Sidiropoulos argued that he understood his undertaking was contingent on Cozzi delivering a complete file on a timely basis so that the action could proceed, which Cozzi had failed to do.
Ontario Superior Court Justice Michael Quigley found that Sidiropoulos had broken his promise to pay the account, but he dismissed Cozzi’s appeal, as his claim was not brought within a two-year limitation period.
“This is a petty claim for less than $3,500 that has been taking space in our justice system for close to nine years,” Quigley said in the ruling.
“The conduct of both parties has been shameful, one for its disdain of a professional obligation and promise, and the other for having neither the energy nor the aptitude to properly pursue a legitimate claim on a timely basis.”
Bryan Kravetz, a lawyer with Grinhaus Law Firm, who was not involved in the matter, says the case highlights that lawyers should make sure undertakings are unambiguous.
“It demonstrates how clear you have to be with an undertaking, and think more about it, and maybe even put conditions, because otherwise you can end up in a grey zone where there is ambiguity,” he says.
Kravetz says lawyers have professional obligations with respect to undertakings and have very powerful obligations to fulfil undertakings and honour them.
The Law Society of Ontario’s Rules of Professional Conduct hold that lawyers must “strictly and scrupulously fulfil any undertakings given by him or her and honour any trust conditions accepted in the course of litigation.”
The dispute has dragged on over eight years, since Cozzi first brought an action against his former client in Small Claims Court for $3,481 that had not been remitted to him from the account. That action was administratively dismissed after Cozzi failed to prosecute it.
Sidiropoulos paid out a small component of the account to Cozzi, but he did not remit the $3,481 central to the dispute. He said that the client had instructed him not to pay.
Cozzi sought to have the dismissal set aside 16 months after it had been dismissed, but the court refused to set it aside. The Divisional Court then upheld the dismissal.
Cozzi then brought his claim against Sidiropoulos, also in Small Claims Court, for the same amount.
A Small Claims Court deputy judge found the action was brought outside of the two-year limitation period and that Cozzi had no tenable cause of action as his claim against the client for the unpaid account had been dismissed.
The deputy judge also found that Sidiropoulos had never undertaken to personally pay Cozzi’s account, just to protect it. Holding the funds in trust would be sufficient to protect it, the deputy judge determined.
In Cozzi’s most recent appeal, the lawyer argued that the Limitations Act does not operate in respect of claims arising from a breach of a solicitor’s undertaking.
Quigley disagreed with the deputy judge’s conclusion that there was no debt due to Cozzi after his action against the client was dismissed. He found that while there might not have been debt due from the client, the original dismissal would not have discharged Sidiropoulos’ personal undertaking given to protect the account.
“In my view, depending on the type of undertaking given, it must be at least arguable that the solicitor’s promise exists independent of what the client does,” Quigley wrote in the decision.
“The lawyer ought not to be released from his promise because the client instructs him not to pay the account.”
He also determined that there was no meaningful difference between protecting and paying an account.
“If the lawyer does not get paid that necessarily means that the obligation ‘to protect’ the fee failed, and so and the lawyer is required to pay,” he wrote.
Quigley, however, also found that Cozzi’s claim should be dismissed as it was brought outside of the limitation period.
He said that while there are some exceptions in the Limitations Act as to the two-year limitation period, none of them applies to claims arising from a breach of a lawyer’s undertaking.
Quigley found neither Cozzi nor Sidiropoulos should be awarded costs, rejecting “the position” of both lawyers.
“In my view, neither is entitled to costs, and it is disingenuous to suggest from his vantage point that Mr. Sidiropoulos has emerged vindicated, his reputation intact,” said the ruling.
“The solicitor who gave a personal undertaking failed in his professional duty to honour it. Were it not for the lassitude of the appellant in pursuing his claim, he could and should have been held liable on his promise. The appellant should have succeeded in his claim, but [he] has only his own conduct to blame for his inability to do so.”
Sidiropoulos says Quigley’s comments about his conduct were unfair. He says the lawsuit was frivolous and notes that Cozzi has now lost this issue in at least five court decisions.
Sidiropoulos says he does not feel that he gave an undertaking back in 2010 when he took over the file. He says he agreed to provide a contingent undertaking that if Cozzi delivered the file materials, he would protect the account.
He says that as Cozzi had not fulfilled the conditions of the alleged undertaking, there was no undertaking.
“Why would I undertake to promise to pay his fee if he is not even handing over the file?” he says.
He adds that the law around what it meant to protect an account was very ambiguous in 2010. At that point, he says, it was not clear that to protect and pay an account meant the same thing.
“To suggest that I somehow knew in 2010 that to undertake to protect an account meant that I had to pay an account, well that’s just not fair,” he says.
Sidiropoulos says that the law may be less ambiguous now, pursuant to this decision, as to what it means to protect an account.
He says that the main takeaway for lawyers from the case is to not be ambiguous about whether they will pay an account and to get direct and clear instructions from clients before making any kind of promises.
Kravetz says the decision should help push lawyers to think more about the undertakings they give as far as protecting another lawyer’s account.
He says that being clear with the client and the previous lawyer is key.
“I think that is the ideal scenario where both parties understand how the account is going to be paid, so that the client understands, the other lawyer understands and so that no one is asking questions later on,” he says.
Cozzi, and his lawyer Jordan Sobel, did not provide comment before deadline.