Court of Appeal for Ontario

Date: 20220615 Docket: C69949

Lauwers, Benotto and Paciocco JJ.A.

BETWEEN

Slavko Ilic Applicant (Appellant)

and

Ducharme Fox LLP now known as Ducharme Weber LLP and Patrick Joseph Ducharme Respondents (Respondents)

Counsel: Sean Dewart and Mathieu Bélanger, for the appellant Patrick J. Ducharme, for the respondents

Heard: May 24, 2022

On appeal from the order of Justice Edward M. Morgan of the Superior Court of Justice, dated September 22, 2021, with reasons reported at 2021 ONSC 6184.

Lauwers J.A.:

I. Overview

[1] The application judge dismissed the appellant’s application for an order allowing the assessment of the respondent solicitor’s accounts to continue before an Assessment Officer. I would allow the appeal for the reasons that follow.

II. Facts

[2] In June 2008, the appellant retained Mr. Patrick Ducharme to represent him on drug trafficking charges. The nature of the retainer, that is, whether the parties had agreed to a block fee or an hourly fee, is disputed. The appellant entered a guilty plea in accordance with a plea bargain on December 8, 2009.

[3] The respondents delivered interim accounts to the appellant on September 9, 2009 and October 13, 2009 and a final account on February 26, 2010. The total amount charged was $153,388, plus taxes and disbursements.

[4] The appellant took out an order for assessment of the final account on April 26, 2010 and another for the assessment of the interim accounts on August 5, 2010. The respondents objected on the basis that the orders were requisitioned from the registrar after the 30-day window for doing so had passed under s. 3 (b) of the Solicitors Act, R.S.O. 1990, c. S.15. Because one of the statutory prerequisites to the registrar’s authority was absent, the registrar lacked jurisdiction to order an assessment: Davies, Ward & Beck v. Union Industries Inc., (2000), 48 O.R. (3d) 794, [2000] O.J. No. 1769, at paras. 12-13 (Ont. C.A.). This left the assessor without jurisdiction to conduct the assessment. However, Superior Court Justices have inherent jurisdiction to order the assessment of solicitor accounts, even after the 30-day window, and can order an assessment to proceed: Price v. Sonsini, 60 O.R. (3d) 257 (2002). Assessment Officer Stevens therefore adjourned the assessment to allow the appellant to bring a motion to a judge of the Superior Court of Justice to determine whether the assessment process should continue.

[5] Instead of bringing the motion, the appellant issued a notice of action against the respondents on February 8, 2011 claiming $150,000 in damages. A defence was delivered in 2012. The action did not progress over the course of the next two years.

[6] On March 10, 2014, counsel for the appellant wrote to the respondents seeking their consent to assess all the accounts rendered by the respondents and to consolidate the assessment proceeding with the civil action. On April 12, 2014, counsel for the respondents wrote back, stating that the respondents were “agreeable to having [the] account assessed”. The parties agreed that the issue underlying the civil action was the assessment of the accounts. They agreed to cancel the scheduled examinations for discovery and proceed with the assessment process. This effectively settled the civil action.

[7] On October 1, 2014, counsel for the respondents corresponded with appellant’s counsel and noted that: “Notwithstanding anything Mr. Ilic may have done he’s entitled to assess his account and to do so fairly. I trust my frankness…will enable both parties to complete this process in a fair and timely fashion”. Later that day, respondents’ counsel stated in an email that he will “do what it takes so that Mr. Ilic gets the review he’s entitled to”.

[8] On November 2, 2014, appellant’s counsel suggested abandoning the assessment procedure in Kitchener and re-applying in Toronto to expedite the process. Respondents’ counsel acquiesced and noted that appellant’s counsel could sign a consent to this effect on his behalf, as agent, if required.

[9] On November 20, 2014, appellant’s counsel took out an order from the registrar in Toronto to assess all three accounts. This order was served on the respondents the next day.

III. The Ittleman Assessment

[10] Assessment Officer Richard Ittleman heard the evidence on the assessment on October 15, 2015, and on March 20 and 21, 2018. The parties made closing submissions in April 2018.

[11] More than a year later, on October 11, 2019, the Assessment Officer asked the parties for submissions on the issue of his jurisdiction because the order for assessment had been issued by the registrar after the 30-day statutory window. The respondents argued that the Assessment Officer was without jurisdiction and that the assessment order was accordingly a nullity.

[12] Well more than a year later, on February 2, 2021, the Assessment Officer accepted the respondents’ argument and found that he did not have jurisdiction to conduct the assessment. He then stayed the matter, pending direction from the Superior Court.

[13] I note in passing that it is hard to understand the astonishingly desultory pace of the Ittleman assessment.

IV. The Decision Under Appeal

[14] The appellant applied to the Superior Court for an order allowing the assessment proceeding before the Assessment Officer to continue and for directions. In the alternative, the appellant sought an order nunc pro tunc referring the respondents’ bills to a new assessment under s. 4(1) of the Solicitors Act.

[15] The application judge declined to exercise his jurisdiction to allow the assessment to proceed. He found that the appellant was not caught off guard by the requisition deadline of 30 days, because he had been represented by counsel who was alerted to the jurisdictional issue by the first Assessment Officer in 2010. The appellant’s failure to cure the procedural defect in the manner proposed by Assessment Officer Stevens weighed against granting the appellant the remedy he sought.

[16] The application judge held that even if the respondents could be taken as having consented to proceeding by assessment hearing, consent could not confer jurisdiction where there was none. He held that neither Assessment Officer Ittleman nor any other Assessment Officer had jurisdiction to proceed in this matter. The protracted assessment procedure in which the parties had engaged was a nullity. This left the respondents’ three accounts unchanged and enforceable as originally rendered.

V. Issues on Appeal

[17] The appellant argues that the application judge made four errors: (i) in failing to consider that the assessment proceeded on consent of both parties and had been completed before the jurisdiction issue arose; (ii) in finding that the respondents were prejudiced by the failure to commence the assessment proceeding within the time required under the Solicitors Act, in the absence of any evidence of prejudice; (iii) in failing to consider binding authority on the proper approach to the assessment of solicitor accounts and to nullity in a civil procedure context; and (iv) in failing to consider the appellant’s alternative claim for an order for assessment nunc pro tunc in the particular circumstances of this case.

[18] In my view, the application judge made the first three errors. I next address these and also address the appellant’s alternative claim in the disposition.

VI. The Governing Principles

[19] There are two sets of governing principles at play in this appeal: those related to the assessment of solicitor accounts and those related to nullities in the civil procedure context.

(1) Principles Governing the Assessment of Accounts

[20] Courts should facilitate, not frustrate, the assessment of solicitor accounts. Sharpe J.A. observed that: “As a general matter, if a client objects to a solicitor's account, the solicitor should facilitate the assessment process, rather than frustrating the process”: Price v. Sonsini, 60 O.R. (3d) 257 (2002), at para. 19. He added his view that “the courts should interpret legislation and procedural rules relating to the assessment of solicitors' accounts in a similar spirit”. The reason for this approach, which Sharpe J.A. quoted from Orkin’s The Law of Costs, is that, "if the courts permit lawyers to avoid the scrutiny of their accounts for fairness and reasonableness, the administration of justice will be brought into disrepute". Sharpe J.A. held that: “The court has an inherent jurisdiction to control the conduct of solicitors and its own procedures”, which “may be applied to ensure that a client's request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities”. I cannot improve on Sharpe J.A.’s articulation of these principles.

[21] Epstein J.A. added in Clatney v. Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377, 131 O.R. (3d) 511, at para. 77, that both the legislation and the court’s inherent jurisdiction “respond to the public interest component of the rendering of legal services and lawyers' compensation, and the importance of maintaining public confidence in the administration of justice”. Again, I agree.

(2) The Doctrine of Nullity

[22] It is time to put the doctrine of nullity out of its misery in relation to civil procedure because it “is difficult to reconcile with modern principles of civil procedure”: Lawrence v. International Brotherhood of Electrical Workers (IBEW) Local 773, 2017 ONCA 321, 138 O.R. (3d) 129, at para. 21, per Sharpe J.A., aff’d, 2018 SCC 11, [2018] 1 S.C.R. 267.

[23] Professor Garry Watson noted that: “The purpose of rule 2.01 of the Rules of Civil Procedure is, quite simply, to abolish the concept of a nullity in the Rules and to provide as much relief as possible from procedural defects…”. [1] Sharpe J.A. took the same approach in Lawrence, at para. 21: “[t]reating procedural flaws or defects as fatal nullities, incapable of amendment” is “inconsistent” with the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.” He quoted r. 2.01(1)(a), which states that “[a] failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court, may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute” (emphasis added).

[24] In Lawrence, Sharpe J.A. quoted with approval the reasons of Kerans J.A. in Bridgeland Riverside Community Assn. v. Calgary (City), 1982 ABCA 138, 37 A.R. 26, which noted, at paras. 27-28: “[N]o concept is more sterile than that which says that a proceeding is a nullity for failure of compliance with a procedural rule and without regard to the effect of the failure”. Kerans J.A. added: “[N]o defect should vitiate a proceeding unless, as a result of it, some real possibility of prejudice to the attacking party is shown, or unless the procedure was so dramatically devoid of the appearance of fairness that the administration of justice is brought into disrepute”. I cannot improve on this language, so I repeat it.

[25] The principles that support the elimination of the concept of nullity from the interpretation and application of the Rules of Civil Procedure apply with necessary modification to the law governing the assessment of solicitor’s accounts under the Solicitors Act.

VII. Application of the Governing Principles

[26] The application judge did not take the intersecting governing principles into account in deciding that the assessment order was a nullity. His decision does not accord with the principle that “[p]ublic confidence in the administration of justice requires the court to intervene where necessary to protect the client's right to a fair procedure for the assessment of a solicitor's bill”: Price, at para. 19.

[27] The application judge focused on the fact that the appellant had been told by the first Assessment Officer in 2010 to remedy the jurisdictional issue. He found the appellant’s subsequent actions to be “many steps over the course of many years” taken with the knowledge of the jurisdictional problem, in direct contradiction of r. 2.02(b). In doing so he invoked Sharpe J.A.’s ruling in Price, quoted at length above.

[28] Rather than use the Price ruling to facilitate the assessment, the application judge used it to frustrate the assessment. Although he accepted that the provisions of the Solicitors Act “are to be read generously in favour of the client party seeking fairness in challenging his or her solicitor’s account”, he held that fairness also “defines the limits of this generosity”. He relied on Price in order to make this point, quoting Sharpe J.A.’s comments, at para. 20 of Price, that r. 2.02(b) “limits the right of a party to attack a proceeding or a step, document or order in a proceeding for irregularity if the party has taken a further step in the proceeding after obtaining knowledge of the irregularity”.

[29] But this turns Price on its head. In Price the solicitor did not raise the timing issue until five years after the assessment order was granted, after the solicitor had participated in a lengthy assessment, and after a finding was made against him. Sharpe J.A. held that the solicitor’s failure to raise a timely objection to the procedure used to obtain the assessment order was “fatal”: at para. 17. To allow the solicitor “to nullify the assessment now would be contrary to the law and to common sense”. It was in this context that r. 2.02(b) was referenced in Price – to impugn the solicitor’s decision to attack the assessment procedure after he had continued participating in it with full knowledge of the procedural defect.

[30] Understood in their proper context, Sharpe J.A.’s comments in Price are much more aligned with the appellant’s arguments in this case. Both parties had been made aware of the jurisdictional problem at the very first assessment hearing in 2010. Despite this, the respondents agreed in April 2014 to have the accounts assessed. This is what led to the cancellation of the discoveries scheduled in the civil action. The respondents’ consent to an assessment procedure was reiterated in October 2014, when respondents’ counsel wrote to the appellant’s counsel and said that he will “do what it takes so that Mr. Ilic gets the review he’s entitled to”. Again, in November 2014 the respondents acquiesced to moving the file to Toronto in order to expedite the assessment process, even allowing the appellant’s counsel to sign a consent on their behalf.

[31] The respondents then actively participated in the assessment process from October 2015 to April 2018, including final arguments. Only after this lengthy process, in responding to the Assessment Officer’s request for submissions on jurisdiction in November of 2019, did the respondents seek to use the issue of jurisdiction to resile from their agreement to the assessment. This was more than five years after agreeing to an assessment process in April 2014.

[32] As Sharpe J.A. noted in Price, “[f]airness and the orderly administration of justice require that solicitors raise procedural objections in a timely manner. To allow such objections to be raised years later, after a lengthy and costly hearing on the merits, would be to invite chaos”: at para. 21. See also, Speciale Law Professional Corp. v. Shrader Canada Ltd., 2015 ONCA 856, at paras. 24-26, leave to appeal refused, [2016] S.C.C.A. No. 56, where a solicitor’s involvement in the assessment process was held to be an “attornment” to the jurisdiction of the assessment order that had been issued on the basis of a “technical irregularity”.

[33] This is precisely what the respondents did in this case. They agreed to the assessment procedure despite knowing of the jurisdictional defect. They participated in the assessment process for the next five years before seizing on the jurisdiction issue as an exit. There is no basis on which fairness, as invoked by the application judge, could justify bringing the assessment proceedings to an end in the utter absence of any evidence of prejudice to the respondents.

[34] The application judge had the authority to authorize the Assessment Officer to complete the assessment and to issue a decision on the merits. His failure to do so was an error.

[35] Finally, I note that Mr. Ducharme made no substantive arguments touching on the issues. He simply asserted that the retainer agreement was for a block fee.

VIII. Disposition

[36] I would allow the appeal. Because this matter has consumed enough of the system’s resources, I would not order a new assessment. Assessment Officer Ittleman has heard the evidence and the arguments. I would order that he now issue his decision on the merits without delay.

[37] The respondents shall pay costs to the appellant in the amount of $6,000 all-inclusive, as agreed.

Released: June 15, 2022 “P.L.” “P. Lauwers J.A.” “I agree. M.L. Benotto J.A.” “I agree. David M. Paciocco J.A.”

[1] Garry D. Watson and Derek McKay, Holmested and Watson Ontario Civil Procedure, loose-leaf, (Toronto: Thomson Reuters, 2022), at para. 14-7.