DATE: 20060602
DOCKET: C43864
COURT OF APPEAL FOR ONTARIO
LABROSSE, MOLDAVER AND FELDMAN JJ.A.
B E T W E E N :
JOSEPHINE SLIWINSKI
Mario C. Gravel for the respondent
Plaintiff/Respondent
- and -
RICHARD MARKS
Richard E. Marks in person
Defendant/Appellant
Heard: May 17, 2006
On appeal from the judgment of Justice Michel Z. Charbonneau of the Superior Court of Justice, dated March 18, 2005, reported at [2005] O.J. No. 1018 .
LABROSSE J.A.:
[1] This is an appeal from the judgment of Charbonneau J. given in an action between the appellant, Richard Marks, a solicitor (“the solicitor”) and the respondent, Josephine Sliwinski, the former client of the solicitor (“the client”). The claim against the defendant Ann Flint was dismissed without costs at the opening of trial.
[2] In 1986, the solicitor was retained by the client to commence an action for medical malpractice. In early 2000, the client dismissed the solicitor and retained the services of another counsel. At that time, the solicitor issued an account for $17,178.42 for services rendered. The account was reduced by an Assessment Officer to $9,900. According to the solicitor, the account was reduced because of a minor reduction on the hourly fee and the client was given credit for what she had already paid. It was not clear why credit had not already been indicated on the account in relation to what the client had already paid. The account was further reduced on appeal by McGarry J. to $5,759.81, less costs of $1,000 granted to the client for a net amount owing to the solicitor of $4,757.81. The solicitor appealed to the Divisional Court.
[3] Shortly before the beginning of trial in the malpractice action, counsel of record for the client had himself removed from the record. At the client’s request, the solicitor agreed to represent her in the upcoming trial. In return, he required the client to give him a $25,000 mortgage on her Brant Street property. He also required the client to sign Minutes of Settlement of his appeal to the Divisional Court, thereby consenting to set aside the order of McGarry J. and confirming the balance owed to the solicitor on the previous bill of costs at $9,000.
[4] Shortly after the trial began, the client granted another mortgage to the solicitor. This mortgage was for $15,000 on her Gardenvale Road property. The solicitor gave her an ultimatum that if she did not give this mortgage, the solicitor would not show up in court the next day.
[5] The client’s action was dismissed with costs. The solicitor issued an account to the client for the trial in the amount of $35,736.03. The amount was reduced on assessment to $30,386.03 and confirmed at that amount by Lalonde J. The solicitor issued a final bill to the client in the amount of $3,356.89 for work done after the trial in respect of an appeal of the judgment that did not proceed. This account was reduced on assessment to $2,904.59.
[6] In November 2001, the solicitor hired counsel to collect the $9,000 referred to above, plus the two accounts for the trial and post-trial work. Counsel served the client with notices of sale for each mortgage and initiated steps to sell the two properties.
[7] The client commenced this action on May 2, 2000. She questioned, on numerous grounds, the validity of the mortgages and the Minutes of Settlement. She also sought an accounting of the amounts owed to the solicitor.
[8] On July 3, 2002, Byers J. granted the client an interlocutory injunction (an ex parte injunction had been granted by Forget J. on April 29, 2002) restraining the solicitor from pursuing the power of sale proceedings on the condition that the client pay $15,000 to the solicitor and $25,000 into court to the credit of the action. She paid both these amounts.
[9] On July 31, 2002, the solicitor instructed the sheriff to sell the Gardenvale Road property on the basis of a writ of seizure and sale that had not been withdrawn as contemplated by the order of McGarry J. The client was granted an order restraining the sheriff from proceeding with the sale until final determination of this action.
[10] In detailed reasons, the trial judge reviewed the positions of the parties. Essentially, the client took the position that all transactions should be set aside because they were conducted under duress and without proper legal advice, while the solicitor took the position that all steps taken by him were proper.
The $25,000 Brant Street mortgage
[11] The trial judge found that the $25,000 Brant Street mortgage was valid. The client had understood and voluntarily signed the mortgage in order to get the services of the solicitor for the upcoming trial. He also found that she was in default under this mortgage when the notice of sale was issued. However, the trial judge found that the notice of sale was clearly incorrect, as it contravened the Mortgages Act, R.S.O. 1990, c. M.40, and he set it aside.
The Minutes of Settlement
[12] With respect to the Minutes of Settlement setting aside the order of McGarry J. and confirming the $9,000 account, the trial judge found that the client had received no legal advice. He found that the solicitor abused his position of trust and breached his fiduciary duty to the client in having her abandon her rights to the upcoming appeal.
[13] The trial judge’s findings with respect to the mortgage and the Minutes of Settlement are not consistent. Both the $25,000 mortgage and the Minutes of Settlement formed part of the retainer under which the solicitor was prepared to take the trial. Quite clearly, the client was under pressure. Her counsel had just had himself removed from the record on the eve of trial. The mortgage and her acknowledgement of the $9,000 account were a deal that the solicitor required to take the trial. It was a negotiation of a retainer and the client could accept or refuse. If the mortgage was valid, I see no reason to treat the Minutes of Settlement differently. The solicitor should have received full credit for that account ($4,757.81 + $4,242.19 = $9,000).
The $15,000 Gardenvale Road mortgage
[14] With respect to the $15,000 Gardenvale Road mortgage, the trial judge noted that the solicitor had testified that the client had agreed to bring the amount in cash before the trial commenced and when she breached her promise, he requested the mortgage. The trial judge did not comment on the evidence that the cash was intended, at least in part, to cover the fees of an expert witness for the trial.
[15] The trial judge stated that the solicitor knew or ought to have known that the client was not able to raise $15,000 in cash in a few days. On this point, the trial judge appears to have been in error. Although stated in relation to the $25,000 mortgage, the client stated in her evidence that she owned properties and had an income of $2,500 a month. She confirmed that she had a good credit rating with the bank and could easily borrow money. However, in the circumstances, this error is of no moment.
[16] The trial judge found that the solicitor gave the client an ultimatum that if she did not sign the Gardenvale Road mortgage, he would not show up to represent her the next day, even though he knew that he was ethically bound to do so. The solicitor admitted to giving the ultimatum, but played down its seriousness by stating that the amount had been discussed before the trial began. He referred to it as an error in judgment and acknowledged that he should have acted otherwise. The trial judge also found that the client had not been advised, as part of the legal advice that she received on this mortgage, that the solicitor would have had to appear the next day whether or not she signed the mortgage.
[17] The conclusion of the trial judge that this mortgage was null and void is well supported by the evidence
The steps taken by the solicitor
[18] The trial judge reviewed, in detail, the steps taken by the solicitor against the client. He found that all amounts claimed by the solicitor in the notices of sale were inflated and had been covered in the orders of Forget J. and Byers J. These amounts were also all disputed in the statement of claim in the present action. Nevertheless, the solicitor’s conduct in filing a writ of seizure and sale with respect to the $9,000 amount (on the client’s North Bay property) was clearly reprehensible when he knew that the Minutes of Settlement were being challenged and that he had been enjoined from proceeding on that account. The trial judge called it “sharp practice of the worst kind” which was intended to cause the client difficulty in properly prosecuting her claim against him. The solicitor had shown no remorse.
[19] In addition, the solicitor attempted to garnishee rents after the Byers J. order. In his affidavit, he stated that “no payment had been made with respect to this judgment”, when in fact he had received the $15,000 ordered by Byers J. The trial judge found that the solicitor’s explanation was not credible and that the notices of garnishment were intended and did cause the client substantial difficulties. The trial judge found this conduct abusive and excessive.
[20] In May 2003, the solicitor directed the sheriff to sell the Gardenvale Road property to satisfy the same writs and the same debts that were the subject matter of the present action and the interim injunction granted by Byers J. This led to another injunction, this one granted by Rutherford J.
[21] The trial judge concluded his analysis in these words:
Having had the opportunity of hearing all the evidence in this case, I find that the defendant was well aware that the “spirit” of Byers J.’s order intended to put on hold generally all types of enforcement proceedings for those same 3 debts until the merits of the action were determined. Once again, the enforcement proceeding taken by the defendant was excessive and abusive and intended to derail the plaintiff’s efforts to bring this matter to trial.
[22] If any one individual action of the defendant described above does not constitute excessive and abusive enforcement, the cumulative effect of these actions over a substantial period of time clearly amounts to excessive conduct. I find that the defendant’s conduct was malicious, oppressive and highhanded and warrants an award of punitive damages.
[23] In my view, except as stated above, all findings of fact and all inferences made by the trial judge are reasonably supported by the evidence at trial. The credibility of the witnesses played an important role in this case and great deference must be accorded to the trial judge on that issue. I am not persuaded that the trial judge made any overriding and palpable error in this case.
The accounting
[24] The solicitor objected to the accounting that was done by the trial judge, arguing that it should not have been part of this action. I disagree. The client pleaded in her statement of claim that she was asking for an accounting of the moneys owed under the mortgages. Moreover, the trial judge noted in his reasons that it was made clear, in discussion with counsel at the opening of the trial, that one of the purposes of the trial was to determine the amount required to be paid by the client to discharge all mortgages and writs.
[25] The trial judge found that the client owed the solicitor a total of $39,348.43 representing his original account ($4,757.81), the trial account ($31,686.03) and the appeal account ($2,904.59), less the $15,000 paid to the solicitor, for a balance of $24,348.43. He also found that the solicitor owed to the client the sum of $2,000 awarded to the client in the Rutherford J. injunction. In addition, he awarded the client punitive damages of $5,000 and costs on a substantial indemnity scale fixed at $34,906.98. The bottom line was that the solicitor owed the client the sum of $17,558.55.
The costs on a substantial indemnity scale
[26] In his reasons, the trial judge awarded the client costs on the higher scale before he received submissions on the issue of costs. On the record before us, there is no indication that submissions were made on the scale of costs. This is an error: see Consolidated Enfield Corp. v. Blair (1996), 1996 11776 (ON SC), 28 O.R. (3d) 714 (Div. Ct.).
[27] The trial judge had awarded punitive damages, and the higher scale of costs did not follow as a matter of course. In Mark Orkin, The Law of Costs, looseleaf (Aurora: Canada Law Book, 2005) at s. 219.1.2, the author says:
Some Canadian courts have declined to award both punitive damages and solicitor-and-client costs on the reasoning that a party who has been punished for misconduct by an award of punitive damages should not be further punished by having to pay costs on the higher scale.
[28] It must be remembered that, as the trial judge noted, the client was a difficult person. The solicitor was, in effect, the third solicitor representing the client on her case. He had clearly stated to her in the past that he had little confidence in successfully prosecuting her claim. She had not paid his accounts and also appears to have broken promises of payment. This was not a case of a solicitor and an inexperienced and vulnerable client.
[29] Although costs are discretionary, in this case the award of punitive damages rendered an award of substantial indemnity costs unnecessary, as costs on a substantial indemnity scale are additionally punitive. This client should not have been additionally rewarded with substantial indemnity costs.
[30] In fixing the costs, the trial judge allowed fees of $28,360, $1985.20 for G.S.T. and $4561.78 in disbursements for a total of $34,906.98. On a partial indemnity basis, I would reduce the fees by approximately 1/3 to $19,000 plus $1330 for G.S.T. and $4561.78 for disbursements (inclusive of G.S.T.) for a total of $24,891.78.
Disposition
[31] As a result, in light of my findings on the validity of the Minutes of Settlement, the amount owing to the solicitor of $24,348.43 is increased by $4242.19 to $28,590.62. The amount owing to the client ($2,000 + $5,000 + $24,891.78) is reduced to $31,891.78. The net amount owing to the client is $3,311.16.
[32] Paragraphs 1, 2 and 5 of the judgment dated March 17, 2005 are varied in terms of these reasons. In all other respects, the appeal is dismissed.
Costs of the appeal
[33] At the end of oral argument, counsel were requested to make submissions on the costs of the appeal, assuming that costs would follow the event. Counsel for the client submitted a bill of costs in the amount of approximately $18,800 based on a substantial indemnity basis and $16,200 on a partial indemnity basis. The solicitor submitted his bill of costs at approximately $72,000 on a substantial indemnity basis and $62,300 on a partial indemnity basis. The amounts claimed by the solicitor are unrealistic and bear no relationship to the nature of this appeal.
[34] Success on the appeal is divided. The client has been successful on the main issues relating to the conduct of the solicitor, while the solicitor has been successful as well, particularly on the scale of costs. The degree of success still favours the client. I would fix her costs of the appeal at $10,000.
RELEASED: June 2,
Signed: “J.M. Labrosse J.A.”
“I agree: M. Moldaver J.A.”
“I agree: K. Feldman J.A.”