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DEFENCES - Statutory compliance - Immunity

Thursday, January 02, 2020 @ 8:26 AM  

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Appeal by the defendant Law Society from an order dismissing its application to strike the action as disclosing no reasonable cause of action. Cross-appeal by the respondent from the order of costs in the cause. The respondent argued he ought to have been awarded costs in any event of the cause. The respondent obtained a judgment against his former lawyer, B, for monies he loaned B as an investment in his law practice. B only repaid a small amount and then left BC. The respondent then commenced the present action alleging that the appellant was negligent in admitting B to the bar and in failing to adequately monitor him once licensed. The appellant applied to strike the claim against it on the basis that the claim was barred by statutory immunities in the absence of a pleading of bad faith or that there was no reasonable prospect of establishing a private law duty of care in a negligence claim against the appellant. The chambers judge considered that the issues raised were not appropriate for determination on an application to strike pleadings, as they required a ruling on the validity of the appellant’s defences rather than a determination on the pleadings alone. He also found that the respondent had pleaded a reasonable claim in negligence.

HELD: Appeal allowed. Cross-appeal dismissed. The chambers judge erred in declining to consider whether it was plain and obvious that the statutory immunities barred the claim. A consideration of an applicable statutory immunity in relation to a claim was an entirely appropriate inquiry in an application to strike. The respondent had to plead that the appellant failed to act in good faith, supported by material facts, to avoid the application of s. 86 of the Legal Profession Act which provided immunity to the appellant for anything done or not done in good faith by persons acting on its behalf. In the absence of such a pleading, any discovery proceeding on such pleadings would have no proper focus and the claim in negligence against the appellant. The absence of a pleading of a lack of good faith was also fatal to the claim in negligence against the appellant. The pleadings failed to establish sufficient proximity that would give rise to a private law duty of care. There was no basis to ground sufficient proximity between the respondent and the appellant in the Legal Profession Act. Section 30 of the Legal Profession Act did not impose a requirement on the appellant to insure losses incurred by clients but directed the benchers to make rules requiring lawyers to maintain professional liability and trust protection insurance, and for the benchers to establish and administer a professional liability insurance program. When read in the context of the Act as a whole, including the immunity in s. 86, there was no basis on which to ground a private law duty of care to essentially insure all losses incurred by clients who did not qualify for coverage under the insurance program. There was no basis for setting aside the costs order. The standard of review of costs orders was a deferential one given their discretionary nature.

Walkom v. Law Society of British Columbia, [2019] B.C.J. No. 2116, British Columbia Court of Appeal, M.E. Saunders, D.C. Harris and B. Fisher JJ.A., November 8, 2019. Digest No. TLD-December302019001