Case information

Law of professions – Barristers and solicitors – Damages – Costs – Whether the Court of Appeal erred in allowing the counterclaim by enforcing a loan agreement between a lawyer and client which the trial judge found was unconscionable and induced by fraudulent misrepresentation by the lawyer – Whether the Court of Appeal erred by reducing the trial award of punitive damages on the basis that the trial judge reasoning was irrational and the award disproportionate to the objectives of retribution, denunciation and deterrence – Whether the Court of Appeal erred by disallowing solicitor-and-own-client, full indemnity costs on the sole basis that there was no litigation misconduct.

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The Applicants, Susan and Don Luft, sued the Respondents, Frederick Zinkhofer and his former firm, Taylor, Zinkhofer & Conway for damages arising from the alleged mishandling of their legal file. The Respondents were found liable at trial for Zinkhofer’s breaches of fiduciary duty, breaches of contract and negligence. The trial judge awarded the Applicants $747,500 in damages, plus pre-judgment interest and solicitor and own client costs. The Respondents appealed the award of damages and the Applicants cross-appealed arguing that damages should be increased. The majority of the Court of Appeal allowed the appeal with respect to the punitive damages, solicitor and own client costs and the loan agreement. The cross-appeal was also allowed to the extent that damages for employment loss were increased by $51,000. The Court of Appeal reduced punitive damages to $100,000, found that the Respondents were entitled to set off $20,332 owed under the loan agreement and set aside the order for solicitor and own client costs and replaced it with party and party costs.