Claim for solicitors' negligence limited to client

Laidar Holdings Ltd. v. Lindt & Sprungli (Canada) Inc.,  2012 BCCA 22 deals with a claim against solicitors. 

 

The British Columbia Court of Appeal holds the claim untenable because the duty alleged lies only to the client and not the plaintiff.  The decision is important in Ontario because it distinguishes, on the legislation and to some extent the facts, the Ontario cases of Cardar Investments Ltd. v. Thorne Riddell (1989) 71 O.R. (2d) 29 (Div. Ct.) and 478649 Ontario Ltd. v. Corcoran (1994) 118 D.L.R. (4th) 682.

 

Specifically, a third party applied to join the defendants' solicitors as a fourth party, alleging the solicitors had breached their duty of care to their client, the defendant. The Court held the alleged breach of duty 'belonged to the client' and could not found a right of the third party to claim contribution and indemnity. 

 

Speaking of the Ontario cases the Court held:

 

[20]         Counsel for DTZ  in the case at bar, however, referred us to two Ontario cases which distinguished Adams in fairly uncomplicated situations involving professional advisors –Cardar Investments Ltd. v. Thorne Riddell (1989) 71 O.R. (2d) 29 (Div. Ct.) and 478649 Ontario Ltd. Corcoran, supra.  In Cardar, the plaintiffs had sued an accounting firm for damages they had allegedly suffered due to negligent advice given to them regarding the amount of scientific research tax credits they needed to buy in order to effect the greatest possible tax savings.  The accounting firm in turn sought to join the plaintiffs' solicitors, alleging they had negligently 'failed to make the necessary calculations' or to advise their client to engage someone else to do so, and might therefore be partly responsible for the plaintiff's damages within the meaning of s. 6 of the Negligence Act, R.S.O. 1980, c. 315.  It provided:

 

6.         Wherever it appears that a person not already a party to an action is or may be wholly or partly responsible for the damages claimed, such person may be added as a party defendant to the action upon such terms as are considered just or may be made a third party to the action in the manner prescribed by the rules of practice for adding third parties.

 

[21]         The law firm naturally relied on Adams, but the Court concluded that the firm's conduct might not be attributable to its client on agency principles.  In the Court's analysis:

 

... The alleged negligence of the solicitors in failing to calculate the optimum amount of tax credits required by the plaintiffs, can only be attributable to the plaintiffs if the plaintiffs were themselves under an obligation to make such calculation. Whether the plaintiffs were themselves under such an obligation depends on how specific the information was that they gave to the accountant and how specific the advice was that was given by the accountant to the plaintiffs. If, as alleged by the plaintiffs, the accountant advised the plaintiffs that each ought to buy $2,000,000 worth of tax credits, it can scarcely be maintained that the plaintiffs had to satisfy themselves in that regard before acting on it. In any event, since it is at this point uncertain whether the alleged negligence of the solicitors can be attributed to the plaintiffs, the third party notice should issue.  [At 33-4; emphasis added.]

[22]         Cardar was approved and relied upon by the Ontario Court of Appeal in Corcoran, the facts of which were somewhat similar to those of the instant case.  The plaintiff purchaser was suing the vendor of certain real property, and its real estate agents ("Stellar"), for negligent misrepresentation concerning the value of the property, which depended on its potential for development.  Stellar in turn issued a third party notice against the plaintiff's solicitor on the ground that he had reviewed the agreement of purchase and sale before it was executed, and failed to give proper advice regarding precautions that could have protected his client.  (Like the allegation made against the solicitors in Cardar, this sounds suspiciously like a 'last clear chance' argument.)

 

[23]         Speaking for the Court in Corcoran, Laskin J.A. referred to Adams.  He read it as turning on the view that the plaintiffs' obligation to mitigate their damages (which Laskin J.A. saw as the "substance" of the defendant's allegation in Adams) was the plaintiff's alone, and could not be avoided by delegation to their solicitor.  This had not been the case in Carder and, he reasoned, was not the case in Corcoran, since in his analysis it was possible a plaintiff could shelter behind his or her choice of a reputable law firm as a defence to attributed responsibility as the firm's principal. In his words:

 

This may not be a case where the fault alleged against the third party is in fact the fault of the plaintiff, but rather a case where the plaintiff may not be responsible for the negligence alleged against its solicitor. While the plaintiff was, as the motions judge points out, responsible for completing the transaction, what has been put against the solicitor is that he was negligent in failing to give proper advice concerning the agreement of purchase and sale and that his negligence contributed to his client's loss. The plaintiff may be able to say that it acted reasonably in retaining the third party to advise it on the terms of the agreement and accordingly should not be responsible for any negligence on the part of its solicitor.  See Salmond and Heuston on The Law of Torts, 20th ed. (1992) at p. 474 ff. and Jackson & Powell on Professional Negligence, 3rd ed. (1992) at p. 363 ff.  [At 689; emphasis added.]

 

Ultimately, since the Court could not say that the third party claim was "certain to fail", the plaintiff's motion to strike out the third party claim was dismissed.