The Importance of Notes

Originally published in LIANSwers vol 82 July 2023 and vol 89 September 2024. Reprinted with permission from Lawyers’ Insurance Association of Nova Scotia.

The Importance of Notes: It’s Not Just for Lawyers, It’s Good Business Practice

In last year’s Manitoba decision of Funk et al. v. Aviva Insurance Company of Canada et al., 2022MBQB 149, the Court granted the defendants’ summary judgment motion and dismissed the claim. The Court held that the defendants exercised the appropriate standard of care and as such there was no genuine issue for trial.

Essentially, the action was against the insurance broker for negligence. In granting summary
judgment, the Court said this about the broker’s business practice:

[39] First, I note that the [broker] maintained a contemporaneous log of discussions and
correspondence with the plaintiffs as part of their regular business routine. There was nothing
special about these clients that caused these notes to be taken – it was simply a good business
practice. The plaintiffs did not keep notes.

Moreover, on an issue for which the broker did not have a specific note, there is this:

[42] In reference to the Questionnaire, [the broker] deposed that she specifically asked about
the heat sources in the outbuildings (at para. 10):

… Although my notes do not specifically refer to there being no woodstove in any of the outbuildings, it was, and is, my general practice to ask whether any of a client’s buildings contains a woodstove or any other source of heat. I did that in my discussion with Mr. Funk. He advised me that there was no heat in the garage. He did not advise me that there was a woodstove in the garage.

We have often said that notes contemporaneously made during your handling of a file certainly
help in defending a claim. But it is also true that that lack of notes will not make a matter
indefensible. When there are no notes on specific issues, evidence of your regular practice is
equally helpful.

In the end, the Court held that the broker met the standard of care by (i) asking the client
appropriate questions to obtain material facts relevant to the matter, (ii) asking the client to read
the insurance application to confirm its accuracy (similar to sending your client a retainer letter
confirming what you will be doing and a reporting letter confirming what you did), and (iii) based upon the information and instructions received properly assessed the risk, gave appropriate advice and placed appropriate insurance.

The Importance of Notes (An Update)

In the July 2023 edition of LIANSwers, we wrote on the importance of making contemporaneous notes of your client interactions. The Court in the decision we cited noted the good business practice that this is, especially when given that your clients will rarely keep notes of your interactions.

The importance of notes is not limited to lawyers. In the decision cited in 2023, the professional at issue was an insurance broker. And in a recent decision that we will mention now, the professional was an investment advisor and the proceeding was of the Canadian Investment Regulatory Organization (CIRO). On this issue, the specific profession is not important for the importance of a professional’s notes across all professions is the same – they are a record of what transpired between you (i.e., the professional) and your client.

In CIRO v. White, 2024 CIRO 67, the panel noted that there were contradictions between the evidence of White and that of his clients. One aspect of the contradictions was the clients portraying themselves as inexperienced investors not interested in high risk investments and who did not understand high risk investments. Conversely, Mr. White portrayed his clients as being experienced, knowledgeable and well aware of the nature of the investments in issue. We see a parallel contradiction on our files. In discussing White’s notes, the panel said at paragraph 125:

The notes that Mr. White made (which notes corroborate Mr. White’s narrative), combined with his oral testimony of the work and care that he put into his investment advice for all clients, including MS, in the context of a lengthy professional relationship with MS, tip the balance strongly in favour of Mr. White’s narrative as opposed to the narrative of MS.

As we said last July, notes contemporaneously made with your client interactions are helpful when we respond to a potential claim.

There is one other aspect of this decision worth noting, related to the similarity of the investment advisor regulatory regime to the regime for lawyers. Both regimes have a regulatory proceeding (a complaint) and civil action (negligence / insurance) component. Lawyers are often faced with matters where both streams are triggered concurrently. And if not, a regulatory proceeding can lead to a civil complaint and a civil complaint can lead to a regulatory proceeding. Which is to say lawyers often see clients presenting evidence in one proceeding to support their position in the other.