Jane Conte Professional Corporation v. Josephine Smith
CITATION: Jane Conte Professional Corporation v. Josephine Smith 2014 ONSC 6009
DIVISIONAL COURT FILE NOs.: 247/14
DATE: 20141015
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
JANE CONTE PROFESSIONAL CORPORATION Plaintiff (Respondent)
– and –
JOSEPHINE SMITH Defendant (Appellant)
A. Andreopoulos, for the respondent
B. Weintraub for the appellant
HEARD at Toronto: October 8, 2014
REASONS FOR JUDGMENT
NORDHEIMER J.:
[1] Ms. Smith appeals from the decision of Deputy Judge Prattas, dated April 29, 2014, wherein he dismissed the appellant’s motion to dismiss this action. The plaintiff commenced this action against the appellant in the Small Claims Court seeking to recover payment of the sum of $26,051.59 pursuant to a contingency fee agreement. At the conclusion of the argument of this matter, I allowed the appeal, set aside the order of the Deputy Judge and dismissed the claim for want of jurisdiction. I said that I would provide reasons for my decision and I now do so.
[2] In November 2009, the appellant retained the respondent to assist the appellant with a personal injury claim arising out of a motor vehicle accident. While there is some dispute over precisely what claims the respondent was to pursue on the appellant’s behalf, in my view that disagreement does not affect the issue that I must determine.
[3] The appellant signed a Contingency Fee Retainer Agreement prepared by the respondent. The Agreement provided that the respondent would be paid 30% of the amount of the appellant’s recovery in her case together with any costs awarded to the appellant. The Agreement also provided that, if the appellant terminated the respondent’s services, the appellant would have to pay for the services provided to that point based on the respondent’s hourly rates.
[4] The appellant did, in fact, terminate the respondent’s services. After she retained new counsel, that counsel wrote to the respondent, on February 12, 2012, advising of their retainer and asking for a copy of the appellant’s file. On March 8, 2012, the respondent replied to that letter by providing a copy of the file. The respondent also included a “final” statement of account in the amount of $17,095.63.
[5] There was then some correspondence between the respondent and the appellant’s new counsel regarding the amount of the account. A period of silence ensued until the respondent sent a letter, dated February 3, 2014, to the appellant’s new counsel that enclosed a new “final” account. This account was in the amount of $26,051.59. The appellant’s new counsel responded to this letter by, among other things, requesting the respondent’s dockets for the work done. The appellant’s new counsel also advised the respondent of her view that, pursuant to the terms of the Solicitors Act, R.S.O. 1990, c. S.15, no action could be brought in respect of the Agreement.
[6] On March 7, 2014, the respondent commenced this action in the Small Claims Court. On April 29, 2014, the appellant brought a motion to strike out and dismiss the respondent’s claim. On that day, the Deputy Judge dismissed the appellant’s motion without reasons. While the respondent says that the Deputy Judge did give some reasons for his decision during the course of the argument of the motion, no such reasons appear anywhere in the record nor do I have a transcript of any reasons. Consequently, I am not able to discern the basis upon which the Deputy Judge decided to dismiss the motion.
[7] On this appeal, the parties are in agreement that the applicable standard of review is correctness. Since this matter involves a question of the jurisdiction of the Small Claims Court that would appear to be the proper standard of review to be applied: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at para. 59
[8] Before turning to the issues that arise under the Solicitors Act, I must first address the failure of the Deputy Judge to give reasons for his decision. The giving of reasons for any decision made is a critical part of a judge’s role. While the reasons do not have to be lengthy or particularly detailed, the reasons must, at the very least, explain why the decision was reached and thus allow for proper appellate review. This point was made in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, where Binnie J. said, at para. 55:
The delivery of reasoned decisions is inherent in the judge’s role. It is part of his or her accountability for the discharge of the responsibilities of his office. In its most general sense, the obligation to provide reasons for a decision is owed to the public at large.
[9] As has been said repeatedly by this court, the requirement to give reasons applies to decisions made in the Small Claims Court. While the content and scope of the reasons will be moderated by the nature of the court, its workload and the type of cases that are heard, there is still a requirement to give adequate reasons. This point was recently reinforced in Doerr v. Sterling Paralegal, 2014 ONSC 2335, [2014] O.J. No. 1732 (Div. Ct.) at para. 19.
[10] The failure of the Deputy Judge to give any reasons for the dismissal of the appellant’s motion is, by itself, a sufficient basis to allow the appeal. While I could remit the matter back to the Small Claims Court for a rehearing, that is not in the interests of the parties nor does it promote the goal of having matters dealt with as expeditiously as possible. Since the jurisdictional issue has been fully argued by counsel in this court, in my view the preferable route was for me to consider the substantive issue and decide it.
[11] Contingency fee agreements are covered by various sections of the Solicitors Act. While such agreements are expressly addressed in s. 28.1, contingency fee agreements are also covered by ss. 20-32 by virtue of s. 16(2). Certain sections are of particular relevance for the purposes of this matter. The first is s. 28.1(11) that reads:
For purposes of assessment, if a contingency fee agreement,
(a) is not one to which subsection (6) or (8) applies, the client may apply to the Superior Court of Justice for an assessment of the solicitor’s bill within 30 days after its delivery or within one year after its payment; or
(b) is one to which subsection (6) or (8) applies, the client or the solicitor may apply to the Superior Court of Justice for an assessment within the time prescribed by regulation made under this section.
This section clearly restricts a client’s right to have a fee under a contingency fee agreement assessed to certain stipulated time frames. The section says nothing about the lawyer’s rights to have a contingency fee agreement assessed, except in the narrow circumstances where subsection (6) or (8) applies.
[12] Another section that is relevant is the more general provision contained in s. 23 that reads:
No action shall be brought upon any such agreement, but every question respecting the validity or effect of it may be examined and determined, and it may be enforced or set aside without action on the application of any person who is a party to the agreement or who is or is alleged to be liable to pay or who is or claims to be entitled to be paid the costs, fees, charges or disbursements, in respect of which the agreement is made, by the court, not being the Small Claims Court, in which the business or any part of it was done or a judge thereof, or, if the business was not done in any court, by the Superior Court of Justice.
[13] This provision is, in my view, extremely broad. It refers to “no action” being brought upon any such agreement. It also refers to “every question” respecting the validity or effect of an agreement between a lawyer respecting the amount and manner of payment is to be determined by the court in which the legal work was done and, if the work was not done in any court, by the Superior Court of Justice. It is to be noted that the Small Claims Court is expressly excluded from this authority.
[14] The next relevant section is s. 24 that directs what is to happen when a question is raised regarding an agreement under s. 23. Section 24 reads:
Upon any such application, if it appears to the court that the agreement is in all respects fair and reasonable between the parties, it may be enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit, but, if the terms of the agreement are deemed by the court not to be fair and reasonable, the agreement may be declared void, and the court may order it to be cancelled and may direct the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein to be assessed in the ordinary manner.
[15] This section makes it clear that if the court is called upon to consider an agreement between a lawyer and his/her client, then, if the court determines that the agreement is fair and reasonable the court will enforce it, and if the court does not so conclude, then the normal assessment process is to be followed.
[16] It will be seen from these sections that the Legislature has established a process by which the validity and enforceability of written fee agreements between lawyers and clients are to be handled. There is nothing in any of these sections that gives any authority to the Small Claims Court to consider issues arising under a written fee agreement including a contingency fee agreement. Indeed, as I have already mentioned, the Small Claims Court is expressly excluded from considering such matters.
[17] In response, the respondent relies on s. 4 of the Solicitors Act. That section reads:
No such reference shall be directed upon an application made by the party chargeable with such bill after a verdict or judgment has been obtained, or after twelve months from the time such bill was delivered, sent or left as aforesaid, except under special circumstances to be proved to the satisfaction of the court or judge to whom the application for the reference is made.
The reference mentioned in s. 4 is found in s. 3 that deals with how clients and lawyers can obtain an order of this court for the assessment of a lawyer’s account. Section 4 provides a presumptive twelve month time limit for a client to obtain an order for the assessment of a lawyer’s account.
[18] The respondent contends that the twelve month time limit found in s. 4 applies to the Agreement in this case and that, once that twelve month period expired, the respondent was free to take whatever action it wanted to pursue the account. In other words, the respondent says that, once the client failed to take any action to have the account assessed within the twelve month limit in s. 4, the matter fell outside the provisions of the Solicitors Act and the lawyer could simply pursue the client on the account as a matter of contract.
[19] In this regard, the respondent points to a number of cases in the Small Claims Court where that court has dealt with claims by lawyers for the recovery of their accounts. None of those cases, however, appear to deal with the situation where there was a written fee agreement. Assuming, without deciding, that a proceeding in the Small Claims Court is available to collect a lawyer’s account generally, there is nothing in s. 4 that purports to have it overrule the express provisions found in ss. 20 to 32 regarding written fee agreements. Rather, s. 4 appears to be directed to the more usual situation where there is no written fee agreement between the lawyer and the client.
[20] In my view, once a lawyer chooses to enter into a written agreement with his or her client “respecting the amount and manner of payment for the whole or a part of any past or future services in respect of business done or to be done by the solicitor” then the lawyer is bound by the procedures set out in ss. 20 to 32 of the Solicitors Act. In particular, if the lawyer wishes to enforce the agreement then he or she must, as set out in s. 23, bring an application for that purpose in the court “in which the business or any part of it was done or a judge thereof, or, if the business was not done in any court, by the Superior Court of Justice”. I repeat that s. 23 expressly excludes the Small Claims Court from this authority.
[21] The respondent advances a further attempt to avoid this result by referring to the Agreement as a “hybrid” agreement because it contained a provision that hourly rates were to be applied if the client terminated the services of the lawyer. The respondent contends that, since that is what happened in this case, the Agreement then ceased to be a contingency fee agreement.
[22] Putting aside for the moment that there is a dispute between the parties as to whether the client terminated the agreement or the lawyer did, no authority was cited to me for the proposition that a contingency fee agreement ceases to be a contingency fee agreement just because it contains such a provision. I note in this regard that s. 28.1(2) reads:
A solicitor may enter into a contingency fee agreement that provides that the remuneration paid to the solicitor for the legal services provided to or on behalf of the client is contingent, in whole or in part, on the successful disposition or completion of the matter in respect of which services are provided. [emphasis added]
It appears, therefore, that the Legislature contemplated that contingency fee agreements could contain non-contingent components of the fee arrangements.
[23] Further, even if the respondent is correct that the Agreement in this case was both a contingency fee agreement and a regular fee agreement, depending on how events unfolded, that result would not take the Agreement outside the application of ss. 20 to 32 including the enforcement procedure set out in s. 23 since those provisions apply to all written fee agreements.
[24] Consequently, I concluded that the Small Claims Court had no jurisdiction to consider a claim made by a lawyer based on a written fee agreement including a contingency fee agreement. I would note, in passing, that this conclusion appears to be consistent with the general rule that questions involving the nature, validity or effect of a contingency fee agreement should be resolved by judges: Cookish v. Paul Lee Associates Professional Corp., 2013 ONCA 278, [2013] O.J. No. 1947 (C.A.) at para. 39.
[25] I would add one other reason why the Small Claims Court could not entertain this claim in this particular case. I earlier noted that the Agreement provided that the lawyer would be paid any costs awarded to the client. Under s. 28.1(8) a contingency fee agreement that provides for the lawyer to receive costs awards must be approved by the court and, in doing so, the court must be satisfied that there are “exceptional circumstances” that justify that approval. Further, s. 28.1(9) expressly provides that a contingency fee agreement, that contains such a provision regarding costs, is unenforceable unless it has been approved by the court. I note, on this point, that the wording of s. 29 makes the whole contingency fee agreement unenforceable, not just the part that deals with awards of costs.
[26] There was no evidence put before the Deputy Judge that the Agreement in this case had been so approved. Consequently, the Agreement was prima facie unenforceable. This is yet another reason why the claim should have been dismissed.
[27] In the end result, therefore, I allowed the appeal, set aside the order of the Deputy Judge and granted an order dismissing the proceeding in the Small Claims Court.
NORDHEIMER J.
Date of Release:
CITATION: Jane Conte Professional Corporation v. Josephine Smith 2014 ONSC 6009
DIVISIONAL COURT FILE NOs.: 247/14
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
JANE CONTE PROFESSIONAL CORPORATION Plaintiff (Respondent)
– and –
JOSEPHINE SMITH Defendant (Appellant)
REASONS FOR JUDGMENT
NORDHEIMER J.
Date of Release: