COURT OF APPEAL FOR ONTARIO

CITATION: Versailles Convention Centre Inc. (2074874 Ontario Inc.) v. William Ross Gilmour (Gilmour Barristers), 2013 ONCA 674

DATE: 20131105

DOCKET: C56931

Weiler, Gillese and Lauwers J.J.A.

BETWEEN

Versailles Convention Centre Inc. Formerly 2074874 Ontario Inc.

and 1579240 Ontario Inc.

Applicants (Appellants)

and

William Ross Gilmour carrying on business as Gilmour Barristers

Respondent (Respondent in appeal)

James S. G. Macdonald, for the appellant Versailles Convention Center Inc.

William Gilmour, in person

Heard and released orally: October 18, 2013

On appeal from the order of Justice Dale F. Fitzpatrick of the Superior Court of Justice, dated March 25, 2013.

ENDORSEMENT

Nature of the Appeal

[1] The appellants appeal the dismissal of their application for an assessment of the accounts of the respondent, Gilmour, a lawyer.

[2] The accounts that are the subject of this appeal were issued by Gilmour to his client, Faqir Padda. Padda, a minority shareholder in Versailles, brought an oppression action against Versailles and the two majority shareholders, who are also its directors, Taggar and Khakh. As part of that proceeding, Padda brought a motion to have a receiver/supervisor for Versailles appointed.

[3] The motions judge granted Padda’s motion and. made an order appointing Paddon + Yorke Inc., (P&Y) as supervisor for Versailles. Pursuant to para. 43 of this order, “the Supervisor [was thereby] authorized to pay the accounts for services of Gilmour Barristers in obtaining the within Order on behalf of [Padda] to be paid forthwith from the funds and assets of [Versailles]”. This was, however, “without prejudice to any Party’s right to claim adjustment in the within action”. The order also provided that, without a court order or P&Y’s permission, only P&Y had the right to initiate any proceeding to the exclusion of all other persons including Versailles. Versailles was under the control of P&Y from April 2010 to May 2012.

[4] Gilmour submitted a bill in the amount of $77,674.95 which P&Y paid in June/July 2010. The bill was $39,034.05 more than what was set out in Gilmour’s full indemnity costs outline submitted at the motion.

[5] Taggar and Khakh directed their lawyer, James S.G. Macdonald, to request copies of the Gilmour accounts paid by P&Y. Macdonald wrote to the lawyer for P&Y and to Gilmour on January 7, 2011, requesting copies of the accounts. P&Y said it needed Gilmour’s consent to release a copy of his accounts. Gilmour asked why Taggar and Khakh should see the accounts and Macdonald sent an email on January 17, 2011, stating:

[Taggar and Khakh’s] request for a copy of Mr. Padda’s account from Gilmour barristers is made pursuant to the right of the parties under paragraph 43 of the [Supervision] order to claim an adjustment in these proceedings. [Taggar] as a director and manager of [Versailles] is entitled to review the basis on which an amount was paid by [Versailles] to Gilmour Barristers and, if it is found to be unreasonable, take steps to assess the account or have it adjusted in these proceedings. Without being able to review the account, [Taggar and Khakh are] restricted from claiming an adjustment or having the account assessed.

[6] Gilmour never responded to this email or nor did he provide copies of the accounts to Versailles, Taggar, Khakh or Macdonald.

[7] Padda discharged Gilmour as his lawyer on August 17, 2011.

[8] Padda settled his oppression action against Versailles, Taggar and Khakh in March 2012 by minutes of settlement. The minutes of settlement provided in para. 17 that the defendants “shall be entitled to pursue any right they have to assess the accounts” that Gilmour provided to P&Y.

[9] In June 2012, Padda gave copies of the accounts to Taggar and Khakh, with redaction of the dollar amounts beside “Retainers Applied” and “Previous Payments”. It appeared to the appellants that Gilmour had been paid twice for portions of the accounts, once by Padda and again by Versailles. Some parts of the accounts also appeared to be related to other steps taken for Padda that were unrelated to the motion for which Versailles had been ordered to pay costs.

[10] Two and a half years after the costs were paid, but only two months after copies of the accounts were delivered directly to Versailles, Versailles sought an assessment of Gilmour’s costs on the basis of “special circumstances” pursuant to s. 4(1) of the Solicitors Act, R.S.O. 1990, c. S.15 and the inherent jurisdiction of the Court to “ensure that a client’s request for an assessment is dealt with fairly and equitably”: Price v. Sonsini, 2002 CanLII 41996 (ON CA), [2002] O.J. No. 2607 (C.A.).

[11] We note that the Limitations Act does not apply to the review of a solicitor’s account. In Guillemette v. Doucet [2007] ONCA 743, at paras. 35-36, this court found:

There is no absolute time bar against Application for the assessment of lawyers’ accounts… Time alone will not… preclude the examination of the suitability of a lawyer’s accounts where other circumstances compel a review of those accounts.”

The Application Judge’s Decision

[12] The application judge found that there were no special circumstances in this case to warrant an exception to the general rule that no assessment will be ordered after 12 months from the delivery of the bill. He held the appellants were essentially trying to challenge the supervision order now, years after it was made.

[13] He found that Versailles had the Gilmour accounts in its possession since at least June/July when those accounts were paid by P&Y, acting as supervisor. The accounts were reviewed by experienced professionals, including P&Y and their counsel. The bill of costs was given to Versailles shortly after the supervision order was made, so Taggar and Khakh would have been aware of the substantial increase when they paid the $77, 674.95. P&Y also provided bi-weekly progress reports on litigation cash flow to all of the parties to the litigation. The application judge found that, therefore, every party involved would have known about the payments. There was a mechanism to challenge costs in the supervision order and the parties could have done so in the 12 months following the receipt of the accounts. Despite all of that, no one challenged the accounts or payment of the accounts for over two years leading up to the settlement in March 2012.

[14] The application judge found that there was no unfairness here to create “special circumstances” under s. 11 of the Solicitor’s Act.

[15] The application judge found, however, that no costs order should be made because it was not reasonable or appropriate for Gilmour to refuse to provide his accounts (even a redacted version) in response to the request of Taggar and Khakh in January 2011. He found that this fueled mistrust and contributed to this action ending up before the courts now. He concluded, in saying this, “I note that Gilmour is bound by whatever instructions Padda was giving to counsel such that my comment should not be interpreted as criticism of Gilmour specifically.”

Discussion

[16] A finding of “special circumstances” turns on a fact driven exercise of judicial discretion. This court will defer to that exercise of discretion absent an error in principle or a clearly unreasonable result: Guillemette v. Doucet, 2007 ONCA 743, 88 O.R. (3d) 90, at para. 4. In our view, this test is met as the cumulative effect of the errors made by the motions judge led to a clearly unreasonable result. In our view, there were special circumstances in this case to warrant an exception to the general rule that no assessment will be ordered after 12 months from the delivery of the bill.

[17] The application judge erred in finding that the appellant was challenging the making of a costs order in favour of Gilmour. The application for an assessment of Gilmour’s costs was not a challenge to the costs order; it was a challenge to the amount of Gilmour’s costs and the right to challenge that aspect was preserved in para. 43 of the order.

[18] The application judge’s finding that Versailles had the information contained in Gilmour’s accounts for two years before commencing the application was also erroneous. P & Y had the information. P & Y paid the accounts. Versailles had the information, for the first time, only two months before it brought the motion.

[19] If the appeal is allowed, Gilmour has not shown that he will be prejudiced in any way. As indicated below there are other circumstances that compel a review of Gilmour’s accounts.

[20] The application judge also made findings of fact that were clearly wrong and not based on the evidence. The application judge imputed the knowledge of the Supervisor, P&Y, to Versailles. The record makes it clear that Versailles did not have that knowledge. It was P&Y, acting as supervisor at the time, who had possession of the accounts. In the circumstances, this does not amount to possession by Versailles. Versailles was under the control of P&Y. The persons running Versailles on a daily basis, Khakh and Taggar, were not aware of the details of the accounts at the time the payment was made out of Versailles’ money and they were not consulted on the decision to pay. As a result of the supervision order, Khakh and Taggar were restricted in their ability to compel an accounting from Gilmour because, in the absence of a court order, or P&Y’s consent, only P&Y could do so.

[21] Furthermore, in the circumstances, the appellants took reasonable steps to attempt to obtain the accounts by requesting them from P&Y and from Gilmour. P&Y said it needed Gilmour’s consent which was not forthcoming. Before us, Gilmour submitted in oral argument that his refusal to accede to the request to provide his accounts was due to lack of instructions from his client, Padda. However, the affidavit evidence filed on his behalf does not bear that out.

[22] It is also worthy of note that the application judge found that Gilmour’s response to Macdonald’s request was not reasonable yet, in refusing to order an assessment, he allowed Gilmour to benefit from his own unreasonable behaviour.

[23] Finally, the application judge failed to address the following factors:

• The discrepancy between the costs outline Gilmour prepared for the motion and the total amount that was paid, which was almost double that amount;

• The amount of the costs to which Gilmour was entitled was limited to the costs of the supervision motion but the face of the accounts that were paid indicates they also relate to other steps Gilmour took in the oppression proceeding; and

• It appears that an overpayment of the accounts occurred because Padda made payments on the same account.

Disposition

[24] Accordingly, the appeal is allowed, the order below is set aside and the appellants’ request for the assessment of the accounts of Gilmour dated January 25, 2010, February 22, 2010, and April 1, 2010 is granted with a direction to the assessment officer, within that assessment, to determine what amount should have been properly paid to Gilmour under the terms of paragraph 43 of the supervision order.

[25] Costs of the appeal and of the application below are to the appellant and are fixed at a total of $15,000, inclusive of disbursements and all applicable taxes.

“K. M. Weiler J.A.”

“E. E. Gillese J.A.”

“P. Lauwers J.A.”