Case: Li v Macnutt & Dumont and Walters, 2019 PECA 30
Keywords: Professional Negligence; Hryniak v. Mauldin, 2014 SCC 7
The Appellant is employed as an international sales manager selling lobster. The Appellant lives and works in Nova Scotia for a PEI company, “By the Water Shellfish” (hereinafter “By the Water”), registered to do business in Nova Scotia. After the Appellant’s employment ends, the Appellant claims By the Water owes her unpaid salary and commissions of $9,537.13. The Appellant files a complaint with the Nova Scotia Labour Standards Division (“NSLSD”). After some discussion, By the Water brings an action against the Appellant in PEI claiming “general damages for breach of fiduciary duty and demanding a full accounting of all sales and contact information”. (See para. 10). The Appellant retains the Respondent law firm to defend her.
The Respondent law firm advises the Appellant to respond, in Prince Edward Island, by filing a statement of defence and counterclaim. As a result of this step, the NSLSD advises by letter that the Appellant’s complaint would be closed, pursuant to s. 83(3)(a) of the Labour Standards Code, RSNS 1989, c 246.
After a failed attempt to recover against the employer in PEI, the Appellant later commences an action against the Respondent law firm, claiming negligence for failing to warn her of the risk the NSLSD would close her file. The Court of Appeal concludes a reasonably competent lawyer, knowing of the Appellant’s NSLSD claim, would not have proceeded in court without first becoming familiar with the applicable legislation and explaining the risks associated. In the course of allowing the appeal, the Court of Appeal re-affirms the principles articulated in Hryniak v. Mauldin, 2014 SCC 7.
The “Standard of the Profession”
The Court of Appeal found that, as a matter of “common sense”, the Respondent law firm “failed to warn” the Appellant of the risk that the NSLSD would close her file and lacked “sufficient knowledge of the fundamental issues or principles of law applicable to the particular work they undertook to enable them to perceive the need to ascertain the law on relevant issues”. (See para. 27). In these circumstances, the Court of Appeal found that a reasonably competent lawyer would be required to “make himself [sic] familiar with the applicable legislation before embarking on a law suit”. (See para. 27).
The Respondent law firm advised the Appellant that “Going to court and making your claims for salary and commissions is the option that best protects your interest.” (See para. 35). For the Court of Appeal, that advice was “wrong” on a review of the applicable legislation. (See para. 35). As between court in PEI or the NSLSD proceeding, the “standard of the profession” required that the Respondent law firm advise the Appellant in favour of preserving her rights in the NSLSD:
It is not difficult to see which option better protects Li’s interests. Under the employment standards legislation she would have a decision, money in her pocket, and still have a counterclaim for wrongful dismissal. In our view it is plain and obvious that a competent lawyer would become familiar with the employment legislation in effect before commencing a law suit or counterclaim concerning one’s employment. The standard of the profession is, in our view, clear. (See para. 39).
Re-Affirming Access to Justice & Proportionality
The Court of Appeal used this case as an opportunity to re-affirm the importance of access to justice and proportionality for “all matters in our civil justice system”. (See para. 2).
In the context of the negligence action against the Respondent law firm, the Court of Appeal noted that the Appellant’s $9,537.13 claim had proceeded through
- small claims court in Nova Scotia;
- Nova Scotia Supreme Court;
- Prince Edward Island Supreme Court on a motion to set aside a Note of Default;
- Prince Edward Island Supreme Court on a motion for summary judgment;
- Prince Edward Island Supreme Court on a simplified procedure trial; and,
finally, to the Court of Appeal – all “without the substance of [the Appellant]’s complaint ever having been considered.” (See para. 4).
The Court of Appeal found that sending this case back to trial to prove the Respondent law firm’s negligence would be the “anthesis [sic]” of what the Supreme Court of Canada was trying to convey in Hryniak v. Mauldin, 2014 SCC 7. (See para. 41).
This raises an interesting question: does a lawyer’s duty of reasonable care include the promotion of timely and affordable access to the civil justice system? The Court of Appeal found this case to be analogous to Hryniak – stating undue process and protracted trials, with unnecessary expense and delay can prevent the Appellant from obtaining a fair and just resolution of their dispute. (See para. 2).
The Respondent law firm argued it would not be possible to determine issues of negligence in this case without expert evidence. The Court of Appeal disagreed. Citing Krawchuk v Scherbak, 2011 ONCA 352 the Court set out a list of exceptions to the general rule that professional negligence cannot be found without expert evidence. (See para. 19).
The appeal was allowed. Since the Court of Appeal also noted that the Appellant “…did prove her damages at the trial” (See para. 42), the Court awarded her the full $9,537.13 representing lost wages and commissions she could have potentially earned in the NSLSD. (See paras. 43-46). Plus pre-judgment interest and costs.
Counsel for the Appellant: Tricy Chun Ying Li, on her own behalf
Counsel for the Respondent: John W. Hennessey, Q.C. (McInnes Cooper, Charlottetown)