PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - TRIAL DIVISION LOUISE PARKER

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1 Date: Docket: GSC Registry: Charlottetown PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - TRIAL DIVISION BETWEEN: LOUISE PARKER PLAINTIFF AND: LEDWELL, LARTER and DRISCOLL and DAVID LARTER DEFENDANTS BEFORE: THE HONOURABLE MR. JUSTICE J. ARMAND DESROCHES Place and Date of Hearing Charlottetown, Prince Edward Island (In Chambers) December 5, 1997 Place and Date of Judgment Charlottetown, Prince Edward Island December 22, 1997 Michele M. Murphy Patrick Aylward Solicitor for the Plaintiff Solicitor for the Defendants

2 GSC LOUISE PARKER PLAINTIFF AND: LEDWELL, LARTER and DRISCOLL and DAVID LARTER DEFENDANTS Prince Edward Island Supreme Court - Trial Division Before: DesRoches, J. Date Heard: December 5, 1997 (In Chambers) Date of Judgment: December 22, 1997 [8 pages] PRACTICE - Judgments and Orders - Summary Judgment - General. Cases Considered: Pizza Pizza Ltd. V. Gillespie, Chicken Chicken et al (1990), 75. O.R. 225 (H.C.); Murphy v. Tignish Credit Union Ltd. And Aylward (1997), 147 Nfld. & P.E.I.R. 188; Simmonds v. Murphy (1996), 137 Nfld. & P.E.I.R. 332; Irving Ungerman Ltd. V. Galanis (1991), 4 O.R. (3d) 545 (C.A.); Karpenbo v. Paroian, Courey, Cohen & Houston (1980), 117 D.L.R. (3d) 383 (Ont. H.C.J.); Maillet and Pothier v. Haliburton and Comeau (1983), 55 N.S.R. (2d) 311 Rule Considered: Prince Edward Island Supreme Court Rules of Court, Rule 20.01(3) Michele M. Murphy, solicitor for the plaintiff Patrick Aylward, solicitor for the defendants

3 DesRoches J.: [1] This is a motion for summary judgment under Rule 20 of the Rules of Court brought by the defendants Ledwell Larter & Driscoll and David Larter. The defendants are requesting the Court to summarily dismiss the plaintiff s claim on the basis that there is no genuine issue for trial. FACTS [2] The plaintiff, Louise Parker retained David Larter of the law firm Ledwell Larter & Driscoll to pursue a claim against Central Guaranty Trust. In June of 1989, the plaintiff and her late husband executed a mortgage in favour of Central Guaranty Trust in the amount of $75, plus interest. The plaintiff says she was assured by her husband that this mortgage had been life insured and if anything happened to him the mortgage would be paid. Central Guaranty Trust also held a second mortgage on the same property which was not insured and is not in issue in these proceedings. Unfortunately, the plaintiff s husband died unexpectedly on April 26, [3] Upon her husband s death the plaintiff contacted Dana Cole of Central Guaranty Trust to inquire about the status of the insurance on the mortgage. She was informed that the application for insurance had been forwarded to National Life and it was up to them to decide if the mortgage loan would be insured. The plaintiff made several inquiries of Dana Cole as to the status of insurability on the loan but received no satisfactory answer. [4] The plaintiff finally was informed in September of 1990 that the mortgage was not insured. Due to the lack of information from Dana Cole, the plaintiff contacted Michelle Sanderson, a lawyer, who received a letter from National Life in September of 1990 stating that the mortgage was not insured. At this time Michelle Sanderson informed the plaintiff that she could no longer act for her as her firm also represented Central Guaranty Trust. This is when the plaintiff retained David Larter to pursue her claim against Central Guaranty Trust. [5] Mr. Larter began communications and negotiations with Central Guaranty Trust on behalf of the Plaintiff and in November of 1991 the solicitor for Central Guaranty Trust communicated a settlement offer to the defendant David Larter. Mr. Larter informed the Plaintiff and her accountant, Mike Cassidy, of the offer. The offer was for the sum of $44, and was accepted by Mr. Larter on behalf of the Plaintiff. This is where the present claim arises. [6] The plaintiff has filed a statement of claim against the defendant David Larter and his firm alleging that the defendants breached their duty of care and good faith to her in that the settlement offer she accepted was not a reasonable one in all the circumstances, and she accepted the offer based on erroneous or negligent information and advice given by Mr.

4 Page: 2 Larter. The defendants have taken the position that the settlement was in fact a reasonable one in all the circumstances. [7] The issue to be resolved in this actions is: Awas the settlement proposal a reasonable one in the circumstancesa? However, the only issue that is before me is whether, based on the evidence submitted, there is any genuine issue for trial in this matter? LAW [8] Rule 20 of the Rules of Court relates to summary judgment. Rule 20.01(3) is authority for the defendants to move for summary judgment: 20.01(3) A defendant, may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim. [9] The approach taken to a similar Rule in Ontario by Henry J. in Pizza Pizza Ltd. v. Gillespie, Chicken Chicken et al (1990), 75 O.R. 225 (H.C.) at p. 238 is as follows: In my view, the general thrust of the seminal decisions of the court on Rule 20, where the moving party is the defendant, may be summarized thus for present purposes: Rule 20 contemplates a radically new attitude to motions for judgment; the objective is to screen out claims that in the opinion of the court based on evidence furnished as directed by the rule, ought not to proceed to trial because they cannot survive the good hard look. There is no arbitrary or fixed criterion that the motions judge must apply. It is a case by case decision to be made on the law and on the facts that he is able to find on the evidence submitted to him in support of the claim or defence, whether the plaintiff has laid a proper foundation in its affidavit and other evidence to sustain the claims made. It is not sufficient for the responding party to say that more and better evidence will (or may) be available at trial. The occasion is now. The respondent must set out specific facts and coherent evidence organized to show that there is a genuine issue for trial. Apparent factual conflict in evidence does not end the inquiry. The court may, on a common sense basis, draw inferences

5 Page: 3 from the evidence. The court may look at the overall credibility of the plaintiff s action, i.e., does the plaintiff s case have the ring of truth about it such that it would justify consideration by the trier of fact? Matters of credibility requiring resolution in a case of conflicting evidence ought to go to trial; however, that depends upon the circumstances of the case; the court in taking the hard look at the merits must decide if any conflict is more apparent than real, i.e. whether there is really an issue of credibility that must be resolved in order to adjudicate on the merits. Motions under Rule 20 must be made sparingly and judiciously; the court will control abuse of this process if necessary by its order for costs. [10] Justice Henry s approach has been adopted in this jurisdiction. [11] In Murphy v. Tignish Credit Union Ltd. and Aylward (1997), 147 Nfld. & P.E.I.R. 188, the Appeal Division of this Court stated at p. 190: The onus is on the moving party to show that the motion for summary judgment should be granted. Coincident with this onus is the responsibility of the responding party to bring forth, in response to the motion, the evidence necessary to demonstrate there are material facts in issue which give rise to a genuine issue within the context of the pleadings and which is deserving of determination by the trial process. All of this has been colloquially described in various decisions as putting your best foot forward and as playing trump or risk losing. [12] It is clear that the law in this area is that while the onus is in the moving party to show that there exists no genuine issue for trial, the respondent also has a responsibility to bring forth evidence on the motion to show there is in fact a genuine issue for trial. [13] In Simmonds v. Murphy (1996), 137 Nfld. & P.E.I.R. 332 MacDonald C.J. considered the meaning of Agenuine issue@. The learned Chief Justice quoted at p. 342 the following from Irving Ungerman Ltd. v. Galanis (1991), 4 O.R. (3d) 545 (C.A.) at p. 551: It is safe to say that genuine means not spurious and, more specifically, that the words for trial assist in showing the meaning of the term. If the evidence on a motion for summary judgment satisfies the court that there is no issue of fact which requires a trial for its resolution, the requirements of the rule have been met. It must be clear that a trial is unnecessary. The burden is on the moving party to satisfy the court that the requirements of the rule have been

6 Page: 4 met. Further, it is important to keep in mind that the court s function is not to resolve an issue of fact but to determine whether a genuine issue of fact exists. [14] In Murphy v. Tignish Credit Union Ltd. and Aylward, supra, our Court of Appeal expressed the following view at p. 190: Generally speaking, it may be said there will be a genuine issue for trial where relevant facts are in dispute and where the credibility of witnesses who have material facts to present, is in question. On the other hand, where the case is properly assessed as being unlikely to succeed at trial, there is no genuine issue for trial and the motion for summary judgment should be granted. [15] The issue of the credibility of witnesses is also critical on a motion for summary judgment. In Simmonds v. Murphy, referring again to the decision of Morden, A.C.J.O. in the Irving Ungerman case, supra, MacDonald C.J. writes as follows at p. 336: [5] On the matter of credibility it was stated that if there is a genuine issue of credibility, a trial is required and summary judgment should not be granted. Morden, A.C.J.O., then turned to the issue of when an issue of credibility exists stating at p. 552 O.R.: At pp to the following appears in 6 Moore s Federal Practice, supra, with respect to whether an issue of credibility exists: AJudge Hutcheson s statement as to the test to be applied in determining whether the materials favourable to the opposing party present an issue of credibility will bear repetition: To proceed to summary judgment it is not sufficient then that the judge may not credit testimony proffered on a tendered issue. It must appear that there is no substantial evidence on it, that is, either that the tendered evidence is in its nature too incredible to be accepted by reasonable minds, or that conceding its truth, it is without legal probative force. (Whitaker v. Coleman (1940), 115 F.2d 305,

7 Page: 5 306) AThe test has been applied and often quoted. Evidence, then, that is too incredible to be accepted by reasonable minds does not raise an issue of credibility. Conversely, if the evidence is such that a jury would not be at liberty to disbelieve it no issue of credibility is present. Or, stated differently, a summary judgment may be granted on evidence that would compel the direction of a verdict; and should be denied when a directed verdict would be improper. [6] Therefore, when questions of credibility arise in this matter the above is the test that I shall be applying. ANALYSIS [16] The statement of claim that the defendants seek to have summarily dismissed alleges the following causes of action against the defendants: a) negligence in breaching the contract with the plaintiff b) breach of duty of care and good faith by: i. failing to note that Cole and the Bank omitted to have Mr. Parker execute a statement of disclosure or waiver of insurance; ii. failing to commence an action; iii. advising the plaintiff to settle the claim without properly informing her of the strengths and weaknesses of her case; iv. advising the plaintiff to accept an unreasonably low settlement considering the strength of her case; v. bringing about an unreasonable delay before taking action; vi. vii. viii. acting in a conflict of interest; advising the plaintiff to execute a release when it was not prudent and reasonsonable to do so; and failing to exercise the care, competence and skill expected of lawyers. [17] Having considered the material filed, I have reached the conclusion that there are issues of fact in dispute in this case which must be decided by a trier of fact in order to

8 Page: 6 determine the main question whether the settlement was reasonable given all the circumstances. To answer that question it will be necessary to present evidence concerning the circumstances surrounding the plaintiff s claim against Central Guaranty Trust, and the circumstances in which the offer was accepted by her. It also will be necessary for the trier of fact to determine whether or not Mr. Larter recommended settlement, and whether, if he did, he was in error in doing so. [18] The defendants have alleged that the settlement was accepted by the plaintiff because she was in financial difficulty. Certainly, there is evidence the plaintiff was experiencing financial difficulties in her business, but it cannot be assumed that this is in fact the reason she accepted the settlement offered. The plaintiff maintains she accepted it because of erroneous advice provided by Mr. Larter. On the other hand, Mr. Larter states in his affidavit that he did not recommend either that the plaintiff accept or reject the offer. The plaintiff alleges she was informed by Mr. Larter that she would have to come up with $30,000 costs prior to trial. She states in her affidavit she believes she was coerced into accepting the offer, and that the matter of costs was not fully explained to her. This, it seems to me raises a genuine issue of credibility. [19] There is some controversy as to the reason why the plaintiff accepted the settlement offered. For example, Michael Cassidy, a Chartered Accountant, who at the material time was the plaintiff s financial advisor, testified at some length in discovery that at about the time of the settlement, the plaintiff was attempting to put together a package to buy down a certain outstanding debt which the plaintiff s business owed to Ultramar. Although, at one point in his testimony, Mr. Cassidy suggested that the plaintiff accepted the offer to settle her claim against Central Guaranty Trust to make the deal with her creditors, subsequently to the direct question ADid Louise Parker accept the November 18, 1991 settlement offer because of her financial problems?@ he answered ANo@, an unambiguous and definitive answer. [20] In order to evaluate the reasonableness of the settlement it will be necessary to weigh the strengths and weaknesses of the case the plaintiff had against Central Guaranty Trust. The plaintiff s position is that the whole amount of the mortgage plus the payments she made on the mortgage from the date of her husband s death, a total in excess of $90,000.00, should have been paid to her as there was minimal risk of losing at trial. The defendants maintain that the $44, settlement was a reasonable one in the circumstances given the inherent risks of trial. In this respect it will be necessary to evaluate the facts surrounding the life insurance policy, and the reason why it never reached National Life; was it an oversight on the part of Dana Cole or was it because Mr. Parker informed Dana Cole that he would probably not qualify for life insurance anyway? Again, there are disputed facts in relation to this issue. Evidence has been presented by the plaintiff that Mr. Parker was in fact insurable, but Dana Cole informed the plaintiff that her husband believed he was not insurable. It will be helpful to the trier of fact to hear the testimony of Dana Cole on this issue.

9 Page: 7 [21] The Plaintiff has also raised the issue of a conflict of interest on Mr. Larter s part. However, I have not commented on this and find it unnecessary to do so. [22] Counsel for the defendants has invited my attention to two cases relating to the standard to be applied to a reasonable and competent solicitor in dealing with matters of settlement. The cases are Karpenbo v. Paroian, Courey, Cohen & Houston (1980), 117 D.L.R. (3d) 383 (Ont. H.C.J.), and Maillet and Pothier v. Haliburton and Comeau (1983), 55 N.S.R. (2d) 311. There is no question, based upon those decisions, it would only be in a clear and exceptional case that the decision of counsel to recommend settlement could be successfully assailed. As is pointed out, however, by Anderson J. Karpenbo at p. 398: I can think of few areas where the difficult question of what constitutes negligence, which gives rise to liability, and what constitutes at worst an error of judgment, which does not, is harder to answer. [23] I am not prepared, based on the material presented in support of this motion, to answer in effect that difficult question on this motion. As McQuaid J.A. wrote in Murphy v. Tignish Credit Union Ltd. and Aylward, supra, at p. 191: It was not for the Chambers judge to assess whether the allegations of the respondent are true or sufficient, on a balance of probabilities, to establish her claim nor is it the role of this Court to do likewise. The Chambers judge had the authority and obligation to assess the evidence presented on the motion and make a determination whether it raised a genuine issue for trial. This was done and I agree with the decision of the Chambers judge in its result. There are genuine issues for trial and they are, whether the appellant was negligent, whether he owed a fiduciary duty to the respondent and, if he did, was there a breach of that duty. On the basis of the pleadings and the evidence before the Chambers judge it has been demonstrated these issues are deserving of determination by the trial process. [24] I reach a similar conclusion in this case and, based upon the jurisprudence to which I have referred and upon my comments above, I would dismiss the defendants motion for summary judgment. [25] Although the defendant s brought this motion and have been unsuccessful, I find that bringing the motion was not unreasonable in the circumstances and therefore I will not award the plaintiff her costs on a solicitor-and-client basis but on a party-and-party basis. December 22, 1997 J.