North American Life Assurance Co. v. Pitblado & Hoskin et al., 2009 MBCA 83

• Judge: Scott, C.J.M., Monnin and Hamilton, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: September 01, 2009
• Jurisdiction: Manitoba
• Citations: 2009 MBCA 83;(2009), 245 Man.R.(2d) 111 (CA)

North Am. Life v. Pitblado & Hoskin (2009), 245 Man.R.(2d) 111 (CA);

      466 W.A.C. 111

MLB headnote and full text

Temp. Cite: [2009] Man.R.(2d) TBEd. SE.005

The Manufacturers Life Insurance Company (formerly North American Life Assurance Company) (plaintiff/respondent) v. Pitblado & Hoskin (defendant/respondent/appellant) and The City of Winnipeg (defendant/appellant/respondent) and L.D.C.L. Holdings Ltd., formerly known as Lakeview Development of Canada Ltd. and 75888 Manitoba Ltd. and Banquet Barons Inc. (third parties)

(AI 07-30-06779; 2009 MBCA 83)

Indexed As: North American Life Assurance Co. v. Pitblado & Hoskin et al.

Manitoba Court of Appeal

Scott, C.J.M., Monnin and Hamilton, JJ.A.

September 1, 2009.

Summary:

Manulife, a mortgagee, sued a law firm for the alleged negligent handling of a mortgage transaction. Manulife also sued the City of Winnipeg for negligent misrepresentation as to the status of a certain parcel of Drain Plan Land which was to be included as part of Manulife's security in a development by Lakeview Development Inc. (the mortgagor), and was adjacent to the commercial property. The law firm cross-claimed against the city.

The Manitoba Court of Queen's Bench, in a decision reported at 215 Man.R.(2d) 61, granted judgment in favour of Manulife against both the city and the law firm, which included pre and post judgment interest calculated using mortgage interest rates. The court found that both the city and the law firm were liable in negligence and the city liable for negligent misrepresentation. The court apportioned liability 75% on the city and 25% on the law firm. The court dismissed the law firm's cross-claim against the city because the city's conduct was not a factor that misled the lawyer involved and he did not rely on any representations by the city. An issue arose as to costs payable by the city.

The Manitoba Court of Queen's Bench, in a decision reported at 224 Man.R.(2d) 129, set the costs on a party and party basis in favour of the Manulife at $800,000, plus taxes and disbursements. The city appealed the trial judge's findings of negligent misrepresentation, as well as the trial judge's award of interest and costs. The law firm cross-appealed the trial judge's finding of negligence and the dismissal of its cross-claim against the city. Both the city and the law firm appealed the trial judge's apportionment of liability.

The Manitoba Court of Appeal dismissed the city's appeal, except on the issue of postjudgment interest. The court allowed the law firm's cross-appeal on the basis that the trial judge erred in finding that a breach of duty of care by one of the lawyers at the firm caused the damage to Manulife. Given that finding, the issue of apportionment was moot. Monnin, J.A., dissenting would have dismissed the appeal and cross-appeal in their entirety.

Barristers and Solicitors - Topic 2588

Negligence - Particular negligent acts - Failure to acquire security for loan advances - Manulife, the mortgagee, instructed its solicitor, Guercio, to obtain certain documents, including a first assignment of a parcel of Drain Plan Land (DPL), before $4,150,000 in mortgage funds were advanced to the mortgagor, Lakeview - Guercio failed to obtain the first assignment but the funds were advanced - Subsequently problems arose as to who had right to the DPL, allegedly ultimately causing Lakeview's bankruptcy resulting in financial losses for the mortgagee - The mortgagee sued the law firm that Guercio worked for - The trial judge allowed the action - The law firm appealed - The Manitoba Court of Appeal allowed the appeal, holding that the trial judge made a palpable and overriding error in his finding of causation - The problems with the DPL could not have been discovered by Guericio in any event - See paragraphs 162 to 173.

Barristers and Solicitors - Topic 2595.1

Negligence - Particular negligent acts - Re mortgages - [See Barristers and Solicitors - Topic 2588 ].

Interest - Topic 3506

Statutory interest - On judgments - Rate of interest - Manulife, a mortgagee, sued the City of Winnipeg for negligent misrepresentation respecting the status of a parcel of Drain Plan Land (DPL) adjacent to the mortgaged property which was to be included as part of the mortgagee's security in a development by a mortgagor - Manulife alleged that the city's misrepresentation arose by omission of any reference to a third party's interest in the DPL in the documentation provided for Manulife's financing requirements - Manulife claimed that this misrepresentation by omission led the mortgagor and its assignees into bankruptcy resulting in a financial loss to Manulife - The trial judge allowed Manulife's claim and awarded postjudgment interest at the then prevailing mortgage interest rate charged by Manulife compounded semi-annually - The city appealed respecting the award of interest - The Manitoba Court of Appeal allowed this ground of appeal - Here there was no principled basis evident from the trial judge's reasons or the record for calculating postjudgment interest other than at the rate of 5% set out in s. 79 of the Court of Queen's Bench Act - See paragraphs 126 to 150.

Municipal Law - Topic 1813

Liability of municipalities - Negligence - Negligent advice or misrepresentation - Manulife, a mortgagee, sued the City of Winnipeg for negligent misrepresentation respecting the status of a parcel of Drain Plan Land (DPL) adjacent to the mortgaged property which was to be included as part of the mortgagee's security in a development by a mortgagor - Manulife alleged that the city's misrepresentation arose by omission of any reference to a third party's interest in the DPL in the documentation provided for Manulife's financing requirements - Manulife claimed that this misrepresentation by omission led the mortgagor and its assignees into bankruptcy resulting in a financial loss to Manulife - The trial judge allowed Manulife's claim, finding: that the city owed Manulife a prima facie duty of care which was not negated because of any risk of indeterminate liability; that the city did not exercise reasonable care when it omitted any reference to the third party in the documentation; that the city misrepresented the status of the DPL to Manulife and did so negligently; that the city was not acting in a legislative capacity such that it would be protected from liability but was at all times acting in its capacity as owner of the DPL; that Manulife relied on the city's misrepresentations and that but for the city's omission, Manulife would have avoided the economic loss - The city appealed - The Manitoba Court of Appeal dismissed the city's appeal holding that the trial judge made no errors in principle or any palpable and overriding errors in finding that negligent misrepresentation had been established - See paragraphs 1 to 125.

Practice - Topic 7109

Costs - Party and party costs - Special orders - Discretion to exceed scale of costs (incl. power to award percentage of actual costs) - The plaintiff was awarded judgment of $4,733,956.70 against the City of Winnipeg for negligent misrepresentation - The total trial period was approximately 55 days with an equivalent time being spent on discovery - The plaintiff was represented by three counsel, although only two participated in presenting evidence or argument on any significant basis - 8198.7 hours of time involved with actual legal fees in excess of $1.5 million - Tariff costs (including double costs for unaccepted offers), were $406,999.45 plus tax and disbursements ($605,984.89) - The plaintiff sought higher costs - The trial judge noted that prior decisions had concluded that based on the complexity and the length of cases, the allowance for costs should bear some recognition of the reality of the actual fees incurred and an approach had been adopted whereby costs were increased to roughly one-half of the true fees - Using that approach in this case, the court set the costs on a party and party basis at $800,000, plus taxes and disbursements - The city appealed - The Manitoba Court of Appeal refused to disturb the costs award - See paragraphs 126 to 160.

Practice - Topic 7115

Costs - Party and party costs - Special orders - Increase in scale of costs - Difficulty and complexity of proceedings - [See Practice - Topic 7109 ].

Cases Noticed:

Booth v. Carter (Mary) Paint Co. (1967), 202 So.2d 8 (Fla. Dist. Ct. App.), refd to. [para. 3].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 53].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 53].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 62].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1, refd to. [para. 62].

Childs v. Desormeaux et al., [2006] 1 S.C.R. 643; 347 N.R. 328; 210 O.A.C. 315; 2006 SCC 18, refd to. [para. 63].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 66].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, refd to. [para. 79].

Design Services Ltd. et al. v. Canada, [2008] 1 S.C.R. 737; 374 N.R. 77; 2008 SCC 22, refd to. [para. 79].

Hasket v. Equifax Canada - see Haskett v. Trans Union of Canada Inc. et al.

Haskett v. Trans Union of Canada Inc. et al. (2003), 169 O.A.C. 201; 63 O.R.(3d) 577 (C.A.), leave to appeal refused (2003), 326 N.R. 397; 194 O.A.C. 400 (S.C.C.), refd to. [para. 91].

Black v. Lakefield (Village) (1998), 113 O.A.C. 74; 41 O.R.(3d) 741 (C.A.), refd to. [para. 92].

Gibbs v. Edmonton (City) (2003), 327 A.R. 183; 296 W.A.C. 183; 15 C.C.L.T.(3d) 303; 2003 ABCA 138, refd to. [para. 95].

Hedley Byrne & Co. v. Heller & Partners Ltd., [1964] A.C. 465 (H.L.), refd to. [para. 113].

Hanke v. Resurfice Corp. et al., [2007] 1 S.C.R. 333; 357 N.R. 175; 404 A.R. 333; 394 W.A.C. 333; 2007 SCC 7, refd to. [para. 121].

Canada Trustco Mortgage Co. v. Kansa General Insurance Co. et al. (1994), 93 Man.R.(2d) 306 (Q.B.), refd to. [paras. 139, 184].

Bank of America Canada v. Mutual Trust Co. et al., [2002] 2 S.C.R. 601; 287 N.R. 171; 159 O.A.C. 1; 2002 SCC 43, refd to. [paras. 140, 183].

Naylor Group Inc. v. Ellis-Don Construction Ltd., [2001] 2 S.C.R. 943; 277 N.R. 1; 153 O.A.C. 341; 2001 SCC 58, refd to. [para. 144].

H.L. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 401; 333 N.R. 1; 262 Sask.R. 1; 347 W.A.C. 1; 2005 SCC 25, refd to. [para. 144].

F.H. v. McDougall, [2008] 3 S.C.R. 41; 380 N.R. 82; 260 B.C.A.C. 74; 439 W.A.C. 74; 297 D.L.R.(4th) 193; 2008 SCC 53, refd to. [para. 149].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 155].

British Columbia (Minister of Forests) v. Okanagan Indian Band et al., [2003] 3 S.C.R. 371; 313 N.R. 84; 189 B.C.A.C. 161; 309 W.A.C. 161; 2003 SCC 71, refd to. [para. 155].

Walker v. Ritchie et al., [2006] 2 S.C.R. 428; 353 N.R. 265; 217 O.A.C. 374; 2006 SCC 45, refd to. [para. 155].

Little Sisters Book and Art Emporium v. Minister of National Revenue, [2007] 1 S.C.R. 38; 356 N.R. 83; 235 B.C.A.C. 1; 388 W.A.C. 1; 2007 SCC 2, refd to. [para. 155].

Apotex Fermentation Inc. et al. v. Novopharm Ltd. et al., [1997] 6 W.W.R. 88; 116 Man.R.(2d) 216 (Q.B.), refd to. [para. 156].

Dinney v. Great-West Life Assurance Co. et al., [2007] Man.R.(2d) Uned. 65; 47 C.C.L.T.(4th) 52; 2007 MBQB 76, refd to. [para. 156].

Howael Ventures (1984) Inc. v. Andersen (Arthur) & Co. (1997), 116 Man.R.(2d) 255 (Q.B.), refd to. [para. 157].

Air Canada et al. v. Liquor Control Board (Ont.) et al., [1997] 2 S.C.R. 581; 214 N.R. 1; 102 O.A.C. 1, refd to. [para. 180].

Murano et al. v. Bank of Montreal et al. (1998), 111 O.A.C. 242; 41 O.R.(3d) 222 (C.A.), refd to. [para. 181].

Yukon Helicopters Ltd. et al. v. Zoochkan et al. (1994), 96 Man.R.(2d) 306 (Q.B.), refd to. [para. 183].

Nelson et al. v. Saskatchewan et al., [2004] 3 W.W.R. 89; 235 Sask.R. 250; 2003 SKQB 265, refd to. [para. 183].

Amertek Inc. et al. v. Canadian Commercial Corp. et al., [2003] O.T.C. 742; 229 D.L.R.(4th) 419 (Sup. Ct.), refd to. [para. 183].

Trippel v. Parker (2004), 184 Man.R.(2d) 231; 318 W.A.C. 231; 2004 MBCA 72, refd to. [para. 183].

Canada Mortgage and Housing Corp. v. Sherritt-Gordon Mines Ltd. (1985), 36 Man.R.(2d) 310 (C.A.), refd to. [para. 184].

Pizzey Estate v. Crestwood Lake Ltd. et al. (2004), 181 O.A.C. 383; 236 D.L.R.(4th) 177 (C.A.), refd to. [para. 184].

Authors and Works Noticed:

Boghosian, David G., and Davison, J. Murray, The Law of Municipal Liability in Canada (1999) (Looseleaf), para. 8.16 [para. 113]; 8.30 [para. 106].

Feldthusen, Bruce, Economic Negligence: The Recovery of the Pure Economic Loss (5th Ed. 2008), pp. 25 [para. 84]; 467 [para. 116].

Fridman, Gerald Henry Louis, The Law of Torts in Canada (2nd Ed. 2002), pp. 359, 360 [para. 83].

Klar, Lewis N., Tort Law (4th Ed. 2008), pp. 232 [para. 74]; 233 [paras. 74, 80]; 237 [para. 82]; 238 to 246 [para. 84]; 249 [para. 117]; 250, fn. 127 [para. 122]; 295 [para. 113].

Rainaldi, Linda A., Remedies in Tort (1987) (Looseleaf), vol. 2, c. 16.IV, paras. 11.2 [para. 81]; 12 [para. 85]; 22 [para. 116]; 22.1 [para. 117].

Counsel:

G.M. Wood and M.T. O'Neill, for the City of Winnipeg;

K.J. Ferbers and N.M. Watson, for Pitblado & Hoskin;

B.J. Meronek, Q.C., R.G. Wookey and E.K. Romeo, for the Manufacturers Life Insurance Co.

This appeal and cross-appeal were heard on May 14-15, 2008, by Scott, C.J.M., Monnin and Hamilton, JJ.A., of the Manitoba Court of Appeal. The decision of the court was delivered on September 1, 2009, when the following opinions were filed:

Hamilton, J.A. (Scott, C.J.M., concurring) - see paragraphs 1 to 176;

Monnin, J.A., dissenting - see paragraphs 177 to 200.