CITATION: Cheadles v. Zanewycz, 2016 ONSC 7909
DIVISIONAL COURT FILE NO.: DC15/14
DATE: 20161221
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
C.HORKINS, L. PATTILLO, J. and PARFETT JJ.
BETWEEN:
CHEADLES LLP
Claimant/ Respondent
– and –
WALTER ZANEWYCZ
Debtor/Appellant
K. Daniel Reason, for the Claimant/ Respondent
Walter Zanewycz, acting in person
HEARD at Thunder Bay: December 5, 2016
C. hORKINS J.
Introduction
[1] In 2006, the appellant Walter Zanewycz retained the respondent law firm Cheadles LLP to represent him in his divorce litigation. The respondent provided legal services over several years and billed the appellant at regular intervals. The appellant owed the respondent money for unpaid accounts. As a result, the respondent brought a motion before Regional Senior Justice D.C. Shaw (“the motion judge”).
[2] In an order dated November 18, 2015 (‘the order”), the motion judge directed the Sherriff of the District of Thunder Bay to enforce a Certificate of Proof of Claim in Court File CV-10-0131 as a writ of seizure and sale/writ of execution in the amount of $49,715.
[3] The appellant appeals the order of the motion judge to this court.
standard of review
[4] The standard of review on an appeal from a judge’s order is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law, the Court stated that there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness. However, with respect to the application of the correct legal principles to the evidence, the standard is palpable and overriding error.
background facts
[5] During the divorce litigation, the respondent represented the appellant twice. On each occasion, the appellant signed a retainer. Accounts were rendered and not always paid.
[6] The respondent first represented the appellant at the start of the divorce litigation. During this litigation, the appellant represented himself for a period of time. Shortly before the trial in family court, the appellant hired the respondent again to represent him at the trial. The respondent billed the appellant for the legal services.
[7] As a result of unpaid accounts, the respondent issued two Affidavits of Claim and Notices under Creditors' Relief Act, R.S.O. 1990, c. C.45 against the appellant. The first proceeding dealt with monies owed under the first retainer. I will refer to this as the pre-trial debt. The second proceeding dealt with monies owed under the second retainer. I will refer to this as the trial debt.
[8] In each proceeding, the respondent brought a motion for a writ of seizure and sale relating to its unpaid accounts for legal services. The motion judge heard the motions together and issued one set of reasons.
[9] The appellant only appeals the relief granted for the trial debt. Although the appellant does not appeal the order dealing with the pre-trial debt, I will briefly review the facts dealing with the pre-trial debt, to provide some context for the appeal.
[10] In July 2009, the unpaid accounts relating to the first retainer were assessed at a hearing by an Assessment Officer under the Solicitors Act, R.S.O. 1990, c. S.15. On November 5, 2009, Assessment Officer Girard determined that the appellant owed the respondent $27,887.51 plus interest. This decision was not appealed.
[11] After the hearing and before the Assessment Officer released his decision, the respondent served the appellant with the first Affidavit of Claim and Notice under the Creditors' Relief Act. This Act, as it then existed, gave a creditor in some circumstances, the status of an execution creditor, even though the creditor had not obtained a judgment against the debtor. The appellant had 10 days after service of the Affidavit of Claim and Notice to contest the Creditors' Relief Act claim. He did not contest the claim.
[12] The respondent then proceeded to file its Certificate of Proof of Claim with the Sheriff. Under the Creditors' Relief Act, the respondent was deemed to be an execution creditor.
[13] In 2013, the pre-trial and trial debts remained unpaid. As a result, the respondent advised the Registrar that it wanted to move forward with a Sheriff’s sale of land that the appellant owned. The Sherriff advised that a court order was required and this led to the respondent’s motions seeking relief for the pre-trial and trial debts.
[14] Dealing with the pre-trial debt, the motion judge denied the respondent’s request because the respondent failed to comply with s. 6(4) of the Solicitors Act that provides as follows:
(4) The solicitor shall not commence or prosecute any action in respect of the matters referred pending the reference without leave of the court or a judge.
[15] The respondent commenced the proceeding under the Creditors' Relief Act before the reference to the Assessment Officer was completed. The respondent did not seek leave of the court before it issued its Affidavit of Claim and Notice under the Creditors' Relief Act. At para. 101 and 106, the motion judge explained that leave is mandatory and the failure to obtain leave meant that the Certificate of Proof of Claim was a nullity:
101 …The wording of s. 6(4) is mandatory. There was no right of action available to Cheadles on its 2009 accounts pending the reference of those accounts to the assessment officer, without leave of the court. Leave was never sought.
106 Therefore, the Certificate in file CV-09-0467 is a nullity because of the breach of s. 6(4) of the Solicitors Act. The judgment of the Assessment Officer, however, is unaffected by this decision and remains in effect.
[16] With the benefit of this background, I will now consider the trial debt, the motion judge’s order and reasons and the grounds of appeal.
The Trial Debt
[17] The facts relevant to the trial debt are set out below.
[18] The appellant signed the second retainer agreement with the respondent on August 26, 2009. He still owed the respondent money for accounts rendered under the first retainer. The parties were waiting for the Assessment Officer’s report when the second retainer was signed. It was agreed that the pre-trial accounts as assessed would stand.
[19] Pursuant to the second retainer agreement, the appellant gave the respondent $40,000 to cover fees for what was expected to be a 14 day trial. If the trial went beyond 14 days, it was agreed that additional fees could be charged. It was also agreed that the respondent would issue monthly accounts and that the $40,000 would be used to pay the accounts.
[20] During the second retainer, the respondent sent the appellant six invoices between September 29, 2009 and April 8, 2010.
[21] The trial took place over 19 days from September 8 to October 9, 2009. After applying the $40,000 retainer, the respondent advised the appellant that he owed the respondent $58,980.37 as of April 14, 2010.
[22] During the spring of 2010, the appellant’s former spouse and others were filing claims for costs against the appellant. The respondent was aware that these creditors were threatening to force the sale of the appellant’s main asset, his home.
[23] The respondent decided to seek relief under the Creditors' Relief Act. The appellant agreed with the respondent’s decision because it would protect what he owed the respondent, against his indebtedness to his former spouse.
[24] On April 15, 2010, the respondent served the appellant with an Affidavit of Claim and Notice. The claim included interest charges of $93.40. There was a credit of $37,351.91 and an adjustment in the appellant’s favour of $467.75, leaving a balance owing of $58,980.37. An account spreadsheet from the respondent’s law firm documented these amounts.
[25] While the appellant denied that he was served with the Affidavit of Claim and Notice, a sworn affidavit from the process server confirmed the service. Further, on August 27, 2010, the appellant signed an Acknowledgment that he had received copies of the invoices during the period of April 28, 2009 to July 27, 2010.
[26] Under the Creditors' Relief Act the appellant had 10 days to contest the claim. As with the pre-trial debt, the appellant did not contest the claim.
[27] On April 26, 2010, a Certificate of Proof of Claim for $58,980.37 was issued. Under the Creditors' Relief Act the certificate remained in force for three years and could be renewed as required. This certificate was renewed on January 19, 2012.
Reasons of the motion judge – trial Debt
[28] After a careful review of the facts, the motion judge ordered that “the Sheriff of the District of Thunder Bay is instructed to enforce the Certificate of Proof of Claim, file no. 10-0000279, in court file CV-10-0131, as a writ of seizure and sale / writ of execution in the amount of $49,715.00.”
[29] The motion judge excluded the respondent’s claim for the account dated April 8, 2010, in the amount of $13,243.91. In respect of this account only, the motion judge found that the respondent’s Affidavit of Claim under the Creditors' Relief Act was contrary to s. 2(1) of the Solicitors Act that states as follows:
- (1) No action shall be brought for the recovery of fees, charges or disbursements for business done by a solicitor as such until one month after a bill thereof, ... has been delivered to the person to be charged therewith.
[30] The motion judge found that the respondent was barred from seeking relief for the April 8, 2010 account of $13,243.91, because the Affidavit of Claim was issued less than 30 days following delivery of the account to the appellant. As a result, the respondent’s claim was reduced to $49,715.
[31] The motion judge denied the appellant’s request that the court conduct an assessment of the trial debt and re-assess the pre-trial debt. He rejected the appellant’s argument that the assessments were required because of special circumstances, the principles of fairness and protection of the public and the proper administration of justice. At para. 109 the motion judge stated:
… As noted above, Mr. Zanewycz has been guilty of undue delay. He has been aware for years of his accounts with Cheadles. He has taken no steps to deal with them. He has acknowledged on several occasions that he is indebted for the legal work done on his behalf. I see no special circumstances that would lead me to conclude that it is fit to order a reassessment of the accounts that were previously assessed, or to order an assessment of the accounts delivered between September 29, 2009, and February 9, 2010. Mr. Zanewycz is no stranger to the litigation process. I am confident that he was more than capable of challenging Cheadles' accounts on a timely basis. There is nothing in the facts that I have reviewed that supports exercising my discretion in favour of Mr. Zanewycz's request. The equities of the case demand otherwise.
The Appellant’s Grounds of Appeal
[32] The appellant argues that the motion judge erred because the entire motion dealing with the trial debt should have been dismissed. He raises the following grounds.
[33] The appellant states that the respondent required leave of the court to proceed with a Creditors' Relief Act claim. He argues, as he did for the pre-trial debt, that there is no right of action unless leave to proceed is obtained from the court. Since leave was not obtained, the appellant argues that the Affidavit of Claim is a nullity. I reject this argument. The requirement for leave under s. 6(4) of the Solicitors Act only applies when the solicitor has commenced any action in respect of the account, such as seeking an assessment of the account. An assessment of the trial debt was never requested. As a result, there is no basis in law for stating that the respondent required leave to issue its second Affidavit of Claim under the Creditors' Relief Act.
[34] The appellant also generally argued that the respondent was obliged to pursue relief for the unpaid accounts under the Solicitors Act, rather than the Creditors' Relief Act. No authority for this position was provided. Furthermore, there is nothing in either Act to support such a position.
[35] The appellant argues that the motion judge erred when he found that the Certificate of Proof of Claim was renewed. The motion judge reviewed this issue in detail at paras. 64-77 and concluded as follows at para 77:
77 Mr. Zanewycz submits that because the Writ Details Report shows that the Certificates were renewed as "Writs" and not renewed as "Certificates", they have expired. I do not accept this submission. Section 21 provides that a Certificate may from time to time "... be renewed in the manner as an execution." For the reasons give above, upon filing the Certificates with the Sheriff, Cheadles was deemed to be an execution creditor and the Certificates were to be treated as writs of execution. In my view, they were subject to renewal in the same manner as a writ of execution. The fact that the sheriff's records show "Writs" rather than "Certificates" is of no consequence.
[36] On this appeal, the appellant simply states that the motion judge erred in finding that the Certificate was renewed. Simply stating this does not make it so. The appellant offered no explanation to support his bald argument. I am satisfied that the motion judge’s reasons on this issue are detailed and without error.
[37] The appellant argues that he was denied the opportunity to “flush out the truth of the matter” and determine the quantum owing. The motion judge declined to re-assess the pre-trial debt and assess the trial debt. This was a reasonable exercise of his discretion, based on the facts that the motion judge set out. There is no merit to this ground of appeal.
[38] The appellant raises alleged errors of fact. The appellant must show that there is a palpable and overriding error. He has failed to do so.
[39] First, he states that the motion judge had no evidence to document the existence of the invoices and what was owed. The invoices and the amount owed were documented in the Affidavit of Claim. The appellant never disputed the Affidavit of Claim.
[40] Second, the appellant argues that contrary to the motion judge’s finding, he never received the invoices. The motion judge found that the appellant received the invoices because he signed an Acknowledgement that was proof of his receipt.
[41] Third, the appellant alleges that he was not given credit for the full amount of the $40,000 retainer. He relies on para. 37 of the reasons where the motion judge refers to the credit of $37,351.91 and not the $40,000 retainer. The value of the credit was included in the account spreadsheet that was attached to the respondent’s Affidavit of Claim. As noted, the appellant did not contest this Affidavit of Claim. The appellant subsequently swore an affidavit on December 1, 2014 in response to the motion. In his affidavit, he did not question the calculation of the trial debt. The appellant has provided this court with no explanation for why the calculation is wrong. Given that the appellant never disputed the Affidavit of Claim, I see no basis for concluding that the motion judge made a palpable and overriding error of fact.
[42] In essence, the appellant seeks a rehearing of the motion that he lost. The findings of fact are entitled to deference. The appellant must demonstrate that the motion judge made a palpable and overriding error of fact or erred in law and he has failed to do so.
conclusion
[43] The appeal is dismissed.
[44] The respondent seeks partial indemnity costs of $4,629.90. The appellant states that he should not be ordered to pay any costs because he is now on disability. This was an appeal wholly without merit. I do not accept that the appellant should be able to shield himself from a costs award. The respondent was successful and is entitled fair and reasonable costs. The amount that the respondent seeks is fair. I fix the respondent’s cost at $4,629.90 and order the appellant to pay these costs.
___________________________ C. Horkins J.
I agree: ___________________________
L. Pattillo J.
I agree: ___________________________
J. Parfett J.
Released: December 21, 2016
CITATION: Cheadles v. Zanewycz, 2016 ONSC 7909
DIVISIONAL COURT FILE NO.: DC15/14
DATE: 20161221
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
C.HORKINS, L. PATTILLO, J. and PARFETT JJ.
BETWEEN:
CHEADLES LLP
Claimant/ Respondent
– and –
WALTER ZANEWYCZ
Debtor/Appellant
REASONS FOR JUDGMENT
C. Horkins J.
Released: December 21, 2016