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BARRISTERS AND SOLICITORS - Negligence - In conduct of action - Consequences of negligence

Thursday, March 16, 2017 @ 8:41 AM  

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Appeal by the defendant, McLean, from a judgment in a solicitor's negligence action. Cross-appeal by the plaintiffs, the Jarbeaus, from the judgment and costs award. The plaintiffs purchased a new home from a developer that leaked due to a failure to meet building code standards. The plaintiffs retained the defendant solicitor to sue those responsible for building and selling them a defective home. The defendant sued the developer, the City and the warranty corporation, but failed to sue the engineer within the limitation period. The defendant negligently advised the plaintiffs they did not have a cause of action against the engineer on the basis they did not have a contract with him. The engineer subsequently acknowledged he was negligent in certifying the design and construction of the home. The plaintiffs settled the first action and sued the defendant seeking damages for solicitor's negligence. On the eve of trial, the defendant admitted liability. The trial proceeded on the issues of causation and damages. A trial within the trial examined the plaintiffs' potential action against the engineer. The jury found in the plaintiffs' favour. The jury assessed the costs of repair at $433,000, and the diminution in value due to the defects at $265,000. Deduction of the $75,000 settlement of the first action resulted in a net award of $190,000. The trial judge declared the jury's cost of repair finding as perverse, but granted judgment for $190,000 as the lesser of the cost to repair and diminution of value. The trial judge reduced the costs payable to the plaintiffs despite bettering a settlement offer on the basis the jury's diminution of value finding was also perverse. The defendant appealed and the plaintiffs cross-appealed.

HELD: Appeal dismissed and cross-appeal allowed. The trial judge did not err in instructing the jury on the use of a "but for" test for causation. The trial within a trial established the plaintiffs would have recovered against the engineer with 100 per cent certainty. The defendant's negligent advice precluded them from litigating that claim. The plaintiffs were accordingly entitled to full compensation for the loss without reduction for contingencies. There was an evidentiary basis for the jury's assessment of both the costs of repair and the home's diminution of value. The fairest measure of damages provided the plaintiffs what they bargained for, namely, a home free of defects. Accepting the jury's assessment that the home had no value precluded awarding the lesser diminution of value amount. The verdict was set aside and substituted with a judgment in the amount of $433,000, representing the costs of repair as assessed by the jury. There was no basis for deducting the prior settlement amount, as it could be attributed to unrelated repairs and legal fees. In assessing costs, the trial judge made unjustified criticisms of the plaintiffs' counsel and failed to give appropriate weight to their settlement offer that bettered the trial result. The costs award was set aside and replaced with an award fixed at $231,000.

Jarbeau v. McLean, [2017] O.J. No. 717, Ontario Court of Appeal, J.M. Simmons, H.S. LaForme and G.I. Pardu JJ.A., February 13, 2017. Digest No. 3642-012