



COURT OF APPEAL FOR ONTARIO

CITATION: Lang Michener LLP v. King, 2018 ONCA 471

DATE: 20180518

DOCKET: C63723

Brown, Huscroft and Trotter JJ.A.

BETWEEN

Lang Michener LLP

Moving Party (Respondent)

and

Gregory P. King

Responding Party (Appellant)

Gregory King, acting in person

Gavin Tighe and Robert Winterstein, for the respondent

Heard and released orally: May 16, 2018

On appeal
    from the order of Justice David L. Corbett of the Superior Court of Justice,
    dated March 31, 2017, with reasons reported at 2017 ONSC 1917, and from the
    costs order of the same date, with reasons reported at 2017 ONSC 3920.

REASONS FOR DECISION

I.

OVERVIEW

[1]

The appellant, Gregory King, a lawyer, appeals from the order granting
    summary judgment dismissing his counterclaim against the respondent, Lang
    Michener LLP.

[2]

In 2007, Mr. King retained Lang Michener to defend him in proceedings
    commenced by the trustee of a bankrupt Italian company, Sincies Chiementin SpA
    (Sincies), to enforce a judgment issued by an Italian court on October 1,
    2001 against Mr. King (the Italian Judgment). The amount of the Italian
    Judgment was U.S. $600,000, plus interest, currency appreciation and costs.
    Following a four-day hearing, Whalen J. granted the trustee summary judgment
    recognizing and enforcing the Italian Judgment (the Enforcement Judgment): 2010
    ONSC 6453.

[3]

This court dismissed Mr. Kings appeal from the Enforcement Judgment:
    2012 ONCA 653. Mr. Kings request for leave to appeal to the Supreme Court of
    Canada was denied: [2012] S.C.C.A. No. 516.

[4]

In March 2011, Lang Michener commenced an action against Mr. King seeking
    payment of its fees for services rendered in the enforcement proceeding. By
    Statement of Defence and Counterclaim dated May 5, 2011 (and amended October
    16, 2013), Mr. King advanced three defences: (i) Lang Michener breached its
    retainer agreement by charging fees that were out of proportion to the amounts
    agreed; (ii) the law firm provided representation and advice at the enforcement
    proceeding that fell below the standard of care; and (iii) one of the firms
    lawyers, John Kelly, was negligent in the advice he provided to Mr. King in
    2008 about a possible action against LawPro, which had denied Mr. King coverage
    under his professional liability insurance policy (the Policy) for the
    Italian Judgment.

[5]

Mr. King counter-claimed against Lang Michener, advancing the same three
    grounds as the basis for his counter-claim. Mr. King sought judgment against
    Lang Michener in the amount he owed under the Italian Judgment, together with
    all legal fees and other costs he had incurred in defending the trustees
    enforcement and recognition claim.

[6]

The motion judge granted summary judgment dismissing Mr. Kings counterclaim.
    The motion judge made no finding about the value of the services Lang Michener
    had rendered; that issue awaits determination in the main action. However, he
    dismissed the counterclaim for two main reasons:

(i)        Mr.
    Kings claim against Lang Michener for negligent representation during the
    enforcement proceeding constituted an impermissible collateral attack on the
    findings made by Whalen J. and, in any event, there is no basis in fact
    available to Mr. King that any shortcomings in oral argument by Lang Michener
    could possibly have caused him any compensable damages; and

(ii)        Regardless
    of the advice Kelly might have given Mr. King in 2008 about a possible claim
    against LawPro under the Policy, Mr. King suffered no damages because the
    Policy did not cover a claim based in fraud, such as the Italian Judgment, and Mr.
    King had failed to report a claim to LawPro within the time required by the Policy,
    which was long before he retained Lang Michener in 2008.

Grounds of appeal

[7]

On this appeal, Mr. King does not challenge the motion judges dismissal
    of that part of his counterclaim alleging that Lang Michener was negligent in
    representing him at the enforcement proceedings. Mr. King limits his appeal to the
    motion judges dismissal of that part of his counterclaim alleging negligent
    advice given by Lang Michener in 2008 in respect of a possible claim against
    LawPro.

[8]

At the hearing, Mr. King clarified that he was abandoning his claim for
    relief in the counterclaim in respect of the amount of the Italian Judgment;
    his claim for damages is now limited to the costs he incurred in defending the
    enforcement proceedings.

[9]

Mr. King also seeks leave to appeal the motion judges award of costs of
    $45,000 against him.

Analysis

[10]

To
    dispose of this appeal, it is only necessary to consider Mr. Kings argument
    that the motion judge erred in finding that the Policy did not cover Mr. Kings
    claim in respect of the enforcement of the Italian Judgment.

[11]

The
    coverage grant under the Policy stated:

To pay on behalf of the INSURED all sums which the INSURED
    shall become legally obligated to pay as DAMAGES arising out of a CLAIM,
    provided the liability of the INSURED is the result of an error, omission or
    negligent act in the performance of or the failure to perform PROFESSIONAL
    SERVICES for others.

[12]

PROFESSIONAL
    SERVICES is defined in the Policy as the practice of the Law of Canada, its
    provinces or territories, and specifically those services performed, or which
    ought to have been performed, by or on behalf of an Insured in such Insureds
    capacity as a lawyer and as a member of the Law Society of Upper Canada.

[13]

In
    its November 23, 2007 letter to Mr. King denying coverage for his claim based
    on the proceedings to enforce the Italian Judgment, LawPro wrote:

The Italian Judgment is based only on claims for
    extra-contractual remedies against you. The Italian Court specifically
    disavowed any jurisdiction to consider the professional liability claims and
    adjudged you liable on a finding of civil fraud. Thus, should an Ontario court
    decide to enforce the Italian Judgment in Ontario, given the Italian Courts
    assessment of the allegations made against you is not based on any error,
    omission or negligent act in the performance of or failure to perform
    Professional Services, the Coverage Grant would not be activated. As the
    Coverage Grant is not triggered, there can be no coverage under the Policy
    available to you in relation to an Ontario Action.

[14]

The
    motion judge found that Mr. Kings liability in respect of the Italian Judgment
    was not the result of an error, omission or negligent act in the performance
    of or the failure to perform professional services for others. He stated, at
    paras. 48, 49, 50 and 52 of his reasons:

In its judgment, the Italian court specifically declined to
    take jurisdiction over [Mr.] King in relation to allegations of professional
    liability:

to ascertain the professional liability of Mr. King is
    certainly outside the scope of Italian jurisdiction, as it has been shown that
    the services performed by the defendant [Mr. King] did not take place in
    Italy.  In summary, Italian jurisdiction exists only with regard to the
    extra-contractual action.

The Italian courts findings on the issue of extra-contractual
    liability were as follows:

Indeed, in light of the reconstruction of facts set forth
    above Mr. King and Mr Chan, as they agreed between themselves, as shown by the
    numerous contacts between them which left indisputable traces in the documents
    examined, acted in such a way as to defraud [Sincies], first by persuading it
    to undertake a significant financial commitment for a commercial transaction
    which, in fact, had never been initiated, and then by definitively preventing
    it from recovering the amount advanced.

The insurance policy covered claims against [Mr.] King arising
    from his provision of professional services.  It did not cover personal
    claims against [Mr.] King. The judgment against [Mr.] King finds that he acted
    in concert with [Mr.] Chan to defraud Sincies of the US $600,000. The fraud
    arose in the context of a transaction in which [Mr.] King acted as solicitor
    and provided legal services, but it is not in respect to an error, omission or
    negligent act in those legal services.



The Italian judgment sounds in fraud, not professional
    negligence, and coverage was not available for [Mr.] King from LawPro in
    respect to liability for fraud

[15]

Mr.
    King submits the motion judge erred in reaching this conclusion for two
    reasons. First, the motion judge departed from the statement of this court, in
    its brief endorsement dismissing Mr. Kings appeal from the Enforcement
    Judgment, that described the Italian Judgment as one which found Mr. King
    liable for his professional conduct as a lawyer in a failed joint venture.

[16]

We
    do not accept that submission. The issue of coverage under the Policy was not
    before this court on the appeal from the Enforcement Judgment. The language
    used by this court obviously was in the nature of a short-hand description of
    the Italian Judgment. The precise basis for the Italian Judgment was set out in
    that judgment, which the motion judge accurately described in his reasons.

[17]

Second,
    Mr. King argues that he was not acting in his personal capacity for Sincies
    or Chan. Consequently, the motion judge should have directed a trial on the
    issue as to whether Mr. Kings liability in Italy arose from his professional
    conduct.

[18]

We
    see no merit in this submission. The motion judge made no error in finding the
    Italian court had specifically declined to take jurisdiction over Mr. King in
    relation to allegations of professional liability. That finding was firmly
    anchored in the reasons of the Italian court, which stated, at para. 9:

[A]
contractual action in order
    to ascertain the professional liability of Mr. Mr. King is certainly outside
    the scope of Italian jurisdiction, as it has been shown that the service
    performed by the defendant did not take place in Italy.  The documentation
    filed on the record, in fact, shows that he maintained his professional offices
    in Canada, where he also pursued the majority of his activities, although he
    sometimes performed services (attending meetings) in China or Hong Kong.

[19]

Coverage
    under the Policy was only available for liability resulting from an error,
    omission or negligent act in the performance of or the failure to perform
    PROFESSIONAL SERVICES for others. The Italian Judgment was clear that Mr.
    Kings liability was not in respect of professional services he had rendered.
    Accordingly, we see no error in the motion judges conclusion, at para. 52 of
    his reasons, that regardless of the advice that was given by Kelly, [Mr.] King
    has suffered no damages: he would have lost an action against LawPro, and so
    his failure to start such a lawsuit after LawPro denied coverage in November
    1997 has cost him nothing.

[20]

In
    light of our conclusion that the motion judge did not err in holding Mr. King
    did not have coverage under the Policy because his liability claim was not in
    respect of professional services rendered, there is no need to consider Mr.
    Kings submissions regarding the motion judges findings about: (i) the
    timeliness of his reporting the claim to LawPro; (ii) the availability of the
    exception to the exclusion of coverage in respect of fraudulent acts; and (iii)
    the applicability of an endorsement to the Policy deeming, as an error,
    omission or negligent act, an insureds vicarious liability for the acts of
    others arising out of the provision of PROFESSIONAL SERVICES.

[21]

As
    to Mr. Kings request for leave to appeal the motion judges cost order, we
    grant leave to appeal, but we do not interfere with the costs award. We see no
    error in principle by the motion judge, nor was his award unreasonable.


II.

DISPOSITION

[22]

For
    the reasons set out above, we dismiss the appeal. We grant leave to appeal the
    motion judges cost award but dismiss the appeal.

[23]

Lang
    Michener is entitled to its costs of the appeal in the amount of $15,000,
    inclusive of disbursements and all applicable taxes.

David Brown J.A.

Grant Huscroft J.A.

Gary T. Trotter J.A.


