Stephen Waqué

The plaintiff sued the defendant appraisers for professional negligence after an arbitrator rejected their real estate appraisal, resulting in the plaintiff receiving a lower buyout price for its property interest.

The defendants brought a third party claim against the plaintiff's former lawyers, alleging the lawyers negligently represented the plaintiff during the arbitration and caused the losses.

The lawyers moved to strike the third party claim, arguing it merely alleged a failure to mitigate and was barred by issue estoppel.

The defendants cross-moved to amend the claim and add another law firm as a third party.

The court struck the portions of the third party claim that amounted to a failure to mitigate the initial loss caused by the appraisal.

However, the court allowed the broader claims regarding the lawyers' negligent representation at the arbitration to proceed, finding they disclosed a tenable cause of action.

The court also granted the defendants leave to add the proposed third parties.

The tenants under two long-term ground leases appealed a majority arbitration award determining the fair market value of the lands for rent re-set purposes.

The court upheld the arbitrators' finding that the freehold interest, not the leasehold interest, was to be valued.

However, the court found the arbitrators erred in law by including the potential value of a freehold residential condominium project in the valuation, as a prior Divisional Court decision between the parties established that development potential unavailable to the tenants due to legal restrictions must be excluded.

Finding that issue estoppel applied to this prior determination, the court set aside the arbitration award and ordered a new hearing.