Law Times

Page 4 January 12, 2015 • Law Times www.lawtimesnews.com Critical rulings show risks of going paperless, lawyer says Personal injury firm subject to several adverse decisions by Ontario judges By MiChAel McKierNAN For Law Times Hamilton, Ont., per- sonal injury lawyer says his firm is the "poster child" for the risks of going paperless after ending up on the receiving end of a series of critical rulings from local judges. Last month, in the case of Hernandez v. Lariviere, Ontario Superior Court Justice Thomas Lofchik refused to reinstate the claim of a Ferro & Co. client af- ter the registrar issued an order dismissing the action for delay. Lofchik wrote that the firm's principal, Lou Ferro, had dis- played inaction that could "fairly be interpreted as both intention- al and deliberate." Citing three previous deci- sions on motions to set aside dismissals for delay involving Ferro's firm, Lofchik said in his Dec. 15 decision that it was "far past time for Mr. Ferro to take responsibility for his actions and for the court to respond to a clear pattern of inattentiveness and neglect." In a statement to Law Times, Ferro said the Hernandez file was "in its prime" while the firm was in the process of transferring all of its paper files to an electronic filing system. "The profession should be warned that the transfer from paper to electronic format comes with its risks," he wrote. "All those risks were calculat- ed by myself when entering into the conversion, but I didn't ex- pect such an incredibly complex and complete revision of the way in which we practised law." At the height of the transfer process, Ferro said he was get- ting up to 100 status notices per month warning that files not on the trial list would be subject to dismissal for delay within 90 days. While some files fell through the cracks, Ferro said judges, in positions removed from the day- to-day realities of practice, were unsympathetic to his plight. "The bench, unfortunately, did not appreciate the sig- nificance of the transfer of 20 million pieces of paper from paper files to electronic," said Ferro, noting his firm's elec- tronic filing system is now "fully employed and working." The Hernandez relates to a motor vehicle accident in 2005 when a vehicle making a left turn hit the plaintiff 's car. While the statement of claim dates back to May 2007, it took nearly three years to complete the plaintiff 's examination for discovery after four previous failed attempts. According to Lofchik's de- cision, the plaintiff then failed to comply with undertakings given at the examination, which resulted in a motion to compel their fulfilment and the cancel- lation of an independent medi- cal assessment. The registrar issued the or- der dismissing the action in De- cember 2011. The judge noted that while Ferro's office became aware of the dismissal in Janu- ary 2012, it took until November 2012 for the firm to serve a mo- tion record to set it aside. Lofchik's ruling also referred to three previous decisions on similar motions involving Fer- ro's law firm. In the 2011 case of Solda- tova v. Bruno, Ferro's client was successful in setting aside the dismissal, but Justice John Ca- varzan warned the lawyer not to expect any further indulgence in the future considering the "ad- ministrative chaos" ref lected in the handling of the file. Later that year, Justice James Ramsay upheld a dismissal or- der in Hernandez v. Western As- surance Co. He blamed missed deadlines on the law firm's "in- adequate file management prac- tise" and reliance on "staff who are inadequately supervised." In 2012, Justice Grant Camp- bell ruled the same way in Thomas v. McLelland, finding "nothing has changed" in Ferro's office since Ramsay's judgment and criticizing the lawyer for his "chronic casual and cavalier ap- proach to his duties." "Within the context of this case and after various admoni- tions from my colleagues on prior cases, Mr. Ferro's inac- tion can fairly be interpreted as both intentional and deliberate," wrote Lofchik after reviewing the previous cases. Despite finding there would be no prejudice to the defendant if he set aside the dismissal, the judge decided against reinstat- ing the plaintiff 's claim. "In the circumstances of this case the finality principle must trump the Plaintiff 's request for an indulgence and restricting the Plaintiff 's claim to an action against his lawyer is a just result on a contextual basis that bal- ances the interest of the parties and takes into account the pub- lic's interest in the timely resolu- tion of disputes," wrote Lofchik. The judgment capped a poor couple of months in front of judges for Ferro's firm: 12 days before Lofchik's judgment, Ramsay dealt another blow to a Ferro client when he proceeded to hear and grant an insurer's summary judgment motion despite the absence of anyone from the law firm at the hear- ing. In Steele v. Intact Insurance Co., a statutory accident-benefits claim, counsel for both sides had agreed to reschedule the motion from a June date to the first week of December. "It was confirmed and then called for hearing today. The plaintiff 's lawyers were notified by telephone and fax. The plain- tiff 's lawyers have not appeared, without explanation. There is a note from the trial coordina- tor on a yellow sticky, saying 'Mr. Ferro's office wants adj.' That is the sum total of commu- nication from the plaintiff 's law firm, which has several lawyers. The defendant's counsel asked to proceed. I saw no reason- able basis for declining to do so given the number of times the case has been up, the lack of any explanation and the fact that in all this time the plaintiff has filed no material," Ramsay wrote in his Dec. 3 endorsement before going on to grant summary judgment. A month earlier, on Nov. 17, Justice Cory Gilmore also had critical words for Ferro in a so- licitor's breach of undertaking action by Justin Hrycko, the former common law spouse of a Ferro client, Olga Miller. Hrycko had lent Miller $40,000 while her motor vehicle accident claim was ongoing on the condition she pay him back out of the proceeds of her settle- ment. Ferro's firm provided him with a written undertaking to that effect, but when it received four separate settlement pay- ments totalling about $650,000 for its work on behalf of Miller, it disbursed none of it to Hrycko. "At his examination for dis- covery, Mr. Ferro was asked why he did not fulfill his undertak- ings. His response on discovery was, 'Well, I don't believe it's a personal undertaking because that infers that I consciously made a promise to do something and failed to do it,'" wrote Gilm- ore in his decision. In the meantime, according to Gilmore's judgment, Miller continued to borrow money from Hrycko without tell- ing Ferro about the increased amount of the loan and inform- ing Hrycko about the existing settlement funds. After Miller died and left a bankrupt estate, Hrycko launched a claim for $100,000 against Ferro alleging that if he had honoured his undertakings, he would have known about the settlements and would never have continued loaning her money. Ferro argued he should only be liable for the $40,000 men- tioned in the written under- taking, but Gilmore ruled he should be responsible for the additional loans in light of "such amounts being a reasonably foreseeable consequence of the breach of his duty relating to the undertakings." Gilmore ordered the law firm to pay $100,000 plus prejudg- ment interest to Hrycko and indicated his view that costs on a full indemnity scale were in order. "With respect to costs, there appears to be no satisfactory explanation as to why Mr. Ferro did not honour his undertak- ings as required by Rule 6 of the Rules of Professional Con- duct. His explanation during his examination as to why he failed to honour his undertakings was somewhat shocking," wrote Gilmore. In his statement to Law Times, Ferro said Gilmore's de- cision was under appeal and the law firm had always set aside "sufficient funds to pay on the directions we had." LT NEWS Be aware of the changes in environmental law and policy Get expert insight into the landmark environmental law issues of the past year. This year's collection of articles reflects developments in the context of larger public policy that is consistent with the maturation of environmental and energy law. 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