Situations often arise where an initial action between, for example, a vendor and purchaser is before the courts and must be decided in order to determine if specific performance should be granted and if the party seeking relief was “ready, willing and able to close”. 

For many reasons and usually to meet a limitation period, one of the parties to that action will also sue the solicitor who acted in the real estate transaction. 

The dilemma: Usually solicitor-client privilege cannot be waived by the solicitor – only by the client. However, if the solicitor is sued by the client, the information between the solicitor and client is no longer privileged. This is only proper so that the solicitor can fully defend himself in the negligence action.

The obvious tactic for the lawyer is to add the action against him to the first action, to be tried together subject to the discretion of the trial judge. 

This leads to the dilemma of what the solicitor can disclose (even in a statement of defence to the former client’s allegations), which will then become a public record and open to the opposite side in the main action involving the aborted purchase agreement.  Often that privileged information may be very detrimental to the former client and particularly to the former client’s position in the initial action.

The situation often arises where for some reason a barrister on behalf of a former lawyer’s client not only sues an alleged tort feasor (a person who commits a tort or civil wrong) but also their prior lawyer, alleging negligence. Production of documents is an essential ingredient in these actions, but should the lawyer be producing the same affidavit affecting the former client to the co-defendant, alleged tort feasor?  This would involve a waiver of a solicitor-client privilege, which is permitted to the solicitor where the former client sues them.  If disclosed to the “co-defendant”, the results may be very prejudicial to the former client.

These types of actions involve dangers and pitfalls for the lawyer acting for the solicitor as he deals with the issue of solicitor-client privilege and proper or improper waiver to a third party.

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In an Ontario case, the listing indicated that a commission was payable on “completed transaction” within six months of termination of the listing agreement.

A combination lease and Agreement to Purchase was “not completed” within the meaning of the Listing Agreement as held by the Ontario Court of Appeal. The court applied the principle that any ambiguity in the terms of an Agreement (Listing Agreement) imposed by the real estate broker would be interpreted in favour of the property owner. This doctrine is called contra proferentem.

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It is a well-known concept that if foreign defendants attorn to the Ontario Court (such as entering a Notice of Intent to Defend), the Ontario Court can and normally will take jurisdiction against the out-of-province defendants. 

Despite this rule of thumb, the Ontario Court declined to exercise its jurisdiction over the parties in a recent case because they had signed a contract and agreed all disputes were to be arbitrated in North Carolina Courts.

The lesson is to make sure that if you sign a contract, read all the clauses and especially where any dispute resolution will take place. Such a term usually involves exclusivity, which a court will enforce.

Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.