Accounting for Law

Rare for appeal court to take different view of agreement

In ordering a lawyer to pay damages for a breach of fiduciary duty, the Ontario Court of Appeal recently did something it is often hesitant to do — draw different factual conclusions from evidence than the trial judge, Toronto commercial litigator and appellate counsel Brian Radnoff, tells Legal Feeds.

In Roth Estate v. Juschka, the Court of Appeal ruled that lawyer Allan Brock must pay $200,000 in damages after finding he was negligent and breached his fiduciary duty when he represented both parties in a sale of shares transaction. The lawyer had perceived that the transaction was akin to a gift rather than a sale, and the Superior Court agreed.

As the article notes, however, the appeal court took a different approach to that of the Superior Court judge in finding that the buyers in this case — the daughter and son-in-law of the now-deceased seller — suffered a disservice when one lawyer represented all parties in the matter.

“Having perceived no potential conflict, he did not undertake the most basic obligations of a lawyer to his client: to raise the problem of acting for both sides, to explain the potential conflict, to obtain consent to act for both sides or to recommend independent legal advice,” wrote appeal court Justice Kathryn Feldman.

As Radnoff, partner at Dickinson Wright, says in the article, the court of appeal did something it’s normally reluctant to do.

“It drew very different factual conclusions or inferences from the evidence compared to the trial judge and took very different views of the agreement at issue,” says Radnoff, who was not involved in the matter.

In terms of the sale in question in this case, Radnoff says in the article that “you can see how a lawyer in this situation might think this is appropriate to do this,” but adds that most lawyers in a similar position would tell one party to get independent advice, and if they declined to do so, include a note in the agreement that says the parties waived that right.

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