A. INTRODUCTION AND OVERVIEW

[1] This is an appeal by James Williams from the decision of Justice Price setting aside the certificate of assessment of Assessment Officer Cannings, which was issued after an assessment of the solicitor and client bill of RZCD Law Firm under the Solicitors Act, R.S.O. 1990, c. S. 15.

[2] The Assessment Officer had ordered the RZCD Law Firm to refund $24,000 of an approximately $89,000 bill and to pay Mr. Williams $12,000 in costs. The motion judge set aside the assessment certificate and, in effect, ordered the RZCD Law Firm to refund $11,711.83 with each party bearing their own costs of the assessment and of the appeal.

[3] On this further appeal, Mr. Williams advances three grounds to restore the certificate of assessment; namely: (1) that the motion judge ought not to have heard the appeal because the RZCD Law Firm had not delivered objections, which pursuant to s. 17(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43 and the Rules of Civil Procedure is a prerequisite to the appellate court having jurisdiction; (2) that the motion judge erred by accepting new evidence on the appeal; and (3) that the motion judge erred in setting aside the certificate and substituting his own assessment for the decision of the Assessment Officer because there were no grounds to do so and the motion judge ought to have shown deference to the decision of the Assessment Officer.

[4] For the reasons that follow, I agree that each of these grounds of appeal have been established.

[5] Accordingly, I set aside the motion judge’s decision, and I confirm the assessment certificate. I order RZCD Law Firm to refund $24,000 and to pay Mr. Williams the $12,000 costs of the assessment hearing, plus $10,000, all inclusive, for the costs of the motion before the motion judge, plus $7,500, all inclusive, for this appeal to the Divisional Court.

B. FACTUAL AND PROCEDURAL BACKGROUND

[6] For the purposes of deciding this appeal, it is not necessary to review comprehensively Mr. Williams’ personal history nor is it necessary to review in detail the legal services that were provided to him by Peter M. Callahan of the RZCD Law Firm. The details are set out in the motion judge’s Reasons for Order reported as RZCD v. Williams, 2015 ONSC 1792. For present purposes, the following summary of the pertinent facts is sufficient.

[7] In 1999, Mr. Williams married Kimberley Williams. This was a second marriage for Mr. Williams, whose first wife had died giving birth to Mr. Williams’ twin daughters. This was also a second marriage for Mrs. Williams, who had a son and two daughters from her previous marriage. Mr. and Mrs. Williams had two children together.

[8] In 2007, the Williams separated, and in 2008, Mrs. Williams commenced matrimonial proceedings against Mr. Williams. Both parties were represented by lawyers.

[9] In February 2009, Mr. Williams discharged his lawyer and hired Mr. Callahan of the RZCD Law Firm.

[10] After a variety of contentious proceedings, the matrimonial dispute was set to proceed to trial for the trial sittings in Brampton scheduled for November, 2009.

[11] On November 19, 2009, there was a trial management conference for what was estimated to be a 7 to 10 day trial. After a day of negotiations, the action settled.

[12] The Assessment Officer was later to describe the settlement as “disastrous” from Mr. Williams’ point of view. The motion judge, after an elaborate analysis based on new evidence that he had requested the parties to deliver, decided that the settlement was an excellent piece of work performed by Mr. Callahan for Mr. Williams. For present purposes, I need not decide whether the settlement was disastrous or excellent.

[13] I do need to note that one circumstance of the settlement was certainly a surprise and a disappointment to Mr. Williams and this circumstance explains why the motion judge reduced the RZCD Law Firm’s fee.

[14] The surprise was that at the time of the settlement, Mr. Callahan did not alert Mr. Williams that there was substantial unbilled work in progress. Only after the settlement did the RZCD Law Firm deliver its final account. In total, the firm billed Mr. Williams $88,508.50, all inclusive. To Mr. Williams’ chagrin, the RZCD Law Firm used monies it was holding in trust from Mr. Williams’ retainer payments and money being held by Mr. Williams’ conveyancing lawyer from the sale of the matrimonial home, to satisfy the accounts. Mr. Williams was left with $40,000.00 from the sale of the home after paying the legal fees.

[15] Pursuant to the Solicitors Act, the unhappy Mr. Williams obtained an order from the registrar to have the RZCD Law Firm’s five accounts assessed. Justice Seppi, however, on December 21, 2010, set aside the registrar’s order because the request was untimely under the Solicitors Act. Mr. Williams, however, persisted, and on July 20, 2011, he obtained an order from Justice Corbett referring the accounts to assessment on the grounds that special circumstances had been shown.

[16] The matter proceeded to a four-day assessment hearing on June 18, 19, 20, and 21, 2013. During the assessment hearing, a dispute arose about whether Mr. Callahan and Mr. Williams had an agreement about Mr. Callahan’s hourly rates. The Assessment Officer did not regard this matter as a reason to decline jurisdiction, and he proceeded with the assessment.

[17] The Assessment Officer delivered reasons for decision on October 4, 2013 and supplementary reasons on December 13, 2013, when he issued a Certificate of Assessment.

[18] On January 30, 2014, pursuant to s. 6 (9) of the Solicitors Act, without delivering a notice of objection to the Assessment Officer, the RZCD Law Firm moved to oppose confirmation of the Certificate of Assessment to have the Certificate set aside.

[19] RZCD Law Firm advanced two grounds of appeal; namely: (1) the Assessment Officer had exceeded his jurisdiction by deciding the dispute about the hourly rates, which it submitted was an issue to be determined by a judge; and (2) in his consideration of the results achieved, the Assessment Officer had erred in principle in his consideration of the value of the solicitor’s work by considering the results achieved after deducting the legal expense.

[20] Mr. Williams responded with a cross-motion to dismiss the motion on the ground that it was out of time and because of failure to serve a copy of the transcript of the evidence at the assessment hearing.

[21] After several adjournments, the competing motions were heard on October 27, 2014.

[22] After hearing argument, the motion judge reserved judgment to permit settlement discussions. In his endorsement, he indicated that if the parties could not settle, then he would require evidence on four issues: (1) how had Mr. Callahan calculated that Mr. Williams’ potential spousal support obligation would range between $9,000 to $15,000 per annum; (2) whether Mr. Williams would likely have changed his instructions if he had been told about the unbilled work in progress; (3) whether Mr. Callahan’s use of the monies being held in trust to pay the RZCD Law Firm’s accounts affected the settlement or any other issue; and (4) the terms of the orders being sought by the parties in the event that the Certificate of Assessment was set aside.

[23] The parties did not settle, and on November 27, 2014, Mr. Williams’ counsel wrote to request an opportunity to make submissions about the application of the Court of Appeal’s decision in Price v. Sonsini (2002), 2002 41996 (ON CA), 60 O.R. (3d) 257 (C.A.) and to object to the filing of any new evidence as would be required to respond to the motion judge’s four questions.

[24] Despite the protest, the motion judge, nevertheless, granted leave to the parties to make further submissions, which they did in writing, including RZCD Law Firm delivering evidence about the four issues raised in the endorsement.

[25] Although for the purposes of deciding the matter now before the court, I need not address the point, on the matter of the application of Price v. Sonsini, Mr. Williams’ submissions to the motion judge were problematic. The problems arose because before his appointment to the bench, the motion judge was the Price of Price v. Sonsini, and Mr. Williams’ submissions about the case were intertwined with a submission that the motion judge should recuse himself on the grounds of a reasonable apprehension of bias if he were disposed not to apply Price v. Sonsini in the way described by Mr. Williams in his submissions. The motion judge did not recuse himself, and after dedicating almost a third of his decision to the topic, he essentially agreed with Mr. Williams’ submission about the implications of Price v. Sonsini. Thus, Mr. Williams’ problematic submissions are not a factor in Mr. Williams’ current appeal, and I need not say anything more about the application of Price v. Sonsini.

[26] Moving on, in his Reasons for Order, the motion judge concluded that the Assessment Officer erred in his treatment of the “results achieved” factor, which empowers the assessment officer to exercise discretion to reduce the lawyer’s fees in view of the recovery achieved by the client.

[27] It is, however, to be noted that in reaching his conclusion that there was an error in principle, the motion judge, relying on Justice (as he then was) Strathy’s decision in Baker (Estate) v. Sony BMG Music (Canada) Inc., 2011 ONSC 7105 noted that there are circumstances where the amount that a solicitor has charged his client can be taken into account when considering the results achieved factor. Thus, the motion judge found a different error in principle than posited by the RZCD Law Firm.

[28] The motion judge’s analysis of a different error in principle is set out in paragraphs 70 to 72 of the order now under appeal, where the motion judge stated:

The assessment officer did make an error in principle, however, by considering solely the amount Mr. Callahan charged, without also considering the Order he secured, compared with the Order that Ms. Williams had sought, and the best and worst outcomes that could have resulted. For the reasons stated above, I find that the $81,133.50 that Mr. Callahan charged was not disproportionate to the $246,240 he saved Mr. Williams in child support, spousal support, and equalization payment, and this must be regarded as an excellent result, especially having regard to the additional fact that Mr. Callahan obtained an order granting Mr. Williams joint custody of his children and access to them 47% of the time.
It was indeed an error in principle for the assessment officer to discount the result achieved by deducting the amounts he charged as his fees. If the costs were deducted from the amount recovered in this way (or, in this case, from the amount Ms. Williams claimed but did not recover), how could it be fair to determine, in this way, whether the fee charged was "proportional" to the results? That is, if the $246,240 that Mr. Williams avoided paying to Ms. Williams is reduced by the $81,133.50 fee that Mr. Callahan charged, to conclude that Mr. Callahan really only saved him $165,106.50, then Mr. Callahan would face the unfair argument that his $81,133.50 fee is disproportionate to the $165,106.50 payment from which he saved his client. This would be unfair because the fee would have been counted twice, once on the fee side of the equation and once by being deducted from the payment his client avoided making to Ms. Williams.
The proper approach is to consider the results achieved by reference to the amount claimed, or the maximum amount recoverable, and then to determine the amount charged in proportion to those results. Mr. Williams could, in the worst case, have lost $246,240, along with custody of his children, and still faced a fee of $81,133.50. The fee is obviously more reasonable in proportion to the $246,240 that Mr. Williams avoided paying, rather than in proportion to an order requiring him to pay that amount to Ms. Williams. To deduct the fee from the result and then ask whether the fee is reasonable having regard to the diminished result is clearly unfair and amounted to an error in principle. On this basis, the report and certificate of assessment officer Cannings must be set aside.

[29] The motion judge went on to consider each of the other well-known factors that may affect the assessment of a lawyer’s accounts, and he concluded that Mr. Williams was not entitled to expect accounts in a lower amount than Mr. Callahan charged. However, Justice Price concluded that Mr. Williams ought to have been told before settling the proceeding, how much he would owe Mr. Callahan and where the settlement would leave him, net of legal costs. Therefore, the motion judge set aside the Certificate of Assessment, assessed RZCD Law Firm’s fees to be $70,000 plus taxes of $3,478.34 plus disbursements. In practical effect, this meant that RZCD Law Firm would have to refund $11,711.83 to Mr. Williams with each party bearing their own costs of the assessment.

C. DISCUSSION AND ANALYSIS

1. Jurisdiction to Appeal a Certificate of Assessment

[30] s. 6 (9) of the Solicitors Act provides that a motion to oppose confirmation of the certificate shall be made to a judge of the Superior Court of Justice.

[31] s. 17(b) of the Courts of Justice Act, provides for appeals to the Superior Court of Justice from a certificate of assessment in respect of which an objection was served under the Rules of Civil Procedure. Section 17 (b) states:

An appeal lies to the Superior Court of Justice from, …

(b) a certificate of assessment of costs issued in a proceeding in the Superior Court of Justice, on an issue in respect of which an objection was served under the rules of court.

[32] Rule 58.11 provides that an appeal under s. 17(b) of the Courts of Justice Act from a certificate of assessment in respect of which an objection was served is governed by rule 62.01 (which is the rule that provides the procedure for appeals from an interlocutory order). Rule 58.11 states:

APPEAL FROM ASSESSMENT

58.11 The time for and the procedure on an appeal under … 17 (b) … of the Courts of Justice Act from a certificate of an assessment officer on an issue in respect of which an objection was served is governed by rule 62.01.

[33] As may be noted, appeals or opposition to the confirmation of a certificate of an assessment officer involve the delivery of objections. The procedure with respect to serving objections is a procedure designed to provide the assessment officer with an opportunity to reconsider and review his or her assessment in light of the objections and to amend his or her decision and certificate accordingly. The procedure is set out in rules 58.09 and 58.10, which state:

CERTIFICATE OF ASSESSMENT

58.09 On the assessment of costs, the assessment officer shall set out in a certificate of assessment of costs (Form 58C) the amount of costs assessed and allowed.

OBJECTIONS TO ASSESSMENT

58.10 (1) On request, the assessment officer shall withhold the certificate for seven days or such other time as he or she directs, in order to allow a party who is dissatisfied with the decision of the assessment officer to serve objections on every other interested party and file them with the assessment officer, specifying concisely the grounds for the objections.

(2) A party on whom objections have been served may, within seven days after service or such other time as the assessment officer directs, serve a reply to the objections on every other interested party and file it with the assessment officer.

(3) The assessment officer shall then reconsider and review the assessment in view of the objections and reply and may receive further evidence in respect of the objections, and the assessment officer shall decide on the objections and complete the certificate accordingly.

(4) The assessment officer may, and if requested shall, state in writing the reasons for his or her decision on the objections.

[34] When an appeal is about the assessment officer’s jurisdiction; i.e., an appeal about the principle upon which the assessment proceeded or the fairness or natural justice of the assessment procedure rather than an appeal about particular items, then the appeal may proceed without objections having been made to the assessment officer: Borden & Elliot v. Deer Home Investments Ltd., [1992] O.J. No. 2152 (Gen. Div.); Wilson v. Gunn & Associates, [1999] O.J. No. 658 (Gen. Div.); Ramos v. Eastern Airlines Inc., [1994] O.J. No. 2033 (Gen. Div.); Rowland v. Sackmar, [1960] O.W.N. 455 (leave to appeal) and [1960] O.W.N. 522 (C.A.); Clark v. Virgo (1896), 17 P.R. 260.

[35] However, where the appeal from a certificate of assessment is confined to specific items in the solicitor’s bill, objections should be delivered, and if objections are not delivered, the appeal court may dismiss the appeal upon preliminary motion: Brooker v. 626381 Ontario Ltd., [2009] O.J. No. 138 (S.C.J.); Re Avery, [1952] O.J. No. 129 (H.C.J.); Robinson v. England (1906), 11 O.L.R. 385 (Div. Ct.), aff’g [1906] O.J. No. 334 (H.C.J.); Campbell v. Baker (1905), 9 O.L.R. 291; Snowden v. Huntington (1887), 12 P.R. 248.

[36] Instead of dismissing the appeal, the court has a rarely exercised discretion to set aside the certificate and to allow objections to be made nunc pro tunc: Robinson v. England, supra; Basman v. Beck, [1989] O.J. No. 274 (Surr. Ct.), but, generally speaking, appeals on specific items in the lawyer’s bill should be based on objections delivered to the assessment officer.

[37] In the case at bar, the appeal from the Assessment Officer was a hybrid appeal. RZCD Law Firm argued that the Assessment Officer did not have jurisdiction because of an alleged dispute about the retainer. This ground of appeal did not require objections to have been served, but the motion judge dismissed this ground of appeal, and this issue is no longer before the court.

[38] The other branch of RZCD Law Firm’s appeal, however, was based on objections to the Assessment Officer’s consideration of the lawyer’s accounts, but RZCD Law Firm did not comply with the requirement of the Courts of Justice Act and the Rules of Civil Procedure to have served objections.

[39] In these circumstances, in my opinion, the motion judge erred by allowing the appeal of the Certificate of Assessment to proceed without objections having been filed, and he ought to have quashed or dismissed the balance of the appeal. Accordingly, the appeal in the immediate case should be allowed with the result that the Certificate of Assessment should be restored.

2. New Evidence on an Appeal of a Certificate of Assessment

[40] There is a second ground for allowing the appeal and restoring the Certificate of Assessment.

[41] The motion before the motion judge was an appeal, and as the factual background above reveals, the motion judge invited and accepted fresh evidence on the hearing of the appeal. In my opinion, it was an error for him to do so.

[42] In Jordan v. McKenzie, [1987] O.J. No. 1193 (H.C.J.), Justice Anderson held that on a motion to oppose confirmation of a certificate of assessment, evidence could be put before the court if the issue on the motion was whether the assessment officer exceeded his or her jurisdiction; however, if the appeal did not concern the jurisdiction of the assessment officer, then the evidence would only be admissible if the evidence met the test for fresh evidence on an appeal. See also Solmon Rothbart Goodman v. Davidovits, [1996] O.J. No. 5066 (Gen. Div.).

[43] In the immediate case, the evidence delivered in response to the motion judge’s four questions, the admission of which evidence was vigorously objected to by Mr. Williams, would not satisfy the strict criteria for the admission of fresh evidence on an appeal, and, therefore, the evidence should not have been invited nor admitted.

[44] It follows that the appeal should be allowed with the result that the Certificate of Assessment should be restored.

3. Appellate Review of a Certificate of Assessment

[45] There is a third ground for allowing the appeal and restoring the Certificate of the Assessment Officer. In the circumstances of this case, the motion judge erred in substituting his own opinion for the opinion of the Assessment Officer.

[46] A motion to oppose an assessment officer’s certificate is in the nature of an appeal, and the court is concerned only with errors in principle and not mere questions of amount, unless the amounts are so inappropriate as to suggest an error in principle; thus, the decision of the assessment officer can be disturbed only if: (a) there is absence or excess of jurisdiction; (b) there has been some error in principle; or (c) there has been some patent misapprehension of the evidence. See: Samuel Eng and Associates v. Ho, 2009 ONCA 150; Rabbani v. Niagara (Regional Municipality), 2012 ONCA 280; John Dryden v. Oatley Vigmond LLP, 2011 ONSC 7303; Nicholas C. Tibollo Professional Corp. v. Wasserman Associates Inc., 2011 ONSC 4742, aff’d 2013 ONSC 2685 (Div. Ct.); Labelle v. Howe, [1996] O.J. No. 759 (Div. Ct.); Eastwalsh Homes Ltd. v. Anatal Development Corp., [1995] O.J. No. 608 (C.A.); Foster v. Kempster, [2000] O.J. No. 5022 (S.C.J.).

[47] On an appeal of a certificate of assessment, the court will not interfere with the exercise of discretion of the assessment officer where the dispute involves no matter of principle but only a question of amount, unless the amount in question is so grossly large or small as to be improper beyond all question: John Dryden v. Oatley Vigmond LLP, supra; Schwisberg v. Kennedy, [2004] O.J. No. 3478 (S.C.J.); Kelleher, Hoskinson v. Knipfel (Executors of the Estate of), [1982] O.J. No. 3283 (C.A.); Re Solicitor, [1908] O.J. No. 454 (H.C.J.).

[48] The court hearing the motion appealing a certificate of assessment should not retry the matter or interfere with the result, unless the reasons demonstrate some error in principle or unless there has been some absence or excess of jurisdiction or some patent misapprehension of the evidence: Ledroit v. Rooplall, 2011 ONSC 2751; Jordan v. McKenzie, supra; In Re Solicitor (1976), 3 C.P.C. 148 (Ont. C.A.); Borden & Elliot v. Deer Home Investments Ltd., [1992] O.J. No. 2152 (S.C.J.).

[49] In the immediate case, the motion judge on the basis of new evidence, which ought not to have been admitted, retried the assessment, and thus the motion judge erred in setting aside the Certificate of the Assessment Officer.

D. CONCLUSION

[50] For the above reasons, the appeal is allowed and the Certificate of Assessment restored.

[51] Having reviewed the bill of costs submitted by Mr. Williams, I would allow him costs on a partial indemnity basis of $10,000, all inclusive, for the appeal before the motion judge and $7,500, all inclusive, for the appeal to this court.

Perell, J.

J.M. Wilson, J.

C. Horkins, J.

Released: April 1, 2016

CITATION: RZCD Law Firm LLP v. Williams, 2016 ONSC 2122

COURT FILE NO.: DC-15-0045-00

DATE: 20160401

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

J.M. WILSON, C. HORKINS, and PERELL, JJ.

BETWEEN:

IN THE MATTER OF THE SOLICITORS ACT

AND IN THE MATTER OF

RZCD LAW FIRM LLP

Solicitors (Respondents)

and -

JAMES WILLIAMS

Client (Appellant) ________________________________________

REASONS FOR DECISION

Perell, J.

Released: April 1, 2016

RZCD Law Firm LLP v. Williams, 2016 ONSC 2122

Case Summary

A. INTRODUCTION AND OVERVIEW

B. FACTUAL AND PROCEDURAL BACKGROUND

C. DISCUSSION AND ANALYSIS

1. Jurisdiction to Appeal a Certificate of Assessment

2. New Evidence on an Appeal of a Certificate of Assessment

3. Appellate Review of a Certificate of Assessment

D. CONCLUSION

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 3

Legal Tests 1

Legislation 2