Citation and Court Information

CITATION: Speciale Law Professional Corporation v. Shrader Canada Limited, 2017 ONSCDC 3613 DIVISIONAL COURT FILE NO.: DC-16-758 DATE: June 28, 2017

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT MATHESON, TRIMBLE and SHEARD JJ.

BETWEEN:

SPECIALE LAW PROFESSIONAL CORPORATION and ANTHONY M. SPECIALE Respondents

– and –

SHRADER CANADA LIMITED Appellant

COUNSEL: Robert G. Schipper, for the Respondents/Solicitors Rosemary A. Fisher, for the Appellant/Client

HEARD at Hamilton: June 6, 2017

Reasons for Decision

TRIMBLE, J.

[1] This is an appeal from the order of Parayeski, J. dated August 18, 2016, refusing to confirm an Assessment Officer’s Report and Certificate, and the related costs order dated September 22, 2016. Leave to appeal was granted by Arrell, R.S.J. on December 23, 2016.

[2] On September 30, 2015, Assessment Officer Horrocks issued a Report and Certificate following a Solicitors Act assessment by the Appellant (the “Client”) of the accounts of the Respondents (the “Solicitor”). A total of 52 accounts were assessed. The Assessment Officer reduced the accounts, totalling in excess of $1 million, to $325,789.01. The Solicitor had left at the outset of the assessment hearing, after his adjournment request was refused, and later brought a motion to oppose confirmation of the Assessment Officer’s Report and Certificate. The motion judge granted the Solicitor’s motion and awarded costs to the Solicitor of $29,000.

[3] For reasons that follow, we allow the appeal, and confirm the Report and Certificate of the Assessment Officer, including his costs award.

FACTS:

a) The Solicitor and Client Relationship

[4] From 1979 to 2013, the Solicitor was counsel to the Client and rendered accounts to it. There was never any written retainer defining the scope and nature of the work. The retainer appeared to be a lengthy general retainer.

[5] From at least 2009 to 2013, the Client struggled financially, sometimes operating at a loss. The principal of the Client experienced ill health, and was removed from that position in 2011 due to his health issues.

[6] The Solicitor then became the President and Chief Executive Officer of the Client.

[7] From 2010 to 2013, the period covered by the accounts at issue in this matter, the Solicitor’s firm rendered 52 accounts totalling more than $1 million.

[8] All the accounts were on the letterhead of the Solicitor’s firm and were signed by him. All the accounts were paid. The Solicitor, as a representative of the Client, signed some of the cheques by which the Client paid the Solicitor. Accounts totalling over $500,000 were rendered in the year prior to the Solicitor being terminated in June 2013.

b) The Assessment Process

[9] In July 2013, the Client obtained, on requisition, a Registrar’s order and appointment to assess the Solicitor’s accounts. The order was obtained under s. 3 of the Solicitors Act, R.S.O. 1990, c. S.15, without notice to the Solicitor.

[10] On October 24, 2013, in a related application in which the principals of the Client were applicants and the Solicitor was a respondent, the Solicitor’s counsel advised the Court and the Client that within the next two weeks the Solicitor intended to bring a motion to set aside the Registrar’s order for the assessment. Nightingale J., the presiding judge, told the Solicitor to attend on the next available date before the Assessment Officer to assess the accounts. Nightingale J. made no order, but his comments are not disputed.

[11] On October 31, 2013, the Solicitor wrote to an Assessment Officer (not Assessment Officer Horrocks), again expressing the intention to bring a motion to set aside the Registrar’s order for the assessment, and saying that the materials were being prepared shortly. However, no such motion was brought at that time.

[12] On January 8, 2014, the Client and Solicitor went to a mediation regarding the accounts. The dispute did not resolve.

[13] On September 5, 2014, the Solicitor’s counsel wrote to the Client’s counsel repeating the Solicitor’s intention to bring a motion to challenge the validity of the Registrar’s order for the appointment for assessment. Still, the Solicitor brought no motion. On September 10, 2014, the parties attended the Assessment Scheduling Court and scheduled the Assessment for three weeks in June and July 2015, beginning on June 1, 2015.

[14] On March 23, 2015, the Client’s counsel wrote to the Solicitor’s counsel asking whether the Solicitor’s counsel still intended to challenge the Assessment. There was no response. The Client’s counsel followed up on April 20, 2015 and April 30, 2015. There was no response. He wrote again on May 13, 2015. On the evening of May 14, 2015, the Solicitor’s counsel responded with a draft Notice of Motion. The draft Notice of Motion was accompanied by letters to an Assessment Officer and to Turnbull R.S.J. (as he then was) seeking a date for the motion on an urgent basis since the Assessment was to start in approximately two weeks. There was no affidavit attached (draft or otherwise).

[15] The motion materials were served and filed on May 25, 2015, one week before the return date for the Assessment and about a year and a half after the Solicitor first indicated that the motion would be brought. The motion was heard by teleconference the next day.

c) Motion to Stay the Assessment

[16] Turnbull, R.S.J. dismissed the motion to quash the order for the Assessment and denied the Solicitor’s request for an adjournment of the Assessment. Turnbull, R.S.J. reviewed the facts and noted the following:

It is arguable that the procedure followed by Shrader to obtain the original ex parte order for assessment was questionable. The solicitor had the opportunity to bring a motion to set the order aside in a timely manner. For reasons only known to him and his counsel, he did not do so.

I find the last-minute motion brought by Mr. Speciale, is but a thinly disguised effort to avoid an assessment of his legal accounts.

[17] At the outset of the three week hearing on June 1, the Solicitor sought an adjournment on the basis that he intended to appeal from Turnbull, R.S.J.’s decision.

[18] The Assessment Officer heard argument on the adjournment request, reserved overnight, and the next day denied the adjournment. The Assessment Officer delivered oral reasons for decision. The Assessment Officer ordered that the Assessment proceed and awarded the Client costs of $7,000 in regard to the adjournment request.

[19] After the Assessment Officer’s decision to deny his request for an adjournment, the Solicitor indicated that he was not prepared to proceed with the assessment process because he thought that his participation in the Assessment might be seen as eliminating or prejudicing his position on appeal from Turnbull, R.S.J.’s decision. Notwithstanding a warning that the Assessment would continue in his absence, the Solicitor left the Assessment and did not participate further.

[20] The Solicitor commenced an appeal of Turnbull, R.S.J.’s decision to the Court of Appeal. The Solicitor also sought to stay the assessment process pending appeal. In her July 13, 2015 endorsement dismissing the stay motion, Epstein, J.A. considered the Solicitor’s history of delay in bringing the motion and his non-responsiveness to his former Client’s counsel, and the fact that when the Assessment Officer refused the Solicitor’s request for an adjournment, the Solicitor decided not to participate in the assessment process.

[21] Epstein, J.A. concluded that it was not in the interests of justice to stay Turnbull R.S.J.’s order pending the determination of the appeal. Her Honour found that the appeal was of dubious merit. Further, there was no prejudice to the Solicitor, who failed to take available avenues of recourse. Finally, Epstein, J.A. determined that the balance of convenience favoured dismissing the motion for a stay: “Simply put, any inconvenience the Solicitors raise is an inconvenience they themselves created. And, in the process, they have inconvenienced the Client.”

[22] The appeal of Turnbull, R.S.J.’s order itself was dismissed on December 7, 2015: 2015 ONCA 856. The Court of Appeal rejected every ground advanced by the Solicitor.

[23] The Solicitor sought leave to appeal to the Supreme Court of Canada. Leave was denied, with costs, on May 12, 2016.

d) The Assessment Itself

[24] After the Solicitor left the Assessment, counsel for the Client asked that the matter be held down until the following Monday because the Client had not anticipated presenting its case so early. The Assessment resumed on June 8, 2015. The Client called two witnesses: a director of the Client (since 2012) and the then President of the Client (who had also been a director since 2003). The Solicitor’s accounts were also entered into evidence. Many of the issues raised during the Assessment were apparent on the face of the accounts (such as block entries with no explanation).

[25] Prior to the assessment, repeated requests had been made by the Client’s counsel to obtain the Solicitor’s dockets. The Solicitor did not provide the dockets. As a result, the Client proceeded with the assessment focusing on what was and was not said in the accounts themselves, without the benefit of the related dockets or the Solicitor’s evidence.

[26] The Assessment Officer’s reasons for decision were delivered orally on September 30, 2015, and comprise about 20 transcript pages. He summarized his approach as follows:

I heard and read details of this case and work performed by counsel from the perspective of the clients. As earlier stated, the solicitor, along with his counsel in this matter, elected not to participate in these proceedings, providing zero evidence to prove and justify any of their accounts charged to the client. I have carefully reviewed my notes and exhibits entered at this hearing and have given them their proper weight. I have taken into consideration all the evidence before me, and have applied the principal factors considered in the Court of Appeal decision in Cohen v. Kealey and Blaney case, and I find as follows….

[27] The Assessment Officer reviewed each of the Cohen factors: Cohen v. Kealey & Blaney (1985), 26 CPC (2d) 211 (C.A.). For most of the factors, he commented that the Solicitor gave no evidence and did not participate in the proceedings among other comments. Under the factor that related to the degree of responsibility assumed by the solicitor, the Assessment Officer referred to the Solicitor’s failure to provide any evidence, indicating that the Solicitor had done what he could to frustrate the assessment process. In that context, the Assessment Officer referred to the Solicitor’s professional obligations regarding billings and assessments.

[28] Ultimately, the Assessment Officer drew what conclusions he could from the evidence before him, given the absence of evidence from the Solicitor arising from his refusal to participate in the process. After reviewing the Cohen factors, the Assessment Officer reduced the accounts based upon reductions in the claimed hourly rates, the number of hours and the disbursements. He assessed the amount of $325,789.01, which was a reduction of $702,689.94, in total.

[29] The Assessment Officer further ordered costs of the assessment, fixed at $10,405.65, in addition to costs of the adjournment motion, which had been fixed at $7,000. The Certificate refers to costs being allowed to the Solicitor in error. They were awarded to the Client, and this is not disputed before us.

[30] The Solicitor then brought a motion for an order refusing to confirm the Report and Certificate of the Assessment Officer.

e) The Motion Judge’s Decision

[31] The main issue raised by the Solicitor on the motion to refuse confirmation was the alleged inadequacy of the Assessment Officer’s oral reasons for decision.

[32] The learned motion judge found that the Assessment Officer’s reasons were “manifestly inadequate,” ruling that they did not clearly show the path he took to his disposition. In doing so, the motion judge was critical of the Assessment Officer for having insufficient evidence on certain elements of the Cohen test. While the motion judge said that the Solicitor had an onus to prove the reasonableness of his fees, the motion judge also held that, when arguing that the fees charged were too high and ought to be reduced, the Client had an evidentiary burden which it did not meet. In taking this approach, the motion judge relied on the absence of evidence from the Client on certain elements of the Cohen test in assessing the adequacy of the oral reasons for decision.

[33] The motion judge granted the Solicitor’s motion, refused to confirm the Assessment Officer’s Report and Certificate, and referred the Assessment for a new hearing before another Assessment Officer.

[34] Leave to this Court was granted by Arrell, R.S.J. on December 23, 2016.

ISSUES:

[35] The main issue on this appeal is whether the motion judge erred in law on the issue of onus. This issue had a significant impact on the decision of the motion judge regarding the adequacy of the Assessment Officer’s oral reasons for decision. Issues were also raised by the Appellant regarding the conduct of the Solicitor and the order of the motion judge.

[36] The above issues must be considered within the applicable standard of review.

STANDARD OF REVIEW:

[37] The Client submits that the standard of review is as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 – namely, that for questions of law the standard of review is correctness; for questions of fact, palpable and overriding error; and for questions of mixed law and fact, the standard varies. Where a legal principle can be extracted from the question of mixed law and fact, the standard for that question is correctness. Where the issue is the application of correct legal principles to the facts, the standard is palpable and overriding error.

[38] The Solicitor submits that the standard of review is that applicable to discretionary orders – namely, the motion judge is entitled to deference unless he has misdirected himself, came to a decision that is so clearly wrong it amounts to an injustice, or gave no or insufficient weight to relevant considerations. The Solicitor relies on Ontario v. Chartis Insurance Company of Canada, 2017 ONCA 59 (“Chartis”).

[39] This appeal arises in a different context than the decision at issue in Chartis. In that case, the Court of Appeal was dealing with a discretionary decision of a judge at first instance regarding whether to disqualify a solicitor because of conflict of interest. By contrast, a confirmation motion is a form of appeal from the report of an assessment officer. The motion judge himself was applying a standard of review (see: Calin A. Lawrynowicz, Barristers & Solicitors v. Marino Estate, 2016 ONSC 2065), and the resulting decision in this case is therefore not comparable to Chartis.

[40] In my view, the Divisional Court’s standard of review of the decision of the motion judge is as set out in Housen. However, even if the Chartis standard of review did apply, the outcome of the appeal would be the same. The error gives rise to a significant injustice to the Client in the circumstances of this case.

ANALYSIS:

[41] In this case, the motion judge erred in law by reversing the onus of proof on the Assessment, imposing on the Client an onus to show that the accounts were unreasonable. The decision on onus was clearly wrong. When viewed with the proper onus of proof, the Assessment Officer’s oral reasons for decision were not so deficient as to fall below the required standard in the circumstances of this case.

1. Onus

[42] It is well-accepted that on an assessment the solicitor has the burden of proof: Schwisberg v. Kennedy, [2004] O.J. No. 3478 (S.C.), at para. 25, appeal dismissed, [2006] O.J. No. 1224 (Div. Ct.). The Solicitor had the onus to prove his accounts. He was obliged to show that the fees were reasonable considering such things as the time expended, the legal complexity of the matters, the monetary value of the matters, the degree of responsibility assumed by the Solicitor, the skill and competence demonstrated by the Solicitor, the results achieved, the importance of the matters to the Client, the Client’s ability to pay and the reasonable expectations of the Client as to the amount of the fee.

[43] The motion judge did not apply the established onus for an assessment. In addressing the onus on the Assessment, the motion judge held as follows:

While it is clear to everyone that the onus rests upon the solicitor to prove the reasonableness of his fees, I am of the view that it is inaccurate to say that no evidentiary burden, whatsoever, rests on the client who argues that the fee charges is [sic] too high and ought to be reduced to something lower. [Emphasis added.]

[44] In the circumstances of this case, where the Solicitor called no evidence at all, the motion judge effectively reversed the onus by holding that the client had a burden to meet. This was an error of law. There was no onus on the client. While it is conceivable that a client might need to adduce evidence to respond to evidence adduced by a solicitor, the Solicitor adduced no evidence in this case.

[45] The motion judge’s error regarding onus had a significant impact on his analysis of the adequacy of the Assessment Officer’s oral reasons for decision, which was the basis for his refusal to confirm the Assessment Report.

2. Adequacy of Reasons

[46] This is not a case where an Assessment Officer gave only “conclusory” or “result selective” reasoning without “grappling with the real issues”: Bales Beall LLP v. Fingrut, 2012 ONSC 4991, at para. 15, aff’d, 2013 ONCA 266; Consky v. Farooq, 2011 ONSC 5148, aff’d 2013 ONCA 393. The Assessment Officer did grapple with the issues and did so in the difficult circumstance of not having evidence from the Solicitor.

[47] The Assessment Officer had the obligation to set out reasons for the Assessment that provided an analysis of the appropriate factors and of the evidence that related to them, showing the path of reasoning: Bales and Beall LLP v. Fingrut; Wilson v. Edward, 2015 ONSC 596; Hooper v. Sheehan, 2012 ONSC 4315. He did so, considering the appropriate onus of proof, the legal test and the available evidence.

[48] The motion judge criticized the Assessment Officer’s reasons for decision in isolated areas, parsing parts of the reasons without taking into account the proper onus of proof. The motion judge relied on the absence of sufficient evidence from the Client to support his findings regarding the inadequacy of the reasons for the assessment decision.

[49] By leaving the Assessment, the Solicitor failed to meet his burden of proof. In the circumstances, the Solicitor risked having his accounts assessed at zero: Neeb v. Woerkam, 1990 CarswellOnt 3559 (Assess. O.), at paras. 10-11. This issue arose on a motion to refuse confirmation in Chiasson v. Richard, 2005 CarswellOnt 1098, [2005] O.J. No. 1104 (S.C.), rvs’d on other grounds, 2005 CarswellOnt 7359, [2005] O.J. 5477. In Chiasson, the solicitor left after his examination-in-chief, without being cross-examined and without complying with the Assessment Officer’s direction for further production of his records. The Court ruled as follows, at para. 13:

…The client’s counsel fairly conceded to the Assessment Officer that the solicitor had paid [one amount] on the client’s behalf… and, accordingly, that one disbursement was allowed to the solicitor. The balance of his claim for fees and disbursements was assessed at nil dollars. This may seem to be a harsh result, but in my opinion, the solicitor’s conduct in abandoning the hearing left the evidentiary record with a dearth of necessary information such that the assessment officer exercised his jurisdiction reasonably in ruling that the solicitor had failed to prove his accounts. [Emphasis added.]

[50] The Assessment Officer would have been entitled to disallow all the accounts in their entirety based on the Solicitor’s failure to discharge his onus. The Client, however, acknowledged that the Solicitor’s work did provide it with some value and was prepared to pay for it. In light of this admission, the Assessment Officer did what he could with the evidence he had before him. As reflected in the reasons for decision, the Assessment Officer assessed the evidence that was before him, including the evidence from the Client’s witnesses and the accounts themselves, which had been tendered by the Client.

[51] In this case, the issue is not whether the Assessment Officer could have written better reasons on each of the parts of the Cohen test. The oral reasons for decision should be considered as a whole and need not be the model of perfection. Rather, the issue is whether the reasons adequately explained the reasoning for the result in the circumstances where the onus was on the Solicitor, who provided no evidence.

[52] I conclude that the reasons for decision were sufficient. The Assessment Officer applied the legal test and reduced the accounts based upon reductions in the claimed hourly rates, the number of hours and the disbursements. The failure of the Solicitor to adduce any evidence was the significant theme in the reasons for decision, in accordance with the onus of proof.

[53] Although not a particular focus of the appeal, I have considered the Assessment Officer’s reference to the Solicitor’s professional obligations under the “degree of responsibility” aspect of the Cohen test. As the motion judge observed, it seems that the Assessment Officer got off track in that regard. As the Assessment Officer stated in that same section, however, the Solicitor provided no evidence to support his billings. That reason alone was sufficient.

[54] Applying the correct onus of proof, and considering the reasons for decision in that context, the motion judge erred in law in refusing to confirm the Assessment Report and Certificate.

3. Other Issues

The Client also made considerable submissions regarding the Solicitor’s conduct in asking for a new hearing in which he could participate when he walked out on the assessment at first instance. The Client submitted that this would constitute an abuse of process. The Client also submitted that the motion judge erred in refusing to confirm the costs order on the adjournment even though the confirmation motion did not relate to the adjournment order. Given the disposition of the appeal on the other issues, however, these issues do not need to be addressed.

CONCLUSION:

[55] The appeal is allowed. The Report and Certificate of the Assessment Officer is confirmed including the Assessment Officer’s costs award in favour of the Client.

[56] On the issue of costs of this appeal, the parties have agreed that the successful party should have costs fixed at $23,000, all inclusive.

[57] With respect to costs of the motion appealed from and the related leave to appeal motion, if the parties are unable to agree on those costs, the appellant shall make its submissions by delivering brief written submissions together with a costs outline within 30 days of today. The respondents may respond by delivering brief written submissions within 30 of service of the appellant’s costs submissions.

TRIMBLE J.

I agree _______________________________ MATHESON J.

I agree _______________________________ SHEARD J.

Released: June 28, 2017