COURT OF APPEAL FOR ONTARIO DATE: 20231110 DOCKET: COA-23-CV-0208

Hourigan, Roberts and Coroza JJ.A.

BETWEEN

Adair Morse LLP Respondent (Respondent)

and

Anna Charron Applicant (Appellant)

Counsel: Jonathan Mesiano-Crookston and Sara Fahmi, for the appellant Jerome R. Morse, for the respondent

Heard: November 8, 2023

On appeal from the order of Justice Markus Koehnen of the Superior Court of Justice, dated December 2, 2022.

REASONS FOR DECISION

OVERVIEW

[1] The appellant retained the respondent to prosecute a negligence action, arising from the tragic death of her husband in Cuba. The case was lengthy and complex. After a few relatively small bills, billing was postponed until after the resolution of preliminary jurisdictional matters. These matters ended up taking several years to resolve. The legal questions of jurisdiction engaged in the case were highly complex, and led to judgments from the Superior Court of Justice, a five-justice panel of this court, and the Supreme Court of Canada.

[2] After the case was argued before the Supreme Court, but prior to the rendering of a judgment, the parties engaged in a mediation. The mediation was successful, and the parties settled for $1,219,500 with a further $115,000 if the appellant won at the Supreme Court. This sum was all-inclusive, but for the costs before the Supreme Court. The appellant was successful in the Supreme Court and the defendants paid the additional $115,000; however, the defendants did not pay the costs for the appeal, and the respondent did not follow-up until after the limitation period had passed.

[3] Following the settlement, the respondent issued the appellant a bill for $435,304.32. It is that bill that is the subject of this appeal. The appellant objected to the bill and sought an assessment under s. 3(b) of the Solicitors Act, R.S.O. 1990, c. S.15.

[4] The assessment officer expressly found that the underlying action was complex, the respondent’s lawyers all kept accurate time, the time dockets were reasonable, and the total bill was proportionate to the appellant’s recovery via the settlement. However, the assessment officer concluded that a reduction in the fees charged was appropriate. Two of those reductions are at issue in this appeal.

[5] First, the assessment officer disallowed the respondent’s annual increases in their hourly rates. The assessment officer held that lawyers and law firms are required to give their clients reasonable notice and particulars prior to increasing their annual rates. It is not permissible to waive this notice requirement in a retainer. Accordingly, the assessment officer reduced the bill by approximately $95,000.

[6] Second, the assessment officer found that while the respondents were generally skillful and competent in their representation of the appellant, their failure to quantify and seek costs to which the appellant was entitled at the Supreme Court was “less than competent.” The assessment officer reduced the bill by $30,000 as a reasonable sum to compensate for this failure by the respondent.

[7] The respondent then appealed to the Superior Court of Justice. The application judge found that the assessment officer made two errors in principle and varied the assessment officer’s order so as to calculate fees based on the retainer agreement. The appellant now asks this court to restore the assessment officer’s original order.

[8] At the conclusion of the oral argument, we advised the parties that the appeal was dismissed for reasons to follow. We now provide our reasons.

ANALYSIS

[9] The appellants raise two issues on appeal.

[10] First, the appellant argues that the application judge improperly interfered with the assessment officer’s conclusion that she had no notice of the respondent’s rate increases. We disagree.

[11] The appellant approached the respondent about retaining it for prosecuting the action. She obtained independent legal advice and negotiated the terms of the retainer before signing it. The retainer outlined the hourly rates of the respondent firm’s lawyers and students. As set out below, it also included a clause specifically authorizing the firm to increase these rates by up to $25 per year, without providing specific notice to the appellant:

I have been advised and understand that the following hourly rates apply, but may be changed from time to time. I specifically consent to Adair Morse LLP changing their hourly rates without specific notice to me should the hourly rates increase by no more than $25.00 per hour, per lawyer, per year.

[12] We agree with the application judge’s conclusion that the appellant had been advised of the increase in hourly rates in the retainer agreement because it specifically pointed out an increase in hourly rates of up to $25 per lawyer per year, and that this was sufficient notice to the appellant. Therefore, the application judge quite properly distinguished the cases relied on by the appellant where clients had been invoiced bills without sufficient notice.

[13] We do not accept the appellant’s argument that the application judge’s decision contradicts the policy behind ensuring that clients are given sufficient notice of impending hourly rate increases – specifically, to afford a client an opportunity to engage their solicitor in a discussion regarding same, and to change legal representation if the client is not in agreement with the increase. There is nothing in the application judge’s decision that is contrary to the policy behind notice. As the application judge noted, there was “settled law” to the effect that a lawyer is not entitled to increase the hourly rates charged without first providing the client reasonable notice and particulars of the pending increase. The application judge grappled with the factual question as to whether there was sufficient notice in this case. His conclusion that the assessment officer erred in principle in finding that there was no notice is amply supported by the record having regard to the written words of the retainer, the fact that the appellant received independent legal advice, and that she did have opportunities to engage in a discussion about those rates.

[14] Further, the application judge noted that the appellant gave evidence below that she was not objecting to the hourly rates, but rather to the number of hours billed. In other words, the appellant did not assert that she had no notice, but instead she took issue with the amount of work actually performed. The appellant also acknowledged in the retainer that she understood the fees for the proceedings could exceed $300,000. At its core, the appellant’s complaint is not about lack of notice of the increase to hourly rates, but rather that she was uninformed about the amount of costs that were accumulating while her case made its way to the Supreme Court of Canada. Accordingly, we do not give effect to this ground of appeal.

[15] Second, the appellant argues that the application judge erred by overturning the assessment officer’s reduction of $30,000 to reflect the respondent’s admitted failure to pursue a cost award at the Supreme Court. The appellant had informed the assessment officer that they were pursuing compensation for the respondent’s failure to pursue costs in a separate civil action. The application judge held that it was improper for the assessment officer to have made any reduction, since the appellant did not ask for it at the hearing and there was no basis for the assessment officer to circumvent that proceeding and make a reduction himself.

[16] We agree with the application judge’s observation that the assessment officer provided a remedy that the appellant had not asked for and for which the respondent had no notice. We have not been shown anything in the record that suggests that this was an issue raised by the appellant before the assessment officer. Indeed, the appellant acknowledges that she has brought a separate civil action in relation to these costs. There is no merit to this ground of appeal.

Disposition

[17] For all these reasons, the appeal is dismissed.

[18] The respondent is entitled to costs on this appeal in the amount of $5,000 all-inclusive.

“C.W. Hourigan J.A.”

“L.B. Roberts J.A.”

“S. Coroza J.A.”