, plus consequential damages that are reasonably foreseeable. As outlined above, the Plaintiffs argued that they are entitled to the hypothetical value of the outside lots as determined by Royce Williamson, as determined in either 2016 or 2018, as 2016 was after the repair efforts by LawPro ended, and 2018 would provide for a reasonable time to have sold the property, if they so chose, after the repair efforts were complete. According to the Plaintiffs, it is not reasonable to suggest that they could have or should have sold the entire property while the repair effort was underway. The Plaintiffs argued that the damages are measured in the value of the two outside lots as this is what they believed they were getting as a result of Mr. Keay’s opinion on severance and that which could not thereafter be realized. The Plaintiffs also claim for a number of special damages, including the retainer paid to Mr. Keay for the severance application, the amount paid to Crowe Valley Conservation as part of the review conducted in relation to the Application for Consent, and interest paid on the mortgage and line of credit for the entire cottage property from 2011 to 2018.

[187] It is the view of this court that the Plaintiffs have not suffered all of the loss or damages that they claim, either flowing from the Defendant’s actions or otherwise. The following things must be considered:

a. The Plaintiffs received the property that they contracted for in the Agreement of Purchase and Sale. Even though at the time they believed that severance was available to them, they were fully aware that they were purchasing the lot as a whole lot with the hope of severance.

b. While there is no question that the Plaintiffs waived the severance condition on the strength of Mr. Keay’s opinion, certainly Mr. Jones was well aware that it was the legal system, generally, that determines whether his property could be severed. He agreed that it was not Mr. Keay that got to decide whether or how the property could be severed. Mr. Jones agreed that Mr. Keay’s job was to provide an opinion, but he did not have the ability to change the law on whether the property could be severed. Mr. Jones acknowledged in cross-examination that he understood that getting the property severed was not automatic.

c. The purchase price of the property was $380,000 as a whole, which is precisely the valuation that Royce Williamson put on the property as a whole at that time. It was listed as a whole property and valued as such. There is no difference in the amount they paid versus the value of the property as at the date of their purchase, similar to Messineo. The Plaintiffs paid exactly what the property was actually worth.

d. The property, whether as a whole or as severed, has continued to increase in value significantly since purchase. The property remains a valuable asset to the Plaintiffs as a whole lot. The Plaintiffs’ evidence shows that they could sell the Property and, at a minimum, recover their entire purchase price. In fact, it is clear that they would profit from the sale. The Williamson Report goes on to conclude that, as of August 4, 2016, the property was worth $494,000, and as of November 22, 2018, it was worth $572,000. That evidence is significant because it shows that the Plaintiffs did not suffer any damages related to the value of the property. Rather, they have benefitted from owning the property. This cannot in any way be characterized as a loss.

e. According to the Plaintiffs own expert evidence, the whole property, with the improvement, continued to be worth as much, if not significantly more than, the property severed into three vacant parts as the years went on. Even in 2016, when the value of the property as three lots was higher than the value of the whole, the difference was negligible. Specifically, the values provided demonstrated:

i. 2010 – as severed, the property was valued $15,000 less than the property as a whole;

ii. 2016 - as severed, the property was valued $6,000 more than the property as a whole, however, Mr. Williamson conceded that the difference in values was negligible and would be considered equal.

iii. 2018 - as severed, the property was valued $42,000 less than the property as a whole.

One would expect this trend to continue to present day. The Plaintiffs provided no evidence as to what the combined value of the lots would be, if one were to include the improvements on the middle lot. In re-examination, Mr. Williamson was asked whether he put a value on the cottage, as to its contribution to value. He stated:

The best example to determine an indication of value that would be found in the cost approach…the depreciated indication of value…and if I remember correctly…I would have to look at it to verify.. but it was the cost approach was close to one of the valuation dates and therefore it would have…whatever that number was….that’s what I thought that….in a ballpark…that structure was worth…but there was also other things…extras and such…servicing, well, septic…water system, septic system, they were all part of that contribution value too.

He was not asked for any further clarification about the value of the cottage or how it would have changed the value of the three lots, with the two outside lots being vacant and the middle lot being improved. The evidence is what it is.

f. There was absolutely no evidence presented at this trial to demonstrate that severed lots are, or were, worth more than the lot as a whole; in fact, the evidence was to the contrary.

g. The Plaintiffs have owned the property since its purchase in 2010. They have used, enjoyed, and improved upon the property since that time. They continue to own the property and the value associated with it. They enjoy the benefit of its significant increase in value over time, whether as a whole or in hypothetical severed lots.

h. Since the day it was purchased, the Plaintiffs have had the ability to sell the property. Even if sold the day after it was purchased, the Plaintiffs would have been able to recoup the entire amount spent, according to the valuation provided. By 2018, the Plaintiffs would have been able to make a significant profit on the property. Today, those profits would likely be greatly increased.

[188] Mr. Keay’s incorrect opinion is not a warranty, and damages are not awarded on that basis. Mr. Keay’s error merely caused Mr. and Mrs. Jones to complete a transaction that they otherwise may have avoided or renegotiated in some fashion. Their ability to choose whether or not to complete their purchase of the property based on accurate information on severance is what they lost. Mr. Keay did not cause the property to be unable to be severed or difficult to sever. It is not clear what if anything he could have done to make the property severable. On the basis of the evidence at this trial, it is not even clear if the property can be legally severed.

[189] While the Defendant unquestionably made an error, his error, the opinion provided to the Plaintiffs about the severability of the property, did not cause or contribute to any loss or damages to the Plaintiffs in relation to the two outside hypothetical lots, as there simply is no damage or loss.

[190] The Plaintiffs are not entitled to damages for unrealized expectations in relation to these two hypothetical outside lots. Again, on the basis of the evidence at this trial, it is not even clear if the property can be legally severed. In cases where lawyers are found to have erred, the court will attempt to restore the aggrieved party to the position they would have been in but for the lawyer’s error, subject to remoteness and reasonable foreseeability. The Plaintiffs were aware by September 1, 2011, about a year after their purchase, that severance was certainly not as simple as Mr. Keay had suggested in his opinion, and in fact, was unlikely – in other words, the property did not have the potential that they had hoped. However, despite knowing this, the Plaintiffs have continued to hold onto and use the property for their enjoyment. It is clear that had they chosen to sell the property, they would have at least broken even, and likely would have profited.

[191] Doug and Beverley Jones seek an extraordinary remedy. They want to keep the property, which Mr. Williamson testified has now significantly increased in value, and they want the court to award them a sum of money on account of the two hypothetical outside lots, either as valued in 2016 or 2018, in addition to carrying costs on the whole property. Considering one measure of damages as the difference between the amount paid by the Plaintiffs to purchase the property and the market value of the property they purchased, there is unquestionably no loss established by the evidence in this case. Fortunately, the Plaintiffs have received a gain. Instead of selling the property, the Plaintiffs chose to keep it, which was most certainly their choice. Having made that choice, they have enjoyed the property, on a premier lake, and its increase in value over the past 13 years. This court does not compensate for disappointed expectations related to their inability to sell the lots as separated. Therefore, in the view of this court, the Plaintiffs are not entitled to receive anything for the value of the hypothetical severed lots or the carrying costs – interest on the mortgage and line of credit – for the property that they still own. There would be no logical basis upon which to award these amounts as damages, allowing the Plaintiffs to live mortgage-interest free for 13 years, given that the Plaintiffs have chosen to hold onto the property, enjoy the continued use of the property, and have realized a significant increase in the value of the property.

[192] As stated in the case law above, damages are based on a restitutionary principle. However, the Plaintiffs in this case are not asking to be put in the position they would have been in but for the error. If this court were to grant the Plaintiffs what they seek, the Plaintiffs would get to keep the entire property that they negotiated to buy at fair market value back in 2010, a property which they have continued to enjoy over the years, a property which has significantly increased in value over the years, while at the same time they would be awarded a value for the hypothetical severed lots that they continue to own, and be paid back all of the mortgage and line of credit interest they paid on the entire property they have continuously owned, still own, and from which they will continue to benefit. This would be a bizarre result. Having exercised their choice to keep the property, and now being able to benefit from a significant increase in value, this cannot in any way be considered a loss.

[193] As for any additional costs and expenses incurred by the Plaintiffs, which were the foreseeable consequence of the Defendant’s negligence, it is clear that the legal fees and fee paid to Crowe Valley Conservation as part of the required review for the Application for Consent fall into this category.

[194] It was reasonably foreseeable that the Plaintiffs would not have engaged Mr. Keay post-closing to apply for severance if Mr. Keay had provided them with accurate advice in July 2010. While it seems clear that Mr. Keay did the work claimed, this work was seemingly all for nothing. But for Mr. Keay’s faulty opinion in July 2010, in this court’s view, these costs would not have been incurred. Therefore, the Plaintiffs are entitled to the return of their $2900 retainer paid to Mr. Key in April 2011. As for the $200 paid to Crowe Valley Conservation as part of the review for the Application for Consent, this is also an extra cost that the Plaintiffs would very likely not have incurred but for the error of Mr. Keay. The Plaintiffs are entitled to these costs. In total, the Plaintiffs are to receive $2900 (return of retainer / legal fees) and $200 paid to Crowe Valley, for a total of $3100. The Plaintiffs are entitled to prejudgment interest of 1.3% from April 30, 2011, when the retainer was paid. The applicable postjudgment interest will be 7% in accordance with the Courts of Justice Act.

[195] As for costs, the court strongly encourages the parties to consult with each other and attempt to reach a reasonable agreement. If the parties are unable to agree as to costs, the court will accept written submissions on costs, which shall be no more than five pages in length, excluding supporting documentation, and which shall be provided to the court office, and to Bev.Taylor@ontario.ca, no later than 4:30 p.m. on January 31, 2024.

Justice V. Christie

Date: January 16, 2024