Law Times

lAw Times • April 28, 2014 Page 7 www.lawtimesnews.com COMMENT mong the recent high-profi le solicitors' negligence cases is King Lo s Toronto I Ltd. v. Em- mons, an Ontario Court of Ap- peal decision that followed another no- table ruling in Outaouais Synergest Inc. v. Lang Michener LLP. While King Lo s was more recently before the appeal court, it was the trial decision of Superior Court Justice Paul Perell that was the more compelling read since the appellate reasons were brief and essentially upheld all of the motion re- sults for essentially all of the reasons set forth by the lower court. In King Lo s, the title search disclosed a laneway that cut through the property. e city, which wasn't the vendor, owned the laneway. e solicitor duly found the laneway and told the client about it but unfortunately did so in such a way that suggested it was a minor issue they could address in a number of ways: conver- sion into land titles a er closing for a few thousand dollars; asking the city to pass a bylaw to convey the lands to the pur- chaser; obtaining a vesting order based on prescriptive rights; or title insurance. As fate would have it, the conversion to land titles wasn't a correct solution, the city required a six-fi gure payment for a conveyance of the laneway, prescription didn't seem to be available, and the title insurance policy wouldn't cover the cost of the city's demand. Although Perell and a unanimous panel of the Court of Appeal found the solicitor in King Lo s negligent, Per- ell went out of his way to redirect any personal disparagement away from the so licitor, noting that as "the dis- cussion of the facts will reveal, like many professional negli- gence cases, the lawyer's error does not show incompetence, unskillfulness, lethargy, or in- attention." Instead, Perell attributed the negligence simply to miscom- munication: "Like many negli- gence cases, the error is a fail- ure in communication. us, the critical facts are what was said, what was not said, what was described, what was misdescribed, what was clear, what was opaque, what was understood, and what was misunderstood." is is an increasingly common theme in solicitors' negligence cases. e solici- tor in King Lo s is well known in the real estate bar and enjoys an excellent profes- sional reputation among his peers. e real fact of the matter is that the level of communication now expected between solicitor and client (which, for all practi- cal intents and purposes, means pains- taking written communications) has reached comparatively new and soaring heights. Furthermore, this isn't a novel concept brought about by the King Lo s decision. LawPRO and other profession- al liability insurers have been harping in- cessantly about the need for greater and better communications for years. King Lo s merely drives the message home through the forehead and with a nail gun. Although there seems to have been a number of miscommunications be- tween solicitor and client in King Lo s, the most profound issue related to the title ins urance. Title insurers will of- ten underwrite known title de- fects on a "limited marketabil- ity" basis or, depending on the nature of the defect, on a "forced removal basis." ese endorse- ments fall short of full coverage because, by their very terms, they indemnify against forced removal of the building (due to, for example, the existence of encroachments or easements) but won't cover impaired marketability of the property or the diminution in value resulting from the title defect. In King Lo s, the relevant endorse- ments indemnifi ed the client if the city asserted rights to the laneway or re- quired it to remove the building on the property but didn't cover the diminution in value that the mere existence of the laneway would nonetheless cause. e city never asserted any remedy in respect of its claim to the laneway or forced the building's removal but it did demand six fi gures as a purchase price if the client wanted to have the laneway conveyed back (which was a de facto quantifi ca- tion of the diminution in the value of the property arising from the laneway de- fect). Perell concluded the solicitor had failed to communicate to the client the limited scope of the "limited marketabil- ity" and "forced removal" endorsements and had eff ectively lulled it into a false sense of confi dence about the title insur- ance coverage. A er King Lo s, solicitors now have a clear duty to explain the scope of ti- tle insurance coverage to their clients, e specially when it's for limited market- ability, "forced removal only" or some other coverage that's less than full cov- erage. Frankly, this may prove to be a daunting task since, even a er all of these years, the exact scope of title insurance coverage remains somewhat fuzzy for many real estate solicitors and fuzzier still for most of their clients. e trial decision in King Lo s is truly one of the more comprehensive decisions on solicitors' negligence I've seen. It's rich in case law references and shows great analysis and an unusual appreciation for the practical side of real estate law. In ad- dition to the title insurance issue, the case also touched upon applicable limitation periods when title insurance is at issue, the need for expert witnesses in solici- tors ' negligence cases, and other matters of interest to real estate litigators. e negligence claim in King Lo s no doubt stemmed, at least in part, from the client's unhappiness with the solicitor's fees in the matter that were more than $270,000 on a $31-million acquisition. But frankly, this is trite since a client's dissatisfaction with its solicitor's per- formance is almost always directly pro- portionate to the fees charged. at has always been the case and isn't unique to real estate law. Life as a modern real es- tate solicitor is, to quote a famous saying, nasty, brutish, and short. King Lo s has simply reminded us of that reality. LT Jeff rey W. Lem is a partner in the real estate group at Miller omson LLP. His e-mail address is jlem@millerthomson. com. GET SLAPP BILL PASSED I read with interest Ian Harvey's piece on March 24 examining the merits of bill 83, the protec- tion of public participation act. Despite vigorous lobbying by Resolute Forest Prod- ucts Inc. against this important legislation, the issue remains fundamentally a matter of free speech. e attorney general's 2010 panel, chaired by dean Mayo Moran of the University of Toronto Faculty of Law alongside noted authority Peter Downard of Fasken Martineau DuMoulin LLP and media law expert Bri- an MacLeod Rogers, concluded unambiguously that "threats of lawsuits for speaking out on matters of pub- lic interest, combined with a number of actual lawsuits, deter signifi cant numbers of people from participating in discussions on such matters." is is an untenable situation in which Ontario's citizens, communities, and journalists are eff ectively shut out of public debate. More recently, the Canadian Civil Liberties Asso- ciation, Canadian Journalists for Free Expression, the Centre for Law and Democracy, the Canadian Me- dia Guild, the Council of Canadians, Lawyers' Rights Watch Canada, and PEN Canada urged Ontario's at- torney general to get the job done on bill 83. Premier Kathleen Wynne, people will recall, has made this a priority of her government. Bill 83 wouldn't prevent legitimate lawsuits. Rather, it would speed up the process for identifying and dis- missing meritless lawsuits. As a consequence, there has been little resistance from the corporate sector. is raises serious questions about Resolute Forest Products' lobbying against this essential free-speech legislation to the detriment of all Ontarians. Dissent- ing voices and critical perspectives may indeed be in- convenient, but that's democracy. Shane Moff att, Forest campaigner, Greenpeace Canada CLINICS LEADING THE WAY e Jan. 20 story, "How does Ontario legal aid compare?" was timely as signifi cant changes are afoot both in England and in Ontario. While the British sit- uation seems to be yet another attack on vital services to poor people, the situation in Ontario is quite diff er- ent. Over the past fi ve years, the Ontario government has invested signifi cant new resources in legal aid as it moves in a direction standing in sharp contrast to most other jurisdictions. at said, things are not all rosy here. e article noted that only 7.1 per cent of Ontarians qualify for legal aid. In short, only those on public assistance will get help from Legal Aid Ontario. It doesn't take much imagination to think of all of those above LAO's cutoff who can't possibly aff ord a lawyer. If one's imagination isn't working, a recent report by the Canadian Bar As- sociation on access to justice will tell the same story. e gap is ugly in what it says about our civil society. It's also expensive for the taxpayer and it's grossly un- fair to many people. If all of that isn't enough, things are getting worse as the gap is growing. e CBA report has some important suggestions for things the legal profession and the government can do about the problem. Realistically, though, reducing or holding down fee increases and introducing mod- erate improvements to fi nancial eligibility for legal aid aren't going to span the divide. Another issue beyond fi nancial eligibility is that it's very diffi cult to get a legal aid certifi cate. Faced with criminal charges, the applicant will have to show a probability of incarceration if there's a conviction. An applicant for certifi cate in a family law matter will only be successful if the dispute is over the children. And refugees face the double dilemma of showing fi nancial need and some merit even as the new Immigration and Refugee Protection Act makes it all but impossible to make out a claim both substantially and procedur- ally. Civil certifi cates have been virtually eliminated and the work has been redirected to the community legal clinics. Poverty has multiplied and deepened in Ontario over the last 25 years, a situation lead- ing to new and more complicated demands on the clinic system for civil poverty law services. With barely any new resources until 2009, clin- ics have cut back on services. For the most part, only those clients facing the loss of the most essential ser- vices, such as subsidized housing, welfare or disability assistance, or status in Canada, receive full assistance. In many instances, even these services are limited. Few people within the clinic system are satisfi ed with this state of aff airs even as the solutions, apart from more money, aren't so obvious. Community legal clinics in Ontario have taken important steps recently to do what they can to meet the needs of more poor people by initiating several important transformation projects that will lead to big changes to the system. Recently, a new deal between the Toronto clinics and LAO unleashed considerable energy in clinics' commitment to change. As that deal gets adapted to the rest of the province, there will be more eff ort put into rethinking how clinics go about their business. The Greater Toronto Area clinic transforma- tion project is charting a course for 16 clinics that includes a major realignment of resources, using more of our collective resources on client services, and redirecting more of them to where the poor- est in our communities now live. We think that by reducing our office space and administrative over- head, we can hire more caseworkers and do more outreach. We also think we can use technology bet- ter so we're more efficient and more able to help people who can then help themselves. We think we can do our work differently so more people can get the service they need. It's no doubt an ambitious plan. However, until our political leaders get more serious about poverty re- duction and start implementing their own ambitious plans, we will have to lead the way. Jack De Klerk, Neighbourhood Legal Services, Toronto King Lofts shows growing perils, provides lessons for real estate lawyers The Dirt Jeffrey Lem Jeffrey Lem A u LETTERS TO THE EDITOR

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