Law Times

Law Times • march 12, 2018 Page 5 www.lawtimesnews.com Negligence alleged in mortgage transaction Client files $5-million claim against Miller Thomson LLP BY ALEX ROBINSON Law Times A client is bringing a $5-million negligence claim against national law firm Miller Thom- son LLP. A developer and numbered corporation alleged the firm and one of its lawyers, Enzo Di Iorio, breached their fiduciary duties when they represented it in a transaction involving the sale of its interests in a Four Season Gardens condominium build- ing in Richmond Hill, Ont. The allegations were set out in a statement of claim filed in Ontario Superior Court Dec. 1 and have not been proven in court. Stephen Turk, the lawyer representing the plaintiff, was not available for an interview. Miller Thomson, which has around 550 lawyers working in offices across Canada, acted for the plaintiff in a 2015 agree- ment of purchase and sale, and Di Iorio, who is a managing partner in the firm's Vaughan, Ont. office, had carriage over the matter. In that transaction, the plain- tiff sold its beneficial interest in certain parts of properties for the condo project to another numbered corporation for $12 million, according to the state- ment of claim. One of the terms of the sale was the discharge of a mortgage registered in favour of Swisscan Asset Management Inc. upon the payment of portions of the purchase price under the agree- ment — $1.1 million on closing and $1.3 million within 90 days. After the closing, the pur- chasers demanded from the plaintiff that Swisscan provide an assignment of the mortgage instead of the discharge set out in the agreement, according to the statement of claim. The plaintiff claimed that Di Iorio and his firm advised them to comply with this demand "even though it was not a valid nor proper demand" and was contrary to the agreement of purchase and sale. This advice was "negligent and highly detrimental to its interests" and a breach of con- tract or its duties to the plaintiff, according to the statement of claim. The plaintiff argued that when it relied on this advice, it caused Swisscan to deliver an assignment of the mortgage to a nominee of the purchaser in- stead of the discharge. The nominee then refused demands the plaintiff made that the mortgage should be dis- charged on the grounds it was fully paid. Miller Thomson and Di Iorio then represented the plaintiff in an unresolved legal proceeding it brought against the nominee and the purchaser, seeking an order discharging the mortgage. The plaintiff claimed the firm and the lawyer had also been negligent in their handling of that proceeding. The plaintiff — identified as 2179548 Ontario Inc. — also alleged that Miller Thomson and Di Iorio had an undisclosed conf lict of interest, as the firm had acted for Swisscan and "pre- ferred the interests of Swisscan over those of the plaintiff." The client also claimed that the firm and lawyer unjustly en- riched themselves at the plain- tiff 's expense by charging sig- nificant legal fees for work that was allegedly negligent. In the statement of claim, the plaintiff argued that the nom- inee and the purchaser used the assignment of the mortgage and their refusal to provide a discharge to leverage their pos- ition and caused "adverse conse- quences." Lawyers say it is not clear from the statement of claim what harm resulted to the plain- tiff from the allegations, but the plaintiff argued it has "suffered and will continue to suffer dam- ages." The claim also noted that "particulars of the damages and adverse consequences" will be provided to the defendants at discoveries, before a trial starts. The statement of claim con- tended that the plaintiff should be granted $5 million damages for negligence, breach of con- tract and breach of fiduciary duties, as well as unjust enrich- ment. The defendants have filed a notice of intent to defend, but they have not yet filed a defence. Lawyer Michael Kestenberg, who is representing Di Iorio and Miller Thomson in the matter, declined to comment. Eldon Horner, of Horner & Pietersma, says the takeaway from the claim — if it is ultim- ately successful — for real estate lawyers is that their role is not and should not be seen to be to just get a deal closed. "Real estate law is viewed in many circles as a commod- ity, and it is not regardless of the amount of money involved in the transaction," says Horner, who is not involved in the mat- ter. "As a result of that view, real estate lawyers often lose sight of the fact that their role as pro- fessional advisers extends to all aspects of the real estate transac- tion." Horner adds that it is ex- tremely important for real estate lawyers to obtain their clients' instructions in writing when there are "other" components to the transaction. This is because when business deals go poorly, the party whose money is at risk will look for someone to blame, he says. "It's often the real estate lawyer who is first in line," he says. LT NEWS A client is bringing a $5-million negligence claim against national law firm Miller Thomson LLP for allegedly breaching its fiduciary duties. Visit gpllm.law.utoronto.ca Questions? gpllm@utoronto.ca Apply today. ONE YEAR | PART-TIME | FOR LAWYERS AND BUSINESS LEADERS Master the Law. 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