Foster v. Laguna, 2007 CanLII 2363 (ON SCDC)

COURT FILE NO.: DC06-0063

DATE: 20070202

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Arnold Foster v. Leo Ledesma Laguna and Merfelda Laguna

BEFORE: Baltman J.

COUNSEL: Thomas M. Arnold, for the Plaintiff

Michael Farace, for the Respondent

E N D O R S E M E N T

1The Appellant law firm, Arnold, Foster, ("Arnold") appeals to the Divisional Court from the judgment of the Small Claims Court dated May 25, 2006 at Milton, Ontario, which dismissed the Plaintiff's claim. The appeal is with respect to an unpaid solicitors account and raises the issue as to what a solicitor is required to disclose in his account under the Solicitors Act, R.S.O. 1990, c. S.15 (the "Act") and the Rules of Professional Conduct.

2Arnold asks that the judgment be set aside and that judgment be granted in accordance with the Plaintiff's Claim, or, alternatively, that a new trial be ordered.

Factual Background

3In April 2001 Arnold was retained by the Respondents, Leo Ledesma Laguna and Merfelda Laguna (" the Lagunas"), to act on their behalf with respect to two land severance applications in the Town of Halton Hills, Ontario.

4Arnold acted on behalf of the Lagunas at a hearing of the Committee of Adjustment on May 22, 2001, wherein the Lagunas' two land severance applications were granted. Following an appeal of that decision, Arnold acted on behalf of the Lagunas at a further hearing before the Ontario Municipal Board ("OMB"), which occurred on September 11, 2001. The OMB issued a decision approving the land severance applications, subject to numerous conditions. These conditions included obtaining a noise impact study and preparing a road widening transfer.

5On January 18, 2002 Arnold provided the Lagunas with an account for services rendered to that date in the amount of $19,960.03, which the Lagunas paid in full. It is clear from the content and chronology of the account that it only reflects services up to and including the attendance at the OMB.

6Shortly after receiving the OMB decision Arnold met with the Lagunas to review the conditions attached to the severance. Arnold's dockets demonstrate that between March 2002 and May 2003 he took numerous steps to satisfy the conditions. The dockets reflect over 50 activities and include extensive contacts with various officials at the Committee of Adjustment, the Ministry of the Environment and CN Rail (regarding noise impact), and the Township of Halton Hills (regarding the road widening).

7Ultimately Arnold succeeded in satisfying the conditions, which allowed the Lagunas to proceed to sell the two properties, the first in May 2003 and the second in October 2003. Arnold acted on behalf of the Lagunas with respect to the sale of these two properties, and provided a separate account for each sale. The first account, dated May 23, 2003, is for $700 plus GST and disbursements, and totals $1,100.66. The second account, dated October 8, 2003, is also for $700 plus GST and disbursements, and totals $997.86. It is evident from the description of services rendered that both accounts relate solely to services performed in connection with the sale, including preparation of the deed, statement of adjustments and closing documentation, arranging for discharges, and attending on the sale. There is no reference in either account to any of the efforts made by Arnold to satisfy the conditions attached to the severance.

8On January 23, 2004 Arnold provided the Lagunas with an account for services rendered in the amount of $5,252.78, comprised of $4,775.00 in fees, $140.20 in disbursements, and $337.58 for GST. Arnold's dockets and the description given in the account demonstrate that this account reflected work he performed between March 2002 and May 2003 in order to satisfy the conditions attached to the severance.

9The Lagunas refused to pay the account because in their view it was "double billing," in other words it included work for which Arnold had previously billed.

10On September 23, 2004 Arnold commenced an action in Small Claims Court for recovery of the account. At the trial of the matter on May 25, 2006 the Deputy Judge dismissed Arnold's claim solely on the basis that the January 23, 2004 account did not provide time dockets and an hourly rate.

Analysis

11The endorsement of the Deputy Judge, in dismissing the claim, provides that there was "no proper proof of services on a time and hourly rate basis." It is clear from the exchange that took place between the Deputy Judge and Arnold's representative that the Deputy Judge believed a solicitor is obliged to set out in his account the number of hours and hourly rate upon which the account is based. The Deputy Judge's final comment, in dismissing the claim, was as follows:

What I'm really concerned of is the details of the solicitor's account and what it must contain and my finding is that there is no proper proof of services on the time and hourly rate basis and on that conclusion the action has to be dismissed.

12Fees and disbursements chargeable by a solicitor are governed by the Act. There is no provision in the Act, which requires a solicitor to provide a time and hourly rate basis for an account to a client. Rather, the Act specifically contemplates "Charges in lump sum" under section 2.(3) which provides that:

2.(3) A solicitor's bill of fees, charges or disbursements is sufficient in form if it contains a reasonable statement or description of the services rendered with a lump sum charge thereof together with a detailed statement of disbursements, and in any action upon or assessment of such bill if it is deemed proper further details of the services rendered may be ordered.

13The description of services rendered on the January 23, 2004 account is as follows:

Re: Applications for Consent

FOR PROFESSIONAL SERVICES RENDERED in connection with the above-mentioned matter, including:

TO conducting subsearch,

TO receiving circulated consent approving conditions of approval receiving provisional consent,

TO numerous discussions and correspondence with CN Rail regarding warning clause and noise impact study to be inserted in all agreements or offers to purchase and the preparation of required undertaking and attending to your execution of same;

TO preparation of road widening transfer, certificate of title and to registration of same on title;

TO fulfilling all conditions;

TO implementation of severance including preparation of Transfer and registration of same,

AND for all other services, attendances, telephone attendances and correspondence necessarily incidental thereto.

14The lump sum fee provided on the January 23, 2004 account is $4,775.00 (+ $334.25 GST), together with the following detailed statement of disbursements:

*GST exempt

DISBURSEMENTS:

*Paid registration fee for road widening $70.70

*Paid to search executions 22.00

Teraview 15.00

Postage 4.50

Photocopies 17.50

Facsimiles 10.50 140.20

G.S.T. on disbursements 3.33

15Given the above noted detailed description of services, together with a lump sum fee and a detailed statement of disbursements, the January 23, 2004 account complies with the requirements for "charges in lump sum" provided in section 2.(3) of the Act. Therefore, in my view, the trial judge erred in law in dismissing the action on the sole basis that Arnold was required under the Act to submit time and hourly rates on the January 23, 2004 account.

16A solicitors practice of accounting for fees and disbursements is also governed by Rule 2.08(1) of the Rules of Professional Conduct which provides that "a lawyer shall not charge or accept any amount for a fee or disbursement unless it is fair and reasonable and has been disclosed in a timely fashion."

17There is no rule, or commentary on any rule, in the Rules of Professional Conduct that require a solicitor to provide his fee on a time and hourly rate basis in an account. Whether the January 23, 2004 account was "disclosed in a timely fashion" as required by Rule 2.08(1) in the Rules of Professional Conduct was not an issue at trial.

18Similarly, whether the account was "fair and reasonable" as required by Rule 2.08(1) was not central to the Deputy Judge's decision. During the trial of the claim the Deputy Judge acknowledged that the Appellant's January 23, 2004 account "has merit". In explaining to the Lagunas the differences among Arnold's accounts dated January 18, 2002, May 23, 2003, October 8, 2003 and January 23, 2004, the trial judge stated the following:

THE COURT: Well, I understand but I don't see in all of these bills an invoice for actual consent applications and completing that sort of thing that was what the last bill was. I don't see that in any of these invoices. Two of them were specifically for sale of lots and the other one is specifically for up to and including the O.M.B. appeal, okay, but there's nothing in any of those invoices for the actual applications for consent and satisfying the municipality's conditions for those consents which still had to be done but there's nothing in the invoices for that part of the work and as far as I could tell this last invoice is, has merit. [emphasis added]

19I find the Deputy Judge was correct in acknowledging that the January 23, 2004 account has merit, as it relates solely to the satisfaction of the conditions for the severance applications and the implementation of the severances. Despite the Deputy Judge's acknowledgment that the January 23, 2004 account has "merit" and relates to services which had not previously been billed, the following exchange took place among Arnold's representative, the Lagunas, and the Deputy Judge following the submission of the evidence in this case:

THE COURT: Anything else anybody wants to say?

MR. ARNOLD: No, Your Honour, those are my submissions.

MS. LAGUNA: It's up to you, Your Honour, what do you think is fair for us, you know.

THE COURT: Well, I'm not sure what's fair as [sic] entered into the picture.

MS. LAGUNA: What do you think is reasonable to charge...

THE COURT: Well, I'm not sure that enters into the picture either at all. What I'm really concerned of is the details of the solicitor's account and what it must contain and my finding is that there is no proper proof of services on the time and hourly rate basis and on that conclusion the action has to be dismissed. Thank you. [emphasis added]

20I find the Deputy Judge erred in law in dismissing the claim. The account complies with the requirements set out in the Act. Moreover, it is fair and reasonable given that it relates strictly to the work Arnold needed to do to satisfy the conditions laid out by the OMB.

21The defendants claim they believed the previous three accounts included all the work done to satisfy the conditions. There is no rational or evidentiary basis for that belief. It is clear the January 18, 2002 account was not a final account, as there were still outstanding matters that required Arnold's services such as the fulfilling of the conditions of approval and the implementation of the severances. In a similar vein, the account for services rendered dated May 23, 2003 and October 8, 2003 relate only to the sale of each property. They were modest accounts that on their face did not reflect in any way the services Arnold rendered in fulfilling the conditions of approval. Those conditions were numerous and required significant work: they didn't satisfy themselves.

22Nor do I agree with the defendants' submission that there was insufficient evidence before the Deputy Judge to justify the full amount of the account. The account reflects approximately 50 entries performed on 33 days over a period spanning 14 months. They involved extensive correspondence, phone calls and negotiations with the Ministry of the Environment, the Township of Halton, CN Rail, and the Committee of Adjustment. While the dockets are not broken down by time intervals, the total fee of $4,775.00 seems fair and reasonable given the extensive – and successful – efforts made by Arnold on his clients' behalf.

Conclusion

23I conclude the Deputy Judge erred in law in dismissing the Plaintiff's claim. His decision is therefore set aside and judgment is granted in the amount of $5,252.78 plus pre-judgment interest in accordance with the Courts of Justice Act.

24Arnold shall have his costs of the appeal, fixed at $1,508.67 inclusive of GST and disbursements.

Baltman J.