''Central Trust Co v Rafuse'', 9862 SCR 147 is a leading decision of the

Supreme Court of Canada The Supreme Court of Canada (SCC; , ) is the highest court in the judicial system of Canada. It comprises nine justices, whose decisions are the ultimate application of Canadian law, and grants permission to between 40 and 75 litigants eac ...

on liability of

solicitor A solicitor is a lawyer who traditionally deals with most of the legal matters in some jurisdictions. A person must have legally defined qualifications, which vary from one jurisdiction to another, to be described as a solicitor and enabled to p ...

s in

negligence Negligence ( Lat. ''negligentia'') is a failure to exercise appropriate care expected to be exercised in similar circumstances. Within the scope of tort law, negligence pertains to harm caused by the violation of a duty of care through a neg ...

and

breach of contract Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other part ...

as well as the doctrine of discoverability under the

statute of limitations A statute of limitations, known in civil law systems as a prescriptive period, is a law passed by a legislative body to set the maximum time after an event within which legal proceedings may be initiated. ("Time for commencing proceedings") In ...

Background

Jack Rafuse and Franklyn Cordon were solicitors who had been hired by a company, which had purchased the shares of Stonehouse Motel and Restaurant Ltd. The agreement of sale required the purchasers to take out a mortgage on the property and to use the assets used as part of the purchase price of the shares. The solicitors had been retained to complete the mortgage transaction. Eight years later, the creditor for the mortgage, Central Trust Co., initiated a

foreclosure Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has Default (finance), stopped making payments to the lender by forcing the sale of the asset used as the Collateral (finance), coll ...

of the mortgage. The creditor,

Irving Oil Irving Oil Ltd. is a Canadian privately owned intergenerational gasoline, oil, and natural gas producing and exporting company, a subsidiary of the parent company Irving Group of Companies, one of the largest "private conglomerates" in North Amer ...

Ltd., tried to prevent the foreclosure by claiming that the mortgage was invalid. The case went to the

. In its decision ''Central and Eastern Trust Co v Irving Oil Ltd'',

980 Year 980 ( CMLXXX) was a leap year starting on Thursday of the Julian calendar. Events By place Europe * Peace is concluded between Emperor Otto II (the Red) and King Lothair III (or Lothair IV) at Margut, ending the Franco-Germa ...

2 SCR 29. the mortgage was invalidated. Having lost the case, Central Trust brought an action against the lawyers for

and

. In their defence, Rafuse and Cordon claimed: *Their liability, if any, was in contract only and not in tort. *They had not been negligent, particularly in view of the conflicting judicial opinion on the question of the validity of the mortgage. *There was contributory negligence on the part of the Nova Scotia Trust Company or those for whom it was responsible because of the approval of the mortgage loan and the instructions to the respondents by persons of legal training. *The contract between the Nova Scotia Trust Company and the respondents, having as its object an illegal transaction, was itself illegal and could not therefore be the basis of an action in damages. *The appellant's action was barred by the statute of limitations. These issues before the Court: # Can a solicitor be liable to a client in tort and in contract for negligence in the performance of the professional services for which the solicitor has been retained? # Were the respondent solicitors negligent in carrying out the mortgage transaction for the Nova Scotia Trust Company? # Was there

contributory negligence In some common law jurisdictions, contributory negligence is a defense to a tort claim based on negligence. If it is available, the defense completely bars plaintiffs from any recovery if they contribute to their own injury through their own neg ...

on the part of the Nova Scotia Trust Company or those for whom it was responsible? # Is the appellant prevented from bringing its action because of the illegality of the mortgage? # Is the appellant's action barred by the statute of limitations?

Reasons of the court

LeDain J wrote the reasons for the majority. On the first issue, he held that the duty in tort and in contract are two entirely-separate duties and can be held concurrently by a defendant. On the statute of limitations, it was held that the plaintiffs were not statute-barred from commencing an action. The commencement of the limitation period was postponed by the common law "discoverability principle:" "A cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence."

References

External links

* {{DEFAULTSORT:Central Trust Company V. Rafuse Canadian tort case law Supreme Court of Canada cases 1986 in Canadian case law