Court of Appeal for Ontario

Citation: Kathleen Cookish v. Paul Lee Associates Professional Corporation, 2013 ONCA 278 Date: 2013-04-30 Docket: C55638

Between: Kathleen Cookish Applicant (Respondent)

and

Paul Lee Associates Professional Corporation Respondent (Appellant)

Before: Doherty, Laskin and Blair JJ.A.

Counsel: Tanya A. Pagliaroli, for the appellant David S. Wilson, for the respondent

Heard: January 14, 2013

On appeal from the order of Justice Kevin W. Whitaker of the Superior Court of Justice dated May 25, 2012, with reasons reported at 2012 ONSC 3084.

R.A. Blair J.A.:

Overview

[1] Paul Lee Associates Professional Corporation delivered an account to Ms. Cookish for services rendered under what it says is a contingency fee agreement. Ms. Cookish contested the account, and obtained an order from Corrick J. on consent referring it to the assessment officer in Toronto for assessment.

[2] As it turns out, however, there is a dispute about the nature of the retainer agreement entered into between the parties. Is it, or is it not, a valid contingency fee agreement, as contemplated by the Solicitors Act, R.S.O 1990, c. S.15 (the Act)? If the answer is no – as Ms. Cookish contends – then the account may be assessed as to amount on a quantum meruit basis. If the answer is yes – as the solicitors contend – then effect must be given to the formula set out in the agreement in determining the amount.

[3] On this appeal, the issue is whether the assessment officer can, or should, determine such a dispute. More precisely, the issue is whether an assessment officer has, or may be given, the jurisdiction to assess a solicitor’s account where there is an underlying dispute between the solicitor and the client about the nature and validity of the retainer agreement.

[4] An assessment officer has no inherent jurisdiction. For the reasons that follow, I conclude that, while there may be circumstances in which it is appropriate for a judge, when referring a solicitor’s bill for assessment, to delegate such decisions to an assessment officer pursuant to the reference powers under Rule 54 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the preferable procedure is for a judge to make those determinations.

[5] For that reason, and also because it appears that the order of Corrick J. referring the appellant’s bill for assessment was made and consented to on the premise that only the quantum of the bill was in dispute, I am satisfied that her order should have been set aside, and that Whitaker J. erred in declining to do so. I would therefore allow the appeal, set aside the orders below, and remit the matter to the Superior Court of Justice for reconsideration.

Factual Background

[6] Ms. Cookish retained the appellant solicitors to represent her in pursuing a claim against her insurer arising out of the denial of long term disability (LTD) benefits. She signed what the solicitors refer to as their “standard contingency fee retainer agreement” for LTD claims.

[7] On March 3, 2009, the claim for LTD benefits was settled at mediation for the sum of $285,000 plus $44,000 on account of costs and disbursements. Ms. Cookish signed a full and final release reflecting the terms of the settlement and, after the retainer amount was deducted from the award, received a net recovery of $237,120.

[8] Almost a year later, on February 3, 2010, she advised the solicitors through another lawyer that she intended to seek an assessment of their account. The application was not launched until August 30, 2010, however.[^1] In the Notice of Application, Ms. Cookish stated: “[t]he client disputes the amount of the account and wishes to have the same assessed.” She did not contest the validity, enforceability or nature of the retainer agreement as a “contingency fee agreement”.

[9] The appellant contends that, on the understanding Ms. Cookish was expressly disputing only “the amount of the account”, it consented to an order directing the assessment. Corrick J. made the order on December 1, 2010.

[10] Before the scheduled assessment was to take place (in November, 2011), the appellant retained its present counsel, who raised the argument that the assessment officer did not have jurisdiction to deal with the matter because at the heart of the dispute was a difference of opinion over the validity of the retainer agreement as a valid contingency fee agreement. The appellant sought to have the matter referred back to the Superior Court of Justice, but Ms. Cookish refused to agree. She argued that she was entitled to a quantum meruit assessment of the account. In response, the appellant took the position that a quantum meruit assessment was not applicable because the retainer was a contingency fee agreement and further, that since the client was disputing the validity of the agreement, the assessment officer did not have jurisdiction to decide that issue.

[11] Faced with this dispute, the assessment officer adjourned the hearing. The appellant then applied for an order setting aside the consent order of Corrick J. directing the assessment. Whitaker J. heard the motion and refused to set aside the order.

[12] The appellant seeks to set aside both orders. It does not oppose the assessment of the account or the determination of the validity and enforceability of the retainer agreement in the proper forum. The appellant asserts, however, that a hearing before an assessment officer is not the proper forum.

Analysis

[13] In summary, the appellant submits:

a) that an assessment officer has no jurisdiction to conduct an assessment where there is a dispute with respect to the solicitor’s retainer or the terms of that retainer;

b) in any event, that an assessment officer has no jurisdiction to assess, examine, enforce or cancel contingency fee agreements because the Solicitors Act has reserved that power to a judge; and

c) that the motion judge erred in failing to find that the interests of justice required the consent order of Corrick J. to be set aside.

[14] In determining these issues, it is helpful to keep in mind that where a solicitor’s bill has been rendered, a client may have the bill assessed in a number of ways, and in different circumstances. They all involve an order of the court referring the matter to the assessment officer. In one circumstance only, that order may be obtained on requisition to the registrar. In all other cases, the reference is made by a judge. The various options are:

a) a requisition to the registrar within one month following delivery of the bill, provided the retainer is not disputed and there are no special circumstances: s. 3 of the Act;

b) an application to a judge for an order directing the bill for assessment,

(i) within 12 months following delivery of the bill: an application founded on the inherent jurisdiction of the court;[^2]

(ii) after 12 months following delivery of the bill: s. 4(1);[^3]

(iii) following payment of the bill: s. 11;

(iv) within 12 months following payment: inherent jurisdiction of the court; and

(v) where the retainer agreement is a contingency fee agreement: s. 28.1(11).

See, generally, Mark M. Orkin, The Law of Costs, loose-leaf, 2nd ed. (Aurora: Canada Law Book, 1987), at ch. 3.

[15] Here, the request for an assessment arises either under (b)(ii) above (i.e., by way of an application made more than 12 months following delivery of the solicitor’s bill, pursuant to s. 4(1) of the Act), or under (b)(v) (by way of application for the assessment of an account rendered under a contingency fee agreement).

a) Does An Assessment Officer Have Jurisdiction to Determine a Dispute Concerning A Retainer Agreement in General?

[16] Ms. Pagliaroli submits on behalf of the appellant that an assessment officer does not have the authority in any circumstances to deal with disputes concerning the retainer, other than disputes regarding quantum alone. In my view, while that is true where an order is obtained on requisition under s. 3(1), it is not accurate to say that such authority may never be given to an assessment officer. However, the preferable procedure is for a judge to determine these issues. Once they have been resolved, the bill may then be referred to the assessment officer for a determination of the proper quantum, if necessary.

[17] I arrive at this conclusion for the following reasons.

[18] An assessment officer has no inherent jurisdiction and must therefore find his or her authority in some statutory source or in the Rules of Civil Procedure. This principle has been applied to masters and, by extension, registrars charged with issuing orders for assessment: see Davies, Ward & Beck v. Union Industries Inc. (2000), 2000 CanLII 5722 (ON CA), 48 O.R. (3d) 794 (C.A.), at para. 13; Crooks v. Clement, [1997] O.J. No. 5436 (Gen. Div.), at para. 11. By further extension, this principle also applies to assessment officers.

[19] The position of assessment officer is created by s. 90 of the Courts of Justice Act, R.S.O. 1990. c. C.43, but it is questionable whether that section itself provides an assessment officer with authority to assess a solicitor’s bill vis-à-vis a client. While s. 90(3) provides jurisdiction “to assess costs in a proceeding in any court”, that provision more likely provides authority for the assessment of costs as between litigants in a proceeding rather than for the assessment of a solicitor’s bill as between the solicitor and the client. In the latter situation, an assessment officer’s authority is rooted either in the Solicitors Act or in reference provisions found in Rule 54 of the Rules of Civil Procedure, in my view.

[20] Subsection 3(1) of the Act and the jurisprudence relating to it make it clear that an assessment officer has no jurisdiction to determine disputes relating to the existence, nature, terms or extent of a retainer agreement where the order is obtained on requisition. There are only two exceptions to this proposition: (i) where there is really no legitimate dispute regarding the retainer; or (ii) where the dispute relates only to the quantum of the bill: see Paoletti v. Gibson, 2009 ONCA 71, 308 D.L.R. (4th) 179, at paras. 28-30; and Park v. Perrier (2005), 2005 CanLII 25637 (ON SCDC), 200 O.A.C. 377 (Div. Ct.), at para. 66.

[21] While an assessment officer is expressly excluded from exercising the authority to resolve disputes regarding the retainer where the assessment order is obtained on requisition under s. 3(1), there is nothing in the Act that expressly grants an assessment officer the authority to do so in any other circumstances. The route to that authority – to the extent it should be exercised – lies in the reference procedure provided in the Rules, in my view.

[22] Rule 54.01 applies Rules 54 and 55 to references directed under a statute, subject to the provisions of the statute. I have no doubt the drafters of the Solicitors Act intended that the reference procedure would provide the mechanism by which the assessment of solicitors’ accounts would proceed. Apart from s. 3 (where the assessment order is obtained on requisition to the registrar), the remaining options for a client to attack a solicitor’s bill (or for a solicitor to seek to enforce it), as outlined earlier in these reasons, all involve an application to the court for a reference. Section 6 of the Act makes it clear that the reference power is indeed the vehicle by which solicitors’ accounts are to come before the assessment officer: s. 6(4) precludes a solicitor from commencing or prosecuting an action for payment “pending the reference” without leave; and s. 6(5) adopts the confirmation procedure from the reference rules for finalization of the assessment officer’s report.

[23] These provisions operate as a sort of gateway between the portions of the Act dealing with assessments and the reference proceedings under the Rules. But it does not follow that every issue regarding assessment should pass through that gateway.

[24] Two primary considerations lead me to this conclusion.

[25] First is the language of s. 23 of the Act. Section 23 is the provision that addresses the determination of disputes under a retainer agreement (including a contingency fee agreement) in general. Its relevant parts state:

No action shall be brought upon [a retainer] agreement, but every question respecting the validity or effect of it may be examined and determined, and it may be enforced or set aside without action on the application of any person [who is entitled to apply as set out in the section], by the court … in which the business or any part of it was done or a judge thereof, or, if the business was not done in any court, by the Superior Court of Justice. [Emphasis added.]

[26] While this language does not explicitly prohibit the court from referring matters “respecting the validity or effect” of a retainer agreement to an assessment officer, it clearly signals the legislature’s intention that matters of that nature are to be determined by the court or a judge thereof. This does not include an assessment officer, for the following reasons.

[27] The term “court” is not defined in either the Solicitors Act or the Courts of Justice Act. However, it is defined in the Rules to mean:

[T]he court in which a proceeding is pending and, in the case of a proceeding in the Superior Court of Justice, includes,

(a) a master having jurisdiction to hear motions under Rule 37, and

(b) a case management master [^4]

[28] Because masters are included in the meaning of “court”, the Rules and various statutes draw a distinction between the “court” and “a judge thereof”. Assessment officers are creatures of s. 90 of the Courts of Justice Act. They are not masters (although all masters are assessment officers: s. 90(2)). The Solicitors Act itself provides further confirmation that assessment officers are not considered to be included in the word “court” by drawing a clear distinction between the two, for example in ss. 18, 26, 27, and 30.

[29] All of this strongly suggests that when the legislature says in s. 23 of the Act that “every question respecting the validity or effect” of a retainer agreement may be “examined and determined” by the court or a judge thereof, the legislature intended that as a general rule, (notwithstanding the reference power) a judge or other member of the court will perform that function – not an assessment officer.

[30] This is consistent with the nature of a judge’s power to direct a reference under the provisions of rule 54.02. A review of those provisions reveals that the power is somewhat circumscribed. Absent consent, it may not be exercised in every proceeding or with respect to every issue coming before the court. This is the second consideration that leads me to the above conclusion.

[31] In its entirety, rule 54.02 states:

(1) Subject to any right to have an issue tried by a jury, a judge may at any time in a proceeding direct a reference of the whole proceeding or a reference to determine an issue where,

(a) all affected parties consent;

(b) a prolonged examination of documents or an investigation is required that, in the opinion of the judge, cannot conveniently be made at trial; or

(c) a substantial issue in dispute requires the taking of accounts.

[32] Undoubtedly, a judge is given broad discretion to refer matters to others for determination where the requirements of rule 54.02 are met. He or she may “direct a reference of the whole proceeding or a reference to determine any issue” at any time in a proceeding. This language itself has a limitless ring to it. However, absent the consent of the parties, the circumstances in which that broad power may be exercised are not unlimited. The rule itself puts boundaries around its exercise.

[33] A consideration of the parameters of the rule in the context of this appeal suggests that the discretion may only be invoked on the basis that “a prolonged examination of documents or an investigation is required that, in the opinion of the judge, cannot conveniently be made at trial” or that the proceedings involve a contest that calls for “the taking of accounts”. Disputes concerning the “validity or effect” of a retainer agreement do not readily fall into those categories, although a straight reference for the assessment of the amount owing under a solicitor’s account more readily does. The other circumstances in the rule invoking the judge’s exercise of discretion (proceedings relating to the conduct of a sale, the appointment of guardians, the conduct of guardianships or receiverships, or the enforcement of orders) all serve to underscore the somewhat limited range of circumstances where, absent consent, a judge may direct a reference.

[34] This, too, is consistent with the view that, in general, disputes regarding the validity or effect of a retainer agreement should be determined by a judge. Absent the consent of the parties, the judge hearing an application for referral of a solicitor’s bill for assessment should give careful consideration to whether it is appropriate to incorporate the resolution of issues regarding a disputed retainer in the order for referral being made.

b) Does an Assessment Officer Have Jurisdiction Over Contingency Fee Agreements?

[35] The appellant submits, in addition, that contingency fee agreements are treated differently, and because the retainer agreement here is that kind of agreement, s. 28.1 of the Solicitors Act ousts the jurisdiction of an assessment officer to construe or enforce it, entirely apart from the foregoing considerations. On a review of the Act as a whole, I am not persuaded that the ouster is as complete as the appellant argues. I do not think the fact that the agreement in question may be a contingency fee agreement alters the above analysis in any material way. Rather, all of the considerations referred to above, together with some additional considerations, lead to a similar conclusion.

[36] Subsection 28.1(1) authorizes solicitors to enter into contingency fee agreements with clients “in accordance with this section”. In the section and the regulations enacted under it, the legislature sets out the parameters governing such agreements: what is permitted and required in terms of their contents; certain exceptions where contingency fees are not permitted (criminal proceedings and family law matters); maximum percentages; approval procedures for amounts exceeding the maximum percentages; enforceability; and assessment of contingency fees.

[37] Subsection 28.1(11) addresses the assessment of contingency fees:

(11) For purposes of assessment, if a contingency fee agreement,

(a) is not one to which subsection (6) or (8) applies, the client may apply to the Superior Court of Justice for an assessment of the solicitor’s bill within 30 days after its delivery or within one year after its payment; or

(b) is one to which subsection (6) or (8) applies, the client or the solicitor may apply to the Superior Court of Justice for an assessment within the time prescribed by regulation made under this section.[^5]

[38] The appellant argues that s. 28.1(11) confers exclusive jurisdiction on Superior Court judges to assess a solicitor’s bill based on a contingency fee agreement. I do not read s. 28 quite as exclusively, however. I see no material difference between the right to “apply to the Superior Court of Justice for an assessment” under s. 28.1(11) and the right to apply to the court or a judge for an assessment in relation to any other retainer agreement. All routes theoretically leave open the potential for a judge to resort to the reference procedure under the Rules and to delegate an issue to the assessment officer.

[39] Nonetheless, for the same reasons that I have articulated above, I conclude that, as a general rule, questions involving the nature, validity or effect of a contingency fee agreement should be resolved by judges. Indeed, there may be stronger arguments for such a proposition in the case of contingency fee agreements.

[40] The acceptance of contingency fee agreements as a legitimate way for lawyers and their clients to structure lawyers’ remuneration has evolved in recent years. At common law, such agreements were long held to be champertous, and therefore unenforceable: see e.g. Solicitor (Re) (1907), 14 O.L.R. 464 (H.C.), at p. 465; Robinson v. Cooney, [1999] O.J. No. 1341 (S.C.); and Bergel & Edson v. Wolf (2000), 2000 CanLII 22703 (ON SC), 50 O.R. (3d) 777 (S.C.). Over time, however, the courts began to recognize “the advantages to the administration of justice, in the form of increased access to justice, from properly regulated contingency fee agreements”: Raphael Partners v. Lam (2002), 2002 CanLII 45078 (ON CA), 61 O.R. (3d) 417 (C.A.), at para. 54; McIntyre Estate v. Ontario (Attorney General) (2002), 2002 CanLII 45046 (ON CA), 61 O.R. (3d) 257 (C.A.), at para. 72.

[41] In the result, the Solicitors Act was amended, effective October 1, 2004, to recognize the validity of such arrangements when entered into in compliance with the terms of that legislation. On October 28, 2004, the Law Society of Upper Canada amended its Rules of Professional Conduct to govern the conduct of solicitors in relation to contingency fee arrangements. Section 28.1 and its related amendments to the Act are the progeny of that evolution.

[42] However, contingency fee agreements remain the subject of careful scrutiny by the court. That scrutiny is provided by judges (or masters). Only the court is entitled to determine whether such an agreement is “in all respects fair and reasonable between the parties” (s. 24). While s. 18 grants an assessment officer that power in relation to retainer agreements in general – subject to the discretionary ability to refer the issue to the court, if it is in doubt – s. 28.1(10) stipulates that ss. 17-19 do not apply to contingency fee agreements. The authority to determine whether an agreement is fair and reasonable is therefore expressly stripped from the assessment officer when it comes to contingency fee agreements.

[43] Contingency fee agreements may only be enforced if they are fair and reasonable, as these qualities form the heart of their legitimacy. Only where such an agreement is not fair and reasonable may it be declared void or be cancelled or disregarded: Henricks-Hunter (Litigation Guardian of) v. 814888 Ontario Inc. (c.o.b. Phoenix Concert Theatre), 2012 ONCA 496, 294 O.A.C. 333, at para. 13. The assessment officer is deprived of the authority to make that call by the terms of s. 28.1(10).

[44] Given this lack of authority regarding the essential characteristics that make a contingency fee agreement enforceable or unenforceable, there would be little point in delegating to an assessment officer, by means of the reference power, the authority to determine disputes involving the nature of the agreement itself or the scope of its terms (except to the extent they may relate to quantum alone), as these disputes would most often go to issues of reasonableness and fairness in any event.

[45] Presumably, the appellant’s contention that s. 28.1 ousts the jurisdiction of the assessment officer would go so far as to suggest that none of the other avenues for contesting (or enforcing) a solicitor’s bill are available when it comes to the assessment of a bill rendered pursuant to a contingency fee agreement. This would theoretically include the requisition procedure where the retainer is not in dispute, or resort to the court’s inherent jurisdiction where the assessment is sought within a year after the bill is delivered, or resort to s. 4 (where the assessment is sought more than 12 months after the bill is rendered), or resort to s. 11 (where the assessment is sought after the bill has been paid).

[46] It is not necessary for purposes of this appeal to resolve that particular contention. I observe, however, that there would appear to be some force in it. Subsection 28.1(11) appears to embrace all contingency fee agreements (those to which subsection (6) and (8) apply and those to which they do not). That being the case, it would make sense that access to other general assessment provisions of the Act would not be available for bills rendered under a contingency fee agreement.

[47] This does not alter the proper disposition of this case, however. If the appellant’s bill has been rendered pursuant to a contingency fee agreement, s. 28.1(11) applies; if not, s. 4(1) does. The ultimate conclusion is unaffected: the court or the judges thereof should generally resolve any issue other than the amount owing under the agreement. Having regard both to the careful scrutiny to which the courts subject contingency fee agreements, and to the more limited role that assessment officers are afforded with respect to such agreements, this view may be even more forceful when it comes to the assessment and enforcement of amounts owing under such agreements.

c) Should the Consent Order of Corrick J. Have Been Set Aside?

[48] I turn, then, to the failure of the motion judge to set aside the consent order of Corrick J. Was it an error not to do so?

[49] There is a real question, in my view, as to whether the order of Corrick J. should have, or was intended to clothe the assessment officer with the jurisdiction to determine the dispute regarding the validity, nature and extent of the appellant’s retainer. I am satisfied she did not intend it to do so.

[50] The materials upon which the order was based raised only the issue of the quantum of the bill. Indeed, the respondent does not contest this or suggest that she was raising a dispute regarding the enforceability, validity or the terms of the retainer on the application. Arguably, the solicitors provided their consent to the order on the basis of the materials supporting the application (notwithstanding the several exchanges of correspondence between counsel, each setting out their own view as to the nature of the retainer).

[51] Given the preference signalled by the legislature that these matters are to be determined by judges, I think it unwise to assume that an order providing simply that the solicitor’s bill “be referred to the Assessment Officer at Toronto for assessment” – as Corrick J.’s order did – is sufficient as a matter of law to vest in the assessment officer the jurisdiction to determine disputes regarding the retainer itself. The language used in the order is the language of quantum. Moreover, such an assumption would work against the grain of all of the jurisprudence suggesting that an assessment officer only has that type of jurisdiction where it is specifically provided.

[52] In this respect, the jurisprudence under s. 3 of the Solicitors Act is instructive. The courts have been assiduous in declaring that assessment officers do not have authority to address genuine disagreements regarding the solicitor’s retainer (except for quantum) when assessing a bill pursuant to an order obtained on requisition. It is a prerequisite of s. 3 that the retainer not be in dispute, and if it turns out to be the case that it is in dispute, the order obtained on requisition must be set aside: see Paoletti v. Gibson; Park v. Perrier; Re Solicitor (1964), 1964 CanLII 232 (ON SC), 49 D.L.R. (2d) 505 (Ont. H.C.); Roach, Schwartz & Associates v. Pinnock, 2004 CanLII 18719 (Ont. S.C.); Penonzek v. Cerra, 2001 ABQB 272, 287 A.R. 57, at paras. 15-17; and Solicitor (Re), 1940 CanLII 356 (ON SC), [1940] 4 D.L.R. 712 (Ont. H.C.), aff’d without reasons 1940 CanLII 324 (ON CA), [1940] 4 D.L.R. 821 (Ont. C.A.). Apart from the clear wording to that effect in the section, the rationale for this approach was explained by Rose C.J.H.C. in the latter case, at para. 7:

On the contrary, since the statute gives power to the registrars to issue the orders on praecipe only in cases in which the retainer is not disputed and there are no special circumstances, the Court ought to see to it that no advantage can be gained by applying on praecipe in a case in which the condition precedent to the exercise of the registrar’s authority to issue the order does not exist. In other words, persons taking these orders on praecipe ought to be held to do so at the risk of having them set aside if it turns out that there is in fact a dispute as to the retainer or any “special circumstance.”[^6] [Emphasis added.]

[53] This rationale suggests that courts have been careful to ensure that assessment officers do not deal with retainer disputes (except quantum) unless they are specifically authorized to do so and that courts and judges should instead have that responsibility. As Rouleau J.A. noted in Paoletti, at para. 27, “once it appears that the retainer is disputed, the assessment officer cannot proceed with the assessment and the matter must proceed before a judge by way of an action or application.” It makes no sense for the courts to be concerned about clients or solicitors jumping the queue – gaining an advantage while applying by requisition – if a simple order directing that the accounts “be referred to the assessment officer … for assessment” were enough to accomplish the same thing, without a judge applying his or her mind to whether the retainer dispute should be resolved by the court (the preferred default position on my analysis) or by the assessment officer.

[54] For these reasons I am satisfied that, unless there is something specific in the order or the reasons of the judge referring the bill for assessment indicating that more is to be decided than simply the quantum to be approved, an order simply referring a solicitor’s bill for assessment should not be interpreted as conveying to the assessment officer the authority to resolve questions surrounding the disputed retainer. There is nothing in either the reasons of Corrick J. (which dealt only with the question of costs on the application) or in her order that would satisfy those conditions – not a surprising turn of events since, as noted above, the entire application was presented to her on the basis that only the quantum of the bill was being contested.

[55] In my respectful view, the motion judge, who was asked to set aside Corrick J.’s consent order, erred in failing to recognize the foregoing factors and in failing to recognize that the heart of the dispute between the appellant and the solicitors revolved around the nature, validity and terms of the retainer agreement – an issue that had to be determined before quantum could be settled. It was an error to conclude that “[t]he Assessment Officer need only determine the quantum”.

[56] Whether the consent order should be set aside must be considered in that light. Courts are cautious about setting aside consent orders, of course, but will where it is necessary in the interests of justice to do so: see Stoughton Trailers Canada Corp. v. James Expedite Transport Inc., 2008 ONCA 817, adopting the principles set out in Beetown Honey Products Inc. (Re) (2003), 2003 CanLII 32918 (ON SC), 67 O.R. (3d) 511 (S.C.), aff’d without comment on this issue, 2004 CanLII 34508 (ON CA), 3 C.B.R. (5th) 204 (Ont. C.A.).

[57] The interests of justice require that the order of Corrick J. be set aside, in my opinion. But for the motion judge’s error in failing to give effect to the jurisprudential preference for judicial determination of disputes regarding the nature, validity and effect of a retainer agreement – absent a clear direction to the contrary – and but for his error in concluding that the only issue to be determined by the assessment officer here was quantum, the motion judge may well have come to a different conclusion. Justice Corrick did not know that the retainer was in dispute and she might well have made a different order – or, at least, may have been more specific in her direction – if she had.

[58] In those circumstances, I conclude that the order of Corrick J. should have been set aside, and that the motion judge erred in failing to so order.

Disposition

[59] For all of the foregoing reasons, I would allow the appeal, set aside the orders of the motion judge and of Corrick J., and remit the matter to a judge of the Superior Court of Justice to hear the application for an assessment.

[60] On that application, the judge will have to determine whether he or she will resolve the dispute between the parties over the nature, validity and effect of the retainer agreement entered into between the appellant and the respondent, or whether this is one of those rare cases where it may be appropriate to refer that dispute to the assessment officer as part of the assessment process pursuant to the reference powers found in rule 54.02.

[61] The appellant is entitled to its costs of the appeal. I do not think there should be any costs of the motion before Whitaker J. in the circumstances.

[62] If the parties cannot agree on the costs of this appeal, they may make brief written submissions, not to exceed six pages, in that regard. The appellant’s submissions shall be filed within 30 days of the date of this order, and the respondent’s within 15 days thereafter.

[63] It follows from the setting aside of the order of Corrick J. that the costs order made by her against the appellant must also be set aside.

[64] In addition, the appellant asks for costs thrown away in relation to the aborted assessment hearing. I would not make such an order at this stage. I prefer to leave that issue to the judge or assessment officer ultimately disposing of the assessment.

“R.A. Blair J.A.”

“I agree D. Doherty J.A.”

“I agree John Laskin J.A.”

Released: April 30, 2013

[^1]: The application was necessary because the appellant was out of time for seeking an assessment as of right under the Solicitors Act.

[^2]: As the Court noted in Fellowes, McNeil v. Kansa Canadian Management Services Inc. (1997), 1997 CanLII 733 (ON CA), 34 O.R. (3d) 301 (C.A.), at para. 6:

The Solicitors Act also does not provide for the referral to assessment of unpaid accounts rendered between one and twelve months prior to the application. However, here too, the court has an inherent jurisdiction. In the usual circumstances, little is required for that jurisdiction to be exercised.

[^3]: This Court has said that the 2-year limitation in the Limitations Act, S.O. 2002, c. 24, Sch. B (in force and effect January 1, 2004) trumps the 12-month provision in s. 4(1) of the Solicitors Act: see Echo Energy Canada Inc. v. Lenczner Slaght Royce Smith Griffin LLP, 2010 ONCA 709, 325 D.L.R. (4th) 518, at para. 49; and Guillemette v. Doucet, 2007 ONCA 743, 287 D.L.R. (4th) 522, at para. 33. Whether the 12-month periods referred to above are to be read as “12 months” or as “24 months” is not relevant to the issues arising on this appeal. I will refer to the 12-month terminology in the statute.

[^4]: Rule 1.03(1).

[^5]: The time prescribed by the regulation is “within six months after [the bill’s] delivery”: O. Reg. 195/04, s. 10. Subsections (6) and (8) are not relevant to the issues on this appeal. Subsection (6) requires early court approval of a contingency fee agreement that provides for an amount to be paid in excess of the maximum percentage provided by regulation. Subsection (8) provides that, save in exceptional situations and as approved by the court, a contingency fee agreement shall not include in the fee payable to the solicitor, in addition to the fee payable under the agreement, any amount recovered by way of costs in the proceeding.

[^6]: Assessment officers are the present-day equivalent of registrars in this sense, and the modern substitution for the word “praecipe” is “requisition”.