Lawyers owe their clients a duty to take reasonable care to avoid conduct that poses an unreasonable risk of harm. In the event that a lawyer is found to have acted contrary to their duty, to what extent should they be held liable to the client and what sort of damages is the client entitled to? Over the course of the past eight years, this question has been grappled with by the Alberta courts in Ashraf v Zinner, 2019 ABQB 389 (upheld on appeal in 2020 ABCA 207 with leave to appeal to the Supreme Court of Canada refused) and in the damages decision rendered orally on March 1, 2022 (Ashraf). These decisions are instructive on establishing the limits of a lawyer’s liability for their negligence and the damages that flow therefrom. Dentons Canada LLP acted as counsel for the Defendant in Ashraf and successfully limited both the extent of the lawyer’s liability and the quantum of damages awarded to the Plaintiff.
Background facts
The dispute in Ashraf arose following the Plaintiff’s retention of a lawyer to commence an action against his former employer for workplace related conduct that resulted in a permanent leave of absence. The Plaintiff allegedly suffered mental and physical abuse at work and retained the Defendant to seek damages for his injuries. The Defendant filed a statement of claim on the Plaintiff’s behalf.
Subsequent to filing the statement of claim, the employer applied to strike the claim on the basis that the action was barred for falling within the jurisdiction of the Workers Compensation Act, RSA 2000 c W-15 (“WCA”). In light of the application, the Plaintiff terminated the Defendant and sought other legal assistance. The Master hearing the application agreed with the employer and held that the claim was statute barred because it sought stress-induced physical injuries sustained at work. He held that the claim should have instead been framed as one of constructive dismissal. Subsequent to the claim being struck, the Plaintiff proceeded with several appeals and attempted to have an amended claim reinstated. Ultimately, the Alberta Court of Appeal agreed with the Plaintiff and restored the action, allowing him to proceed with an amended claim for constructive dismissal.
The Plaintiff continued to litigate his claim against his former employer before ultimately settling the action two years later. Subsequently, the Plaintiff commenced an action against his former lawyer for negligence, breach of contract, breach of trust, and breach of fiduciary duty, alleging that the original poorly drafted claim continued to “taint” his legal interests and influenced unfavourable subsequent decisions that ultimately forced him to settle the action – leaving a large portion of damages unrecovered. The Plaintiff sought damages from the Defendant in excess of CA$9 million for disability payments, lost income, medical expenses, general pain and suffering, and reduced quality of life, amongst other things.
Trial decision on liability
The trial was bifurcated into liability and damages. Following a 10-day liability trial, the Court concluded that the lawyer did not meet the standard of care he owed to his client by pursuing claims barred by the WCA instead of commencing a proper claim for constructive dismissal. During the trial, the defence presented the Court with various “exit ramps” or points in time where the Defendant should no longer be deemed to be the “but for cause” of any damages. In short – at some point in time the liability must end.
The Court agreed and recognised that there may be a point in time where subsequent or intervening steps occur that release a negligent individual from further responsibility. In doing so, the Court concluded that once the Court of Appeal restored the Plaintiff’s claim and allowed the amendment to plead constructive dismissal, the Defendant’s liability stopped because the Plaintiff now possessed the claim that should have been filed at the onset. From that point forward, the Plaintiff voluntarily assumed all of the risks associated with litigating his claim. While the Plaintiff ultimately settled the action, he did so on his own terms.
In professional negligence claims, it is often necessary for the Court to consider what loss (if any) is caused by the lawyer’s breach of duty. Typically, this is done by conducting a “trial within a trial.” A trial within a trial asks the trial judge to consider the hypothetical action that the plaintiff would have had against the original defendant “but for” the negligence of the professional, including the issues of liability, causation and damages. If those damages are found to be more than the plaintiff settled for or was awarded at trial, the lawyer is responsible for the difference.
Ashraf is instructive, as it demonstrates a circumstance in a professional negligence claim where a trial within a trial is not necessary to quantify damages. Given the finding that the Plaintiff’s claim was fully restored and that he assumed all of the risks with continuing to litigate, the Court found it unnecessary to determine whether the settlement was appropriate. Instead, the Court found that the Defendant was only liable for the costs and damages that resulted from the Plaintiff’s efforts to repair and revive the original claim. Along with avoiding a difficult trial within a trial process, the decision greatly reduced the potential quantum of damages.
The appeals
The Plaintiff appealed the trial decision, alleging, amongst other things, that the Court erred in finding that the Defendant’s liability ceased after the Court of Appeal decision. The Plaintiff maintained that, notwithstanding that his claim had been restored, the original negligence “tainted or stigmatized” the entire action in a manner that influenced future court decisions and ultimately forced his hand in settling. The Court of Appeal disagreed and accepted that the Plaintiff had been placed back into the position he would have been had the Defendant filed a proper claim in the first instance. Any claim of stigmatization or tainting of his claim was without merit.
The Plaintiff filed an application for leave to appeal the Court of Appeal’s decision to the Supreme Court of Canada. The defence argued that the application was merely an attempt to reargue the factual findings that were made before the trial judge and upheld by a unanimous Court of Appeal and that the application raised no broad questions of law. The application was denied.
Damages decision
Following the exhaustion of the Plaintiff’s appeals, a three-day damages hearing was held to determine the scope and quantum of damages. The Court concluded that the majority of the ~CA$9 million in damages sought by the Plaintiff was not recoverable and instead awarded a combined sum of ~CA$87,000. In doing so, the Court recognized that, like any negligence claim, damages awarded to the Plaintiff must be reasonably foreseeable and relate to harm directly caused by the lawyer.
Recognizing that the Plaintiff took steps and actions to restore his action, the Court awarded compensatory damages in the amount of approximately CA$37,000 for those related costs. In addition, the Plaintiff was awarded CA$50,000 in general damages for the exacerbation of this mental and physical injuries during the time period he had retained the Defendant. In addressing those damages, the Court was forced to consider the fact that the Defendant did not cause the Plaintiff’s underlying injuries and that litigation itself is inherently stressful – regardless of whether there are negligent actions involved. The Court accepted the defence’s position that, given these two factors, the Defendant should only be proportionally responsible for those damages. In doing so, the Court recognized the difficulty courts face in trying to determine how much a plaintiff’s worsening condition can be attributed to the actions of a defendant. That quantum will be assessed on a case by case basis and determined based upon the relevant facts.
The Court agreed with the defence that the remaining multi-million dollars in damages, including those for past/future loss of employment, loss of enjoyment of life, and medical expenses were not recoverable from the Defendant given that they were not directly incurred as a result of the negligence. Those types of damages were available for the Plaintiff to pursue from his former employer in the case he ultimately settled, but cannot be recovered through his negligence claim.
Key takeaways
The principles applied in Ashraf have significant implications for professional negligence based actions. The decision on liability makes clear that a lawyer may not continue to be held liable to a client endlessly. Once a client has taken steps, either on their own or with new counsel, to remedy the negligent action, the original professional is no longer considered to be the “but for” cause of any damages sustained from that point forward. The decision can provide a level of comfort for professionals, as they can take solace in the fact that their potential liability has an exit ramp.
The decision on damages is equally instructive, as it makes clear that a professional is only responsible for the associated costs to rectify the negligence and that any harm sustained thereafter is not recoverable. Importantly, unlike situations where a lawyer’s negligence was the “but for” cause of a poor settlement or decision, Ashraf demonstrates that the oft-used trial within a trial may be unnecessary to quantify damages. This in turn can foster more efficient outcomes, as a trial within a trial can be a costly and timely endeavor. Lastly, Ashraf is helpful in that it again notes that a defendant cannot be held responsible for the totality of a claimant’s mental and physical ailments when there are other contributing and underlying factors.
For more information about professional negligence actions in Alberta or Canada, please contact Michael Sestito and Steven Latos or another member of Dentons’ professional Liability group.
