Roth Estate v. Juschka et al., (2016) 346 O.A.C. 20 (CA)

• Judge: Feldman, Hourigan and Benotto, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: June 04, 2015
• Jurisdiction: Ontario
• Citations: (2016), 346 O.A.C. 20 (CA);2016 ONCA 92

Roth Estate v. Juschka (2016), 346 O.A.C. 20 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. FE.003

Marlene Florence Roth, Estate Trustee of the Estate of Harold Peter Roth, deceased and Marlene Roth (plaintiffs) v. Roy Juschka, Cynthia Juschka and Roth-Juschka Holdings Ltd. (defendants/appellants) and Allan D. Brock (third party/respondent)

(C57506; 2016 ONCA 92)

Indexed As: Roth Estate v. Juschka et al.

Ontario Court of Appeal

Feldman, Hourigan and Benotto, JJ.A.

February 2, 2016.

Summary:

A lawyer acted for both sides in a family share purchase transaction that included the provision of a promissory note. One side sued the other on the note and the defendants brought a third party claim against the lawyer for negligence and breach of fiduciary duty.

The Ontario Superior Court, in a decision reported [2013] O.T.C. Uned. 4437, allowed the action on the note, but dismissed the third party claim. Following that judgment, the parties to the main action settled for a lesser sum. The defendants appealed the dismissal of the third party claim. The defendants sought indemnification for the amount they paid to settle the judgment on the note.

The Ontario Court of Appeal allowed the appeal, holding the lawyer liable to the defendants for negligence and breach of fiduciary duty.

Barristers and Solicitors - Topic 1604

Relationship with client - Conflict of interest - Acting for both sides - A lawyer acted for both sides in a family share purchase transaction that included the provision of a promissory note - One side sued the other on the note and the defendants brought a third party claim against the lawyer - The trial judge allowed the action, but dismissed the third party claim - The defendants appealed - The Ontario Court of Appeal allowed the appeal, holding that the lawyer was negligent and had breached fiduciary duties - The trial judge erred in finding that because the transaction was very beneficial to the defendants there was no potential conflict of interest - It was a palpable and overriding error for the trial judge to have found that the defendants would have signed the documentation whether they went to another lawyer for advice or not - There was potential conflict of interest from the start, but the lawyer acted for all sides without ever considering whether there was that potential and without warning the clients accordingly - See paragraphs 29 to 54.

Barristers and Solicitors - Topic 1605

Relationship with client - Conflict of interest or duties - Loan transactions - [See Barristers and Solicitors - Topic 1604 ].

Barristers and Solicitors - Topic 1619

Relationship with client - Conflict of interest or duties - Situations resulting in a conflict - [See Barristers and Solicitors - Topic 1604 ].

Barristers and Solicitors - Topic 2594

Negligence - Particular negligent acts - Failure to inform or advise client - A lawyer acted for both sides in a family share purchase transaction that included the provision of a promissory note - One side sued the other on the note and the defendants brought a third party claim against the lawyer - The trial judge allowed the action, but dismissed the third party claim - The defendants appealed - The Ontario Court of Appeal allowed the appeal, holding that the lawyer breached the standard of care - He failed to understand and explain the meaning and effect of the promissory note, and the fact that, between the consulting agreement and the promissory note, the defendants could potentially pay an amount for the plaintiffs' shares that was far in excess of their value - He also failed to warn the defendants of the risks of the transaction - See paragraphs 55 and 56.

Cases Noticed:

Boardman v. Phipps, [1966] 3 All E.R. 721; [1967] 2 A.C. 46 (H.L.), refd to. [para. 31].

Davey v. Woolley, Hames, Dale & Dingwall (1982), 35 O.R.(2d) 599 (C.A.), refd to. [para. 31].

Waxman v. Waxman (2004), 186 O.A.C. 201; 44 B.L.R.(3d) 165 (C.A.), refd to. [para. 31].

Upper Valley Dodge Chrysler Ltd. v. Cronier Estate et al. (2005), 205 O.A.C. 238; 10 B.L.R.(4th) 201 (C.A.), dist. [para. 51].

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, refd to. [para. 55].

Fasken Campbell Godfrey et al. v. Seven-Up Canada Inc. et al. (2000), 128 O.A.C. 249; 182 D.L.R.(4th) 315; 47 O.R.(3d) 15; 2000 CarswellOnt 89 (C.A.), refd to. [para. 56].

Counsel:

Thomas J. Corbett, for the appellants;

James D. Virtue and Dagmara Wozniak, for the respondent.

This appeal was heard on June 4, 2015, before Feldman, Hourigan and Benotto, JJ.A., of the Ontario Court of Appeal. The following decision was delivered for the court by Feldman, J.A., on February 2, 2016.