Bjornsson et al. v. Smith et al., (2016) 330 Man.R.(2d) 314 (CA)

• Judge: MacInnes, Monnin and leMaistre, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: April 29, 2016
• Jurisdiction: Manitoba
• Citations: (2016), 330 Man.R.(2d) 314 (CA);2016 MBCA 91

Bjornsson v. Smith (2016), 330 Man.R.(2d) 314 (CA);

      675 W.A.C. 314

MLB headnote and full text

Temp. Cite: [2016] Man.R.(2d) TBEd. OC.003

Michael Kenneth Bjornsson, Clinton Bjornsson, The Winnipeg Humane Society and The Estate of Carol Dee Bjornsson through its Administrator, Michael Kenneth Bjornsson (plaintiffs/respondents) v. James Richard Smith (defendant/appellant) and Peter J. Moss and Karen Burwash, carrying on the practice of law under the firm name of The Law Offices of Peter J. Moss, and the said firm of The Law Offices of Peter J. Moss, James Richard Smith and Marilyn Jean MacKenzie (defendants)

(AI 15-30-08438; 2016 MBCA 91)

Indexed As: Bjornsson et al. v. Smith et al.

Manitoba Court of Appeal

MacInnes, Monnin and leMaistre, JJ.A.

September 22, 2016.

Summary:

A lawyer, who was acting for an estate, arranged for the sale of the principal asset of the estate, a residence, to his wife for a reduced price. The residual beneficiaries claimed against the reimbursement fund (RF) of the Law Society of Manitoba, seeking reimbursement for loss arising from the misappropriation or conversion of trust property by the lawyer. The estate and the residual beneficiaries (plaintiffs) subsequently commenced a court action against the lawyer et al., including the lawyer's wife. The RF compensated the residual beneficiaries from the fund. The Law Society obtained a release and assignment from the estate and the residual beneficiaries of all causes of action. Since that time, the Law Society assumed conduct of the court action. The lawyer moved for an order striking out the plaintiffs' statement of claim.

The Manitoba Court of Queen's Bench dismissed the motion. The lawyer appealed, arguing that the judge erred in failing: 1) to strike the statement of claim on the ground that the court action was being funded by the Law Society and was thus the product of champerty or maintenance; and 2) to find that the Law Society had no legislative jurisdiction to fund and maintain the court action, and was only permitted to participate in the action as a plaintiff or as a co-plaintiff pursuant to s. 47(3) of the Legal Profession Act (Man.).

The Manitoba Court of Appeal dismissed the appeal.

Barristers and Solicitors - Topic 6716

Compensation fund - Payments to client - Procedure - Subrogated or assigned claims by Law Society - The Law Society of Manitoba paid estate beneficiaries out of the Society's reimbursement fund arising out of the lawyer's sale of estate property to his wife for a reduced price - The Law Society then assumed, by way of assignment, conduct of an action that the estate and beneficiaries had commenced against the lawyer - The lawyer sought to have the statement of claim struck, arguing that the Law Society had no legislative jurisdiction to fund and maintain the court action, and was only permitted to participate in the action as a plaintiff or as a co-plaintiff (Legal Profession Act (Man.), s. 47(3)) - A motions judge refused to strike the pleading - The lawyer appealed - The Manitoba Court of Appeal dismissed the appeal - The court held that the right of subrogation was clearly implicit in the language of s. 47(3) - Subrogation gave the Law Society the right to pursue recovery against the lawyer - Section 47(3) also implicitly provided the Law Society with the statutory right of assignment - It was not mandated under s. 47, that the Law Society sue in its own name - While rule 11 of the Court of Queen's Bench Rules required a continuation order where the interest of another party was transferred by assignment, the court dispensed with the need for such an order in this case - See paragraphs 25 to 90.

Choses in Action - Topic 273

What may be assigned - Benefits or rights assignable - Claim or cause of action - [See Barristers and Solicitors - Topic 6716 ].

Contracts - Topic 6761

Illegal contracts - Agreements contrary to public policy - Champerty and maintenance - General - The Law Society of Manitoba paid estate beneficiaries out of the Society's reimbursement fund arising out of the lawyer's sale of estate property to his wife for a reduced price - The Law Society assumed conduct of an action that the estate and beneficiaries had commenced against the lawyer - The lawyer sought to have the statement of claim struck, arguing that the action was being funded by the Law Society which had no financial interest in the litigation and, therefore, its assuming conduct of the action amounted to champerty or maintenance - A motions judge refused to strike the pleading - The lawyer appealed - The Manitoba Court of Appeal dismissed the appeal - The court held that it was clear that the Law Society did have a legitimate financial interest in the lawsuit - There was no evidence of improper motive - There was no basis for appellate interference - See paragraphs 17 to 24.

Subrogation - Topic 15

General - Right of subrogation - When available - [See Barristers and Solicitors - Topic 6716 ].

Counsel:

S. Green, Q.C., for the appellant;

D.M. Skwark and A.R. Foderaro, for the respondents.

This appeal was heard on April 29, 2016, before MacInnes, Monnin and leMaistre, JJ.A., of the Manitoba Court of Appeal. The following judgment was delivered for the court on September 22, 2016, by MacInnes, J.A.