7.3: Summary Judgment (Application and decision)

Case Summary

The Respondents signed an offer to purchase a share in a franchise (the “Offer to Purchase”) and made several installment payments towards the franchise interest. The Respondents consulted the Applicant lawyer. The Applicant informed the Respondents that the Offer to Purchase had been done improperly and that the Respondents’ money was at risk.

The Applicant attempted to rectify the problems with the Offer to Purchase on the Respondents’ behalf but was unsuccessful. The franchisor rejected the Respondents’ application to purchase the franchise. The Respondents sued the Applicant in negligence for allegedly providing a warranty to the franchise transaction.

The Applicant applied for Summary Dismissal of the claim against him per Rule 7.3. Neilson J. noted that Rule 7.3 allows a party to apply for Summary Judgment where there is no merit to a claim part of it. The Court reviewed the approach of the Supreme Court of Canada in Hryniak v Mauldin, 2014 SCC 7.

The Respondents’ claim was based in negligence and required proof of a duty of care, breach of the standard of care, compensable damages, and causation. As the Respondents’ lawyer, the Applicant owed the Respondents a duty of care. However, the Court determined that the Applicant did not breach the standard of care. Justice Neilson found that several of the Respondents’ claims, like providing advice regarding the lack of security for money already paid, were outside the scope of the Applicant’s retainer.

Further, the Court determined that the Respondents failed to establish that the damages alleged were caused by the Applicant’s advice or lack thereof. The losses alleged by the Respondents concerned the installment payments the Respondents paid before consulting the Applicant. Neilson J. therefore granted the Application for Summary Dismissal of the claim.

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