DON'T CUT CORNERS

Even able and experienced lawyers make mistakes. Some mistakes are quite common. Why? Simple clerical errors or forgetfulness are not the full answer. A recent Court of Appeal decision may reveal other causes.

A judge retroactively extended protection of claims against persons other than the insolvent company being protected under the Companies' Creditors Arrangement Act.

The written application (notice of motion) did not mention such protection. The application was simply to approve a sale of mortgaged assets. Ideas for further relief evolved during oral discussion in front of the judge, including preserving claims against other entities. That was a new topic for all concerned. The lawyer for the lawyers about to suffer extended liability expressly opposed the idea, but had had very little time to think about it, and no time at all to do any research or consult with anyone. On the spot he could not come up with any real grounds to oppose. After little discussion, the court preserved claims against his clients, irrespective of any time limits.

On appeal, the Court of Appeal set that order aside. One of the most fundamental rules of procedure is a principle of natural justice. No one can lose rights without clear advance notice of the case to be made against him or her, and proper opportunity to prepare evidence and arguments to oppose it.

In retrospect, the point seems obvious. It is unanswerable. What went wrong? Maybe three things.

1. Much legal work today is specialized. Specialists get used to doing the usual thing, the usual wording of orders, and special procedures become usual. Most courts are not specialized. They do everything. So judges become familiar with general principles and rules, especially those which recur in different fields, such as criminal law, administrative law, and family law. A lawyer very experienced in transportation law, public utilities, or expropriation, may have less day-to-day familiarity with such general rules and principles. The lawyer knows they exist, but they do not spring to mind on the spur of the moment.

2. Urgency, real or imagined, brings dangers. Doing something within 2 or 3 days is often necessary. But doing something within 10 or 20 minutes is risky. Later you may slap your forehead and wonder how you could have overlooked something basic. Skipping ordinary procedures, such as serving a detailed written notice and adhering to what it says, is doubly dangerous. “Time does not permit,” you may reply. But here the company being monitored under the Act had been found hopeless and was going to be liquidated, not saved. This motion turned into a 3-cornered dispute involving others. The order saved no time. For want of a few more hours (maybe overnight), 17 months were lost, doubtless with prejudice, expense, and inconvenience.

3. Being cooperative and friendly? Usually that has merit. But only up to a point. When something new comes up, it is surprising how rarely counsel point out that it is new, so they have had no chance to think about it, let alone consult anyone, and cannot be sure what to say. They do not ask for more time. Asking for three more weeks might be unreasonable, but asking for a few hours, or overnight, is often vital. Even getting a brief new affidavit from the client might take 24 hours.

Counsel who rushes everyone along and quickly gets a favorable order, without proper notice to all, builds a castle on foundations of sand. After it rains, that counsel holds nothing but a big bill to pay.

See Wiebe v. Weinrich Constr. 2020 ABCA 396, Edm 1903 0139 AC (Nov 9)..

– Hon. J.E. Côté

The Commentaries are intended to call the attention of lawyers to promising or threatening developments in the law, in civil procedure, in developing their skills, or simply to describe something curious, funny or intriguing.

Justice Côté recently retired from the Court of Appeal of Alberta and currently acts as an arbitrator, mediator, or referee under Rules 6.44 and 6.45 of the Alberta Rules of Court.

He may be contacted through Juriliber at email: info@juriliber.com or phone 780-424-5345.