Legal Proceedings and the Middle Class

In an article posted recently in the online version of Canadian Lawyer, Margaret Waddell put forward a proposal which she entitled “A Radical Idea for Giving the Average Person Their Day in Court”.

In her article, she suggested that asking whether or not the average person can afford a trial is the wrong question.  Instead, we should ask ourselves whether we can afford to maintain a judicial system that effectively bars the average person from being able to take his or her civil dispute to trial with the benefit of legal representation.

There is simply no question about the fact that the average person is going to have a lot of difficulty paying for a lawyer to take a matter to trial, assuming that by “average person”, we are talking about someone who earns at the level of Canada’s national income.

Litigation lawyers charge their time out at varying rates, generally dependent upon experience and, to some extent, geography. On balance, in my view, one gets what one pays for. That does not mean that a person will only be able to get proper or even adequate representation by paying top dollar.  I know many young litigation lawyers, including those at my own law firm, who can do an excellent job at a reasonably hourly rate.  My definition of “reasonable”, however, may not be shared by everyone.  Even young lawyers can be costly for average income earners.

For those whose incomes are below average but nowhere near the poverty line, the justice system approaches complete inaccessibility.  Family law courts in particular are inundated with cases where at least one of the two parties are unrepresented.  Where an unrepresented party must go into battle against a lawyer acting on the other side, the result can be devastating.  What may be even worse is that the unrepresented party will usually leave the courtroom without the first clue as to what just happened to him or her, or what he or she could have done prior to the hearing in order to increase the odds of success.

In smaller claims, an attempt has been made to address the point by increasing the Small Claims Court jurisdiction to $25,000.00.  The Small Claims Court is designed for people to be able to represent themselves without counsel.  While I do not have any statistics to offer, I have to believe that this has made a positive difference.

Ms. Waddell’s radical idea, incidentally, is that every lawyer ought to choose a case in which the client cannot afford to proceed and agree to act without charging a fee, or at a substantially reduced rate, or on a contingency.  By doing so, she suggests, the client can be shown that he or she is not a faceless commodity and that the legal profession is still prepared to help the average Canadian to obtain access to justice.

Ms. Waddell’s proposal is a laudable one but, I fear, unlikely to gain traction.  While many law firms would be prepared to consider acting without charge where doing so serves the public interest, or where humanitarian considerations exist, the idea of ignoring economic realities out of general principle is not likely to be viewed favourably by very many lawyers.

In my view, a better answer is to pursue the policy that gave rise to the increase in the Small Claims Court monetary jurisdiction by making it easier for people to represent themselves.  The first step to be taken in that process, as far as I am concerned, is to simplify the route which one must take to get to trial.

The need for simplification is nowhere clearer than in the family law context where, as I have indicated, many cases involve unrepresented parties.  Although I do not practice in the family law area, I have been present in Family Law Court and I have been astonished at the inability or the unwillingness of judges to take into account the fact that they are speaking to unrepresented litigants who are familiar with neither the procedure nor the jargon associated with court proceedings.  These are people who leave the courtroom completely mystified and, even worse, feeling as if they have no chance of ever receiving what they would consider to be their day in court.  I would bet that if the stakes were not so high, many would just give up.

I do not believe that lawyers are going to be increasing the number of pro bono cases they take on any time soon.  As Ms. Waddell points out and as many of us know, we do have a problem with access to justice.  In my view, the answer is to increase the opportunities for people to represent themselves where they choose to do so either because they cannot afford a lawyer or for any other reason.  This means, firstly, that the monetary jurisdiction of the Small Claims Court, with its enormously simplified procedures, should be increased even further.

Secondly, parties involved in disputes in that court should be expected to represent themselves.  Indeed, a party wishing to be represented by counsel should have to demonstrate a need for such representation by satisfying a judge, on motion, that the party is incapable of representing himself or herself.

Thirdly, and specifically with respect to parties involved in matrimonial disputes, the process must be simplified.  In that respect, I am not talking about even more steps designed to encourage or, as some might say, coerce parties into attending endless settlement conferences and discouraging them from ever actually entering into a courtroom to have a dispute resolved once and for all.  I am talking about simplifying the rules, eliminating unnecessary steps, and translating the rules into plain English so that people understand what they can expect in a courtroom, and what will be expected of them.

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The New World of Summary Judgments: Are the Courts Going Too Far?

The recent case of King Lofts Toronto I Ltd. vs. Emmons involves the granting of a summary judgment where the remedy would never have been possible in the past.

This was a solicitor’s negligence case in which the law firm moved for summary judgment dismissing the claim and, without formally bringing a cross-motion for summary judgment, the former client requested a partial summary judgment against the law firm.

In 2005, a developer retained the Defendant law firm to act on a purchase of four commercial properties in downtown Toronto. The price was $22.5 million. The title indicated that the City of Toronto owned a strip of land and a laneway under the rear of one of the buildings.

The purchaser assigned its interest in the purchase agreement to the Plaintiff in this case, whose principal was described by the Court as an experienced businessman and investor in real estate. The Plaintiff retained the law firm to continue and to complete the transaction.

Before closing, the lawyer handling the file told the Plaintiff about the laneway. He also said that this was a minor issue that was covered by title insurance that was being obtained. He indicated that the problem would be solved by converting the property from the Registry System to the Land Title System, that this could be completed after closing, and that the cost of doing so would be relatively nominal. Subsequently, the law firm indicated that after closing they could approach the City and ask for a by-law to be passed to convey the lane to the Plaintiff. Alternatively, they could attempt to obtain a court order based on the length of time that the building had been located on the laneway itself.

In any event, it was clearly conveyed to the Plaintiff that the problem was a minor one and likely covered by title insurance.

What the Plaintiff was not told is that the City would request payment for a conveyance of the laneway even though it had been located under a building for about eighty-six years. He was also not told that the title insurance policy excluded coverage for City-owned laneways.

The deal closed with no holdback in respect of the laneway. After the closing, the Plaintiff did nothing about the laneway and several years passed.

In 2008, the Plaintiff received an unsolicited offer from a Real Estate Investment Trust to purchase the properties. An agreement was signed for the sale to the REIT for a purchase price of $31.5 million.

Before the closing of that transaction, the lawyer for the REIT demanded that the title be rectified so that the Plaintiff could convey the laneway. When the Plaintiff looked into it further, it discovered that it would cost $106,000 to get the City to convey the laneway. An application was made to the title insurance company for coverage but that was denied.

The Plaintiff had no choice but to pay the $106,000 for the laneway. It then closed the deal to sell the properties to the REIT for $31.5 million – $9 million more than it had paid four years earlier.

The Plaintiff then sued the law firm for negligence.

At this point, one might well take a step back and suggest that having achieved a profit of almost 50%, the Plaintiff might have better things to do than to chase its former law firm over $106,000. It may be the fact that the law firm had billed the Plaintiff more than $270,000.00 in fees for the purchase transaction, which the Plaintiff had apparently found excessive, played a role in the Plaintiff’s decision to pursue the matter.

In any event, the law firm brought a motion for judgment to dismiss the claim on a variety of grounds. The most interesting one, in my view, related to the issue of causation.

As the Court pointed out, for a lawyer to be liable for professional negligence, the client must prove that the misconduct caused the client’s loss and that the client has suffered damages as a result. Generally, the “but for” test is used, on a balance of probabilities. In other words, the client must show that the injury would have not occurred “but for” the negligence of the lawyer.

In this case, the Plaintiff argued that had he been made aware of the extent of the problem, and the cost of resolving it, he would have insisted on a reduction in the purchase price.

By way of contrary evidence, the original purchaser of the property (who had assigned the purchase agreement to the Plaintiff) provided evidence that the vendor was notoriously hard to deal with and would never have agreed to such a reduction.

If that is true, of course, it could be argued that the law firm actually did the Plaintiff a tremendous favour. If the Plaintiff had been told of the extent of the problem and asked for the reduction, and the vendor had refused, it is very possible that the Plaintiff would have lost the deal (and therefore, the handsome profit achieved upon resale four years later).

As a reflection of the current state of the law on summary judgments, however, what is particularly interesting is what the Judge did with this evidence.

The Judge simply accepted the Plaintiff’s evidence and disregarded the evidence of the original purchaser. He decided that it was “at least doubtful that the vendor…could have simply relied on the recession clause to withdraw from the transaction” and concluded on a balance of probabilities that likely, there would have been agreement between the parties on a holdback or an abatement of the purchase price.

The Judge went on to dismiss the law firm’s motion for summary judgment and to grant summary judgment in favour of the Plaintiff on liability, with a trial to follow on damages.

In my view, this is a surprising decision that may move the yardsticks for summary judgment a long way. The current jurisprudence does allow the judges to make some credibility findings in certain circumstances. Here there was a contest between written evidence from the Plaintiff as to what he would have done (with the benefit of hindsight) on the one hand, and written evidence from another individual with nothing to gain or lose in the transaction suggesting that what the Plaintiff would have done would not have worked. I would have thought that this would have required a trial in order to resolve. However, that was not this motion court Judge’s opinion.

Subject to review by the Court of Appeal, this case might well constitute a significant development in the law of summary judgment in Ontario.