The Supreme Court of Canada denied leave to appeal today in a case involving an allegation of civil fraud against a plaintiffs’ personal injury lawyer.
The case of Paulus v. Fleury arose out of a car accident. At a pre-trial conference, the plaintiffs’ lawyer made submissions that he had “independent” witnesses to the accident who were “good people” and “solid”.
The claim settled at the pre-trial conference for $850,000. Immediately after the pre-trial conference, the defendant’s lawyer received a call from his investigator indicating that records revealed it was likely that the witnesses’ son lived across the street from the plaintiff.
This called into question the plaintiffs’ lawyer’s statement that the witnesses were independent. The defendant’s lawyer wrote to the plaintiffs’ lawyer the next day to repudiate the settlement.
In a motion to enforce the settlement, the motion judge found that the plaintiffs’ lawyer made untrue statements about the witnesses which amounted to civil fraud. The motion judge did not enforce the settlement.
The Court of Appeal overturned the decision of the motion judge. The Court of Appeal indicated that statements or submissions made by counsel do not amount to civil fraud if either there is a reasonable basis for them, or if counsel did not knowingly mislead the court.
The Court of Appeal noted that the plaintiffs’ lawyer owed his clients a duty of resolute advocacy in advancing their best interests. No such duty was owed to the opposing party.
At the same time, the Court of Appeal indicated that the duty of resolute advocacy has limits. A lawyer cannot knowingly attempt to deceive a tribunal, misstate facts, present or rely upon a false deceptive affidavit, suppress what ought to be disclosed, or otherwise assist in any fraud, crime, or illegal conduct.
Moreover, advocates should not use tactics that are dishonest, including in their interactions with opposing counsel, or engage in any conduct calculated to induce the court to act under a misapprehension of the facts.
However, the Court of Appeal also noted that, in almost every trial, at least one counsel’s submissions will be rejected as unsustainable. The notion that judicial disagreement with an opinion expressed by counsel in the course of judicial proceedings makes that counsel guilty of civil fraud is incompatible with the duty of counsel to advocate on behalf of his or her client.
The Court of Appeal held that the statements by the plaintiffs’ lawyer were expressions of opinion for which there was a reasonable basis. The description of the witnesses was a legitimate exercise of advocacy. The Court of Appeal noted that opinions as to whether someone is a good or independent witness are as open to debate and disagreement as opinions as to whether someone is a good lawyer.
Further, the point at which the degree of acquaintance renders a witness “not independent” or biased may be open to debate and may differ in different settings.
There was no basis to conclude that the plaintiffs’ lawyer did not sincerely and in good faith describe the witnesses in the manner he did.
Moreover, the Court of Appeal held that it would be unreasonable to conclude that the plaintiffs’ lawyer intended opposing counsel to rely on his submissions, given the adversarial context and the nature of the statements.
Lastly, the Court of Appeal suggested that the defendant’s lawyer did not act with due diligence in investigating or asking any questions about any link between the plaintiffs and the witnesses.
As a result, the settlement was enforced.