At issue was a painting by the American artist, Charles Russell, "Pirates of the Plains", which had been in the Webster family since 1931. Mr. Russell, who died in 1926, is apparently well known for his paintings of the "Old American West". The painting was very special to Mr. Webster who saw it as a link to his father who had originally acquired the painting. 

On September 29, 1982, Mr. Webster's mother sold the painting to Mr. Thomson, without Mr. Webster's knowledge, for $150,000. Mr. Webster asked Mr. Thomson if he could re-acquire the painting. Mr. Thomson proposed that if Mr. Webster sold him a painting he owned by Cornelius Krieghoff, Mr. Thomson would give Mr. Webster the opportunity to purchase the Russell painting after he died at the painting’s appraised market value. This proposal was contained in a letter that Mr. Thomson wrote to Mr. Webster. Mr. Webster accepted.

On August 25, 2003, Mr. Thomson sold the Russell painting for U.S. $5,600,000 without apparent regard to his agreement with Mr. Webster. In 2004, Mr. Webster commenced a legal proceeding against Mr. Thomson. Mr. Webster's claimed damages for breach of contract in the amount of $4,000,000 and punitive damages in the amount of $10,000,000. After Mr. Thomson died in June 2006, the action was continued against his estate.

The motions judge granted the summary judgment motion on the grounds that Mr. Webster had not proved his damages because he had provided no evidence that he could raise the many millions necessary to purchase the Russell painting. 

However, the Court of Appeal held that the amount of damages was not a proper consideration on a Rule 20 motion. There was no need, as the motion judge thought, for Mr. Webster to prove his damages at this stage of the proceeding. In the court’s view, the motion judge assumed the role of a trial judge which was not proper. 

The court further held that it was a fundamental principle that a person could not benefit from his/her breach of contract. In this case, Mr. Thomson breached an enforceable contract. He could not perform the contract as a result of its breach. As such, Mr. Thomson could not benefit from his breach, which he apparently did based on the motion judge's findings. This was still another reason why summary judgment was set aside. Everyone is indeed equal before the law. 

Thanks for reading and enjoy the weekend.

Justin

Posted on February 12^th, 2008 by Hull & Hull LLP

Hello and welcome to Hull on Estates. You’re listening to Episode #97 on Tuesday, February 12^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.   Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills.  Now, here are today’s hosts.

Chris Graham: Hi and welcome to another episode on Hull on Estates. I’m Chris Graham.

Justin de Vries: And I’m Justin de Vries. Chris, this is the first time that you and I have podcasted together, so that’s always fun. And after much debate, we decided that we were going to look at the Ontario Civil Justice Reform Project which was a project that started in, I believe, 2006 and Mr. Justice Colter Osbourne was appointed by then- Attorney-General Michael Bryant to look at reforming or at least improving the civil justice system. And I thought it was worthwhile spending some time just talking about the system.  And I know, Chris, that you were recently out of the country for a long period of time but are now back and deep into the system and it’s interesting to know what your impressions are of the current problems or access to the system for those people who can’t afford it.

Chris Graham: Yeah, absolutely. Spending some time outside of a place governed by rule of law does give you a special perspective and appreciation for a judicial system. And when I look at all of these recommendations, I’m struck by two things: first, many of them are excellent and; second, many of them are also maybe, a little conservative in a sense.

Justin de Vries: Well let’s get there. Let’s… I think what inspired the report is the fact that anybody who is in the system, be it counsel or a party, know how expensive litigation has become. And unfortunately, the sad result is that cases often settle, which is not bad in and of itself, but they settle because of cost. The economics of litigation begin to drive the costs. I would think that a fairly standard estate matter that had to go in front of Court, be it a Will interpretation or a Will challenge would be well over a $100,000.00 by the time you put in a hotly contested one. And those are things that, not only in the estate world, but in the civil context, the larger civil context, are a problem. So access to justice, what people listening to this who went to law school will know, was always a big deal, was a problem that needed to be looked at. And Mr. Justice Colter Osbourne is well respected in the province. He’s currently the province’s Integrity Commissioner which means he works for the provincial government and they put to him certain questions dealing with a member’s integrity of the Parliament or of the Legislature in Ontario. And he’s a former Justice of the Court of Appeal. So I was never in front of him, but I’ve mediated with him and again, a very capable judge. What are some of the reforms, Chris, that caught your fancy in all of this?

Chris Graham: Okay, one of the most exciting reforms is the recommendation that the jurisdiction for the Small Claims Court should be increased to $25,000. I just think that’s fantastic. Small Claims Court is a great way for people to get some justice without spending more on lawyers than they may get back. And right now, the maximum is…

Justin de Vries: $15,000.

Chris Graham:  $15,000, yeah.

Justin de Vries: I think it started originally at 5, moved up to 10 and now it’s 15. What’s also interesting in that recommendation is that you cannot appeal from judgments of less than $1,500. What may be interesting, and I don’t know what Justice Osbourne found out but… some Small Claims Court judges may be less than happy with that because you’re going to have a lot of self-represented litigants dealing with some of their problems. But it’s probably better, as you say, Chris, to have it there than in front of the Superior Court.

Now coupled with that is an increase or a recommendation that the monetary limit for Simplified Procedure actions be increased from $50,000 to $100,000. The $50,000 Simplified Procedure Rules probably came in now about 5, 6 years ago and the idea was you really remove the discovery process from Simplified actions. They were simplified because they were $50,000 or less. No discovery. You could have a summary judgment motion and the Rules in respect of that were somewhat eased, so it was easier for the Court to grant summary judgment motion. And you could also have a simplified trial which really relied on witness statements and a limited cross-examination. So that increase would be to $100,000, which I think is great as well. As part of a Simplified Procedure, you get a pre-trial which is always a good way to settle a case. And there’s no indication that that would fall by the wayside. So Chris, what else did you see that you liked?

Chris Graham: Well, when it comes to Simplified Procedure, there’s a recommendation that there can be 10 minutes for a statement, a general statement of any party whose sworn an Affidavit for the summary trial. Or 10 minutes for an examination-in-chief. And I think that’s a fantastic way of bringing a very small amount of useful procedure into the trial aspect. Again, it’s limited to 10 minutes and that will preserve… I think it’s a fantastic way of preserving the simplified aspect of the trial, while getting a little bit of evidence before the Court and allowing the judge to do what judges do really well, which is evaluate credibility and weigh evidence.

Justin de Vries: Well, speaking of that, what caught my attention was the recommendation to amend Rule 20 to allow the Court to weigh evidence, evaluate credibility and draw any reasonable inference from the evidence. However, what Mr. Justice Osbourne indicates is that that power ought not to be exercised where the interests of justice require that the issue be determined at trial. And this is really picking up from the fact that when summary judgment rules about 10 years ago, there was a series of cases where trial judges were doing exactly that.  While there was no genuine issue for trial, there was an issue of credibility. Judges were nevertheless granting summary judgment in the right circumstances. The Court of Appeal shut that down like there was no tomorrow and really put a chill on the Rule and it became much less effective because the Court of Appeal at the time said if there’s credibility involved, there should be a trial. You can’t make a conclusion based on a paper record which is what summary judgment is. And what Mr. Justice Osbourne has picked up and said now hold on, let’s go back to what was then a common sensical approach.  Where it’s appropriate, allow summary judgment to be granted by weighing the evidence and drawing reasonable inferences. But as a protection to the public or to parties, if the interests of justice are against that kind of finding, then push it on to a trial. So I’m glad to see that because I think that makes a lot of sense.

The other one, Chris, what do you think about this one? It caught my attention was Mr. Justice Osbourne wanted lawyers to be encouraged, I suppose through their various societies that they belong to and organizations, to consider new and innovative billing methods that would promote access to justice for litigants with civil litigation issues who can’t afford counsel. You know, the hourly rates are so high in many instances, I always thought block billing was an interesting way to approach things.

Chris Graham: Yeah… in the olden days, rules against champerty and maintenance prevented a lot of well…prevented almost any innovation when it came to billing and really did force lawyers to stick to hourly billing, which makes unaffordable a lot of matters which otherwise would be dealt with. This looks great and block billing can really work in some areas, areas where services are highly standardized and lawyers do the same thing over and over again, it’s fantastic for everybody. In other areas, I guess I mean the danger which the lawyer will have to deal with is that if you block bill, some clients will sort of take that as a free ride.  And you have to have some type of protection against clients adopting unreasonable stances. But it’s great if anybody can figure out a way to make it viable.

Justin de Vries: One of the problems we have as litigators, of course, is that you never know your inputs when you make up a budget. It’s not as if you’re making a widget. You don’t know how the other side is going to react. You don’t know what kind of blowback you’re going to get, what kind of motions you face and therefore it becomes very difficult to estimate your costs. Plus I find there’s a little bit that, to some extent, the Courts suck and blow on it because they go after you if your bills are too high, but then they’re also upset if you provide them with product that is not terribly impressive. So it’s a little bit hard. The other thing, though, that we do have in the estate world which provides us some flexibility is really to bill a client at the end of the piece, when they come into, if they’re a beneficiary, payment out of the estate, or to look to the estate itself to pay. Even though the rules of costs have changed a bit, that gives us some flexibility.

I think the last one that I thought we could talk about, Chris, was this idea of limiting discoveries, that one of the recommendations was to amend Rule 31, which is the rule that deals with examinations, so that each party has up to 1 day, that is, 7 hours, to examine parties adverse and interests subject to agreement otherwise or a Court Order. So what Mr. Justice Colter Osbourne is recommending is just making the discovery process, which can be endless, down to 1 day. But I’m not quite sure how I feel about that one. Part of me says that’s a great idea, but discovery’s such a powerful tool… you know, are you often going to be running off to Court to get an Order and justify more questions because the other side simply won’t agree?

Chris Graham: Yeah exactly. There are some very good arguments for limiting discoveries. On the other hand, sometimes you discover your evidence in discoveries, you don’t necessarily go in knowing exactly what you’re going to find and sometimes what you find requires yet more discovery. And if you only get 7 hours, well, one long discovery or 2 average discoveries, can easily eat that up. And then what are you left with? Well, if you have to get a motion, that means you’ll have to draft motion materials, you’ll have to negotiate with the other side, it’ll be more delays. At least in our little slice of the world, most matters will require at least easily 3-5 witnesses and 7 hours’ of discovery probably won’t cut it in a lot of situations. I can’t speak for areas outside of estates litigation, though. Maybe it would be just fantastic in contract litigation. But I am skeptical on that one.

Justin de Vries: Well, finally, there is one more I want to talk about and we’ll just touch upon it and that is… the Law Reform Commission of Ontario which was recently re-established after being disbanded under the Harris government, should review the role of the Divisional Court as a Court of intermediate appellant jurisdiction. It’s my understanding that Ontario is the only province that has this intermediate appellant jurisdiction and so, as such, it would be worthwhile to see if that’s necessary.  Because you’re really having Ontario Superior Court judges, albeit a panel of three, looking at what their colleague did in the first instance.  And you wonder whether or not…though in general, I think the Divisional Court is quite good…but you wonder whether or not it’s as unbiased as it could be and whether you should just get in front of the Court of Appeal.

Chris Graham: Yeah.  I would add one thing to that and this seems like nitpicking, but it doesn’t always feel like nitpicking when you’re the one doing it. Because there’s this Divisional Court out there, it means that every time you’re considering launching an appeal of a decision, you have to confirm which Court you appeal to. And it does sound simple, but it doesn’t end up being simple and it can add half an hour, an hour, an hour and a half of work to any file. And regardless of the good reputation of the Divisional Court or any other questions, personally, I’m in favour of anything that eliminates the amount of work that you have to do to get to the end result, the natural result of the file. So I mean, I am the one that does that research. So, of course, I’d be in favour of just, well, eliminating it altogether because it would mean one hour less on every file where there’s an appeal being considered.

Justin de Vries: Well I think that brings us to the end of this week’s discussion. Thanks for listening and for joining me today, along with Chris, of course.

Chris Graham: It was a pleasure, Justin. I look forward to podcasting with you again soon. And we look forward to hearing from our listeners. You can send us an e-mail at hull.lawyers@gmail.com or just pick up the phone and leave us a message on our comment line at 206-350-6636. Be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law. We hope you enjoyed the show. I’m Chris Graham.

Justin de Vries: And I’m Justin de Vries. Thanks for listening.

This has been Hull on Estates with the lawyers of Hull & Hull.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

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