Introduction

A client’s capacity, vulnerability, and susceptibility to undue influence should always be live issues in the work of trusts and estates professionals. Lawyers, for their part, are obligated to ensure in any retainer that their client has the requisite capacity to: (1) retain counsel, and (2) give instructions to counsel and execute any documents necessary to resolve the specific matter for which counsel is retained. As such, matters such as granting Powers of Attorney, making testamentary dispositions, and effecting real property transfers each have discrete determining criteria for capacity. Lawyers must therefore make time- and task specific determinations of a client’s capacity. It goes without saying that in the course of retainers where a client’s capacity, vulnerability, and susceptibility to undue influence are at issue, lawyers must be especially careful in their initial and ongoing assessment of their client’s ability to retain and instruct counsel

In the case of Barberio Estate (Re) v. Da Costa,^[1] the court had to determine whether the real estate lawyer was negligent in assisting his elderly client, now deceased, to transfer his property to his neighbours for below market value, in the motion for summary judgment.

Background facts

Guido Barberio (the “Deceased”) lived next door to Jose Da Costa and Rosa Da Costa, a married couple, for about 16 years before he died on February 19, 2010, at the age of 82. On June 3, 2008, the Deceased transferred title of the home he lived in to Jose Da Costa for a sum of $100,000. It is alleged that this amount was far below market value.

Mr. Allen Welman (“Mr. Welman”), Barrister and Solicitor, acted for the Deceased on this real estate transaction. After his death, the Deceased’s estate (“Estate” and/or the “plaintiff”) issued a statement of claim on September 7, 2011 against the Da Costa’s and Mr. Welman (herein referred to as the “defendants”). The plaintiff alleges that the Deceased was taken advantage of in the sale of his home by the Da Costa’s. It is further alleged that this wrongful act was aided by the negligent actions of Mr. Welman. The defendants denied this. The Da Costa’s submitted that the Deceased validly transferred his home to the Da Costa’s in appreciation for the past care they gave him and the future care they would continue to give him. Mr. Welman submits that he conducted himself appropriately in facilitating the real estate transaction.

The Defendant brought a summary judgment motion to dismiss the action. The plaintiff stated that a trial was needed. The plaintiff did not seek summary judgment in its favor on any of the issues raised by the defendants.

Amongst the issues the court had to determine were:

• Whether the claim against Mr. Welman statute barred?
• If Mr. Welman acted negligently, did his negligent action(s) cause the plaintiff any damages? And,
• If some of the claims are amenable to summary judgment, is it appropriate to grant partial summary judgment?

The court reviewed the facts of the case leading to the transfer of the property and the action:

• On April 22, 2008, the Deceased was admitted to hospital and went through some testing which showed congestive heart failure.
• On April 29, 2008, the Deceased met with Alice Fava, a lawyer recommended to him by a friend. The Deceased signed a Power of Attorney for Personal Care appointing the Da Costa’s and a Power of Attorney for Property appointing Ms. Fava. He further signed a Will naming Ms. Fava as his executor and a sister in Italy as a beneficiary.
• In early to mid-May, the Deceased met Ms. Fava with a signed agreement of purchase and sale of his home, transferring it to the Da Costa’s for $100,000. Ms. Fava did not approve of it. There is a dispute between the parties of how this meeting went. Ms. Fava’s evidence is that she felt the Deceased was vulnerable and could not take care of himself. She believed there were alternative ways to compensate Rosa Da Costa for taking care of him. Ms. Fava wrote to the Da Costa’s stating that she refused to approve the transfer, the sale of the Deceased’s property on those terms was unconscionable, and, if proceeded with, it would be set aside.
• In May of 2008, the Deceased met with Mr. Welman to get his help with the transfer of his property. The Da Costa’s also retained a lawyer, Nelson Garcia, to act for them on the transfer. A second agreement of purchase and sale for the property was signed.
• On or about May 30, 2008, the transfer of the Deceased’s property to Jose Da Costa was signed. An undertaking from the Da Costas to allow the Deceased to live in his home and to take care of him also was signed.
• On May 30, 2008, the Deceased signed with Mr. Welman a Power of Attorney for the Property appointing Rosa Da Costa, and a Will naming his sister in Italy as beneficiary.
• On June 3, 2008, the property was transferred and registered on title to Jose Da Costa.
• From June 2008 to August 2009, there is a dispute between the parties about the amount of care and attention the Da Costa’s gave to the Deceased.
• In August of 2009, the plaintiff submits that Mario Lucente, the Deceased’s cousin, met with the Deceased who showed Mr. Lucente his Will. Other documents regarding the transfer of his property were also shown. It is alleged that the Deceased said to Mr. Lucente and Giorgio Barberio, a nephew, that he did not sign the documents and did not sell his house to the Da Costa’s.
• On August 30, 2009, the Deceased met with Mauro Marchioni, a lawyer. The transfer documents were reviewed. The Deceased stated that he did not sell his home.
• On August 31, 2009, Mr. Marchioni wrote to Mr. Welman about the Deceased’s understanding that he did not sell his home.
• On September 1, 2009, Mr. Marchioni wrote to the Da Costa’s revoking the Power of Attorneys and advising them not to take any further steps. Mr. Marchioni advised that they were going to take steps to set aside the transfer of the property.
• On September 2, 2009, the Deceased executed a direction to Mr. Welman to provide Mr. Marchioni with a copy of the real estate file for the property.
• It is alleged by the plaintiff that Mr. Welman delayed in providing his file and failed to provide the full and complete file to Mr. Marchioni.
• On February 19, 2010, the Deceased passed away.
• On September 7, 2011, the plaintiff issues the statement of claim.

The court reviewed the Rules of Civil Procedure,[2] and case law concerning summary judgment. Pursuant to Rule 20, a plaintiff is entitled to move for summary judgment dismissing “all or part” of a defendant’s claim. Rule 20.04(2) mandates that the court “shall” grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to all or part of the claim.

The Supreme Court of Canada confirmed that summary judgment is a “significant alternative model of adjudication.”[3] Rule 20 provides judges with fact-finding powers (i.e. the power to weigh evidence, evaluate credibility, and draw inferences) if required in order to eliminate unmeritorious claims that have no chance of success at trial.

Determining a motion for summary judgment involves a two-step approach. A judge must: 

• Determine whether there is a genuine issue requiring trial based only on the evidence before him or her, without using the fact-finding powers. If there is no genuine issue requiring a trial, summary judgment “mustbe granted;”
• If there appears to be a genuine issue requiring a trial, the judge should then determine whether, “the need for a trial can be avoided” by using the fact-finding powers to weigh evidence, evaluate credibility, and draw inferences.

In addressing the issue of whether Mr. Welman acted negligently, and if his negligent action(s) caused the plaintiff any damages, the plaintiff must establish causation. The test for causation is the, “but for” test on a balance of probabilities; in other words, that the injury would not have occurred but for the negligence of the lawyer.[4]

Mr. Welman argued that there is no issue requiring trial since the allegation that he negligently permitted the Deceased to close the sale of his property for less than the fair market value and failed to protect his interest is completely answered by Ms. Fava’s evidence that she met with the Deceased alone on or about May 13, 2008, and advised him against the transaction.

In short, it was submitted that regardless of how negligent Mr. Welman’s advice and actions were, it would not have made any difference since the Deceased would still have sold his property to the Da Costa’s on the terms that he did. The fact that he did so, despite Ms. Fava’s advice, shows that the plaintiff cannot prove that, but for, Mr. Welman’s negligence, the plaintiff would not have suffered the injury that he did.

To assess this argument, the court reviewed the plaintiff’s pleadings that alleged the estate suffered damages due to Mr. Welman’s negligence in the amount of $250,000 as Mr. Welman breached his retainer with the deceased and was negligent in his representation; he failed to properly, or at all, advise the deceased of his rights in respect of the Transfer; he failed to analyze all of the facts surrounding the Transfer, including the value of the property being transferred and the price for which it was being transferred, thereby depriving the decedent of the fair market value of his home; he failed to protect the deceased’s interest in respect of the value of his property; he failed to ensure that the deceased appreciated the nature of the documentation he was executing and the effect of the documents in respect of the property’s interest; he failed to exercise the degree of skill and care of a reasonable lawyer.

The plaintiff also relied on the expert report of Reuben Rosenblatt, Barrister and Solicitor, who was of the opinion that Mr. Welman fell below the standard of care of a reasonably competent solicitor in the manner in which he represented the Deceased in the sale of his property.

The Judge decided that with respect to causation there is a genuine issue requiring a trial.

On the issue of whether the claim against Mr. Welman statute barred, the court reviewed Section 4, 5(1) and 5 (2) of the Limitations Act.  The Plaintiff and Mr. Welman argued as to when the claim for negligence was discovered and when the limitation period commenced to run.

The Judge was of the opinion that a trial cannot be avoided by using his powers under Rule 20.04, as it is against the interests of justice to do so. To do so would not lead to a fair and just result and will not serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

Conclusion

The Motion was dismissed, as the case could be disposed of on summary judgment. There was genuine issue requiring trial respecting claim that the Da Costa’s were unjustly enriched; the nature of relationship between couple and the Deceased was a key and material issue requiring trial; all of the evidence must be considered in determining whether there was juristic reason for enrichment and deprivation; and there were serious credibility issues that could not be resolved on summary judgment motion.  A trial is required to determine the issues.

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[1] Barberio Estate (Re) v. Da Costa, 2018 ONSC 6144 (CanLII)

[2] RULES OF CIVIL PROCEDURE: R.R.O. 1990, Reg. 194

[3] Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 (S.C.C.), at para. 45

[4] Pilotte v. Gilbert, Wright & Kirby, Barristers & Solicitors, 2016 ONSC 494 (Ont. S.C.J.).

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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.