Judge rejects dealers’ claims against GM Canada, tells law firm to pay $45M

TORONTO – An Ontario judge has ruled partially in favour of a group of former General Motors dealers but cleared GM Canada of breaking any law when it gave them a take-it-or-leave-it buyout offer during a 2009 industry crisis.

Judge Thomas McEwen of the Ontario Superior Court dismissed claims for damages sought by both the former dealers and GM Canada, but he ordered a Toronto-based law firm to pay $45 million to the dealers for breach of contract and negligence in its dealings with them at the time.

Cassels, Brock & Blackwell said it plans to appeal.

The penalty issued to the law firm was only a small fraction of the millions that were sought by about 180 former dealers led by Thomas (Lynt) Hurdman, who owned and operated Trillium Motors in Toronto.

The dealers sought up to $750 million in compensation from GM Canada, claiming they could have received a better deal if they’d had more time and better legal representation than they received in 2009.

They also sought up to $475 million from Cassels Brock, claiming it hadn’t disclosed it was in a conflict of interest because the firm had also agreed to act for Industry Canada on matters involving GM Canada.

McEwen, who held 41 days of hearings from September to December last year, said in his ruling released Wednesday that Cassels knew it was in a conflict “from the outset” but “continued to act for both the federal government and the dealers.”

John Birch, general counsel of Cassels, Brock & Blackwell, said the firm is confident its lawyers conducted themselves properly and in accordance with their responsibilities.

“We feel that the findings are not justified on the evidence and that there are significant legal errors in the decision,” Birch said in an email.

“We continue to believe that Trillium Motor World and the other automotive dealers had not become our clients in the circumstances, and they were each represented by their own independent legal counsel. This judgment creates potentially indeterminate liability for lawyers.”

In regards to General Motors of Canada Ltd., McEwen wrote that the company did not breach any common law or statutory obligations to the dealers.

McEwen dismissed Trillium’s claim against GM Canada as well as the company’s counterclaim against the dealers. The company accused the dealers of violating agreements that they signed in order to receive compensation agreeing to give up their dealerships.

“General Motors of Canada welcomes the decision and we remain focused on serving our customers and building our business in Canada,” the company said in an email.

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