



COURT OF APPEAL FOR ONTARIO

CITATION: King Lofts Toronto I
    Ltd. v. Emmons, 2014 ONCA 215

DATE: 20140321

DOCKET: C57845

Watt, Strathy and Benotto JJ.A.

BETWEEN

King Lofts Toronto I Ltd. and King Lofts Toronto
    II Ltd.

Plaintiffs (Respondents)

and

P.
    Martin Emmons, Fraser Milner Casgrain LLP
and

First Canadian Title
    Insurance Company Ltd.

Defendants (Appellants)

Anne Posno, for P. Martin Emmons and Fraser Milner
    Casgrain LLP

Melvyn L. Solmon and Matthew Valitutti, for the
    respondents

Heard and released orally: March 17, 2014

On appeal from the judgment of Justice Paul Perell of the
    Superior Court of Justice, dated September 30, 2013.

ENDORSEMENT

[1]

This is an appeal of the summary judgment granted against Martin Emmons
    (the solicitor) and Fraser Milner Casgrain (the law firm) for solicitors
    negligence in connection with a commercial real estate transaction.

[2]

The respondent corporations (the respondent) purchased four commercial
    properties in downtown Toronto. The purchase price was $22.5 million. The
    respondent retained the appellants to act on the purchase. At the time of the
    offer, the city of Toronto owned a strip of land underneath a building on one
    of the properties.

[3]

Before the closing, the appellant solicitor discussed the laneway issue
    with the respondent. The respondent understood from the solicitor that it was a
    minor matter that would be resolved with the conversion of the property to Land
    Titles, that the cost would be few thousand dollars and that title insurance
    would deal with the matter.

[4]

A number of deficiencies were dealt with on closing with the use of
    holdbacks. There was no holdback for the laneway.

[5]

After closing, the solicitor reported that the laneway could not easily
    be converted to Land Titles, that the city would need to transfer it to the
    respondent but in order to provide you with some comfort title insurance was
    arranged to deal with the ownership issues.

[6]

Two years later, the respondent received an offer to purchase and
    retained a different solicitor to act on the sale. In response to requisitions
    from the purchaser, this lawyer attempted to obtain a conveyance from the city.
    The city expected to be paid $106,000 for the laneway. The respondent made a
    claim on the title insurance policy but learned that the insurance did not
    cover the issue. It brought action against the appellants for solicitors negligence.
    This transaction closed for $31.5 million.

[7]

The appellants brought a motion for summary judgment seeking dismissal
    of the action. The respondent did not file a cross-motion. The motion judge
    granted summary judgment in favour of the respondent on the basis of negligence
    and directed a trial on the quantum of damages.

[8]

The appellants submit that the motion judge erred in in his determination
    of the limitation period and the necessity for expert evidence on the standard
    of care.

The limitation period

[9]

The appellants submit that the notice of action was filed late, more
    than two years after the new lawyers discovered the cause of action. It is
    submitted that they learned of the loss in April 2008 when the city indicated
    it expected to be paid for the land. The motion judge held that the period
    started to run in January 2009 when the title insurance claim was denied.

[10]

In
    our view, the respondent was entitled to rely on the solicitors advice regarding
    title insurance. The appellant had been told by the solicitor that title
    insurance would deal with the issue of the laneway. Until coverage was
    denied, and the solicitor was proven wrong, there was no cause of action so the
    limitation period did not start to run.

[11]

We
    agree with the motion judge in this regard.

The Expert evidence on the standard of care

[12]

The appellants submit that the motion judge could not conclude
    that the solicitor breached the duty when expert evidence was not called to
    give testimony about the standard of care. We do not agree. The evidence was
    clear that the respondent was not warned of the risk that the city might expect
    payment. There was a clear duty to warn and the facts are not in dispute that
    there was no warning. On the contrary, there was erroneous advice that the
    matter could be dealt with by title insurance. We do not suggest that there
    is no need for expert opinion in solicitors negligence matters generally.
    Here, there was a clear duty to warn that was not complied with and expert
    evidence was not required.

[13]

Although
    not referred to in oral submissions, the appellants submitted in their factum that
    the motion judge erred on the issue of causation. The appellants submit that
    there are no damages because they would have been able to negotiate a holdback
    for the laneway. The motion judge correctly determined that this was
    speculative.

[14]

In
    oral argument, the appellant added a new ground of appeal: that the motion
    judge erred in granting judgment in favour of a party who had not given advance
    notice of a claim for summary judgment. There are two points in response to
    this:

1)

The appellant did not
    request an adjournment at the time; and

2)

The Supreme Court of
    Canada in
Hryniak v.
Mauldin

2014
    SCC 7,
has approved a culture shift requiring judges to manage
    the process in line with the principle of proportionality in the application of
    Rule 20.

[15]

This
    action involves a claim for $106,000 arising out of a multi-million dollar
    transaction. The principles of proportionality and sensible management of the
    court process support the motion judges ruling.

[16]

The
    appeal is dismissed. Costs to the respondent in the amount of $15,000,
    inclusive of disbursements and all applicable taxes.

David Watt J.A.

G. Strathy J.A.

ML. Benotto J.A.


