Monday, 18 June 2012

Inconsistent Pleadings Within and Outside of an Action

Rule 3-7(6) provides that a party "must not plead an allegation of fact or a new ground or claim inconsistent with the party's previous pleading".  The question of what are "inconsistent" as opposed to merely "alternative" pleadings has sometimes vexed counsel and the courts, particularly in light of R. 3-7(6), which provides that:
(7)  Subrule (6) does not affect the right of a party to make allegations in the alternative or to amend or apply for leave to amend a pleading.
In Pepper’s Produce Ltd. v. Medallion Realty Ltd., 2012 BCCA 247, the court confirmed (albeit without referring to R. 3-7(6), the following principles with respect to inconsistent pleadings:
  1. a party must not plead inconsistent positions within the same action (by later amendment), as well as in different actions (in this case, in a Reply in a Small Claims action and a Notice of Civil Claim in the Supreme Court action); and
  2. a party is considered to take inconsistent positions when it first alleges that it entered into a contract with A and settles with A, but subsequently seeks to amend pleadings to allege that it in fact entered into a contract with B and has suffered damages as a result of B's conduct:

Thursday, 7 June 2012

Beware "Entire Contracts"

Ordinarily, even an incompletely performed contract gives rise to quantum meruit compensation.  This is not the case, however, for "entire contracts" or "lump sum contracts".  These contracts require full performance before a duty to pay arises.  For such contracts, a court cannot imply a pro rata payment term, nor find that equity imposes a restitutionary quantum meruit obligation.  For example, a builder who agreed to construct a house under a lump sum contract but who did not complete it was not entitled to recover for the work actually completed.  

The decision of Master Taylor in Slater Vecchio LLP v. Cashman, 2012 BCSC 830, is a notable example of the application of this doctrine and a cautionary tale for lawyers taking on contingency files.

The solicitors in this case transferred in an ongoing personal injury file with two ICBC actions - tort and Part 7 benefits.  Under the retainer agreement, the client agreed to pay them a 33.3% contingency fee for acting as his solicitors "with respect to my claim for damages incurred as a result of personal injuries and other losses arising out of a motor vehicle accident...".  The solicitors settled the tort claim and reached an agreement with the previous law firm regarding distribution of fees.  However, when the client asked about the status of the Part 7 action, he was advised that the solicitors were not prepared to act further because they did "not believe the case is worth pursuing".  When the client refused to consent to the withdrawal, the solicitors terminated the retainer.

On a review under s. 70 of the Legal Profession Act, Master Taylor found that the retainer was "an entire contract and intended as such by which the Solicitors were obligated to prosecute both the Client’s tort action and his Part 7 action to their respective conclusions in order to be entitled to any fee."  Finding that the retainer was neither replaced by a new one, nor amended, nor released when the fee was settled between firms, Master Taylor concluded that the solicitors breached the retainer when they unilaterally withdrew.  Accordingly, they had to refund to the client $201,600 in fees plus Court Order Interest.

Saturday, 2 June 2012

Major Change to Court of Appeal Practice: No More Interlocutory Orders and "Order Approach"

In one quiet and not so fell swoop, as part of the ongoing "justice reform", the BC Legislature and AG Shirley Bond dealt a deadly blow to the complex and cumbersome process for determining what Supreme Court orders require leave to appeal.  Apparently at the request of the Court of Appeal, the concept of "interlocutory orders" has been repealed and replaced with "limited appeal orders".  Only these orders, made on applications specifically listed in the amended Court of Appeal Rules - Rule 2.1, now require leave to appeal.  The Court of Appeal will be able "to add to the list if it identifies other categories of application that it believes will consistently be denied leave to appeal."

Friday, 1 June 2012

BCSC No Longer Charging Hearing Fees

In a "Notice to the Profession" sent out today, the Law Society advised that the government is appealing the Vilardell v. Dunham decision striking down hearing fees, but, meanwhile, the Court Services Branch:
... has suspended the processing of payments or issuance of invoices for hearing fees for Supreme Court civil jury and non-jury trials and applications under Appendix C, Schedule 1, Items 9 and 10 of the Supreme Court Civil and Family Rules, while the matter of hearing fees is before the courts.
This answers my earlier question of applicability of this decision, issued with respect to hearing fees under the Old Rules, to the New Rules.

Ebbs and Flows of Pre-Sale Litigation

Perhaps it is the beginning of the summer lull, but there has been a dearth of interesting decisions over the last week.  There was, however, a very notable decision dealing with the Real Estate Development Marketing Act (REDMA) released on May 23.

Woo v. ONNI Ioco Road Five Development Limited Partnership, 2012 BCSC 764, was yet another case where purchasers brought an action to rescind pre-sale contracts based on breaches of REDMATwo aspects of this case were unusual, however:
  • the amendment to the disclosure statement that the buyers did not receive, and on which they based their action, essentially provided that everything was on track; and 
  • rescission was demanded more than two years after the sales completed and buyers took possession. 

The court found for the buyers, applying a standard of materiality that arguably differs from the one established by the SCC and BCCA, and which stands in stark contrast to another REDMA decision released earlier this year.  Moreover, and the court refused the developer's counterclaim for occupational rent or compensation for the diminution in value of the units, finding that:
  1. the equitable principle of restitutio in integrum did not apply to statutory rescission under REDMA; and
  2. because REDMA is a consumer protection legislation, policy consideration precluded the developer's claim for compensation:
[123]      In the absence of a statutory provision for an accounting, there are policy considerations that weigh against the Court ordering occupational rent and an accounting.  The purpose of the statutory right of rescission provided by s. 21(3) is to protect consumers by ensuring that developers disclose all material facts. That section is aimed at providing a remedy to purchasers where a developer fails to perform its obligations, rather than at achieving equity between both parties to a commercial transaction.
[124]      The prospect of recovering occupational rent might create for some developers an incentive to litigate claims for statutory rescission and to prolong that litigation, knowing that occupational rent would continue to accrue. 
My full analysis of this and other recent REDMA decisions was published as a feature article on the BCRElinks.Com.