644036 Alberta Ltd. Plaintiff - v. -, 2016 ABQB 597

Court of Queen’s Bench of Alberta Citation: 644036 Alberta Ltd v 625494 Alberta Ltd, 2016 ABQB 597 Date: 20161031 Docket: 0603 12941 Registry: Edmonton Between: 644036 Alberta Ltd. Plaintiff - and - 625494 Alberta Ltd., Federal Mortgage Corporation Ltd., H.M.E. Evans & Company Limited, Kay McVey Smith & Carlstrom LLP; Sherry B. Heikel, Sherry B. Heikel Professional Corporation, Dobko Logan Innes & Hougestol; Bruce Logan, Bruce Logan Professional Corporation Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Sterling M.

Sanderman _______________________________________________________ [ 1 ] This trial centered around the alleged negligent actions of a lawyer in Grande Prairie, Alberta, in relation to the purchase of lands marked for development. Counsel are to be complimented for the manner in which they narrowed the issues before the court. Through diligent preparation, counsel submitted an Agreed Statement of Facts to the court that removed the need to call a significant number of witnesses.

The Agreed Statement of Facts was supplemented with documentary evidence that supported the admissions. [ 2 ] These facts were augmented by the litigant’s read-ins. The litigants each called an expert witness to comment upon whether

the appropriate standard of performance had been met by the solicitor representing the purchaser in handling the acquisition of this parcel of land. [ 3 ] Counsel are to be commended for their effective use of court time. [ 4 ] The Agreed Statement of Facts is set out below: STATEMENT OF AGREED FACTS 644036 Alberta Ltd., Kay McVey Smith & Carlstrom LLP, Sherry B. Heikel, and Sherry B.

Heikel Professional Corporation (collectively the "Parties"), agree for the purposes of the trial of this action that the following numbered statements will be found as facts at the trial of this action, and are admissible as evidence without further or formal proof and without prejudice to the right of the Parties to read-in additional evidence at trial. PARTIES l. The Plaintiff, 644036 Alberta Ltd. ("644"), is an Alberta corporation. 2. The remaining Defendants in the action are 625494 Alberta Ltd. ("625"), Kay McVey Smith & Carlstrom LLP, Ms. Sherry B. Heikel, and Sherry B. Heike Professional Corporation. 3.

The Defendant, 625, is an Alberta corporation. 4. Sherry B. Heikel and her professional corporation, Sherry B. Heikel Professional Corporation (collectively “Ms. Heikel”) represented 644 as the purchaser of certain lands pursuant to the CPS (defined below). The vendor, 625, was represented by Bruce Logan ("Mr. Logan") of the firm Dobko Logan Innes & Hougestol LLP. 5. At all material times Ms. Heikel was either a partner or an employee of Kay McVey Smith & Carlstrom LLP and duly registered as a member of the Law Society of Alberta. 6. As of 2004, Ms.

Heikel had practiced as a solicitor in Grande Prairie for seventeen years, primarily focusing on corporate commercial matters, real estate and wills. REAL ESTATE TRANSACTION 7. 625 and 644 executed a Contract of Purchase and Sale dated August 26, 2003 (the "CPS") whereby 625 agreed to sell three parcels of land in Grande Prairie, Alberta to 644. By its terms the CPS was to be completed on October 15, 2003; however completion was postponed by agreement between the parties until November, 2004. The CPS is attached hereto as Schedu1e 1. 8.

Prior to November 15, 2004 (the "Closing Date''), the CPS was amended to remove certain property identified in

Schedule "A",

Section l(

c) of the CPS. 9. Under the terms of the amended CPS, 625 agreed to sell the remaining two parcels of land to 644. 10.

The first parcel to be purchased by 644 under the amended CPS was land described by its geographic boundaries as: Morgans Meadow Phase III, Grande Prairie Alberta [Southerly Portion of Morgans Meadow bounded on the south by 92 Ave., on the east by 92 Street, on the north by PLU of Block 2, Plan 9925835 and on the west by Park Road, Lot 24, Block 5 Plan 9925830 and 93 Street and 94 Ave.] Per Addendum “A” Legally known as: Portions of NE 24-71-6-W6 [approximately 11.6 acres] (Any portion of NE 24-71-6-W6 not within the indicated boundaries is not included in the sale) (hereafter the "Morgan Meadow Lands") 11.

The second parcel to be purchased by 644 under the amended Agreement was land described by its municipal address and legal description as: 9434 - 93 Street, Grande Prairie, Alberta (Morgans Meadow RH) Legally known as: Lot 1, Plan 9825219, [approximately 11.6 acres] Located in the city of Grande Prairie, in the province of Alberta, as per Addendum "B" hereto. (hereafter the “RH Lands”) 12. The purchase price for the Morgan Meadow Lands and the RH Lands was $1,500,000.00. 13. 644 arranged for mortgage financing for the purchase of the Morgan Meadow Lands and the RH Lands through Morbank Financial Inc. (“Morbank”).

Morbank was represented by Carl McClintock ("Mr. McClintock") of Knibbe McClintock Lawyers in connection with the financing. 14. The Morgan Meadow Lands were also subject to a vendor take-back mortgage in the amount of $471,538.34 (the "Vendor Take- Back Mortgage"). The Vendor Take-Back Mortgage was granted by 644 pursuant to a Master Loan Agreement and registered Encumbrance. A copy of the Master Loan Agreement between 625 and 644 (and its principals) and the Encumbrance are attached as

Schedule 2. RETAINER OF MS. HEIKEL 15. Ms. Heikel began acting as 644’s solicitor in connection with the completion of the CPS and mortgage financing on or about July 24, 2004. Although she did not provide a written retainer agreement, Ms. Heikel understood her role was to act on behalf of 644 to complete the purchase of property described in the CPS, namely the Morgan Meadow Lands and the RH Lands TITLES COMPRISING THE MORGAN MEADOW LANDS 16.

As of July 24, 2004, the Morgan Meadow Lands were made up of two separate titles registered with the Alberta Registrar of Land Titles (the "Land Titles Office") as titles 992 315 139 +56 (the "56 Title") and 992 315 139 +57 (the “57 Title”). As of July 24, 2004, 625 was the registered owner of both the 56 Title and the 57 Title. 17. As of July 24, 2004, both the 56 Title and the 57 Title were subject to a mortgage in favour of the Federal Mortgage Corporation Ltd., registered as instrument 992 098 166, and a caveat in favour of the Federal Mortgage Corporation Ltd. and H.M.E.

Evans & Company Limited, registered as instrument 042 098 279 (the “Non-Permitted Encumbrances”). 18. The 56 Title and the 57 Title were created pursuant to a legal subdivision that was registered with the Land Titles Office on October 19, 1999 as instrument number 992 315 139 (the “Subdivision Plan”). 19. The Subdivision Plan, attached as

Schedule 3, includes a form of interest in land, denoted by dashed lines, running through the Morgan Meadow Lands (as depicted in the CPS) and is identified as “C. of T. 982 148 010”. 20. Following the registration of the Subdivision Plan, the interest identified as "C. of T. 982 148 010" became the 56 Title. 21. As of July 24, 2004, and at all relevant times thereafter, copies of the Subdivision Plan, the 56 Title, and the 57 Title were available and could have been retrieved from the Land Titles Office. STEPS TAKEN TO ASCERTAIN TITLES 22. Prior to July 24, 2004, Ms.

Heikel had never worked on a real estate transaction in which the land being transferred was described by geographic boundaries, rather than legal descriptions, as was the case for the Morgan Meadows Lands under the CPS. 23. Ms. Heikel did not consult with other partners at Kay McVey Smith & Carlstrom LLP, or any other lawyer, about their experience in concluding real estate transactions where the land being transferred was described by geographic boundaries, rather than legal descriptions. 24. In August, 2004, Ms.

Heikel had her conveyancing assistant order searches from the Land Titles Office to try and ascertain what legal titles comprised the Morgan Meadow Lands. At all material times, Ms. Heikel's conveyancing assistant was employed by Kay McVey Smith & Carlstrom LLP. 25. Ms. Heikel believes that her conveyancing assistant would have provided the Land Titles Office with the description of the Morgan Meadow Lands found in the CPS, however she could not recall whether Addendum “A” to the contract would have been provided to the Land Titles Office. Ms.

Heikel's file does not contain a record of the search requests (Requests for Service) to the Land Titles Office in 2004 nor did she subsequently produce any in response to her undertaking at Questioning. Ms. Heikel's office did not send a letter to the Land Titles Office explaining that they required copies of all titles registered in the name of 625 located within the boundaries of the Morgan Meadow Lands described in the CPS. 26. Ms. Heikel did not retain any record of the search instructions that were provided to her conveyancer or the Land Titles Office prior to the Closing Date. 27. Ms.

Heikel did not obtain or review the Subdivision Plan, or any survey plans, to determine what legal titles were included within the Morgan Meadow Lands. 28. Ms. Heikel did not speak with anyone at the Land Titles Office nor did she write to the Land Titles Office in an effort to determine what legal titles were included within the Morgan Meadow Lands. 29. A search ordered from the Land Titles Office by Ms. Heikel's conveyancer identified that the 57 Title formed part of the Morgan Meadow Lands, but did not identify that the 56 Title formed part of the Morgan Meadow Lands.

The copy of the 57 Title that was obtained during the search is attached as

Schedule 4. 30. Upon reviewing the 57 Title, Ms. Heikel neither requested nor reviewed a copy of the Subdivision Plan registered at the Land Titles Office. 31. Ms. Heikel felt the descriptions in the CPS were in some cases confusing and inadequate. Ms. Heikel grew frustrated with trying to determine what properties were being purchased and with the results of the search. 32. Roger Field ("Mr. Field") was the President of 644 in 2004. After receiving the mortgage documentation from Mr. McClintock on July 29, 2004, and prior to the Closing Date, Ms. Heikel met with Mr. Field (the “Meeting”). 33. At the Meeting, Ms.

Heikel presented Mr. Field with the 57 Title and had him confirm that the 57 Title was the Morgan Meadow Lands, as she remained uncertain that it was the correct title. 34. Ms. Heikel understood Mr. Field to be a land developer who was also an architect in Grande Prairie. It was her belief that in light

of his experience he knew full and well the title to the property that 644 was to acquire. 35. Ms. Heikel determined that the 57 Title contained 11.91 acres to be transferred to 644 as the Morgan Meadow Lands. She made this determination by subtracting the excepted acreage from the total 161 acres all as described on the 57 Title. Ms. Heikel's handwritten notes regarding her calculations are found on

Schedule 4. 36. The only notes of the Meeting are written on correspondence from Mr. McClintock dated July 28, 2004 attached as

Schedule 5. 37. At the Meeting, Ms. Heikel presented her calculation that 11.91 acres were to be transferred to 644 and Mr. Field confirmed that was the land to be purchased. 38. Ms. Heikel did not present Mr. Field with the 56 Title at the Meeting. A copy of the 56 Title as it would have appeared prior to the Closing Date is attached as

Schedule 6. 39. At the Meeting, Ms. Heikel did not discuss with Mr. Field the possibility that the Morgan Meadow Lands could be made up of multiple legal titles. 40. At the Meeting, Ms. Heikel did not discuss with Mr. Field the possibility that a new survey could be prepared to confirm the legal description of the Morgan Meadow Lands. 41. Prior to the Meeting, Mr. Field had been to the physical site of the Morgan Meadow Lands and was familiar with the physical dimensions of what 644 purchased. 42. Mr. Field recalls Ms.

Heikel expressing her concern or confusion with the description of the Morgan Meadow Lands to him at the Meeting. Ms. Heikel specifically indicated that there were discrepancies in the calculation of area between the CPS and 57 Title and that they needed to get that resolved. 43. Mr. Field confirms that Ms. Heikel specifically indicated that she was concerned that the acreage did not add up to 11.6 acres. 44. Mr. Field confirms that he reviewed a survey at the Meeting. Mr. Field's believes that the survey is that previously attached as

Schedule 3. Ms. Heikel did not review the survey at the Meeting or at any subsequent time prior to Closing. 45. Mr. Field did not feel that there was a need for a new survey as he did not think a new survey at that time would reveal anything that he had not already viewed. 46. By the end of the Meeting based on the information presented by Ms. Heikel, Mr. Field satisfied himself that the 57 Title was what was meant to be conveyed and he expressed that understanding to Ms. Heikel. 47. Ms. Heikel did not tell Mr. Field that there was a possibility that 644 may not get all of the titles. 48. After speaking with Mr.

Field at the Meeting Ms. Heikel was not concerned that the 57 Title was insufficient as it: contained more acreage than found in the property description in the CPS; Mr. Field conveyed his belief that it was all of the property 644 was purchasing; and she understood that he was talking on a continual basis with the surveyor. 49. At no time prior to the Closing Date did Ms. Heikel identify that the 56 Title was included in the Morgan Meadow Lands. 50. On November 2, 2004, the 57 Title was transferred from 625 to 644 and a mortgage was registered on the 57 Title in favour of Morbank as instrument 042 480 997.

The 56 Title was not transferred from 625 to 644. 51. On the Closing Date, Ms. Heikel advanced the balance of the purchase price, in the amount of $1,450,434.15, to Mr. Logan. 52. The Transfer of Land with respect to the Morgan Meadows Land was prepared by Mr. Logan. The transfer identified only the land in the 57 Title. Attached collectively as

Schedule 7 are the Transfer of Land with respect the Morgan Meadows Land and Mr. Logan's September 30, 2004 cover letter. EVENTS SUBSEQUENT TO CLOSING 53. The Non-Permitted Encumbrances were subsequently discharged from the 57 Title prior to December 31, 2004. 54. Prior to the Closing Date, Ms. Heikel knew that 644 intended to subdivide the Morgan Meadow Lands after receiving title from 625, and accordingly appreciated the importance of all included titles being conveyed. 55. Following the Closing Date, 644 attempted to subdivide the Morgan Meadow Lands in accordance with the subdivision plan attached as

Schedule 8 (the "Proposed Subdivision"). 56. The 56 Title intersected with two of the lots in the Proposed Subdivision, namely Lot 12 and Lot 56A. 57. 644 was unable to subdivide Lot 12 and Lot 56A because the 56 Title was not transferred to 644 by 625. 58. The market value of Lot 12 at the time 644 attempted to subdivide the Morgan Meadow Lands in accordance with the Proposed Subdivision was $666,270.00. 59. The market value of Lot 56A at the time 644 attempted to subdivide the Morgan Meadow Lands in accordance with the Proposed Subdivision was $190,931.00.

60. Ms. Heikel did not identify the existence of the 56 Title until August 3, 2005, at the earliest. 61. On September 27, 2005, Ms. Heikel wrote to Mr. Logan demanding a transfer of land for the 56 Title as well as proof that the Non-Permitted Encumbrances had been discharged 62. Federal Mortgage Corporation Ltd. refused to discharge their Non-Permitted Encumbrance from the 56 Title. Attached as

Schedule 9 is a copy of Ms. Heikel’s letter to Mr. Logan on September 27, 2005. 63. On November 16, 2005, Ms. Heikel wrote to Mr. Logan again demanding that he provide a transfer of the 56 Title and stating that it was "self-evident'' the property (56 Title) was to be included, and was, "in error" not included. Attached as

Schedule 10 is a copy of Ms. Heikel’s letter to Mr. Logan on November 16, 2005. 64. On June 12, 2006, Ms. Heikel wrote to Mr. Field stating: Further to our many conversations with respect to the above matter, I wanted to commit to writing my position before more time passes. I confirm I acted for 644036 Alberta Ltd. on the purchase of certain property from 625494 Alberta Ltd. You will recall the contract of purchase and sale dated August 26, 2003 did not contain full legal descriptions of all the property being purchased.

When the transfer of land was received from Bruce Logan you and I met in my office and reviewed the transfer. I distinctly recall this meeting and recall asking that you review the legal descriptions on the transfer to ensure they were correct. It is so clear in my mind because of the frustration I suffered trying to figure out which property was being purchased and because of all the Land Titles searches I conducted. In the end I resolved only you could advise as to what was being purchased.

I required you do so because, as you and I discussed, the descriptions as contained in the August 26, 2003 contact were confusing and, in some cases, inadequate. You did review the transfer and signed the same. Roger, I need to be clear here that I accept no responsibility for the above described property not being transferred. Attached as

Schedule 11 is a copy of Ms. Heikel's letter to Mr. Field on June 12, 2006. 65. The 56 Title continued to be registered in the name of 625 on August 16, 2006, the date on which Ms. Heikel terminated her representation of 644. 66. At no time prior to terminating her representation of 644 did Ms. Heikel file a purchaser's caveat in relation to the CPS against the 56 Title. JUNO LANDS PROJECT 67. 644 intended to develop the Morgan Meadow Lands and RH Lands. 644 referred to the overall development as the Juno Lands Project. 68. The intention was to subdivide the Morgan Meadow Lands into mixed residential lots. 69.

Financing was obtained by 644 as follows: (a) $2,866,000.00 from Morbank in 2004, subsequently increased to $4,814,871.00 in 2005;and (b) $471,538.34 as the Vendor Take-Back Mortgage from 625. 70. 644 obtained sub-division approval of the Juno Lands on February 16, 2006. 71. 644 sold 11 lots in the Morgan Meadow Lands in 2006. Morbank received 80% of the sale proceeds in return for partial discharges of its mortgage. 625 also provided partial discharges of the Vend or Take Back Mortgage on each of the 11 sales. 72. 644 eventually had financing issues with Morbank.

The principals of 644 had pledged personal assets in other provinces as collateral to Morbank in connection with the initial $2,866,000.00 mortgage. Morbank had agreed to release its security over that personal property once $1 million of property in the Juno Lands development had been sold. Once that security was removed, the principals of 644 intended to access their personal assets as working capital to continue on with the Juno Lands development. However, Morbank refused to release its security over the personal assets of the principals of 644 as agreed. Mr.

Murray believes the issues regarding Morbank arose when its President died on January 16, 2006. 73. To facilitate the next phase of development of the Juno Lands (after sub-division), 644 obtained the approval of Western Community Mortgage Inc. (“WCMI”) to provide financing in the amount of $10 million. However, WCMI never advanced any portion of the $10 million to 644. Further, 644 was required to pay $420,000.00 commitment fee in consideration of the loan from WCMI.

WCMI never returned the $420,000.00 commitment fee. 644 later successfully sued WCMI and its principal obtaining a judgment against both for the entire amount of the commitment fee. 74. Shortly after it became apparent that the WCMI loan was not forthcoming, Morbank commenced foreclosure proceedings. Morbank's Statement of Claim for foreclosure was issued on February 20, 2007. 75. 644 attempted to market lots in an effort to redeem its obligations pursuant to the Morbank mortgage. During this period 644 received offers to purchase additional lots in the Morgan Meadow Lands.

However, those deals did not close as 625 refused to provide partial discharges of the Vendor Take-Back Mortgage. Attached hereto and collectively marked as

Schedule 12 are the Offers to Purchase lots owned at the time by 644 in the Morgan Meadow Lands that were unable to close as a result of 625's refusal to provide partial discharges of the Vendor Take-Back Mortgage.

76. An offer to purchase Lot 12 was accepted on June 11; 2007. The offer was in the amount of $614,082.00. The offer to purchase isattached as

Schedule 13. 77. The appraised value of Lot 12 as of June 15, 2007 was $614,000.00. Attached as

Schedule 14 is the report of Bill Hanson, Plantand Associates Appraisal Services Inc. dated January 25, 2016. 78. An offer to purchase Lot 56A was accepted on June 11, 2007. The offer was in the amount of $169,784.00. The offer to purchaseis attached as

Schedule 15. 79. The appraised value of Lot 56A as of June 15, 2007 was $170,000.00. 80. Notwithstanding 644 received offers on Lot 12 and Lot 56A, those lots did not legally exist because the 56 Title was nottransferred to 644 at Closing. Lot 12 would have been the largest lot as depicted on Bearisto sub-division survey completed in 2005attached as

Schedule 14. The RM land use designation (medium density residential district) for Lot 12 would have permitted a 4 storyapartment building on the site. See

Schedule 14 Bill Hanson, Plant and Associates Appraisal Services Inc. dated January 25, 2016 atSection 9-1 and Appendix B. 81. Ultimately Morbank did foreclose upon the Juno Lands project. The remaining Juno Lands were judicially sold by Morbank for$4,500,000.00 pursuant to Court Order filed September 19, 2008 in Action No. 0701 01874. Morbank subsequently obtained

summaryjudgment in the amount of $1,047,304.01 against 644's guarantors on December 8, 2008, reflecting the deficiency owed by 644 toMorbank after sale of the remaining Juno Lands. Attached as

Schedule 16 are copies of the Orders for sale of the remaining Juno Landsand the

summary judgment. 82. In its application to approve the sale of the remaining Juno Lands Morbank relied on the Affidavit of Value and Valuator's Reportfiled March 19, 2008 in Action No. 0701 01874 attaching the appraisal report prepared by Pomeroy Valuation Group Ltd. with aneffective date of March 8, 2008. Attached as

Schedule 17 is the Affidavit of Value and Valuator's Report filed March 19, 2008 in ActionNo. 0701 01874 attaching the appraisal report prepared by Pomeroy Valuation Group Ltd. FEES FOR LEGAL SERVICES 83. Ms. Heikel invoiced 644 for services in relation to the purchase of the RH Lands and Morgan Meadow Lands on October 26,2004, November 16, 2005 and September 8, 2006. Attached as

Schedule 18 are copies of the cover letters and invoices from Ms. Heikelto 644 on the noted dates. [5] The expert witnesses who testified in this trial were highly qualified solicitors practicing in the Province of Alberta. Each ofthese gentlemen have over 30 years of experience, most of it involving the acquisition and sale of real property in this province.

Bothprovided expert reports and both were cross examined extensively on the opinions expressed in them and the evidence they gave at trial.The unique factual situation presented by this case created differing opinions. [6] Both expert witnesses were highly knowledgeable in regard to real estate transactions. Mr. Robert Bruce and Mr. LubosPesta, QC, gave credible evidence and were candid in response to the questions they were asked in cross examination. On occasion, eachwas somewhat defensive when justifying a position they advocated.

I attribute this to their desire to defend their personal practices asthey varied somewhat. Neither lost their objectivity as a result of being involved in an adversarial setting. [7] This case focusses on the level of performance expected when a solicitor is retained to perform a task. The standard expectedis succinctly stated by the Supreme Court of Canada in Central Trust Co. v Rafuse, (SCC), [1986] 2 SCR 147. Thefollowing is found at paragraph 58: 58 A solicitor is required to bring reasonable care, skill and knowledge to the performance of the professional service which he hasundertaken. See Hett v.

Pun Pong (1890), 1890 CanLII 35 (SCC), 18 S.C.R. 290, at p. 292. The requisite standard of care has beenvariously referred to as that of the reasonably competent solicitor, the ordinary competent solicitor and the ordinary prudent solicitor. [8] More than 20 years before Central Trust Co. v Rafuse was decided, this statement of law was made by Riley J. in TiffenHoldings Ltd. v Millican, (ON CA), [1964] A.J. No. 103.

At paragraphs 8 and 9, the following is found: 8 The standard of care and skill which can be demanded from a lawyer is that of a reasonably competent and diligent solicitor. 9 It is not enough to prove that the lawyer has made an error of judgment or shown ignorance of some particular part of the law; itmust be shown that the error or ignorance was such that an ordinarily competent lawyer would not have made or shown it. [9] Three paragraphs later, Riley J. stated: 12 The obligations of a lawyer are,. I think, the following:

(1) To be skilful and careful.

(2) To advise his client on all matters relevant to his retainer, so far as may be reasonably necessary.

(3) To protect the interests of his client.

(4) To carry out his instructions by all proper means.

(5) To consult with his client on all questions of doubt which do not fall within the express or implied discretion left to him.

(6) To keep his client informed to such an extent as may be reasonably necessary, according to the same criteria.

[10] These paragraphs have received numerous judicial endorsements at trial and appellate levels in this Province and others in theensuing decades. See: Spence v Bell 1982 ABCA 282; Yang v Overseas Investments

(1986) Ltd., (AB KB), [1995] AJ No. 58 QB; 285614 Alberta v Burnett, Duckworth, Palmer (1993), (AB KB), 8 Alta L.R. (3rd) 212 QB; Meier vRose 2012 ABQB 82; Couture v Lamontagne (1996), (SK KB), 151 Sask Rep. 283(QB). [11] It is against this background that the conduct of Ms. Heikel must be assessed. [12] Before one can properly assess the standard of care exercised by a solicitor, it is necessary to properly determine the confinesof the retainer agreement.

What is expected of the solicitor by the client will determine whether the standard of care has been breachedonce the solicitor agrees to perform the legal work requested. In Victoria & Grey Trust Co. v Apple (1984), 32 RPR 230 (Ont.

H.C.J.) atp. 239, Justice McKinley stated: A solicitor's retainer, whether it be written or oral, or partly written and partly oral, imposes a two-fold duty upon the solicitor: first, toexercise the care and skill of a reasonably, competent solicitor in accordance with the standards of the profession, and second, when thematter for which he has been retained is the carrying out of a contract between his client and another party, to see that the precise termsof the contract for which the solicitor would normally be responsible are carried out in accordance with the terms of the contract, unlesshe has received instructions to the contrary. [13] When acting for a purchaser, a solicitor is expected to ensure that the client receives what the client agreed to purchase.

Thesolicitor should read the contract of purchase and sale to determine what the purchaser wishes to acquire and then to take steps to ensurethat that property is transferred from the vendor to the purchaser. At the conclusion of the transaction, the purchaser wants to have goodtitle to the land described in the contract of purchase and sale. That is the scope of the retainer in this matter. At the conclusion of thetransaction, the Plaintiff did not have good title to the land described in the contract of purchase and sale. Ms. Heikel was sued.

The factthat the Plaintiff did not acquire good title to what was to be transferred does not establish negligent behaviour on the part of the solicitor.The conduct of the solicitor in carrying out her obligations to her client are determinative of this. [14] Both experts agreed that the problem in this matter was created from the awkward and less than adequate legal description ofthe lands contained in the contract for purchase and sale. The lands were described by existing boundaries. This was a description of landunfamiliar to Ms. Heikel.

Rather than seeking assistance from someone in her firm who had broader experience or consulting with othercounsel, she continued to act for the Plaintiff and dealt with this matter as she had in the past with property with a more familiar legaldescription. She instructed her legal assistant to perform the usual search with the Land Titles Office for the North Alberta RegistrationDistrict in Edmonton in relation to the lands which were the subject of the contract for purchase and sale. This minimal inquiry made inthe first instance is the only information requested from the Land Titles Office. [15] Ms.

Heikel felt that the description of these lands in this fashion was confusing and inadequate. She grew frustrated withtrying to determine what properties were being purchased. The cursory inquiry she made at the Land Titles Office did not resolve herfrustration. [16] The documentation received from the Land Titles Office identified one title that formed part of the lands desired to bepurchased. It did not identify another title that was part of these lands. Ms. Heikel, through her assistant, only requested this onedocument from the Land Titles Office. Ms.

Heikel’s examination of the title provided indicated that there were 11.91 acres to betransferred to the Plaintiff. She made this determination through a mathematical calculation having reference to the title provided. Thereclearly were discrepancies in the calculation of the lands to be purchased and what was referred to on the title provided. The acreage didnot add up. It appeared as if more land was being transferred than had been purchased. Clearly, confusion existed. Did the presence ofthis confusion and uncertainty call for further inquiries? [17] Not according to Mr.

Pesta, the expert called on behalf of Ms. Heikel. He rests his opinion on three factors. The first has to dowith the area of the land purchased. The contract called for 11.6 acres to be conveyed. The area of the one title identified and conveyedwas, according to Ms. Heikel’s calculations, 11.91 acres. Mr.

Pesta submits that there would be very little reason to suspect that anothertitle existed when the identified title represented an area of land greater than that to be purchased. [18] He finds further comfort in the fact that two experienced lawyers involved in the transaction, representing the seller and themortgagor, believed that the one title provided correctly represented the land to be sold. These lawyers had no duty to the Plaintiff andtheir collective error cannot provide Ms. Heikel with a defence. [19] Lastly, he indicates that Ms.

Heikel could take comfort in the fact that her client was an experienced architect and developerwho was of the opinion that the title being conveyed represented the land desired to be purchased. [20] Because of these three factors, he is of the opinion that Ms. Heikel did not breach the standard of a reasonably competent anddiligent solicitor. [21] Mr. Bruce, the expert called by the Plaintiff, reached a different conclusion. There is no doubt that he is a prudent and carefulpractitioner. He sets high standards for himself in relation to carrying out his duties on behalf of his clients.

After hearing him testify inrelation to how he conducts his practice, there is no doubt that his personal standards are beyond those of a reasonably competent anddiligent solicitor. Ms. Heikel cannot be held to the personal standard Mr. Bruce sets for himself. She must meet the standard imposedupon her by the law. [22] In this case, did Ms. Heikel meet the standard required of her? The answer is no. The key in making this determination is Ms.Heikel’s recognition that something was not right. Different words have been used to describe her attitude towards the completion of thistransaction.

She was concerned, disturbed and possibly upset. In any event, this type of consternation on the part of the solicitor clearlymandates further investigation. Her belief was that something was not right. When a lawyer embarks upon a task they have not addressedin the past and feels that there is something wrong, their duty is to make inquiries that resolve the difficulty. This can be done by solvingthe problem on their own or seeking the assistance of others.

[ 23 ] The central land registration system in place in Alberta allows a person to make inquiries whenever there is uncertainty in relation to a proper title being conveyed. A system of public record keeping is easily accessed. In this era of rapid electronic communication, answers can be readily obtained by lawyers who are not practicing in the cities where the Land Titles Offices are located. Communications by fax, emails or telephone are available to lawyers who practice anywhere in Alberta.

They can communicate with the Land Titles Office to get the information that resolves any questions they may have about the validity of a title. That was not done. Because of the failure to make the requisite inquiries, a title was missed and land that was the subject of the contract for purchase and sale was not conveyed. [ 24 ] It is obvious that Ms. Heikel knew that there was something amiss with this matter. She felt troubled by her inability to make sense of the difficulty. If anything, this situation called for heightened diligence upon her part to solve the puzzle.

She should not have concluded the transaction without taking steps to satisfy herself that the Plaintiff was getting the property that the contract called for. [ 25 ] There were other steps that Ms. Heikel could have taken when she became aware of the difficulty. She should have sought further information from the Land Titles Office. She could have asked for all of the titles that existed that were within the boundary description of the property. She could have reviewed the subdivision plan in existence. She could have made inquiries with the Land Titles Office personnel to alleviate her concerns.

None of this was done. She should not have closed the transaction until she was satisfied that the contract was fulfilled. Ms. Heikel’s minimal inquiries in the first instance and her failure to attempt to resolve an obvious problem falls short of the standard of a reasonably competent and diligent solicitor. [ 26 ] Does the fact that Ms. Heikel received the approval of Mr. Field, the principal representative of the Plaintiff, in relation to Title 57 being the lands to be conveyed, absolve her of any responsibility? [ 27 ] When Ms. Heikel met with Mr.

Field, she had concerns about the title in relation to the lands to be purchased. She had not been to the site. Mr. Field had. She assumed that Mr. Field, because of his background, had experience in reading subdivision plans. Such a plan was present in her office at the meeting although she did not look at it. She may have made unwarranted assumptions in relation to Mr. Field’s knowledge and expertise. There is no clear evidence that his level of sophistication as a developer was as she claims. Although the title she had in her possession and her instincts told her something was amiss, she accepted Mr.

Field’s assertion that he was of the belief that the title that had been provided by the Land Titles Office represented the land he wished to purchase. She should not have been so ready to accept this opinion. The documentary evidence she had in her possession told her something else. [ 28 ] If indeed she wished to proceed with the closing, having the doubts she did, she needed to fully inform Mr. Field of her concerns.

The advice required to be given to a client and the duty owed to a client may lessen if the client informs his lawyer that he knows what he is doing, is aware of the risks of following that course of action and wishes to pursue it. The sophistication of the client and his knowledge are factors to consider when assessing whether the lawyer has fulfilled her duty. Here, something was obviously causing Mr. Heikel concerns. Regardless of the sophistication of her client, she had a clear duty to fully inform him of the risks of closing.

That conversation did not take place. [ 29 ] Instructions to proceed by the client in the face of evidence suggesting caution should only be acted upon if the client has been fully informed of the dangers of proceeding. Instructions to complete the deal in such circumstances must come from a fully informed client. Mr. Field did not fit within this description. His instructions to proceed was not the decision of a client properly informed of the risk he was taking. The obligations of a lawyer set out by Justice Riley in 1964 in relation to advising a client on all matter relevant to the retainer was breached.

The instructions given by Mr. Field cannot absolve Ms. Heikel of blameworthiness. [ 30 ] Her letter of June 12, 2006, to Mr. Field does not assist her in this regard. This is a classic after-the-fact letter drafted to excuse conduct that the writer fears is deficient. Reconstructing a conversation held a couple of years earlier, from memory, is always troubling. It is extremely difficult to accept the reconstruction when there are no meaningful notes in Ms. Heikel’s file which would have helped her recall the events. This letter misrepresents to Mr. Field the number of inquiries made with the Land Titles Office.

There was one, not multiple. [ 31 ] Ms. Heikel was negligent in relation to the services she performed for 644036. What damage has the Plaintiff suffered? A mechanism for ascertaining this must be found in the evidence for damages in tort seek to put the injured party back in the same position he would have been in if the wrong had not occurred. It is fundamental that the Plaintiff be compensated for all reasonably foreseeable loss directly or indirectly caused by the tort. [ 32 ] In this case, the breach led to a failure to convey two lots to the Plaintiff.

If the proper searches had been made, the 56 Title would have been discovered and transferred with the other property to the Plaintiff. The Plaintiff agreed to pay $1,500,000.00 to the Vendor for certain lands. All of that property was transferred to the Plaintiff with the exception of the two lots. Lot 12 and Lot 56A were missed. The objective in awarding damages in a case like this is to restore the Plaintiff to the position he would have occupied had there been no negligence. Specific performance is not an option.

Much has transpired since the late summer of 2003 when the contract of purchase and sale was executed. [ 33 ] Although the lands were originally obtained by the Plaintiff to develop, the failure to transfer the two lots did not cause the failure of the development contemplated by the Plaintiff. Any suggestion that it was is merely speculative. There were a number of reasons that caused this development to fail. An inability to obtain proper financing appears to have been the primary reason. This in no way was connected to the negligent action. Mr.

Field was clear in his answers when discovered that the failure to transfer the two lots did not cause the development to fail. [ 34 ] In late 2004, the 57 Title was transferred to the Purchase from the Vendor. The 56 Title was not. Two lots did not make their way into the hands of the Plaintiff. What was their value at the time of the transfer. Those are the damages that should be awarded to the Plaintiff. [ 35 ] The Plaintiff seeks damages based upon appraisals made in relation to the two lots in January of 2016.

The appraisals do not value the lots at the time of the transfer of the land in late 2004 but value them as of June 15, 2007. What date for valuation does justice between the parties?

[36] In 1092369 Alberta Ltd. v Joben Investments Ltd., 2013 ABQB 310, Brown, J. (as he then was) analyzed how the time forcompensation should be fixed.

At paragraphs 162 and 163, he stated: [162] Canadian law recognizes that both equity and the common law are sufficiently flexible in·cases concerning contracts dealing withland to allow the Court discretion in fixing the appropriate date for calculating damages at some date other than that of breach. (Fridman,The Law of Contract in Canada at 713.) This is consistent with the compensation principle applicable to a breach of contract, by whichthe Corporate Plaintiff should be put in as good a position, financially speaking, as it would have occupied had Joben performed itscontractual obligations of using reasonable efforts to satisfy the Condition by the Condition Day. (Naylor Group Inc. v.

Ellis-DonConstruction Ltd., 2001 SCC 58 at para. 73; 306793 Ontario Ltd. In Trust v. Rimes (1979), (ON CA), 100 DLR (3d)350 at para: 9(ONCA). It is also consistent with Sopinka J.'s reliance in Semelhago upon Wroth v. Tyler, [1974] Ch. 30 (as to equity) andJohnson v. Agnew, [1980] AC 367 (HL) (as to the common law). In Johnson v.

Agnew, Lord Wilberforce, speaking (at 401) for theHouse of Lords, described the general rule of assessment at the date of breach as "not an absolute rule [and that] if to follow it wouldgive rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances.” [163] It is, therefore, open to the Court to compensate the Corporate Plaintiff for the loss of two lots by a measure of damaged assessedat some point later than the date of breach.

While that will usually be the date of trial or judgment, it can be - as the Corporate Plaintiffurges here - some other date between the date of trial or judgment and the date of breach. [37] At paragraph 165, the following is found: [165] Furthermore, the Court must exercise caution in awarding damages based on the trial date or judgment date, or any date later thanbreach.

The resulting award of damages might overcompensate the Corporate Plaintiff, placing it in a better position than it would haveoccupied had Joben used reasonable efforts to meet the Condition Day. [38] It would be inappropriate to use the appraisals prepared in relation to the two lots that were not transferred in order to ascertainthe loss to the Plaintiff. There is nothing wrong with the methodology used by the appraiser. He employed a highest and best-useanalysis in assessing the value of the property. He determined what would be the most productive and positive use of these two lots.

Hethen employed a direct-comparison approach. He compared these two lots with similar properties that had recently been sold in theGrande Prairie area with similar market features around the month June of 2007. Although he employed this methodology in January of2016 in order to arrive at a value for the property in June of 2007, his approach is one that is generally accepted by the courts. Theproblem with this appraisal is that it was not undertaken in order to assist in this litigation. These appraisals were prepared in order tovalidate offers that had been accepted to purchase this property.

There is no rational connection between the valuation date of June 15,2007 and the failure to transfer the property in the fall of 2004. [39] In fact, the appraiser recognized the inherent limitations of his appraisal. In both reports, he indicated that, “because marketconditions, including economic, social and political factors, change rapidly and, on occasion, without warning, the market valueexpressed as of the valuation date of this estimate (i.e.

June 15, 2007) cannot be relied upon to estimate the market value as of any otherdate except with further advice of the author.” The appraiser clearly recognizes that the principle of supply and demand drives the valueof the property. It can be fluid. The Plaintiff urges that this limiting qualification be ignored. That cannot be done. [40] This date for valuation was selected by the Plaintiff for the purposes of another piece of litigation.

It cannot be used in thislitigation because the time for assessing the loss suffered by the Plaintiff is the time of the failure to properly transfer the land. [41] Pursuant to the contract of purchase and sale, the Plaintiff was to pay $1,500,000.00 for approximately 11.6 acres. Lot 12 andLot 56A were not properly transferred. Lot 12 was approximately 33,671 sq. ft. Lot 56A was approximately 10,106 sq. ft. The total notconveyed was approximately 43, 777 sq. ft. An acre of land consists of 43,560 sq. ft. Slightly more (217 sq. ft.) than an acre was paid foryet not conveyed.

When the contract of purchase and sale was executed in August of 2003, the Plaintiff agreed to purchase land for alittle less than $130,000.00 per acre (approximately $129,310.00 per acre). Slightly more than an acre was not transferred. That is theloss attributable to the failure of Ms. Heikel to properly carry out her duty to her client. The value placed on this land is $129,500.00.Those are the damages that the Plaintiff shall have. [42] In addition to this, the Plaintiff will have the legal fees paid to Ms. Heikel in relation to this transaction returned.

Heard on from the 12th to the 14th day of September, 2016. Dated at the City of Edmonton, Alberta this 31st day of October, 2016. Sterling M. Sanderman J.C.Q.B.A. Appearances:

Daniel L. Morrow, Mathieu J. Lafleche, Bennett Jones LLP for the Plaintiff Damian Shepherd, Amani Abdu, Chomicki Baril Mah LLP (CBM Lawyers) for the Defendants: Kay McVey Smith & Carlstrom LLP, Sherry B. Heikel, and Sherry B. Heikel Professional Corporation