Condo Law Digest – November 2015

Boundary wall, south of Moel Famau - - 1410171.jpg1483677 Ontario Ltd. v Howard, 2015 ONSC 6217
Decision Date: October 9, 2015

The plaintiffs are Kevin and Deborah Purdy; the defendant is their former solicitor. The Purdys retained Howard in 2004 to handle a joint venture agreement between themselves and the owners of a 73 unit apartment building in Perth, Ontario (the “Crain Group”) to convert the apartments to condominium units and sell them for a profit. Howard was also retained by the Crain Group on the transaction. He drafted a joint venture agreement which both parties signed. In 2006 a new agreement superseded the joint venture. The Crain Group agreed to sell the building to the plaintiffs for $5.85 million, which was to be financed by the sale of condominium units. The Purdys sold 26 units to John Rivington, an acquaintance, and an additional 11 units to two other investors. Before the closing sale date, Rivington, followed by the other investors, advised that he would not close on their purchases because of misrepresentations made regarding the state of the building and the rental revenues. After negotiations, Rivington agreed to purchase 46 units at a reduced price. The Crain Group agreed to extend the closing date and provided a vendor take back mortgage to the Purdys for $1.1 million on the 14 unsold units. The Purdys were unable to pay the mortgage in full and so the Crain Group initiated a Power of Sale. The Purdys brought an action against the Crain Group, Rivington, and Howard. In 2009 the claims against the Crain Group and Rivington were dismissed after a motion for summary judgment.

In this action the Purdys claim that Howard was in a conflict of interest and that his negligence caused them to suffer damages of over $2 million in lost profits. Between 2004 and 2007, the Purdys had a number of conflicts with the Crain Group over the building and Howard advised both sides. In the trial, Gavin MacKenzie, a lawyer who is an expert in the area of conflict of interest for lawyers, testified that Howard had breached Rule 2.04 of the Rules of Professional Conduct when he failed to advise that he was acting for both the Purdys and the Crain Group. Howard concedes breaching the rule, but denies negligence or that his actions caused damages to the Purdys. Madame Justice Wilson agreed. She found that the Purdys failed to establish a link between Howard’s actions and their financial loss.

Comment: Howard said that he was engaged in “shuttle diplomacy” between the Purdys and the Crain Group – something more appropriately done by a neutral third party. While parties to an agreement should be aware of the need to protect their interests by seeking independent legal advice, lawyers also need to be careful of appropriate boundaries. (For more on this topic see I’m in Mediation – Why do I need a lawyer?)

TSCC No. 2130 v York Bremner Developments et al., 2015 ONSC 6370
Decision Date: October 15, 2015

I hope readers will forgive me for not attempting to summarize this complicated ongoing dispute. The plaintiff is TSCC 2130, a residential condominium in the “Maple Square” complex. The defendants are York Bremner Developments (the condominium’s declarant and the owner of the commercial and retail lands in the same complex), and Cadillac Fairview Co (appointed by York Bremner as the shared facilities manager).

I mention this case so that I can draw attention to the words of Justice Myers:

There has to be an end to these cases.  They will be resolved by the parties or by the court.  Resolution has to be as efficient, affordable, and proportionate as possible.  Both parties seem to be unwilling to move forward by narrowing the issues so that an early and efficient resolution can occur.  Yet, they are neighbours.  They have to live with each other for years to come so that the idea of arriving at a modus vivendi and ending the legal blood-letting must represent the win-win outcome.  But they are sophisticated parties and they have determined that an all-out legal war is a better strategy than a consensual resolution.  […] In any event, it is the parties’ right to choose to litigate.  But it is incumbent on the court and counsel for that matter to get the war ended as efficiently as possible despite the parties’ strategies and tactics.  If nothing else, these parties are not entitled to the free use of a disproportionate amount of court time to hammer away at each other in their private war of attrition.   Neither will the court abide tactical steps that may make perfect sense to clever tacticians, but serve to impede the goals of timely and efficient resolution on which the civil justice system is based. [Emphasis added.]

About the image:

Boundary wall, south of Moel Famau – – 1410171” by Roger Cornfoot. Licensed under CC BY-SA 2.0 via Wikimedia Commons.