Hartslief v. Terra Nova Royalty concerned a contract reached by two solicitors regarding an employee’s termination.
The lawyers were named as Litherland, acting for Alan Hartslief, and Sangra, acting for the employer Terra Nova.
The lawyers agreed on a draft contract during a phone conversation on Dec. 10, 2012, and Litherland was under the impression all that remained was for each side to sign the documents.
However, Sangra thought they had agreed Terra Nova would not sign the agreement until the firm was satisfied Hartslief had returned books and records.
Terra Nova subsequently pulled out of the agreement and offered new terms that were unacceptable to Hartslief, who launched a lawsuit.
On Nov. 15, 2012, trial judge Justice Brian MacKenzie found both solicitors had been acting with authority to bind their clients, but that Sangra may not have communicated the conditional element of the contract to Litherland.
At an appeal on Sept. 20, 2013, Terra Nova argued the trial judge had erred in finding Sangra had the authority to bind his client on Dec. 10, 2012.
There were occasions during the negotiations when Sangra had said he would have to seek instructions from his client before he could respond to draft terms suggested by Litherland, said Justice Mary Newbury in an oral decision published yesterday.
“On this basis, counsel seemed to suggest that Mr. Litherland had been put on notice or should have known that Mr. Sangra did not have authority to bind his client in the discussions on Dec. 10,” she said.
But, she added: “I am not persuaded that the trial judge erred in ruling that Mr. Sangra had the authority to bind his client.
“Indeed, the fact Mr. Sangra had in the past had to seek instructions before agreeing to something, but did not do so when he agreed to the draft on the morning of Dec. 10, would seem to indicate that he had such authority on that occasion.”
Terra Nova’s counsel J. Groia had “cautioned us that the practice of commercial law might be adversely affected by the trial judge’s ruling in this regard,” she added.
But she pointed to the 2009 case Sekhon v. Khangura, which found: “It is in the interests of the administration of justice that solicitors be free to complete settlements with solicitors without having to enquire about or be concerned with the actual authority of the solicitor.”
Groia had “submitted that the question of the authority of a solicitor acting for a sophisticated party to bind his or her client is an important one.”
Newbury agreed, but said: “Unless a solicitor clearly communicates the contrary to those with whom he or she is negotiating, a solicitor is the agent of his or her client and thus may bind the client to an agreement such as this. After all, a solicitor ‘acts for’ the client.”
The appeal was dismissed.