Rescission as a remedy for innocent misrepresentation:
Are damages also available?

I had always understood that an Assessment Officer on an assessment could not make findings regarding solicitors’ negligence which would lead to issue estoppel in later proceedings. I understood this to be the case because the general scope of an Assessment Officer’s task is not to determine whether a solicitor acted negligently but rather the value, if any, of solicitor’s work. Of course, often the client claims the solicitor was negligent and therefore the value of the work was less.

To my surprise (and thanks to Ted Goddard of LPIC for these cases) there is a line of cases suggesting that issue estoppel on solicitor’s negligence can arise in an assessment. Corbett v. Kealey (unreported, December 19, 1985) is an early example of this. During an assessment, the Officer found that the solicitor had been negligent and reduced fees to nil. The client then sued the solicitor and argued that issue estoppel applied and the solicitor could not challenge the finding of negligence. In an appeal decision without reasons, the Court found that issue estoppel did apply and the solicitor could not challenge the findings of negligence by the Assessment Officer.

The later case of Woods v. Chamberlain (1991), 6 OR (3rd) 419 held that where a client is alleging negligence in the context of an assessment of costs, the assessment is more properly heard by a judge because a finding of negligence during the assessment "may have far reaching consequences in addition to the reduction or elimination of the solicitor’s fees". The obvious implication is that a finding of negligence may be made during an assessment and such finding may be binding in later proceedings.

Finally, the fairly recent decision in Susin v. Baker (1997) O.J. 834 is relevant in that the Court of Appeal (Brooke, Osborne and Weiler) upheld a decision in which an action against a solicitor for negligence was dismissed. The Court found that an earlier assessment of costs had focused on the question of solicitor’s negligence and negligence found not to exist. The Court held that it was improper to allow the claim to continue as this would result in the "relitigation of the issue of the solicitor’s alleged negligence." Although Susin was peculiar factually, it does stand strongly for the proposal that issue estoppel with respect to negligence can arise on an assessment.

Accordingly, it is prudent to be very careful in the face of claims of negligence on an assessment. If the matter is determined adversely to a solicitor, the solicitor may be stuck with that determination. While the Assessment Officers are uniformly good, counsel may not be properly prepared to deal with issues of negligence during an assessment and the Assessment Officers may not be in the best position to determine what amounts to negligence. Certainly, where negligence is alleged, it makes sense, at the least, to prepare fully and not to have the matter dealt with by a junior lawyer with slight preparation.