Commercial Litigation

Advise clients properly in writing about merits of case

By Kirsten McMahon, AdvocateDaily.com Managing Editor

A recent estates ruling which awarded full recovery costs against the defendants’ counsel highlights the perils of taking an untenable legal position, says Toronto commercial litigator and appellate counsel Brian Radnoff.

“It is very rare that costs are awarded personally against counsel. And it is similarly rare that a court awards full indemnity costs. Here you have both,” says Radnoff, a partner with Dickinson Wright LLP, pointing to an Ontario Superior Court of Justice decision involving misappropriation of estate funds by the estate trustee and her lawyer.

The matter involved a $1-million estate, with issues that went beyond straightforward estate administration and touched on the duties owed by an estate trustee, and her lawyer, to the beneficiaries of an estate and to the court, the decision states.

“The plaintiffs made offers to settle both before and after issuing the application. These offers were reasonable and should have brought the proceeding to a speedy conclusion. The outcome the plaintiffs ultimately achieved was as favourable as their offers to settle,” wrote Justice David Price.

The will was straightforward, and litigation should not have been necessary to ensure the estate was properly administered, the judgment states.

“It was [the defendant’s] breaches of her fiduciary duty, exacerbated by her lawyer’s failure to guide her that resulted in the litigation proceeding beyond its initial stages,” Price wrote in ordering the defendants and their lawyer to jointly and severally pay the plaintiffs’ costs of more than $365,500.

The court also ruled the defendants’ lawyer personally pay 25 per cent of the costs.

“What’s particularly interesting about this case is that the basis for the cost award against the lawyer was — among a couple of other issues — knowing the client’s case was without merit and yet continuing to oppose the plaintiffs’ claim,” says Radnoff, who was not involved in the matter and comments generally.

“There were other things like misleading the court, and not complying or assisting with court orders, so those were obviously relevant,” he tells AdvocateDaily.com. “But what’s really interesting is that, because of the production of counsel’s file, the court came to the conclusion that the lawyer knew from the beginning that the client had a hopeless case.

“Essentially, the court found the lawyer failed in her obligation to advise the client the case was hopeless and proceeded to mount a defence that was based, in part, on facts that were inaccurate or misrepresentations,” Radnoff notes.

He says even if a client’s case is a weak or extremely risky case, it would not be considered improper to defend it provided the client has been properly advised and made aware of the low chance of success.

“Of course, you can’t defend by making false statements or taking inaccurate positions,” Radnoff says. “This matter was more complicated than simply defending the case because it was a finding that the lawyer took incorrect positions, and she made some misrepresentations.”

He says lawyers should not be discouraged from taking on difficult cases or from taking instructions from clients, but there is a limit, he says.

“This case is a good reminder of what those limits are,” Radnoff says. “Be very careful in terms of advising clients properly about the merits of their case and ensure that advice is in writing.”

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