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Monday Morning Case Bites for July 12, 2021

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Steven Graham

Malton v Attia, 2021 ABQB 503
Negligence | Standard of Care of a practicing lawyer

This matter was sent back to the Court of Queen’s Bench to be re-tried. The Plaintiffs claimed the Defendant, a lawyer they retained to sue a home inspector, breached his duty of care to them and was negligent in his advancement of that action, and commenced this action against him.

The Defendant first argued that the Plaintiffs could not be successful as they had not called any expert evidence regarding the standard of care of a practising lawyer. The Court rejected that argument, concluding that a Queen’s Bench justice in this case had the necessary knowledge to assess the standard of care of a lawyer without the assistance of an expert:

[11]           As noted above, this exact question was argued before the first trial justice in this action and that argument was rejected. I am advised that that ruling was not appealed or interfered with on appeal. Consequently, the Maltons assumed, not unreasonably, that they would not have to call an expert at the re-trial and I agree. The analysis done by the first trial justice was extensive and thorough. She notes that as “a general rule, a judge will rarely require expert standard of care evidence to evaluate the litigation practices of a lawyer operating before that same court”: Malton at para 213. She concluded:

The HouseMaster Action was conducted in the Alberta Court of Queen’s Bench. I am a judge of that court. Presumptively I have the expertise to evaluate the conduct of litigation in this court. I have not received any evidence from the Defendants to displace that presumption: Malton at para 217.

I therefore conclude I do not require expert lawyer standard of care evidence to evaluate any of Attia’s alleged and admitted misconduct…: Malton at para 221.

[12]           Both in the interest of fairness, and given the nature of the failures advanced (breach of duty related to a relatively straightforward civil claim) I find that the skills and abilities necessary to execute the retainer here, in a way that meets the standard of a reasonably competent and diligent lawyer, are known to and within the general knowledge of this court. No expert evidence is necessary.

The Court confirmed the well-established law regarding the standard of care expected of a lawyer:

[13]           The standard of care expected of a lawyer is reasonable competency and diligence. A lawyer does not guarantee success, a lawyer must apply skills and abilities to the retainer in a way that meets the standard of a reasonably competent and diligent lawyer. An error of judgment is not sufficient: Spence at para 27Ashraf v Zinner, 2019 ABQB 389 at paras 59-60 (Ashraf), aff’d 2020 ABCA 207.

[16]           The standard of care does not require perfection, and disastrous results do not necessarily mean that the standard was breached. In assessing whether a lawyer’s conduct falls below the standard of care, one must be careful not to apply hindsight. The conduct must be assessed from the position the lawyer was in at the time of the acts or omissions: Adeshina at para 205.

[17]           As noted in Ashraf, “the expectation that a client has as to representation of a reasonably competent lawyer does not raise to the level of expecting or requiring perfection by the lawyer retained, nor does it rise to the level that the lawyer guarantee success before undertaking any legal work”: para 60.

[18]           Included in the standard of care is a duty to diligently protect the interests of the client and to communicate in a timely fashion about perceived difficulties: Ashraf at para 63. A lawyer’s duty of reasonable diligence includes keeping clients informed of developments in a matter. Specifically, a lawyer should notify a client forthwith of any settlement offer and the lawyer’s opinion on it: Baniuk at para 61.

Many allegations of negligence were raised against the Defendant, one of which was that he failed to advance the action promptly. While the Court confirmed that a lawyer has a duty to diligently pursue an action on behalf of his clients, the Court did not find the Defendant’s advancement of the action to fall below the relevant standard.

The Court did find that the Defendant fell below the standard in regard to his responsiveness and communication with the Plaintiffs, his clients:

[37]           I have two versions of what happened to the $95,000 offer. The Maltons say they expected Mr. Attia to make the offer; he says “we decided against it”. I have the Maltons’ fax raising the offer. I have nothing else in Mr. Attia’s file to indicate that it was discussed or to support his testimony that “we decided against it”. I find that the Maltons wanted the offer to be made. While I have no doubt that Mr. Attia did not think that making the offer would be productive, he had an obligation to discuss this with his client and outline his reasons, the likelihood of the offer being accepted, and the impact on the process. I find that he did not do so. By failing to convey the offers as instructed by his clients I find that Mr. Attia’s conduct fell below the standard of care expected of a competent and diligent lawyer.

The Plaintiffs also asserted that the Defendant gave them negligent advice. The Court confirmed that the standard in that regard is not one of perfection:

[39]           When giving advice, the standard is not one of perfection. It may be that counsel is wrong in the advice given while not falling below the standard of care required. Sometimes the law is not settled. Sometimes it takes litigation to determine the law. Sometimes counsel may assert a position and find that an adjudicator does not agree. This does not mean that the counsel’s advice fell below the standard of a reasonably competent and diligent lawyer.

The Court rejected the Plaintiffs’ claim that the Defendant negligently advised them they could not advance a lost opportunity claim:

[41]           With respect to a claim for lost opportunity, I find that Mr. Attia was correct in his advice and a claim for lost opportunity was not sustainable. A plaintiff claiming lost opportunity damages must establish that but for the defendant’s wrongful conduct, the plaintiff had a chance to obtain a benefit (or avoid a loss).

[42]           In these circumstances, even with the home inspector’s wrongful conduct, the Maltons could have invested their money for its original purpose and obtained the benefit. They chose to divert the funds to the house. In addition, to sustain a claim, they would have to establish that the opportunity lost was sufficiently real to rise above mere speculation. There was little evidence to establish that their retirement plan was acted on to make it more than mere speculation.

[43]           Finally, the Maltons’ lost opportunity to invest “…[was] too unrelated to the wrongful conduct to hold the defendant fairly liable”: Deloitte & Touche v Livent Inc (Receiver of)2017 SCC 63 at para 77. The lost opportunity to invest is too remote. The home inspector cannot have foreseen that his wrongdoing would prevent the Maltons from buying investment properties as it is unlikely that the home inspector knew about the Maltons’ desire to buy investment properties with their savings. While it was foreseeable that his wrongdoing would result in a financial burden on the Maltons, the reasonable expectations between the home inspector and the Maltons were related only to the purchase of the property that the home inspector was inspecting, not other investment properties.

[44]           As such I find that Mr. Attia’s advice on this matter was correct and his conduct did not fall below the standard expected.

On the matter of the Defendant’s advice to the Plaintiffs to mitigate their losses, however, the Court found that the Defendant failed to give the Plaintiffs sufficient information to weigh their options:

[52]           Thus, Mr. Attia appears to have been motivated to tell the Maltons to mitigate and repair. The issue is that it is not Mr. Attia’s job to decide what is in the Maltons’ best interest – it is his job to advise them as to the law – in this circumstance the duty to mitigate. This means advising of the duty to mitigate and the extent of the duty. The Maltons thought they had to mitigate at all cost and that impecuniosity was not a defence. Mrs. Malton raised with Mr. Attia, several times, the difficulties they were having mitigating (in accordance with their understanding of their duty). Mr. Attia did not dissuade them from this obvious misconception of the law, apparently because he thought it was in their interest to fix the house. This was not his decision to make.

[53]           I find that removing that decision from them is a breach of the standard of care. A competent and diligent lawyer may have the same concerns Mr. Attia had but a competent and diligent lawyer is required to explain all the reasons why he thought they should fix the house while also advising on the limits to mitigation. Having taken away the decision from the Maltons, Mr. Attia’s conduct fell below the standard of care expected.

The Court also found some instances where the Defendant’s trial conduct fell below the standard of a reasonable and competent lawyer, in particular in regard to submitting exhibits and preparing his clients for examination, as well as in regard to quantifying the damages claim:

[79]           A reasonably competent and diligent lawyer would have been better prepared for trial. While sometimes litigation cannot be anticipated, preparing your witnesses for direct examination, preparing all the exhibits you plan on entering for trial to prove your own case, and having copies for the court and opposing counsel is not too much to ask for. This is particularly true for a plaintiff who gets to present their case first. I find that it is not unreasonable to expect counsel to have reviewed the material he intended to put into court and to prepare his client on how the material will go in. A reasonable and competent counsel would have done so. Mr. Attia did not. I find that he failed to meet the standard of care required of a reasonably competent and diligent lawyer.

[85]           While “courts have long recognized the difficulty facing lawyers in the conduct of litigation where decisions are made in what might be described as the heat of battle”, I find this is not what was happening here: Garrant v Moskal, 1985 CanLII 2349 at para 10, 40 Sask R 155 (SKCA). While Mr. Attia had a good grasp of the liability issues he was facing, it appears he did not prepare for, consider, or understand anything about the damages his clients were claiming. A reasonably competent and diligent counsel would have known his clients’ case relating to damages, not just liability. Mr. Attia clearly was not prepared to present his clients’ case related to damages. He appeared to be “winging it”. I find his lack of preparation and presentation of the Maltons’ damages claim fell below the standard expected of reasonably competent and diligent counsel.

The Court also found that the Defendant had breached his standard of care by settling the interest and costs portion of the claim without instructions:

[98]           In cross examination, Mrs. Malton was asked “what could you have contributed” to the discussion on costs and prejudgment interest because she did not understand things such as party and party costs. This is entirely beside the point. Counsel has an obligation to seek instructions before settling any part of a claim and if that involves explaining what counsel is proposing and why, so be it. Counsel cannot simply imply that the client would not have understood and they were acting in the client’s best interest. I find that Mr. Attia breached his standard of care by failing to obtain settlement instructions prior to setting the final judgment roll and failing to advise the Maltons of their right to appeal the decision.

Having found a breach, the Court also found that the Plaintiffs suffered damages as a direct result of the Defendant’s breaches. One such element was the Defendant’s failure to argue a link between water infiltration and the resultant mould and rot in the house purchased by the Plaintiffs in the original action:

[112]      At trial the Maltons claimed $107,607.07 in damages. Justice Lee’s approach was to try, as best he could, to take the amount claimed, deduct for repairs on items that were identified by Housemasters and deduct for betterment. He assessed damages at $38,381.10. I find that competent counsel at trial would have argued that work that was done to remediate rot and water infiltration was recoverable even if it was unseen by Housemasters. The point is that Housemasters missed the red flags that this damage was lurking below the surface, they should have identified it for the Maltons, they did not. The Maltons bought the house so Housemasters is responsible for fixing it. Justice Lee also deducted amounts for repairs identified in the report that were in addition to the $6,000. However, in this trial within a trial I will not be doing so as I accept that the Maltons would not have bought the house in its current condition and Housemasters should be responsible for those repairs too.

[113]      Had the damages been properly presented and argued, the Maltons would be seeking all of the $107,607.07 on the basis that they would not have incurred any of the expenses but for Housemasters’ negligence, plus additional damages for repairing mould and rot damages and damages for the health consequences of the mould and general damages for the anxiety and stress of the action.

Having found that the Plaintiffs would have been awarded higher damages at the original trial if not for the Defendant’s breaches, the Court still applied a discount factor for risk:

[119]      Before calculating the damages in the trial within a trial I must then consider a discount factor for the risk of litigation or “opportunity lost”. There is no certainty that the Maltons would get the amount I have assessed. Different evidence may have been presented. Housemasters may have marshalled greater efforts toward damages, even in argument, if the Maltons’ strategy in the trial was adjusted. I also must factor in the betterment argument as noted above. While it is not a science, I must do my best and estimate that the Maltons lost a 70% opportunity to have the damages I set out above.

[120]      The total potential damages in the trial within the trial are $97,501.99 ($82,501.99 plus $10,000 plus $5,000). From the damages calculated I would deduct the $6,000 Housemasters estimated for repairs and add the lost opportunity factor of 70%, leaving damages at $68,251.39. The difference between the lost opportunity and the amount awarded by Justice Lee ($38,381.10) means a difference of $29,870.29 being the damages caused by Mr. Attia’s failure to represent his clients to the standard expected of him at trial.

The Court also assessed $3,000 in damages regarding the negligent mitigation advice given by the Defendant, $3,000 in damages for failing to convey offers, and $2,750 in damages for the Defendant’s failing to seek instructions before settling the interest and costs portion of the judgment.

The Court further assessed general damages of $10,000 for the mental distress caused to the Plaintiffs:

[129]      As with the action against Housemasters, general damages may be claimed where the test in Fidler is met. I have no hesitation in finding that when retaining a lawyer, one object of the contract is to secure a psychological benefit and that mental distress upon breach was in the reasonable contemplation of the parties when the contract was entered. I also find that the degree of mental suffering caused in this case is sufficient to warrant compensation. Both Mr. and Mrs. Malton testified to the stress, the lost trust in society, the broken relationships with friends and family, and the lost time occasioned by their involvement with Mr. Attia. Damages for mental distress do not need to be corroborated and although they are difficult to demonstrate, they are compensable and can be substantial: Boudreau v Benaiah (1998), 1998 CanLII 14650 (ON SC), 154 DLR (4th) 650 at para 129 (ONCJ), var’d (2000), 2000 CanLII 5651 (ON CA), 46 OR (3d) 737 (ONCA) (Boudreau).

[132]      In this case there was evidence of the stress of litigation and ample evidence of Mr. Attia failing to keep communication open with his clients. In fact, the Maltons stated that Mr. Attia was doing a good job for them – until they received the decision of Justice Lee. I find that given the Maltons’ evidence of the stress they were experiencing, general damages in the amount of $10,000 is appropriate.

Having considered all of the above, the Court declined to award any punitive damages.