COURT OF APPEAL FOR ONTARIO
CITATION: Clatney v. Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377
DATE: 20160519
DOCKET: C60500
Cronk, Epstein and Huscroft JJ.A.
BETWEEN
Mark Clatney
Applicant (Appellant)
and
Quinn Thiele Mineault Grodzki LLP and Bertschi Orth Solictors and Barristers LLP
Respondents (Respondents)
Paul Auerbach, for the appellant
William R. Hunter, for the respondent Quinn Thiele Mineault Grodzki
Cheryl Letourneau, for the respondent Bertschi Orth Solicitors and Barristers
Heard: November 13, 2015
On appeal from the order of Justice Hugh R. McLean of the Superior Court of Justice, dated April 30, 2015.
Epstein J.A.:
OVERVIEW
[1] At the heart of this appeal lies the importance of public confidence in the administration of justice and, in that context, the court’s supervisory role over the appropriate compensation for legal services.
[2] In March 2008, the appellant was seriously injured in a motor vehicle accident. The respondents are the law firms that represented him in his tort claim. This claim was settled in July 2013 for $800,000, an amount that included Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) claims advanced by the appellant’s wife and two teenaged sons. Certain funds were distributed, as will be discussed in further detail below.
[3] Under a court order dated August 21, 2013, the settlement monies that then remained, approximately $655,000, were held under a charging order pending resolution of the accounts of the respondent, Bertschi Orth Solicitors and Barristers LLP ("Bertschi Orth"),[^1] for fees rendered and disbursements incurred in representing the appellant in the initial stages of his tort action. In November 2013, $70,000 of that $655,000 was paid into court on behalf of the appellant’s sons.
[4] On December 3, 2013, an order was issued on consent (the “Consent Order”) that provided for the release of the remaining monies, approximately $585,000. The Consent Order specified payment to the respondents of amounts in full satisfaction of their fees and disbursements, with the remainder to the appellant. As a result of this order, the appellant realized a net amount of $274,142.47. The respondents received $310,000, in total.
[5] On November 25, 2014, the appellant brought an application for an order referring the respondents’ accounts to assessment pursuant to the provisions of the Solicitors Act, R.S.O. 1990, c. S.15. The application judge dismissed the application on the basis that, in the light of the Consent Order, he lacked jurisdiction to hear the matter. The appellant appeals.
[6] For the reasons that follow, I am of the view that the application judge had jurisdiction to refer the respondents’ accounts to assessment and erred in law in holding otherwise. I would allow the appeal, set aside the Consent Order, and direct the respondents’ accounts to be assessed.
THE BACKGROUND FACTS
[7] At the time of the accident, the appellant was 46. He was then living with his wife and two teenaged sons. Following the accident, the appellant lost his job, and he and his wife separated.
The initial retainer
[8] In January 2009, the appellant retained Bertschi Orth to represent him in his tort and accident benefits claims.[^2] The appellant entered into a contingency retainer agreement with Bertschi Orth that provided for payment of fees equal to 35% of damages recovered, plus disbursements incurred on his behalf, plus GST. The agreement contained a provision stating that, if the appellant terminated the retainer prior to the resolution of his claim, he would pay Bertschi Orth all fees, disbursements and charges for services rendered by it to the date of termination.
The change in solicitors and the settlement
[9] In November 2012, the appellant terminated Bertschi Orth's retainer and hired the respondent, Quinn Thiele Mineault Grodzki LLP (“Quinn Thiele”). Jaimie Noel, a lawyer at Quinn Thiele who had been representing the appellant’s sons on their FLA claims, agreed to represent the appellant in his tort claim and to continue to represent his sons. She had previously worked at Bertschi Orth.
[10] The appellant entered into a contingency fee agreement with Quinn Thiele that provided for payment of fees equal to 30% of damages recovered, plus disbursements incurred, plus HST.
[11] No written undertaking was given by Quinn Thiele or by the appellant in relation to Bertschi Orth's fees and disbursements. Correspondence from Bertschi Orth indicates that it was prepared to negotiate the amount owing and recognized the potential need for “a reduction… on a pro rata basis depending upon the settlement amount, the amount recovered for fees, and the time [the] firms spent on the file.” Ms. Noel informed Bertschi Orth that she did not have instructions from her client to agree to pay Bertschi Orth’s account or disbursements. Her evidence was that she advised the appellant that the fees to be charged by Quinn Thiele pursuant to their retainer agreement were separate from any fees owing to Bertschi Orth.
[12] In December 2012, Bertschi Orth delivered a draft account to the appellant setting out $106,000 in fees and over $7,000 in disbursements. The total balance due, including HST, was identified as $117,333.17.
[13] Ms. Noel scheduled a mediation of the tort action for July 2, 2013. The mediation proceeded and the action was settled for $800,000 – $625,000 to the appellant, $105,000 to his wife and $35,000 to each of the two children. Of the appellant’s $625,000, $20,000 had been received by him in advance and a further $20,000 was paid for costs of one of the co-defendants in the action.
[14] Ms. Noel did not obtain written instructions from the appellant confirming his net recovery after payment of fees and disbursements to either of the respondent law firms. The appellant's contemporaneous notes suggest that he expected to receive a net amount of no less than $400,000 from the settlement.
The charging order
[15] Later in July 2013, Bertschi Orth learned of the settlement and moved to obtain a charging order against the settlement funds.
[16] On August 12, 2013, Smith J. of the Superior Court of Justice endorsed the record requesting a charging order, to the effect that "[n]one of the settlement funds" were to be disbursed until Bertschi Orth's account was assessed and the "respective share of fee[s] between Bertschi Orth and [Quinn Thiele had] been determined".
[17] Quinn Thiele had prepared a response on the appellant’s behalf to Bertschi Orth’s motion for a charging order but the materials were not filed in time. The responding motion record was eventually filed and, on August 14, 2013, Smith J. further endorsed the record to the effect that all settlement funds were to be subject to a charging order until Bertschi Orth’s account was assessed.
[18] By order dated August 21, 2013, Smith J. revised the August 12 endorsement (as modified by the August 14 endorsement) by providing that “the settlement funds [would] be held in trust by [Quinn Thiele] but not distributed until such time as the completion of the assessment of the [Bertschi Orth] account; and distributed on consent or after a further order [was] obtained” (the “Charging Order”).
Fee discussions and correspondence
[19] Shortly after the date of the Charging Order, the parties started to address the amounts the appellant owed the respondents for their legal services.[^3]
[20] On October 7, 2013, Bertschi Orth obtained an order from the Registrar for the assessment of its account. Later, the assessment hearing was set for January 21, 2014.
[21] At this point in time, the appellant was experiencing mounting financial pressure, a situation he made clear to Quinn Thiele on several occasions.
[22] The first indication that the appellant communicated his financial problems to Quinn Thiele appears in an October 9, 2013 email from the appellant to Ms. Noel. In that email, the appellant requested $34,000 to “resolve debt issues” and stated that he “[would] need to claim bankruptcy”. Ms. Noel responded the next day, stating that she would “look into whether payment [could] be issued”.
[23] In a lengthy email sent on October 23, 2013, Mikolaj Grodzki, a partner at Quinn Thiele, advised the appellant that the firm could not represent him in any assessment of Bertschi Orth's account because Ms. Noel had formerly been an associate at Bertschi Orth. Mr. Grodzki relied on the alleged conflict to urge the appellant to settle Quinn Thiele’s account before dealing with Bertschi Orth’s account, so that the "obstacle" to negotiating Bertschi Orth's fees could be removed:
[Quinn Thiele’s] interest to protect our earned fees and to assert a claim for them conflicts with the need to represent your interests against [Bertschi Orth] at this time. Accordingly, we need to remove this obstacle and settle our account with you now. This will be an amount that you agree to pay regardless of the outcome of the assessment of the [Bertschi Orth] matter.... lf we can do this, then I can focus entirely on representing your interests against [Bertschi Orth] and not on protecting [Quinn Thiele’s] financial interests in the file.
[24] Mr. Grodzki went on to advise the appellant that a resolution of Quinn Thiele’s account would assist him in the pending assessment of Bertschi Orth's account:
We would prefer to reach a mutually acceptable amount and consent to have [Quinn Thiele’s] account assessed in that amount. This would then also be evidence for the assessment hearing of what you are paying the lawyers who did the work and settled the case. This is a relevant factor in assessing the [Bertschi Orth] law account.
[25] In this email, Mr. Grodzki also stressed that the "the assessment process itself [would] be lengthy" and that the legal costs associated with the assessment would be high.
[26] On October 29, 2013, Quinn Thiele delivered a form of account to the appellant claiming fees, disbursements and HST totalling $305,159.14.[^4] Accordingly, at that point in time, Quinn Thiele and Bertschi Orth were asserting claims of fees and disbursements in an aggregate amount in excess of $422,000 – almost two-thirds of the $695,000 allocated to the appellant and his sons.
[27] On November 4, 2013, Quinn Thiele offered to settle its account with the appellant for $215,000.
[28] On November 5, 2013, the appellant delivered a Notice of Intention to Act in Person in the assessment of the Bertschi Orth account.
[29] On November 13, 2013, the appellant again communicated his financial stress, this time to both firms. He wrote to several individuals at Quinn Thiele and Bertschi Orth, requesting $50,000 to “prevent any further financial hardship, bankruptcy and [to] pay off several long overdue bills.” He asked both firms to confirm their agreement, and requested that Quinn Thiele advise what paperwork was required at his end.
[30] On November 14, 2013, Cheryl Letourneau, counsel at Bertschi Orth, responded on behalf of the firm indicating that it would consent to the release of $50,000, provided the firm was given $8,175.35 of that amount to cover disbursements. By email that same day, the appellant accepted Bertschi Orth’s offer.
[31] Quinn Thiele, however, took a different position. On November 16, 2013, Mr. Grodzki emailed the appellant as follows: “Please review the [Charging Order], the Court ordered that both accounts ([Bertschi Orth] and us) have to be settled before any funds released. The consent from [Ms. Letourneau] is useless.” The appellant responded the next day, explaining his belief that consent among the parties was sufficient for the funds to be released.
[32] On November 19, 2013, the appellant again informed Quinn Thiele that, in his view, a court motion was not required for the release of the requested funds. The appellant requested payment of $8,175.35 to Bertschi Orth, and $41,824.65 to himself. He concluded, highlighting his mounting financial pressures a third time: “I want to stress to the partners HOW URGENT this matter is from a personal and financial matter.”
[33] Mr. Thiele responded to the appellant on November 20, 2013 in an email saying:
I note your comment that a Court order is not required, that the consent from Ms. Letourneau is enough. Frankly, that is simply not true. The Court has ordered the proceeds charged and prohibits our dealing with the funds until the assessment. Ms. Letourneau’s consent does not carry the same weight as a Court Order and she, (like every other lawyer) does not have the power to over-ride a Judge’s order. Only a Judge may undo or change a Judge’s order. That being said, with consent, we can fairly quickly get a Judge to make a new order releasing funds etc., so long as there is consent. This is often and normally done on a Friday in express motions court. The earliest that anyone in this office could draft and attend to such a motion would be November 29, 2013.
He noted that it was his understanding that Mr. Grodzki had offered to settle the firm’s account with the appellant for $210,000.
The Settlement, the Fee Agreements and the Consent Order
[34] The appellant responded at 4:29 a.m. on November 21, 2013, agreeing to take Quinn Thiele’s settlement offer of $210,000. He noted that his acceptance came in the light of Quinn Thiele’s confirmation that the $50,000 could not be released as a result of the Charging Order and that a failure to accept the $210,000 offer would lead to an assessment hearing with consequent costs and delay. That same day, the appellant signed a settlement agreement with Quinn Thiele.
[35] Shortly thereafter, the appellant settled the Bertschi Orth account for $100,000. On November 28, 2013, the appellant signed a release as contemplated by this settlement.
[36] These two agreements will collectively be referred to as the “Fee Agreements”.
[37] Quinn Thiele then obtained the Consent Order. Pursuant to the terms of this order, the Charging Order was set aside and the monies in trust were released to Quinn Thiele for distribution in accordance with the Fee Agreements, with the remainder to the appellant.
[38] Quinn Thiele and Bertschi Orth delivered their final accounts to the appellant on December 4, 2013 and December 31, 2013, in the amounts of $264,195.74 and $92,541.35, respectively. Bertschi Orth’s December 31 account also included a Trust Statement indicating a payment of $7,458.65 for two additional invoices.
Proceedings below
[39] On November 25, 2014, the appellant applied for an order for both accounts to be assessed and, if required, an order setting aside the Consent Order and related settlement documents.
[40] The application judge dismissed the application. The entirety of his brief endorsement reads as follows: “By virtue of the [Consent Order] I have no jurisdiction to hear this matter as it is in fact a matter for an appeal to the Court to Appeal subject to leave etc.”
ISSUES
[41] The appeal raises two issues:
Did the application judge err in concluding that he was unable to consider the application for want of jurisdiction?
If the application judge had jurisdiction to consider the matter, should this court order an assessment of the respondents’ accounts?
ANALYSIS
(1) Did the application judge err in concluding that he was unable to consider the application for want of jurisdiction?
[42] I am of the view that the application judge erred in finding that he lacked jurisdiction to consider the appellant’s request for an order directing the respondents’ accounts be assessed.
The procedural argument
[43] As previously indicated, within his application seeking an order that the Fee Agreements be assessed, the appellant requested an order setting aside the Consent Order.
[44] The respondents submit that an order to set aside a court order can only be obtained by way of a motion under r. 59.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.[^5] The appellant brought an application under r. 14.05. The remedies provided for under this rule do not include the order requested by the appellant. Consequently, the application judge was procedurally barred from considering the request.
[45] In my opinion, acceding to this procedural argument would not be consistent with the principles that form the foundation of the Rules of Civil Procedure.
[46] Rule 2.01(1) provides that a failure to comply with the Rules is an irregularity and does not render a proceeding, or a step in a proceeding, a nullity. 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. Relatedly, r. 2.01(2) provides that the court shall not set aside an originating process on the ground that the proceeding should have been commenced by an originating process other than the one employed.
[47] Rule 2.01 reflects the general principle outlined in r. 1.04(1), that the rules “shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” As this court explained in Finlay v. Van Paassen, 2010 ONCA 204, 101 O.R. (3d) 390, at para. 14:
Rule 1.04(1) and rule 2.01 are intended to do away with overly “technical” arguments about the effect of the Rules and orders made under them. Instead, these provisions aim to ensure that the Rules and procedural orders are construed in a way that advances the interests of justice, and ordinarily permits the parties to get to the real merits of their dispute.
[48] In my view, the respondents’ procedural argument is “overly technical”. The appellant had no choice but to start a new proceeding as the tort action had been dismissed by order dated August 26, 2013. He did so by Notice of Application seeking an assessment of the respondents’ accounts. It was within that valid application that the appellant sought an order setting aside the Consent Order.
[49] It is worth noting that this court has previously addressed procedural or technical discrepancies in the context of assessments of solicitors’ accounts. In Price v. Sosnini (2002), 2002 CanLII 41996 (ON CA), 60 O.R. (3d) 257 (C.A.), a decision to which I will again refer later in these reasons, Sharpe J.A. said, at para. 19:
The court has an inherent jurisdiction to control the conduct of solicitors and its own procedures. This inherent jurisdiction may be applied to ensure that a client's request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities.
[50] It is my opinion that, in these circumstances, it was open to the application judge to consider the appellant’s request to set aside the Consent Order notwithstanding it was relief sought within an application.
Did the Consent Order deprive the application judge of jurisdiction to order an assessment, if one was warranted?
[51] I agree with the application judge’s view, expressed in his endorsement, that the Consent Order, as it stood, was a bar to his assuming jurisdiction to consider the request that the Fee Agreements be assessed. While the Consent Order remained in place, an assessment of the Fee Agreements would have allowed the appellant to avoid the consequences of the order issued against him; namely, the final acceptance and payment of the fees and disbursements to the respondents. In such circumstances, an order that the Fee Agreements be assessed would have constituted “an attack made in proceedings other than those whose specific object is the reversal, variation, or nullification of the order”: R. v. Wilson, 1983 CanLII 35 (SCC), [1983] 2 S.C.R. 594, at p. 599; Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 71. In short, an assessment order would have amounted to an impermissible collateral attack on the Consent Order.
[52] My difficulty with the application judge’s view is that, here, the appellant specifically requested that the application judge set the Consent Order aside, removing any collateral attack concerns. In my view, the application judge should have considered this request and his failure to do so constituted an error in law.
Should this court set aside the Consent Order?
[53] In Aristocrat v. Aristocrat (2004), 2004 CanLII 32256 (ON CA), 73 O.R. (3d) 275, this court held that r. 59.06 does not confer jurisdiction to hear a motion to set aside an order, at first instance. Here, however, a request to set aside the Consent Order was brought before the application judge. And the application judge considered this request in the face of a complete record and arguments by the parties.
[54] I therefore now turn to the question whether this record supports the granting of such an order.
[55] The respondents submit that the application judge’s comment in the brief hearing before him that there was a lack of evidence of “fraud, slip, [or] mistake” is fatal to the appellant’s claim to have the Consent Order set aside. Furthermore, say the respondents, the objectives of finality and certainty would be undermined if the Consent Order were disturbed.
[56] I disagree.
[57] Courts are, with good reason, cautious about setting aside orders, particularly those made on consent. Finality is important in litigation. And, when dealing with a consent order, the objective that parties be held to their agreements is also an important consideration.
[58] However, as this court remarked in Tsaoussis (Litigation Guardian of) v. Baetz (1998), 1998 CanLII 5454 (ON CA), 41 O.R. (3d) 257, at p. 272, there are ways, two in fact, by which an individual who would otherwise be bound by a previous order can seek to have that order set aside. First, the party can move in the original proceedings under r. 59.06(2)(a) in cases of “fraud or facts arising or discovered after [the order] was made”. Or, the party can bring a separate action to set aside the order.
[59] The role of r. 59.06 is to provide an expeditious procedure for setting aside court orders. However, it does not prescribe or delineate a particular test: Mohammed v. York Fire & Casualty Insurance Co. (2006), 2006 CanLII 3954 (ON CA), 79 O.R. (3d) 354 (C.A.), at para. 36, leave to appeal ref’d, [2006] S.C.C.A. No. 269; Tsaoussis, at p. 272. Ultimately, under r. 59.06 or within a separate action, an individual seeking to set aside an order is required to show “circumstances which warrant deviation from the fundamental principle that a final [order], unless appealed, marks the end of the litigation line”: Tsaoussis, at p. 266.
[60] Thus, a court is not limited to setting aside an order in instances of fraud or facts arising or discovered after the order has been made. This is reflected in a review of this court’s decisions, which demonstrates a willingness to depart from finality and set aside court orders 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), 2004 CanLII 34508 (ON CA), 3 C.B.R. (5th) 204 (Ont. C.A.); Cookish v. Paul Lee Associates Professional Corp., 2013 ONCA 278, 305 O.A.C. 359.
Application
[61] For the following reasons, it is my view that setting aside the Consent Order is necessary to achieve justice between the appellant and the respondents relating to the legal costs associated with the tort action.
[62] I return to the background of the Consent Order.
[63] There is no suggestion that Bertschi Orth was not entitled to request a charging order to secure payment for services rendered. I do question, however, why the Charging Order was sought and granted over the entire amount of the settlement funds rather than an amount sufficient to protect Bertschi Orth’s interests.
[64] What is also problematic, in my view, is Quinn Thiele’s conduct once the Charging Order was in place.
[65] As detailed above, the record demonstrates that Quinn Thiele was well aware of the significant financial pressure the appellant was facing in the fall of 2013.
[66] Against that background, Quinn Thiele not once but twice informed the appellant that $50,000 of his own money could not be released to him, even with Bertschi Orth’s consent. This advice was incorrect. And all Quinn Thiele had to do to know that this advice was incorrect was to review the Charging Order.
[67] Quinn Thiele admits that the position it repeatedly took with the appellant that no money could be released to him, on consent, was not correct. It contends, however, that this error was immaterial for two reasons.
[68] First, Quinn Thiele argues that the appellant instructed Ms. Letourneau to stop the process for the release of the funds because he was negotiating a settlement with both firms.
[69] I cannot agree with this submission. It is not clear from the record that the appellant gave such instructions to Ms. Letourneau. Although in the appellant’s email to Ms. Letourneau on November 21, 2013, he tells her to “put the filing on the back burner”, it is unclear whether that comment referred to her earlier commitment to rectify an issue that had arisen with the court file number for the assessment, or her earlier expressed opinion that the parties’ consent did not need to be filed in court. Even if the record does support a finding that the appellant made such a request, it was made after Quinn Thiele had erroneously led the appellant to believe that a small portion of the settlement funds could not be released on consent.
[70] Second, Quinn Thiele submits that, during the negotiations relating to the settlement of the legal fees, the appellant had access to independent legal advice.
[71] A review of the record indicates that this was not the case. The appellant briefly spoke to two lawyers in October 2013. Both lawyers told the appellant that they would require a retainer. To Quinn Thiele’s knowledge, the appellant was unable to afford a retainer. He was approaching bankruptcy. He was in the middle of divorce proceedings. He had lost his job as a corporate account executive in 2010, and had achieved limited success at several different jobs thereafter. He had drained his savings and investments.
[72] The application judge did not consider whether setting aside the Consent Order was necessary to achieve justice in this case. As such, this court is justified in weighing the relevant considerations and coming to its own conclusion. Having done so, I conclude that the Consent Order should be set aside. This would achieve a just result as it would allow the appellant’s request for an assessment to be considered on its merits.
[73] My conclusion is based on the cumulative impact of the following:
• In the fall of 2013, the time when his financial obligations to the respondents were being discussed, the appellant was, to the knowledge of the respondents, in a very vulnerable position. He had suffered a traumatic brain injury, the after-effects of which he continued to experience, and was suffering from depression. And, he was in desperate financial straits.
• Quinn Thiele increased the already existing pressure on the appellant in a number of ways.
o Quinn Thiele did not take steps available to it to ensure that Bertschi Orth’s fees and disbursements were protected. While Ms. Noel’s correspondence indicated Bertschi Orth did not receive instructions from the appellant to sign an undertaking, there is no evidence that she explained the consequences of this decision to him. This failure to take steps gave rise to the need to obtain the Charging Order. The Charging Order made the Consent Order necessary.
o There is no indication that, in responding to Bertschi Orth’s request for a charging order, Quinn Thiele took the position, on behalf of the appellant, that the scope of the Charging Order should be limited to the amount claimed by Bertschi Orth, and not granted over all the settlement funds.
o Quinn Thiele gave the appellant erroneous legal advice to the effect that he could not access a relatively small amount of his money. In doing so, Quinn Thiele admits, it misinterpreted the clear legal effect of the Charging Order.
o Quinn Thiele urged the appellant to settle his account with it, arguing that Quinn Thiele would then assist the appellant in his negotiations with Bertschi Orth thereby saving him the considerable expenditure of time and legal costs associated with an assessment.
• In dealing with the issue of the Charging Order and amounts owed to the respondents, the appellant did not have independent legal advice.
• Quinn Thiele’s initial draft account to the appellant was $305,159.14, an amount incorrectly calculated based on 30 percent of $800,000. The base amount should have been significantly lower, subtracting the $105,000 portion for the appellant’s then wife, the $20,000 in costs awarded to one of the co-defendants, and the amount for party and party costs. This over-calculation of the amount the appellant may have owed to Quinn Thiele under the contingency agreement presented an inflated starting point for the fee negotiations that took place in the fall of 2013.
• There is no evidence that the Fee Agreements were “negotiated” with the appellant in circumstances in which he would have understood the impact of the Consent Order on the amount he would ultimately receive from the settlement.
• The respondents do not point to any specific prejudice they would suffer if the Consent Order were set aside.
[74] Of additional relevance is the fact that the Consent Order pertained to agreements relating to the amount and payment of legal fees and disbursements. As I explain below, agreements of this type involve the public interest in a way other private contractual matters do not. Thus, the interests of justice in this case must be understood in the light of the court’s supervisory role over the rendering and payment of legal accounts.
(2) Should this Court order an assessment of the respondents’ accounts?
[75] The conclusion that the Consent Order should be set aside allows this court to consider whether the Fee Agreements, which, under the terms of the Consent Order, have been paid, should be reopened and an assessment of the accounts rendered further to those agreements, ordered.
[76] The respondents submit that the circumstances do not warrant ordering an assessment, primarily on the basis that the appellant willingly participated in the settlement of the amounts he owed the respondents through the Fee Agreements. In so doing, he chose to forego the scheduled assessment of the Bertschi Orth account and the opportunity to have the Quinn Thiele account assessed.
The role of the courts
[77] The courts have inherent jurisdiction as well as jurisdiction under the Solicitors Act to order lawyers’ accounts to be assessed. Both sources of 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.
[78] In Plazavest Financial Corp. v. National Bank of Canada (2000), 2000 CanLII 5704 (ON CA), 47 O.R. (3d) 641 (C.A.), at para. 14, Doherty J.A. explained how the public interest informs the court’s role in supervising the rendering of legal services and payment of legal fees:
The rendering of legal services and the determination of appropriate compensation for those services is not solely a private matter to be left entirely to the parties. There is a public interest component relating to the performance of legal services and the compensation paid for them. That public interest component requires that the court maintain a supervisory role over disputes relating to the payment of lawyers' fees. I adopt the comments of Adams J. in Borden & Elliot v. Barclays Bank of Canada (1993), 1993 CanLII 5450 (ON SC), 15 O.R. (3d) 352 (Gen. Div.) at pp. 357-58, where he said:
The Solicitors Act begins with s. 1 reflecting the legal profession's monopoly status. This beneficial status or privilege of the profession is coupled with corresponding obligations set out in the Act and which make clear that the rendering of legal services is not simply a matter of contract. This is not to say a contract to pay a specific amount for legal fees cannot prevail. It may. But even that kind of agreement can be the subject of review for fairness: see s. 18 of the Solicitors Act.
[79] In Price, at para. 19, Sharpe J.A. further elucidated the court’s role:
Public 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. 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…. In my view, the courts should interpret legislation and procedural rules relating to the assessment of solicitors' accounts in a similar spirit. As Orkin argues, "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." The court has an inherent jurisdiction to control the conduct of solicitors and its own procedures. This inherent jurisdiction may be applied to ensure that a client's request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities. [Citations omitted.]
The applicable provisions of the Solicitors Act
[80] For context, I start with s. 16(1) of the Solicitors Act, which provides:
Subject to sections 17 to 33, a solicitor may make an agreement in writing with his or her client respecting the amount and manner of payment for the whole or a part of any past or future services in respect of business done or to be done by the solicitor, either by a gross sum or by commission or percentage, or by salary or otherwise, and either at the same rate or at a greater or less rate than that at which he or she would otherwise be entitled to be remunerated.
[81] The term “agreement” includes but is not limited to contingency fee agreements, which, for the purposes of ss. 16 and 20-32, are considered to be “agreements”: Solicitors Act, ss. 15, 28.1(10). As Salhany J. explained in Ruetz v. Morscher & Morscher (1995), 1996 CanLII 7985 (ON SC), 28 O.R. (3d) 545 (Ont. Gen. Div.), at p. 550, “Section 16 of the Solicitors Act does not require that the agreement take on any particular form. The authorities are clear that all that is required is that the document be an enforceable agreement.” In this case, the “agreements” in question were not the initial contingency agreements or the Consent Order, but rather the Fee Agreements entered into in full satisfaction of each respondent’s fees and disbursements.
[82] Because the amounts agreed upon in the Fee Agreements have been paid, the operative provision for the purposes of reopening the agreements and ordering an assessment is s. 25 of the Solicitors Act:
Where the amount agreed under any such agreement has been paid by or on behalf of the client or by any person chargeable with or entitled to pay it, the Superior Court of Justice may, upon the application of the person who has paid it if it appears to the court that the special circumstances of the case require the agreement to be reopened, reopen it and order the costs, fees, charges and disbursements to be assessed, and may also order the whole or any part of the amount received by the solicitor to be repaid by him or her on such terms and conditions as to the court seems just. [Emphasis added.]
Special circumstances
[83] The question is, therefore, whether the record supports a finding that special circumstances exist here that require the Fee Agreements to be reopened and an assessment ordered. The jurisprudence reveals limited consideration of the scope of “special circumstances” as expressed in s. 25 of the Solicitors Act, in particular.
[84] As noted by courts considering the meaning of “special circumstances” within other provisions of the Solicitors Act, however, the language implies that the court has a broad discretion to determine the matter having regard to all the circumstances in the case, but that ordering an assessment after payment will be the exception rather than the rule: Minkarious v. Abraham, Duggan (1995), 1995 CanLII 7253 (ON SC), 27 O.R. (3d) 26 (Gen. Div.), at paras. 47, 51-52; Guillemette v. Doucet, 2007 ONCA 743, 88 O.R. (3d) 90, at para. 4; Plazavest, at paras. 29-30, 33; Echo Energy Canada Inc. v. Lenczner Slaght Royce Smith Griffin LLP, 2010 ONCA 709, 104 O.R. (3d) 93, at paras. 29, 32; Bui v. Alpert, 2014 ONCA 495, at para. 7.
[85] In the s. 11 context, where the payment of a bill does not preclude the court from referring it for assessment if the special circumstances of the case appear to require it, this court has noted that “exceptional circumstances of either a contractual or equitable nature could lead a court to find that an assessment is necessary or essential on general principles or is called for as being appropriate or suitable in the particular case”: Plazavest, at para. 33. In Echo Energy, at paras. 30-31, this court said that “in the context of s. 11, those special circumstances relate to the underlying principle that payment of the account implies that the client accepted that the account was proper and reasonable.… Thus, special circumstances will tend to either undermine the presumption that the account was accepted as proper or show that the account was excessive or unwarranted.”
[86] With this in mind, I view the authorities and the objectives of the Solicitors Act as supporting the following broader test: “Special circumstances” are those in which the importance of protecting the interests of the client and/or public confidence in the administration of justice, demand an assessment.
[87] In The Law of Costs, loose-leaf, 2nd ed. (Toronto: Canada Law Book, 2015), at para. 306.3, Mark M. Orkin identifies the relevant circumstances as including but not limited to:
• the sophistication of the client;
• the adequacy of communications between solicitor and client concerning the accounts;
• whether there is evidence of increasing lack of satisfaction by the client regarding the services relating to the accounts;
• whether there is overcharging for services provided;
• the extent of detail of the bills;
• whether the solicitor/client relationship is ongoing; and
• whether payments can be characterized as involuntary.
Application
[88] The appellant is not unsophisticated but was, at the time he entered into the Fee Agreements, vulnerable. He was permanently impaired by the brain injury he suffered in the car accident. He was under intense financial pressure. The appellant did not have independent legal advice when such was clearly called for. He expressed his dissatisfaction with the legal services rendered by both firms. He terminated his retainer with Bertschi Orth and, when it came to resolving the firms’ fees and disbursements, the appellant expressed his frustration with Quinn Thiele. Finally, at the time the Fee Agreements were entered into, detailed accounts had not been rendered by Quinn Thiele.
[89] Furthermore, of particular importance is Quinn Thiele’s representation of the appellant. I refer to conduct referred to above that; 1) contributed to the need for Bertschi Orth to obtain the Charging Order, 2) resulted in an order that reflected no effort on Quinn Thiele’s part to represent the appellant’s interests by ensuring that the Charging Order affected him only to the extent necessary, 3) misled the appellant by providing erroneous legal advice and 4) exerted pressure on the appellant to settle – all of which put the appellant in a position in which he had little choice but to enter into the Fee Agreements.
[90] In these circumstances, considered cumulatively, the protection of the appellant’s interests and the public’s confidence in the administration of justice demand that the Fee Agreements be reopened and an assessment be ordered.
Impact of the Consent Order
[91] I now turn to a consideration of whether the Consent Order acted to fulfil the purposes of an assessment under the Solicitors Act.
[92] A consent order “is not a judicial determination on the merits of a case but only an agreement elevated to an order on consent”: Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, at para. 64.
[93] There is no evidence that Smith J., in granting the Consent Order, did what an assessment officer would do; namely, consider the fairness or reasonableness of the Fee Agreements. In these circumstances, the Consent Order did not act as a substitute for an assessment. It had nothing to do with promoting the public interest, ensuring public confidence in the administration of justice or protecting the appellant. It was issued to elevate the Fee Agreements to an order that would allow the parties to access the monies being held under the Charging Order.
[94] The fact that the Consent Order forms part of the background in which the assessment order is being requested does not detract from the conclusion that the special circumstances in this case demand that an assessment be ordered.
Conclusion regarding the Request for an Assessment Order
[95] I therefore conclude that, in the circumstances of this case, relief should be granted under s. 25 of the Solicitors Act. The Fee Agreements should be reopened and an assessment of the respondents’ fees and disbursements should take place.
DISPOSITION
[96] For these reasons, I would allow the appeal, set aside the Consent Order and direct that the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein be assessed.
[97] The application judge did not determine the costs of the application. I would award the appellant his costs of the application, fixed in the amount of $10,000, including disbursements and applicable taxes.
[98] Further to the parties’ written submissions as to costs, I would award the appellant his costs of this appeal in the amount of $15,000, including disbursements and applicable taxes.
Released: May 19, 2016 (GE)
“Gloria Epstein J.A.”
“I agree E.A. Cronk J.A.”
“I agree Grant Huscroft J.A.”
[^1]: Then known as Bertschi Orth Smith LLP.
[^2]: The accident benefit claim was settled by a paralegal firm working out of Bertschi Orth’s offices, and is not relevant to this appeal.
[^3]: Any reference in this decision to fees and disbursements owed by the appellant to the respondents encompasses those for services rendered both to the appellant himself and to his children, as the appellant agreed to pay for both sets of fees and disbursements.
[^4]: In an email dated November 20, 2013, Michael Thiele, a partner at Quinn Thiele, revised this amount. He informed the appellant that the total amount of fees and disbursements owed was $264,210.50, more than $40,000 less than the original amount stated.
[^5]: Rule 59.06(2)(a) provides as follows: “A party who seeks to, (a) have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made… may make a motion in the proceeding for the relief claimed.”