Beals v. Saldanha et al.,

Beals v. Saldanha (1998), 81 O.T.C. 161 (GD)

MLB headnote and full text

Temp. Cite: [1998] O.T.C. TBEd. NO.105

Frederick H. Beals, III and Patricia A. Beals (plaintiffs) v. Geoffrey Saldanha, Leueen Saldanha, Dominic Thivy and Rose Thivy (defendants) and William Kelly (third party)

(Court File No. 93-CQ-40311SA)

Indexed As: Beals v. Saldanha et al.

Ontario Court of Justice

General Division

Toronto

Jennings, J.

November 6, 1998 and January 12, 1999.

Summary:

The plaintiffs' offer to purchase the defendants' Florida land (lot 2) referred to lot 1. The defendants amended the offer to read lot 2 and returned it. The plaintiffs accepted this counter offer and began construction on lot 1. All closing documents referred to lot 2. After construction on lot 1 ceased for unrelated reasons, the plaintiffs discovered that they had been building on the wrong lot. Expenditures totalled $13,886.57 U.S., which included the purchase price of $7,887.39 U.S. The plaintiffs sued the defendants in Florida for recision and damages. The defendants were noted in default for failure to comply with a procedural rule that they were unaware of. A jury assessed damages and awarded the plaintiffs $260,000 U.S. including $50,000 U.S. punitive damages. An Ontario lawyer advised two of the defendants (the Saldanhas) that the Florida judgment was unenforceable in Ontario because they had not attorned to the jurisdiction. The lawyer was unaware that, because of a Supreme Court of Canada decision rendered almost a year earlier, there was a significant risk that the Florida decision was enforceable in Canada. The Saldanhas took no steps to set aside the Florida judgment. The plaintiffs sued to enforce the Florida judgment in Ontario. The defendants asserted that the judgment was unenforceable because it was obtained by fraud or, alternatively, because to do so would be contrary to the principles of natural justice and public policy. In the event that the plaintiffs' action succeeded, the Saldanhas sought indemnity from the Ontario lawyer.

The Ontario Court (General Division), in a judgment reported at paragraphs 1 to 93 below, held that fraud was a defence to a foreign judgment and that it could encompass more than "extrinsic" fraud. With respect to default judgments, facts going to liability were deemed to be true. Accordingly, facts going to fraud on liability were deemed to have been considered and adjudicated. However, facts going to damages had to be proven. Where, as in the case at bar, the facts going to fraud were not before the trier, the issue of fraud relating to damages will not have been assessed and the domestic court will be entitled to adjudicate on the issue. The court held that the Florida judgment was unenforceable on the ground of fraud relating to damages. Alternatively, the court would have refused to enforce the judgment on the basis of public policy. Had the Florida judgment been enforceable in Ontario, the court would have allowed the Saldanhas' indemnity claim.

The Ontario Court (General Division), in a decision reported at paragraphs 94 to 99 below, awarded costs of the action on a party and party scale up to the commencement of trial and on a solicitor and client basis thereafter. The court considered modest offers to settle made by the plaintiffs just prior to the trial and that the plaintiffs had obtained the Florida judgment by deliberately misleading the jury.

Barristers and Solicitors - Topic 2506

Negligence - General principles - Obligations or duties of a lawyer when acting for a client - See paragraphs 78 to 91.

Barristers and Solicitors - Topic 2586

Negligence - Particular negligent acts - Negligent advice - See paragraphs 78 to 91.

Barristers and Solicitors - Topic 2594

Negligence - Particular negligent acts - Failure to inform or advise client - See paragraphs 78 to 91.

Conflict of Laws - Topic 6663

Foreign judgments - Action on foreign judgment - Bars - Fraud - See paragraphs 37 to 63.

Conflict of Laws - Topic 6663

Foreign judgments - Action on foreign judgment - Bars - Public rules - See paragraphs 64 to 77.

Practice - Topic 5927

Judgments and orders - Enforcement of foreign judgments - Bars - Public policy - See paragraphs 64 to 77.

Practice - Topic 5928

Judgments and orders - Enforcement of foreign judgments - Defences - Fraud - See paragraphs 37 to 63.

Practice - Topic 5934

Judgments and orders - Enforcement of foreign judgments - Registration or enforcement - Defences - Fraud - See paragraphs 37 to 63.

Practice - Topic 5934

Judgments and orders - Enforcement of foreign judgments - Registration or enforcement - Defences - Public policy - See paragraphs 64 to 77.

Practice - Topic 7243

Costs - Party and party costs - Offers to settle - Effect of failure to accept - See paragraphs 94 to 99.

Practice - Topic 7454

Costs - Solicitor and client costs - Entitlement to - Improper, irresponsible or unconscionable conduct - See paragraphs 94 to 99.

Cases Noticed:

Morguard Investments Ltd. et al. v. De Savoye, [1990] 3 S.C.R. 1077; 122 N.R. 81; [1991] 2 W.W.R. 217; 76 D.L.R.(4th) 256; 52 B.C.L.R.(2d) 160, refd to. [para. 37].

Hunt v. Lac d'Amiante du Québec Ltée et al., [1993] 4 S.C.R. 289; 161 N.R. 81; 37 B.C.A.C. 161; 60 W.A.C. 161, refd to. [para. 37].

Godard v. Gray (1870), L.R. 6 Q.B. 139, refd to. [para. 41].

Four Embarcadero Centre Venture v. Kalen (1988), 65 O.R.(2d) 551 (H.C.), refd to. [para. 41].

Jet Holdings v. Patel, [1990] 1 Q.B. 335 (C.A.), refd to. [para. 43].

Woodruff v. McLennan (1887), 14 O.A.R. 242 (C.A.), consd. [para. 45].

Abouloff v. Oppenheimer & Co. (1882), 10 Q.B.D. 295 (C.A.), refd to. [para. 45].

Jacobs v. Beaver (1908), 17 O.L.R. 496 (C.A.), folld. [para. 46].

Roglass Consultants Inc. v. Kennedy et al. (1984), 65 B.C.L.R. 393 (C.A.), refd to. [para. 49].

Powell v. Cockburn (1976), 8 N.R. 215; 68 D.L.R.(3d) 700 (S.C.C.), consd. [para. 51].

Jacobsen v. Frachon (1927), 138 L.T. 386 (C.A.), refd to. [para. 54].

Adams v. Cape Industries, [1991] 1 All E.R. 929 (C.A.), refd to. [para. 54].

Family Trust Corp. v. Harrison, [1986] O.C.P. No. 14 (Ont. Dist. Ct.), refd to. [para. 58].

Chitel et al. v. Rothbart (1982), 39 O.R.(2d) 513 (C.A.), refd to. [para. 62].

Boardwalk Regency Corp. v. Maalouf (1992), 51 O.A.C. 737; 6 O.R.(3d) 737 (C.A.), refd to. [para. 64].

Loucks v. Standard Oil Co. of New York (1918), 224 N.Y. 99, refd to. [para. 65].

United States of America v. Ivey et al. (1995), 26 O.R.(3d) 533 (Gen. Div.), refd to. [para. 66].

Clarke v. Lo Bianco (1991), 84 D.L.R.(4th) 244 (B.C.S.C.), refd to. [para. 67].

Stoddard v. Accurpress Manufacturing Ltd. (1993), 84 B.C.L.R.(2d) 194 (S.C.), refd to. [para. 67].

Ontario v. Mar-Dive Corp. et al. (1996), 20 O.T.C. 81; 141 D.L.R.(4th) 577 (Gen. Div.), consd. [para. 69].

Authors and Works Noticed:

Castel, J.G., Canadian Conflict of Laws (3rd Ed. 1994), p. 163 [para. 71].

Counsel:

K. Sherkin and M. Boussidan, for the plaintiffs;

Neal H. Roth, for the defendants (Thivy);

Peter J. Lukasiewicz and Susan J. Stamm, for the defendants (Saldanha);

Holly Nicholson and William O'Hara, for the third party.

Jennings, J., of the Ontario Court (General Division), heard this matter at Toronto, Ontario, on September 15-17, 1997 and January 26-29, 1998, and delivered the following judgments on November 6, 1998, and January 12, 1999.