Court of Appeal for Ontario

Date: 2017-07-04 Docket: C63702 Judges: LaForme, Hourigan and Paciocco JJ.A.

Parties

In The Matter of the Solicitors Act

And In The Matter of

Ares Law Professional Corporation and Bernard P. Keating Solicitors (Respondents)

and

Ronald Rock Client (Appellant)

Counsel

Louise James, for the appellant

Joanna L. Nairn, for the respondents

Hearing and Appeal

Heard: June 30, 2017

On appeal from the order of Justice G. M. Mulligan of the Superior Court of Justice, dated January 31, 2017.

Reasons for Decision

Introduction

[1] This is a dispute over an assessment of a lawyer's fees and disbursements. Below, the assessment officer assessed the lawyer's account at $125,602.83. The client brought a motion to oppose confirmation, which was dismissed, and the motion judge granted judgment to the lawyer. The client appeals. We dismiss the appeal for the reasons that follow.

Background

[2] The respondents, Ares Law and Bernard Keating (together, "Ares Law") were retained pursuant to a contingency fee agreement with Mr. Rock, the client in an action against Food Basics. The agreement provided that in the event the retainer was terminated the fee would be billed on an hourly-rate basis. It also provided that the client would pay all disbursements reasonably incurred in furtherance of the client's claims.

[3] After five years the solicitor-client relationship broke down and Ares Law were removed as solicitors of record. The client retained new counsel, Mr. Igbinosun.

[4] Importantly, after the retainer was terminated, Ares Law, Mr. Igbinosun, and the client entered into an agreement (the "Undertaking"). It provided that Mr. Igbinosun and the client were undertaking to protect the account of Ares Law in the amount of not more than $50,000. And, depending on the resolution of the case, this amount could be subject to possible negotiated reduction or an assessment.

[5] Mr. Igbinosun subsequently passed away and the client chose to self-represent. The client ultimately entered into a settlement agreement with Food Basics for $30,000. The agreement also contained the following: "The defendants agree to pay costs directly to Bernard P. Keating (Ares Law Professional Corp.)." It did not contain any reference to the Undertaking, and Ares Law had no say in its negotiation or drafting.

[6] Regarding Ares Law's costs, Food Basics lawyers, acting on behalf of the client, advised:

My client's insurer, Zurich, is willing to cover the cost of some of your listed disbursements at this time, as part of its settlement with the plaintiffs. I also understand that you have brought an action against the plaintiffs for your outstanding account, and we would like to offer to pay half of that amount as a way to settle that issue.

[7] Then they later advised:

Further to my client's offer to you on costs, my client is now willing to pay half of your listed disbursements, plus $5,000 for your legal fees, or alternatively, we can have your costs assessed. My client would pay whatever amount that is determined by an assessment officer. [Emphasis added].

[8] Ares Law accepted that offer and the matter proceeded to assessment.

The Assessment

[9] The original amount of Ares Law's account was $139,302.52. The assessment officer made some small adjustments and ultimately assessed the outstanding amount at $125,602.83.

[10] In reaching his decision, the officer performed a detailed analysis of the nine factors relevant to cost assessments, as enumerated by this court in Cohen v. Kealey & Blaney (1985), 10 O.A.C. 344, [1985] O.J. No. 160 (C.A.).

[11] Notably, the assessment officer rejected the argument that the Undertaking applied to limit Ares Law's total recovery to $50,000. He held it would have applied had Mr. Igbinosun represented the client at the time of the settlement, but because the client was then acting for himself the agreement no longer governed. He further concluded that the undertaking was not incorporated into the settlement with Food Basics and the client should reasonably expect to pay fees pursuant to the retainer agreement.

Confirmation of the Assessment

[12] The client brought a motion to oppose confirmation of the assessment, and Ares Law brought a cross-motion for judgment in the amount of the assessment. The motion was dismissed and the cross-motion was allowed.

[13] The appellant has now filed a second appeal to this court, advancing essentially the same arguments it did on the confirmation motion.

Standard of Review

[14] The appeal to this court from the motion judge's decision is one of the rare instances when a litigant has a second appeal as of right. That is, since there is only one judgment, that given by the confirming judge, the appeal to this court is as of right: Capsule Investments Ltd. et al. v. Heck (1993), 12 O.R. (3d) 225 (C.A.), at para. 6. Because of the need for finality within a reasonable time, "there is an accentuated need to identify palpable and overriding error in factual matters before interfering at this second level of review": Capsule Investments Ltd., at para. 7.

Issues and Analysis

[15] The appellant raises essentially four grounds of appeal. We would not give effect to any of them.

[16] First, the appellant asserts that the assessment officer failed to appreciate the "peculiar position" of Food Basics and Mr. Rock — that Food Basics, having agreed to assume liability for paying Mr. Rock's account, stepped into Mr. Rock's role at the assessment hearing. As a result, the assessment officer at times properly interpreted "the client" to mean Mr. Rock and at other times improperly interpreted it to mean Food Basics.

[17] We disagree. Reading the assessment officer's decision as a whole, it is evident he appreciated Mr. Rock was the client. Where he referred to Food Basics, he did so in a manner consistent with a proper understanding of its role.

[18] Second, the appellant argues the assessment officer misapprehended the evidence regarding the true value of the claim in determining the reasonableness of the lawyer's fees.

[19] We do not accept this submission. Although the assessment officer held that the value of the claim was likely higher than the $30,000 for which it was ultimately settled, the history of this litigation provided ample evidence to support that view. The appellant is unable to point to any palpable error in the assessment officer's view of the value of the claim, and thus there is no basis to interfere with it.

[20] Third, relying on s. 3 of the Solicitors Act, R.S.O. 1990, c. S. 15, the appellant argues the assessment officer did not have jurisdiction because there were "special circumstances" in this assessment. However, as the motion judge correctly found at para. 20, the issues the appellant has identified do not constitute special circumstances that would impact the assessment officer's jurisdiction.

[21] We agree with Ares Law; special circumstances that operate to oust jurisdiction are exceptional situations or conditions — particularly those that cause quantum and accounting of fees to become entwined with larger legal and factual questions — such that assessing costs necessarily requires answering questions outside the assessor's jurisdiction. We would adopt the description of "special circumstances" expressed in Middlebrook & Company v. McCormack, 2011 ONSC 376, [2011] O.J. No. 177, at para. 9: they are typically "questions that require a decision from the court by action or application". There were no such questions at play here.

[22] Further, nothing about the Undertaking dispute changed the essence of the issue on the assessment, namely, the reasonableness and quantum of fees recoverable. That inquiry is the same when making the determination generally as it is when the quantum has been expressed as a term of a written retainer and the allegation is that this term was subsequently changed: see Aird & Berlis v. Federchuk (1997), 34 O.R. (3d) 406 (Gen. Div.), at para. 18. In either case, the inquiry is squarely within the assessment officer's jurisdiction.

[23] Fourth, the appellant contends the assessment officer and motion judge erroneously treated the Undertaking as irrelevant to the client's expectations regarding costs because Food Basics was not a party to the Undertaking. We see no merit in this submission. As the motion judge correctly noted at para. 13:

… both the solicitor and counsel for the client had a full appreciation of the facts and circumstances surrounding the prior undertaking that fees would not exceed $50,000, as well as the solicitor's actual account of $139,000. If the purpose of an assessment hearing was to determine fees and disbursements up to a maximum of $50,000, that should have been spelled out in clear and unambiguous language in the offer. It was not.

[24] Thus, if the appellant believed the Undertaking applied to limit the assessed account, then he — not Ares Law — had the obligation to raise that issue in advance of the hearing, but failed to do so. Moreover, even if the Undertaking applied, by its terms it was "subject to negotiation between the parties and, if necessary, further assessment proceedings". Further negotiations and an assessment proceeding did occur. Those events, contemplated by the Undertaking, clearly overtook the putative $50,000 cap. And, the parties agreed to be bound by the result of the assessment.

Disposition and Costs

[25] For those reasons, we would dismiss the appeal. The respondents are entitled to costs of the appeal fixed in the amount of $10,000, inclusive of all applicable disbursements and taxes.

H.S. LaForme J.A.

C.W. Hourigan J.A.

David M. Paciocco J.A.