





CITATION:
Attis v. Ontario, 2011
          ONCA 675



DATE: 20111031



DOCKET: C52776



COURT OF APPEAL FOR ONTARIO



Sharpe, Epstein JJ.A. and Cunningham A.C.J. (
ad hoc
)



BETWEEN



S. Joyce Attis and A. Tesluk



Appellants



and



Her Majesty the Queen in Right of Ontario, as
          Represented by the Minister of Health, the Attorney General for Canada
et
          al.



Defendants (Respondent)



Samuel S. Marr, for the appellant, Attis

A. Tesluk, appearing in person

J. Brian Casey and David Gadsden, for the appellants, Legge
          and Legge & Legge

Paul J. Evraire, Q.C., Shain Widdifield and James Soldatich,
          for the respondent, Attorney General for Canada








Heard:  September 26, 2011

On appeal from the order of Justice
          Cullity of the Superior Court of Justice dated September 10, 2010.

Cunningham A.C.J. (
ad hoc
):



[1]

This is an appeal by John B.J. Legge & Legge, Barristers and
    Solicitors (the firm) from the order of Cullity J. dated September 10, 2010
    (the order).  Cullity J. ordered the appellant to indemnify the plaintiffs
    for costs awards previously made in this action, including costs awarded to the
    Attorney General for Canada (the AG) in a previous appeal to this court as
    well as costs of an unsuccessful application for leave to the Supreme Court of
    Canada.  The basis of the decision was that the plaintiffs had not given the
    appellants authority to bring the action because they had not properly advised
    the plaintiffs of their potential exposure to costs.  Simply put, Cullity J.
    found that:

1)

the plaintiffs had not been properly advised of their potential exposure
    to costs in the event of the dismissal of the class proceeding (as it was);

2)

uninformed consent or authority to proceed is not consent or authority;
    and

3)

when a solicitor commences an action without consent or authority from a
    client, the solicitor should be personally liable for costs.

[2]

In arriving at his conclusion, Cullity J. relied upon Rules 15.02(4),
    and 57.07(1)(c) of the
Rules of Civil Procedure
, O. Reg. 575/07, s. 6(1). 
    As well, the motions judge relied upon the courts inherent jurisdiction with
    respect to the conduct of counsel.

[3]

By way of background, the plaintiffs certification motion in the
    underlying action was dismissed by Winkler J. (as he then was) on May 3, 2007. 
    Costs were awarded to the AG against the plaintiffs in the amount of $125,000.

[4]

Following the dismissal of the certification motion, the plaintiffs
    appealed to the Court of Appeal which, on September 30, 2008 dismissed the
    appeal, awarding costs to the AG in the sum of $40,000.  It should be noted
    that the AG at no time requested that these costs should be borne by the
    appellants.  Nor was any criticism of plaintiffs counsel registered.

[5]

An application for leave to appeal to the Supreme Court of Canada was
    dismissed on April 23, 2009 with costs of $1,086.10 being awarded to the AG.

[6]

In June 2009, the AG was informed by appellants counsel that the
    plaintiffs were impecunious.  Then in July 2009, the plaintiff Attis commenced
    proceedings against the appellants alleging negligence for not advising her of
    the potential of personal liability for costs.  This action was defended and is
    currently in limbo.

[7]

The next event occurred in November 2009 when the AG brought a motion
    before Cullity J. seeking to reopen the issue of costs and requesting that the
    costs awarded to the AG throughout become the responsibility of the appellants. 
    In this motion for directions, the AG relied upon s. 97 of the
Courts of
    Justice Act
, R.S.O. 1990, c. C.43, s. 12 of the
Class Proceedings Act
,
    S.O. 1992, c.6 and Rule 59.06(2)(c).

[8]

After hearing argument, Cullity J. agreed with the appellants
    contention that he lacked jurisdiction.  Nevertheless, rather than simply
    dismissing the motion, Cullity J. offered suggestions as to what steps the AG
    might take, including amending the motion in order to proceed under Rule
    15.02(a).  Accordingly, the motions judge adjourned the motion
sine die
in order to give the AG an opportunity to consider its position with respect to
    the issue of informed consent.

[9]

At a case conference on March 16, 2010, Cullity J. permitted the AG to
    amend its motion with a proviso that the appellants were not to be precluded
    from challenging jurisdiction.  For procedural purposes, the motions judge
    directed that affidavit evidence would become examination-in-chief and that the
    deponents could be cross-examined in open court.  Production of all relevant
    documentation was to be made beforehand.  Two further case conferences were
    held in June and July, 2010 and on both occasions the appellants requested the
    matter be stayed to permit them to appeal these procedural directions.  These
    requests were denied and the motion proceeded over four days commencing July
    12, 2010.

[10]

Five issues are raised by the appellants:

1)

Did the motions judge err in finding he had jurisdiction under the
    courts inherent jurisdiction or under Rule 15 to award costs for want of
    authority on the respondents motion?

2)

Does Rule 57 have any application?

3)

Did the motions judge err in his application of breach of warranty of
    authority?

4)

Was there procedural unfairness in this summary proceeding; and

5)

Did the motions judge create a reasonable application of bias?

[11]

We shall only deal with the first four grounds as we see no merit in the
    fifth.  As all of the four issues with which we shall deal engage questions of
    law, the standard is correctness.

Was there a misapplication of inherent jurisdiction and Rules 15.02(4),
    57.07(1)(c) and 59.06(2)(a)?

[12]

In urging us to find that the motions judge had jurisdiction, the AG submits
    that the solicitor-client relationship is inherently one of dependency in which
    counsel has a duty to warn clients so they fully understand potential risks
    before steps are taken.  When it appears a wrong has been committed, the
    courts inherent jurisdiction provides a mechanism by which a remedy may be
    fashioned.  Indeed, the AG argues, the court on its own motion could have
    instituted this procedure as a means of controlling its process.  This, they say,
    goes to the core jurisdiction of a Superior Court.

[13]

With respect to Rule 15.02(4), it is the AGs position that any consent
    the plaintiffs might have given the appellants to proceed was not informed and,
    therefore, they were not authorized to commence the proceeding.  Accordingly,
    pursuant to this Rule, they should be liable to pay the costs of the proceeding.

[14]

Not surprisingly, the appellants have a different view of the issue. 
    While they appreciate the courts inherent jurisdiction and the ability to
    craft procedures and to control its process, there can be no unfettered
    jurisdiction to correct all wrongs.  There must be a legal right involved.  A
    defendant has no right to inquire into the legal advice given to the plaintiff
    by the plaintiffs lawyer.  That is purely a matter between solicitor and
    client.  We agree.

[15]

Rule 15 is designed to terminate proceedings where a named plaintiff has
    not authorized commencement.  The proceedings here, without question, were
    commenced with the plaintiffs authority.  Even if the plaintiffs did not
    understand the costs implications of initiating proceedings, that could not
    invalidate or nullify the authority they conferred upon their counsel to
    commence the proceedings.  If there is any question concerning the legal advice
    the plaintiff received before conferring that authority, it is a matter between
    the solicitor and the clients.  It is for an aggrieved party to take steps and,
    as it turns out, that is exactly what the plaintiff Attis did.  On July 13,
    2009, she commenced proceedings in negligence against John B. J. Legge and
    Legge & Legge seeking damages of $250,000.

Does Rule 57 have any application?

[16]

With respect to Rule 57.07(1)(c), we agree with the appellants that this
    Rule is to be used only in exceptional circumstances and has no application
    here.  The motions judge acknowledged that the conduct of Mr. Legge was without
    reproach throughout and there was no issue raised in this regard before Winkler
    J., the certification judge.

Did the motions judge err in his application of breach of warranty of
    authority?

[17]

As to whether the learned motions judge misapplied the law of breach of
    warranty of authority, we agree with the appellants position.  Cullity J.
    ordered the appellants to pay the respondents costs for breach of their implied
    warranty of authority.  Without question an agent is deemed to have his
    principals authority when he purports to act or make any contract on behalf of
    the principal.

[18]

A breach of warranty occurs when one creates an impression of agency when
    none exists.  Thus an agent who enters into a contract with a third party on
    behalf of a principal, by implication, warrants that he or she has authority. 
    If it turns out that the agent did not have the requisite authority, the agent
    may be liable to the third party.

[19]

The following discussion of a passage from the Waddams text on the Law
    of Damages referred to in
Royal Bank v. Starr (c.o.b. as Ettmor Ltd.)
,
    [1985] O.J. 1763 is useful:

The imposition of liability on an agent for breach
    of warranty of authority is on the borderline between contract and tort and has
    sometimes been said to be an instance of strict liability for innocent
    misrepresentation.

But if the juridical basis of the action were
    tortuous, one would expect damages to be measured by the loss to the plaintiff,
    if any, rather than by the gain he would have made if the agent really had had
    authority.  It is the latter measure that has been universally adopted.

Professor Waddams in his text at p. 327 para. 571
    states:

The damages against the purported agent
    are measured by what the plaintiff would in fact have gained had the defendant
    actually had authority.
It has often been stressed that this is not
    always the same as the damages that would have been recovered in an action
    against the alleged principal.  [Emphasis added]

[20]

Assuming without deciding that breach of warranty of authority would
    apply, in the present case, such a breach could not have provided the
    respondent with recoverable damages.  Because the late Ms. Attis and Ms. Tesluk
    were impecunious, even if they had provided authority to Mr. Legge and lost,
    the AG would not have recovered costs from them.  To award the AG costs now
    would be to put the AG in a better position than if the action had proceeded
    with authority and failed.  As was stated in
Skylight Maritime SA v. Ascot
    Underwriting et al.
, [2005] EWHC 15 (Comm) at para. 20:

[A] claim for breach of warranty of authority cannot
    be deployed to put the promisee in a better position than if the warranty had
    been true.  Thus, if a supposed client is insolvent, substantial damages for
    breach of a solicitor warranty of authority will not normally be recoverable
    because the promisee would not have been able to recover costs against the
    client even if the solicitor had authority to act.

[21]

We agree with this assertion.

Was there procedural unfairness?

[22]

The appellants also urge us to find that the procedure adopted by
    Cullity J. was unfair.  Because of our conclusions with respect to the first
    three issues, it is not be necessary to deal extensively with this issue. 
    However, some comment is needed.

[23]

Given that one of the original class plaintiffs, the late Ms. Attis, had
    commenced proceedings against Mr. Legge and his firm before the AGs November
    2009 motion, it is argued that by proceeding as he did, Cullity J. created an
    unnecessary multiplicity of proceedings.  We strive in Ontario to avoid multiplicity. 
    Indeed, s. 138 of the
Courts of Justice Act
states:

As far as possible, multiplicity of legal
    proceedings shall be avoided.

[24]

The motions judge, being aware of the late Ms. Attis civil proceeding
    and given the almost identical relief sought, should have directed the action
    to proceed which would have engaged all the usual pre-trial mechanisms.  The
    rather unconventional approach taken by the motions judge, in the face of an
    existing civil action, was one that ought to have been avoided.  While perhaps
    not unfair, it would at the very least have been preferable, given the
    seriously conflicting positions, to direct a trial of the issue pursuant to
    Rule 37.13.  This could easily have taken place at the same time as the trial
    of the Attis action.  While appellants counsel may not have explicitly
    requested a trial of the issue, she did strongly argue throughout that the
    procedure proposed by Cullity J. was inappropriate.

[25]

As earlier noted, we see no merit in the suggestion that Cullity J.
    created a reasonable apprehension of bias.

[26]

For the reasons given above, we allow the appeal and set aside the order
    of Cullity J.  The appellants shall have their costs which by agreement we fix
    at $35,000, all inclusive.  Counsel for Ms. Attis shall have his costs which we
    fix at $2,500, all inclusive.

RELEASED:
RJS OCT 31 2011

Cunningham A.CJ.
ad hoc


I agree Robert J. Sharpe J.A.

I agree G.J. Epstein J.A.


