Martin v. Goldfarb et al.

• Jurisdiction: Ontario
• Date: 26 August 1998
• Citation: (1998), 112 O.A.C. 138 (CA),1998 CanLII 4150 (NS CA),1998 CanLII 4150 (ON CA),41 OR (3d) 161,163 DLR (4th) 639,44 BLR (2d) 158,42 CCLT (2d) 271,[1998] CarswellOnt 3319,[1998] OJ No 3403 (QL),112 OAC 138,12 CPC (5th) 222,82 ACWS (3d) 175
• Court: Court of Appeal (Ontario)

Martin v. Goldfarb (1998), 112 O.A.C. 138 (CA)

MLB headnote and full text

Temp. Cite: [1998] O.A.C. TBEd. SE.007

Robert E. Martin (plaintiff/respondent) v. Clifford Goldfarb, Farano, Green and Aleksandra Kurowska-Barrie (defendants/appellants)

(C27477)

Indexed As: Martin v. Goldfarb et al.

Ontario Court of Appeal

Finlayson and Carthy JJ.A. and Then, J.(ad hoc)

August 26, 1998.

Summary:

Martin entered into certain business and real estate transactions with Axton, who had a recent conviction for mortgage fraud. Martin alleged that Goldfarb, a lawyer, failed to make timely and material disclosure of Axton's true identity and criminal back­ground. Martin alleged that Axton's fraudu­lent activ­ities caused him to fall from a net worth of over $18,000,000 to abject destitu­tion. After his discharge from bankruptcy in 1992, Martin claimed damages against Goldfarb and Goldfarb's law firm for breach of fiduciary duty owed to him and his com­panies and, alternatively, for negligence. A claim against Kurowska-Barrie, in-house counsel for Axton's company, was settled prior to trial.

The Ontario Court (General Division), in a decision reported 30 O.T.C. 321, allowed Martin's action and awarded $5,949,447 in damages plus prejudgment interest at 7% from January 11, 1990. Goldfarb and his firm appealed.

The Ontario Court of Appeal allowed the appeal in part. The court held that the dam­age award could not stand and remitted the matter to the trial judge to determine the proper award of damages.

Barristers and Solicitors - Topic 1548

Relationship with client - Duty to client - General - Fiduciary duty - Martin entered into business transactions with Axton - Martin hired a lawyer, Goldfarb, who knew that Axton had a fraud conviction, but failed to tell Martin - Martin claimed that Axton's fraudulent activities caused him financial ruin - Martin sued Goldfarb and his law firm for breach of fiduciary duty owed to him and his companies - The trial judge allowed Martin's action and awarded $5,949,447 damages - Goldfarb appealed - The Ontario Court of Appeal ordered a reassessment of damages - First­ly, dam­ages should have been limited to the direct loss caused to Martin per­sonally through his dealings with Axton only after he retained Goldfarb - Second­ly, the losses suffered by Martin personally should have been distinguished from those suffered by his corporations - Thirdly, there was a lack of cogent evidence to support the damage award.

Barristers and Solicitors - Topic 1554

Relationship with client - Duty to client - General - Duty to inform client - [See Barristers and Solicitors - Topic 1548 ].

Damages - Topic 803

Assessment - Where amount of loss diffi­cult to estimate or determine - The Ontario Court of Appeal stated "... that it is a well-established principle that where dam­ages in a particular case are by their in­herent nature difficult to assess, the court must do the best it can in the circum­stances. That is not to say, however, that a litigant is re­lieved of his or her duty to prove the facts upon which the damages are estimated. The distinction drawn in the various au­thorities, as I see it, is that where the assessment is difficult because of the na­ture of the damage proved, the difficulty of assessment is no ground for refusing sub­stantial damages even to the point of re­sorting to guesswork. However, where the absence of evidence makes it impossible to assess damages, the litigant is entitled to nominal damages at best." - See paragraph 75.

Damages - Topic 4010

Interference with economic relations - Breach of fiduciary relationship - By law­yer - [See Barristers and Solicitors - Topic 1548 ].

Equity - Topic 3655

Fiduciary or confidential relationships - Breach of fiduciary relationship - Dam­ages - [See Barristers and Solicitors - Topic 1548 ].

Cases Noticed:

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 31].

Air Canada v. M & L Travel Ltd., Martin and Valliant, [1993] 3 S.C.R. 787; 159 N.R. 1; 67 O.A.C. 1, refd to. [para. 34].

Canson Enterprises Ltd. et al. v. Boughton & Co. et al., [1991] 3 S.C.R. 534; 131 N.R. 321; 6 B.C.A.C. 1; 13 W.A.C. 1, refd to. [para. 34].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 34].

R. v. Rukland (1998), 123 C.C.C.(3d) 262 (Ont. C.A.), refd to. [para. 57].

Foss v. Harbottle (1843), 2 Hare 460; 67 E.R. 189, refd to. [para. 59].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man. R. 241; 139 W.A.C. 241, refd to. [para. 60].

Goldex Mines Ltd. v. Revill et al. (1974), 7 O.R.(2d) 216 (C.A.), refd to. [para. 62].

Hoskin v. Price Waterhouse Ltd. et al. (1982), 37 O.R.(2d) 464 (Div. Ct.), refd to. [para. 64].

Wood v. Grand Valley Railway Co. (1915), 51 S.C.R. 283, refd to. [para. 70].

Chapman v. Hicks, [1911] 2 K.B. 786 (C.A.), refd to. [para. 71].

Radcliffe v. Evans, [1892] 2 Q.B. 524, refd to. [para. 73].

Toronto Transit Commission v. Aqua Taxi Ltd. et al., [1957] O.W.N. 65 (H.C.), refd to. [para. 74].

Williamson v. Stephenson (1903), 33 S.C.R. 323, refd to. [para. 75].

Penvidic Contracting Co. Ltd. v. Interna­tional Nickel Co. of Canada Ltd. (1975), 4 N.R. 1; 53 D.L.R.(3d) 748 (S.C.C.), refd to. [para. 75].

Counsel:

Geoffrey D.E. Adair, Q.C., and Krista Springstead, for the appellants;

William G. Dingwall, Q.C., and Thomas S. Kent, for the respondent.

This appeal was heard on May 19 and 20, 1998, before Finlayson and Carthy, JJ.A., and Then, J.(ad hoc), of the Ontario Court of Appeal. The following decision was delivered for the court by Finlayson, J.A., and released on August 26, 1998.