nan CANADA S.K. No. 2364 PROVINCE OF NOVA SCOTIA IN THE SUPREME COURT OF NOVA SCOTIA TRIAL DIVISION BETWEEN: FARM CREDIT CORPORATION, body corporate and W. BRUCE GILLIS, Barrister and Solicitor nan HEARD BEFORE: The Honourable Mr. Justice K. P. Richard PLACE HEARD: Halifax, Nova Scotia DATES HEARD: December 4, 5, 1989 DECISION DATE: December 5, 1989 COUNSEL: Walter O. Newton, Q.C. and Steven Enman for the Plaintiff Harry E. Wrathall, Q.C. and Alex Cameron for the Defendant CANADA S.K. No. 2364 PROVINCE OF NOVA SCOTIA IN THE SUPREME COURT OF NOVA SCOTIA TRIAL BETWEEN: FARM CREDIT CORPORATION, body corporate and W. BRUCE GILLIS, Barrister and Solicitor Defendant Richard, J. (orally): This is an action by Farm Credit Corporation (FCC) against the defendant, W. Bruce Gillis, a barrister and solicitor practising in Middleton, Nova Scotia. Basically, it is a claim in professional negligence against Mr. Gillis for the losses sustained by FCC as a result of the alleged negligence of Gillis. The matter originated in the late fall of 1978 when the mortgagors, Paul and Eric Langille, farmers in the Middleton area, negotiated loan to be secured by mortgage on real estate known as the "Phinney farm". By letter of December 5, FCC confirmed that funds would be available to the Langilles. One of the conditions in paragraph of the letter states: "That you are willing to supply the Corporation with valid milk assignment to repay your mortgage loan on monthly basis. The exact amount of the monthly payments shall be determined at the time the loan is disbursed and you shall be advised of the amount required." In addition to that letter, there was also loan offer in which certain other stipulations were made respecting the security for the loan. One such condition was contained in clause D. "SPECIAL INSTRUCTIONS" "Fluid milk quota clause required in the amount of 1237 litres/day." By copy of the covering letter the Langille brothers purportedly accepted the terms and returned the letter dated December 12, 1978 which is stamped as received by FCC on December 18, 1978. Mr. Gillis had been engaged by the Langilles over the years as their solicitor and he continued his engagement with respect to this transaction. His letter of December 22, 1978 addressed to FCC indicates fairly complete understanding of the matter as well as his instructions to act for the Langilles on their behalf in this transaction. The matter then laid dormant until the 1st of April. On April 3, 1979 D.C. Rogers, Atlantic Assistant Regional Manager of FCC, wrote to their legal agent in the area, R. MacLeod Rogers, with instructions to disburse funds in accordance with the terms of the mortgage loan. In the instructions Mr. Rogers stated in part: "Would you please carry out sub‑search on this account before releasing the cheque to the Langilles and the Bank. Also have the borrower sign the attached Dairy Order and have their signatures witnessed and return both copies to the Corporation,” Enclosed was the dairy order directed to Twin City Dairies with blank space to be signed by Paul and Eric Langille. Following the receipt of that by solicitor R. MacLeod Rogers he sent letter to Gillis, the defendant, in which he states in part: "Please find enclosed herewith cheque from Farm Credit Corporation payable to the Imperial Bank of Commerce to pay out the Bank mortgage. Would you please disburse this cheque, after insuring on behalf of Farm Credit Corporation that the fire insurance is in order on the property. Would you also arrange with the Langilles to sign the enclosed Dairy Order in triplicate and return all copies to me, as soon as possible." The evidence is clear that Mr. Gillis was persuaded by one or the other or both of the Langilles that stipulation No. in the letter of December was no longer in effect because of the new deal which had been worked out between the Langilles and FCC. There is no doubt in my mind that Gillis was lulled into false sense of security by these representations. He disbursed the funds without having first had the dairy order executed by the Langilles. It matters not what assurances the Langilles gave to Mr. Gillis. He had clear and explicit instructions from his principal, R. MacLeod Rogers, to have the dairy orders executed. have no problem finding that Mr. Gillis was negligent and in breach of the trust imposed upon him by R. MacLeod Rogers when he disbursed the funds without having first received the signed dairy orders. In response to Mr. R. MacLeod Rogers, Mr. Gillis wrote on May indicating certain questions with respect to insurance. There was no mention at that time of the dairy order or any agreement that the Langilles had indicated had been concluded between them and FCC. MacLeod Rogers on June 27 sent to FCC what purported to be his final report on this matter in which he enclosed number of documents. Conspicuous by its absence was the dairy order. There are handwritten notes by FCC people indicating that these had not been received and they were strong enough in their opinion that they were prepared to withhold legal fees until such time as the agreements were received. This was confirmed to R. MacLeod Rogers by letter from D.C. Rogers of July 4, 1979. Mr. Gillis on July 9th, presumably after meeting or conversation with R. MacLeod Rogers, indicated that the Langilles had advised him that the dairy orders were no longer required. Following this on July 17, 1979, Mr. R. G. Aumell, Atlantic Region Manager for FCC, wrote to the Langilles indicating the amount outstanding at the time and also requesting payment of the arrears and the signed dairy order. further letter was written to Mr. R. MacLeod Rogers in which it was still the FCC position that the dairy order was required as part of the security for this loan package. On August 14, 1979, Eric and Paul Langille wrote to Farm Credit Corporation protesting that they did not have to submit the dairy orders because of other arrangements which had been made. It is not clear what other arrangements had been made but he did indicate in this letter that the initial conditions outlined were changed somewhat. In direct response to this is the letter of August 28, 1979 from FCC to the Langille brothers and it starts: "This will acknowledge your letter of August 14, 1979 regarding payment arrangements on your loan." And then, down two paragraphs, is the following statement: "Instead of monthly payments, as we had hoped for, we will now follow the payment arrangements as outlined in the loan offer you mentioned."(emphasis added) The loan offer mentioned is obviously the semi‑annual payment schedule set out in the original loan offer which accompanied the letter of December 5th. The contents of the August 28, 1979 letter was confirmed to R. MacLeod Rogers by telephone conversation and subsequently by letter of September 6th in which Mr. D.C. Rogers stated in part: "As mentioned to you on the phone, the Corporation does not intend to take this any further and have written the Langilles accordingly. We are disappointed that this error came about and we leave it up to you to advise Mr. Gillis as you see fit, in the hopes that this error will not be repeated in the future in connection with our accounts." By letter of September 6, R. MacLeod Rogers wrote to the Farm Credit Corporation. On September 11th R. MacLeod Rogers wrote to Gillis, the defendant, which reads in part: "I enclose copy of letter which have just received from Farm Credit in Moncton indicating that they are not going to proceed any further with respect to the breach of their and my instructions.” Presumably the letter that was sent along with that was the letter of September 6th. At this point new deal was made between the Farm Credit Corporation and the Langilles. The Farm Credit Corporation was no longer insisting on the execution of the dairy order. accept the argument of counsel for the defendant in that this forgiveness or alteration of the deal ended the matter insofar as Mr. Gillis was concerned. As a result, I am firmly of the view that the plaintiffs were then, and are now, estopped from exercising any of their rights against Gillis or R. MacLeod Rogers under the original instructions. Even if had found otherwise, it is clear from the correspondence that the damages at that time were slightly over $7,000.00. These arrears had been subsequently paid by the Langilles. There is no evidence that FCC suffered any losses during the time that the instructions respecting the dairy order were still subsisting. At the risk of being flip, must say that there are so many grounds upon which the plaintiff's action could be dismissed in this matter that am just choosing the most obvious one. am not dealing with the question of laches although there is merit in the argument of defendant's counsel on that point. To determine this case need not go beyond the doctrine of estoppel as annunciated by Lord Denning in Combe v. Combe, [1951] nan All E.R. 767. The following oft quoted passage from that case is particularly appropriate in the present circumstances: "The principle, as understand it, is that where one party has, by his words or conduct, made to the other promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported in point of law by any consideration, but only by his word. (p. 770)." Even though Gillis in this case was not party he was the legal agent, through R. MacLeod Rogers, for this specific transaction. He must therefore be in the same position as the principal insofar as liability in this transaction. The doctrine of estoppel is doctrine of fairness. It would be patently unfair for FCC to lull Gillis into sense of security by renegotiating the deal with the Langilles and then, several years later, hold Gillis responsible under the original deal. Quite apart from the question of estoppel there are other circumstances which militate against FCC in this case. Between the time the mortgage deal was made in 1979 and the foreclosure action several things occurred. FCC renegotiated new security for the mortgage and gave up the original security. There is serious question that some of the surrendered security was of substantially greater value than that taken up. These actions were taken without any regard to the impact on the legal rights of Gillis. Then there is the matter of FCC making deal with the Langilles to settle the foreclosure action on terms which may have effected Gillis' position vis vis the mortgage security of FCC. The effect of these transactions on the bankruptcy proceedings against the Langilles could also bear on the question of prejudice to Gillis. These matters need not be dealt with since have decided the case in favour of Gillis on the basis of estoppel as already discussed. The plaintiff's action is dismissed with costs to the defendant to be taxed. Judament accordingly. J. Halifax, Nova Scotia December 5, 1989 1. INTRODUCTION 2. NATURE OF CLAIMS 4. BACKGROUND FACTS (a) General (b) Medical (c) The Boat Repair Business (d) The Service Station Business 14 5. MR. WEBSTER'S INJURIES AND THEIR EFFECTS (a) The Websters' Evidence 16 (b) Peter Drillio's observation of Webster after the accident 29 6. MEDICAL ASSESSMENT OF MR. WEBSTER (a) Dr. G. J. H. Colwell 32 (b) Dr. W. D. Stanish 39 (c) Dr. R. H. Yabsley 46 (d) Dr. Edwin Rosenberg 55 7. FINDINGS ON MEDICAL INJURIES 59 (a) Mr. Cherry's Analysis 62 b) Applicable Considerations on Quantum 75 (i) Non‑pecuniary Damages 79 (ii) Pre‑trial Loss of Earnings and Profits83 (iii) Prospective Loss of Earnings and Profits 83 (iv) Other Special Damages 86 (v) Pre‑judgment Interest 86
55/45. In an action for professional negligence against a solicitor for failing to obtain specific security requested in written instructions, the plaintiff renegotiated the deal and no longer insisted upon receiving the specific security. That the plaintiff was estopped from exercising any rights against the solicitor under the original instructions.