In the recent decision of Goldentuler v. Simmons Da Silva LLP, 2021 ONCA 2019, the Court of Appeal for Ontario considered whether an individual had capacity to commence a lawsuit in which the cause of action belonged to an estate.

Facts

The late Henry Goldentuler (“Henry”) was a lawyer in private practice. Before his death, Henry commenced an action against a group of former employees who had removed 120 client files from his office at night and deleted his electronic records related to those files.

After Henry’s death, his brother, Edward Goldentuler (“Edward”), who is also a lawyer, obtained an order to continue the action in the name of Henry’s estate. The claim proceeded to an uncontested damages assessment and a judgment in the amount of $318,174.55 was awarded to the estate.

Edward then retained Ray Thapar of the law firm Simmons Da Silva LLP (“SDS”) to appeal the damages assessment to the Court of Appeal for Ontario. The appeal was successful and the damages awarded in favour of the estate increased to $901,791.71.

Although SDS succeeded in satisfying the judgment, a dispute arose between SDS and Edward regarding their fees for the appeal. As a result, Edward commenced a solicitor’s negligence claim in his own name and in his personal capacity. Edward personally sought $2 million in damages, alleging that SDS fell below the standard of care in conducting the appeal.

Motion to Dismiss

SDS brought a motion pursuant to Rule 21.01(3)(d) of the Rules of Civil Procedure to dismiss the action on the basis that Edward lacked the legal capacity to commence an action, as SDS had acted for the estate, and not Edward in his personal capacity. SDS also argued that only the estate could have suffered the alleged damages, not Edward personally.

The motion judge dismissed SDS’s motion to dismiss. The motion judge found that SDS knew that Edward had purchased Henry’s law firm from his wife, who was the executor of Henry’s estate. Moreover, the retainer was between SDS and Edward, such that SDS’s duty of care was owed to Edward. Moreover, Edward had capacity to bring the action because SDS’s legal invoices were addressed to Edward, and Edward was the only party who could have been affected by the outcome of the appeal since he had purchased Henry’s law firm.

Appeal

The Court of Appeal for Ontario found that the motion judge made a “palpable and overriding error” in her reasons, for failing to recognize that SDS had been retained by the estate, not Edward personally. The estate was named when Henry’s original litigation was continued, and the estate was the beneficiary of the damages award that was increased on appeal. Indeed, the judgment was paid to the estate, and the retainer was signed with SDS for the estate’s benefit. The fact that the legal account was directed to Edward was of no moment, as Edward was the person providing instructions to SDS on behalf of the estate. As such, Edward had no personal claim arising from the retainer with SDS, and therefore, had no capacity to bring the solicitor’s negligence claim. The appeal was allowed, the lower court’s order was set aside, and SDS’s motion was granted dismissing Edward’s action.

Take Away

When commencing any claim, counsel should be mindful of who their client is, in what capacity their client is acting or on whose behalf, and for whose benefit the claim is being commenced. Otherwise, the claim may be subject to attack on the ground of lack of capacity to sue.