Granville Savings and Mortgage Corp. v. Slevin et al., (1992) 78 Man.R.(2d) 241 (CA)

• Judge: O'Sullivan, Huband and Helper, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: June 17, 1992
• Jurisdiction: Manitoba
• Citations: (1992), 78 Man.R.(2d) 241 (CA)

Granville Savings v. Slevin (1992), 78 Man.R.(2d) 241 (CA);

    16 W.A.C. 241

MLB headnote and full text

Granville Savings and Mortgage Corporation (plaintiff/appellant) v. Patrick Slevin (defendant/respondent) and Fraser G. Campbell, Rudy V. Maxwell, Robert Kozminski and Robert L. Zaparniuk (third parties/respondents by cross-appeal)

(Suit No. AI91-30-00033)

Granville Savings and Mortgage Corporation (plaintiff/respondent/appellant by cross-appeal) v. Fraser G. Campbell, Rudy V. Maxwell, Robert M. Kozminski and Robert L. Zaparniuk (defendants/appellants/respondents by cross-appeal)

(Suit No. AI91-30-00053)

Indexed As: Granville Savings and Mortgage Corp. v. Slevin et al.

Manitoba Court of Appeal

O'Sullivan, Huband and Helper, JJ.A.

June 17, 1992.

Summary:

The plaintiff mortgagee sued the defendant Slevin on a written guarantee of the mort­gage loan. Slevin sought indemnification from the mortgagor's solicitors, as third parties. In a second action the mortgagee sued the solicitors for breach of contract, breach of the duty of care and breach of fiduciary duty. The actions were heard together.

The Manitoba Court of Queen's Bench, in a judgment reported 68 Man.R.(2d) 241, dismissed the action against Slevin, but allowed the action against the solicitors. The mortgagee appealed the dismissal of the action against Slevin. Slevin cross-appealed the dismissal of his third party claim against the solicitors. The solicitors appealed the finding of liability against them. The mort­gagee cross-appealed the assessment of damages and costs against the solicitors.

The Manitoba Court of Appeal, O'Sullivan and Helper, JJ.A., dissenting in part, held that the solicitors were not liable to the mortgagee, that Slevin was liable on his guarantee and that the solicitors owed no duty to Slevin.

Barristers and Solicitors - Topic 1004

Retainer - Whether lawyer retained - A mortgagor retained lawyers to act for him - The mortgagee chose not to be repre­sented by lawyers - No legal fee was charged by the lawyers to the mortgagee - An employee of the mortgagee testified that it was clear that the lawyers acted only for the mortgagor, not both parties - The Manitoba Court of Appeal held that there was no implied retainer between the lawyers and the mortgagee - See para­graph 39.

Barristers and Solicitors - Topic 2588

Negligence - Failure to acquire security for loan advances - A mortgagor retained lawyers to act for him - The mortgagee was unrepresented - The mortgagee required that the mortgagor's lawyers provide a certificate of title showing the mortgage as a first charge - The certificate was provided, but the lawyer's carelessness in interpreting a recent Real Property Act amendment resulted in a failure to note the existence of prior registered judgments against the mortgagor - The mortgagee sued the mortgagor's lawyers in negli­gence, contract and for breach of fiduciary duty - The Manitoba Court of Appeal held that the lawyers were not liable to the mortgagee - There was no contractual relationship, no duty of care owed to the mortgagee, no specific undertakings made and unfulfilled and no breach of fiduciary duty - See paragraphs 27 to 64.

Barristers and Solicitors - Topic 4363

Relations with third parties - Solicitors undertakings - What constitute - A mort­gagor's lawyers were required to produce a certificate of title indicating the mortgage was a first charge - The mortgagee chose not to have a lawyer represent its interests - The lawyers erroneously believed, because of a misinterpretation of a recent Real Property Act amendment, that the mortgage constituted a first charge - Reg­istered judgments had priority - The mort­gagee claimed the law­yers were liable for breaching the under­taking that the mort­gagee would receive a first charge on the property - The Manitoba Court of Appeal held that no such specific under­taking existed - The lawyers provided what they undertook to provide, a certifi­cate of title indicating the mortgage was a first charge - See para­graphs 46 to 64.

Barristers and Solicitors - Topic 4441

Relations with third parties - Duty to third parties - General - Lawyers acting for a mortgagor provided a certificate of title to the mortgagee that carelessly failed to note the existence of prior registered judgments against the mortgagor - The mortgagee claimed the lawyers owed the mortgagee, as a nonclient, a duty of care based on the Hedley Byrne principle - The Manitoba Court of Appeal held that the Hedley Byrne principle did not apply where the lawyers acted for one of two parties who were adverse in interest - The kind of relationship which would give rise to a duty of care was negated by the lawyers' duty to their client and the inherent clash of interest between the parties - See para­graphs 40 to 45.

Contracts - Topic 9273

Unconscionable transactions relief - Per­sons entitled to relief - Guarantor of mortgage - Slevin agreed to guarantee a friend's mortgage - Slevin was a mature, intelligent man who understood his obliga­tion to pay if his friend defaulted - The friend defaulted - The trial judge relieved Slevin of his liability under the Uncon­scionable Transactions Relief Act - The Manitoba Court of Appeal stated that "the circumstances under which Slevin executed the guarantee are not compatible with a claim that Slevin's undertaking was uncon­scionable. ... there is nothing in the record to indicate that he was placed in a disad­vantageous position or was taken advan­tage of by anyone." - See paragraph 81.

Guarantee and Indemnity - Topic 124

The contract - Formation of contract - Non est factum - General - Slevin agreed to co-sign his friend's mortgage - The mortgagor's lawyers decided to substitute a guarantee and Slevin appeared before one of the lawyers for execution - Slevin read the document, knew it was not a mortgage, asked no questions and chose not to see his own lawyer, but understood his obligation should the mortgagor default - The lawyer offered no advice or induce­ments - The Manitoba Court of Appeal affirmed that the defence of non est factum did not apply to relieve Slevin from liabil­ity under the guarantee - See paragraph 65.

Guarantee and Indemnity - Topic 124

The contract - Formation of contract - Non est factum - General - The Manitoba Court of Appeal stated that "where a per­son voluntarily entered into a written agreement or gives a written undertaking, not knowing its true nature because of laziness or some other carelessness on his or her part, the document will not be declared void due to non est factum where no misrepresentation was involved." - See paragraph 74.

Cases Noticed:

Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., [1964] A.C. 465; [1963] 2 All E.R. 575, refd to. [para. 2].

Andronyk v. Williams (1985), 36 Man.R.(2d) 161 (C.A.), refd to. [para. 3].

Canadian Financial Co. v. First Federal Construction Ltd. et al. (1982), 131 D.L.R.(3d) 575; 16 B.L.R. 156 (Ont. C.A.), refd to. [para. 8].

Strange v. Buss (1869), John 663; 70 E.R. 585 (V.C.), refd to. [para. 14].

Forbes v. Jackson (1882), 19 Ch. D. 615, refd to. [para. 14].

Strange v. Fooks (1863), 4 Giff. 407; 66 E.R. 765, refd to. [para. 15].

Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102; 32 N.R. 191, refd to. [para. 16].

Bank of Montreal v. Petronech (1984), 52 C.B.R.(N.S.) 17 (Alta. Q.B.), refd to. [para. 17].

Prospect Mortgage Investment Corp. v. Van-5 Developments Ltd. et al. (1985), 23 D.L.R.(4th) 349 (B.C.C.A.), refd to. [para. 22].

Esso Petroleum Co. Ltd. v. Mardon, [1976] Q.B. 801 (C.A.), refd to. [para. 40].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 40].

Wynston v. Macdonald et al. (1979), 105 D.L.R.(3d) 527, refd to. [para. 42].

Allied Finance and Investments Ltd. v. Haddow & Co., [1980] 2 N.Z.L.R. 428 (H.C.), refd to. [para. 43].

Foster Advertising Ltd. v. Keenberg and Manitoba, [1987] 3 W.W.R. 127; 45 Man.R.(2d) 1 (C.A.), refd to. [para. 45].

Girardet v. Crease & Co. (1987), 11 B.C.L.R.(2d) 361 (S.C.), refd to. [para. 48].

Douglas v. Peacock and Skene, [1924] 1 W.W.R. 597 (S.C.), refd to. [para. 49].

Marvco Color Research Ltd. v. Harris and Harris, [1982] 2 S.C.R. 774; 45 N.R. 302; 141 D.L.R.(3d) 577, refd to. [para. 73].

Prudential Trust Co. Ltd. et al. v. Cugnet, [1956] S.C.R. 914, refd to. [para. 73].

Saunders v. Anglia Building Society, [1971] A.C. 1004, refd to. [para. 73].

Morrison v. Coast Finance Ltd. et al. (1965), 54 W.W.R.(N.S.) 257; 55 D.L.R.(2d) 710 (B.C.C.A.), refd to. [para. 82].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 37 C.C.L.T. 117; 42 R.P.R. 161; 31 D.L.R.(4th) 481, refd to. [para. 125].

Tracey et al. v. Atkins (1979), 105 D.L.R.(3d) 632 (B.C.C.A.), refd to. [para. 125].

Ormindale Holdings Ltd., Redekop, Wall and Wall & Redekop Corp. v. Ray, Wolfe, Connell, Lightbody & Reynolds (1982), 36 B.C.L.R. 378, refd to. [para. 140].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 35 E.T.R. 1, refd to. [para. 146].

Bomek and Bomek v. Bomek and Dauphin Plains Credit Union (1983), 20 Man.R.(2d) 150 (C.A.), refd to. [para. 152].

Adams v. Fahrngruber et al. (1976), 10 O.R.(2d) 96, refd to. [para. 155].

Banco de Portugal v. Waterlow, [1932] A.C. 452, refd to. [para. 176].

Payzu v. Saunders, [1919] 2 K.B. 581, refd to. [para. 177].

Cartlidge v. Smith and Granville Savings & Mortgage Corp. (1987), 44 Man.R.(2d) 252 (C.A.), refd to. [para. 179].

Pilkington v. Wood, [1953] Ch. 770, refd to. [para. 180].

British Westinghouse Electric and Manu­facturing Co. Ltd. v. Underground Elec­tric Railways Co. of London Ltd., [1912] A.C. 673, refd to. [para. 181].

Statutes Noticed:

Real Property Act, R.S.M. 1988, c. R-30; C.C.S.M., c. R-30, sect. 134(1) [para. 22].

Real Property Act, S.M. 1982-83-84, c. 7, sect. 167.1 [para. 35].

Unconscionable Transactions Relief Act, R.S.M. 1987, c. U-20; C.C.S.M., c. U-20, generally [para. 6].

Authors and Works Noticed:

Charlesworth and Percy on Negligence (7th Ed. 1983), p. 574 [para. 40].

Crawford, Bradley E., Article on Uncon­scionable Transactions Relief (1966), 44 Can. Bar Rev. 142, p. 143 [para. 152].

Falconbridge on Mortgages (4th Ed.), p. 469 [para. 22].

Fridman, The Law of Contract in Canada (2nd Ed. 1986), p. 244 [para. 78].

Halsbury's Laws of England (4th Ed.), vol. 12, p. 497, para. 1210 [para. 192]; vol. 20, para. 280 [paras. 13, 160]; vol. 44, p. 99, para. 131 [para. 143].

Marriott and Dunn, Practice in Mortgage Remedies in Ontario (5th Ed. 1991), para. 4.19 [para. 11].

McGregor on Damages (14th Ed.), p. 62 [para. 173].

Price and Trussler, Mortgage Actions in Alberta (1985), p. 59 [para. 12].

Waters, D.W.M., Banks, Fiduciary Obliga­tions and Unconscionable Transactions (1986), 65 Can. Bar Rev. 37, p. 50 [para. 153].

Counsel:

R.W. Schwartz and M.A. Thomson, for Campbell et al.;

C. Blanaru, for Slevin;

W.S. Gange, for Granville Savings and Mortgage Corp.

These appeals and cross-appeals were heard on December 18-19, 1991, before O'Sullivan, Huband and Helper, JJ.A., of the Manitoba Court of Appeal.

On June 17, 1992, the judgment of the Court of Appeal was delivered and the following opinions were filed:

O'Sullivan, J.A., dissenting in part - see paragraphs 1 to 26;

Huband, J.A. - see paragraphs 27 to 91;

Helper, J.A., dissenting in part - see paragraphs 92 to 194.