COURT OF APPEAL FOR ONTARIO

CITATION: Sheikh v. Pearl, 2016 ONCA 523

DATE: 20160630

DOCKET: C60394

Simmons, LaForme and Huscroft JJ.A.

BETWEEN

Zahira Sheikh by her Litigation Guardian, Ahmed Hussein Sheikh, Ahmed Hussein Sheikh, Lubna Sheikh, Saleh Omer Sheikh, and Yasmeen Sheikh

Plaintiffs (Respondents)

and

Daniel Pearl and Reva Pearl

Defendants

Jeffrey S. Leon and Gannon G. Beaulne, for the appellant Levinter & Levinter LLP

R.P. Quance and D. Waldman, for the respondents Zahira Sheikh by her Litigation Guardian, Ahmed Hussein Sheikh, Ahmed Hussein Sheikh, Lubna Sheikh, Saleh Omer Sheikh, Yasmeen Sheikh and Himelfarb Proszanski LLP

Heard: December 10, 2015

On appeal from the order of Justice Frederick L. Myers of the Superior Court of Justice dated April 17, 2015.

Simmons J.A.:

A. Introduction

[1] The appellant, Levinter & Levinter LLP, acted as counsel for the plaintiffs (the “personal respondents”) in this personal injury action for many years. After their solicitor-client relationship broke down, the appellant somehow obtained a judgment in the personal injury action against their former clients, the personal respondents, for $206,000, for legal fees and disbursements. A different law firm, Himelfarb Proszanski LLP (the “respondent law firm”), took over conduct of the personal injury action for the personal respondents and participated in the proceeding by which the $206,000 judgment was obtained.

[2] The parties to the personal injury action later moved under rule 7.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for approval of a proposed settlement of the action. Court approval was required because two of the personal respondents were under a disability. Under the terms of the proposed settlement, the appellant was to receive $206,000 on account of its legal fees and disbursements in accordance with the $206,000 judgment.

[3] The settlement approval judge did not approve the proposed settlement. Among other things, he recommended in an endorsement that the appellant receive $102,500 in satisfaction of its account. In addition, he stipulated that if all parties and law firms were not prepared to resolve matters as he suggested, “the settlement is not approved” and all issues would have to be resolved “in an active litigation process with independent representation for [the injured personal respondent].”

[4] The appellant did not consent to the settlement approval judge’s recommendation. Nonetheless, the respondent law firm advised the appellant that it intended to obtain a judgment implementing the settlement approval judge’s recommendations. In due course, the respondent law firm obtained a “partial judgment” signed by the settlement approval judge, which provided, in part, that the appellant would receive $102,500 in satisfaction of its outstanding account.

[5] About a year after the partial judgment was issued, the appellant moved for an order under rule 59.06(2)(c) to “carry into operation” the $206,000 judgment by varying the partial judgment to accord with the $206,000 judgment.

[6] Relying on s. 34(2) of the Solicitors Act, R.SO. 1990, c. S.15, the appellant also requested an order declaring that the respondent law firm is jointly and severally liable for the balance owing to the appellant under the $206,000 judgment because the respondent law firm disbursed all funds payable under the partial judgment in the face of the $206,000 judgment.

[7] The motion judge dismissed the appellant’s motion, holding that rule 59.06(2)(c) does not authorize a Superior Court judge to determine which of two subsisting Superior Court orders is correct.

[8] The appellant appeals from the motion judge’s order.

[9] The main issue on appeal is the proper interpretation of rule 59.06(2)(c).

[10] In oral submissions on appeal, the appellant also asked that its motion be amended, if necessary, to claim relief under rule 37.14 and that relief be granted under that rule.

[11] For the reasons that follow, I would dismiss the appeal.

B. Background

(1) The personal injury action

[12] In January 1992, the personal respondent Zahira Sheikh (“Ms. Sheikh”) suffered serious injuries in a car-pedestrian accident. She and the other personal respondents retained the appellant and, in December 1993, commenced this action for damages arising from the accident. At the time the action was commenced, the personal respondent Yasmeen Sheikh was a minor. In 1998, Ms. Sheikh was declared incapable of managing her personal and financial affairs and two of the personal respondents, Ahmed Hussein Sheikh and Lubna Sheikh, were appointed as joint guardians of her person and property.

(2) The solicitor-client relationship breaks down

[13] The appellant acted as counsel for the personal respondents for many years both in relation to the personal injury action and in relation to a no-fault benefits claim that was settled in 1998.

[14] In 2007, the solicitor-client relationship between the appellant and the personal respondents broke down and the respondent law firm took over the conduct of the action for the personal respondents.

[15] According to the appellant, at a case conference held in February 2007, the defendants in the action indicated they would be alleging impropriety on the part of Ms. Sheikh’s family members in relation to the use of accident benefits funds. Ultimately, the Public Guardian and Trustee began an investigation into the family members’ guardianship. The appellant asserts that, at a March 2007 pre-trial, Ms. Sheikh’s family members provided instructions to settle her claim but then later disputed that such instructions had been provided. According to the appellant, the solicitor-client relationship broke down after these events.

(3) The appellant obtains a charging order and judgment for its legal fees

[16] After the respondent law firm assumed carriage of the action, the appellant and the respondent law firm were unable to agree on how to address the appellant’s outstanding account. In September 2008, the appellant obtained a charging order with the consent of the respondent law firm. The charging order provides that the appellant “is entitled to a first charge in the amount of $485,868.05, plus interest, or in the alternative, an amount to be determined by an Assessment Officer, in respect of the within action for [its] legal fees, costs, charges and disbursements incurred in the within action.”

[17] According to the appellant’s account, the $485,868.05 comprised $269,305.50 for fees, $54,140.04 for disbursements, $18,570.98 for taxes and $143,851.53 for unpaid invoices from third-party suppliers, including $64,941.66 for outside counsel.

[18] The charging order also required the appellant to forward its file to the respondent law firm within 10 days.

[19] Prior to the charging order being made, the respondent law firm had commenced an assessment proceeding on behalf of the personal respondents concerning the appellant’s outstanding account. On June 11, 2011, the appellant and the respondent law firm agreed that the appellant’s outstanding account would be settled for $150,000 on account of fees and $56,000 on account of disbursements, for a total of $206,000.

[20] No certificate of assessment was taken out arising from the June 2011 settlement of the assessment proceeding. Instead, the appellant brought a motion in the personal injury action “for enforcement of the settlement of [its] account.” On April 27, 2012, a judgment was issued in this action which provides that the personal respondents shall pay to the appellant a total of $206,000 on account of fees and disbursements together with post-judgment interest of 3 per cent per annum from June 13, 2011. The appeal record does not include the motion record that led to the $206,000 judgment. However, the motion judge’s reasons relating to the $206,000 judgment recite the settlement and describe the contested issue on the motion as relating to interest. The formal judgment describes the relief sought on the motion. However, the appeal record includes no explanation of the basis on which this relief was, or could be, obtained in the personal injury action.

(4) The settlement approval process

[21] According to the appellant, at some point it learned from the respondent law firm that it was preparing material for court approval of a settlement the parties to the personal injury action had reached and that the appellant’s account would be included in the settlement approval material in accordance with the $206,000 judgment.

[22] On April 22, 2013, the settlement approval judge, who also conducted the February 2007 case conference and March 2007 pre-trial, issued an endorsement in which he was critical of the appellant’s account and described the $206,000 judgment several times as a “purported judgment.”

[23] In his endorsement, the settlement approval judge observed that “[a]ll of the problems with the care for Ms. Sheikh and misuse of her money arose on [the appellant’s] watch.” He said that as Ms. Sheikh was under a disability and Yasmeen Sheikh was recited as a minor, court approval of the fees settlement was required. He said that “[w]hat purports to be a Judgment” was issued as the result of the appellant’s motion for enforcement of the settlement and noted that the appellant was not a party to this action and that no new action, nor any application to enforce a private contract, had been started. Nor had Ms. Sheikh been provided with separate representation despite the conflict between her guardians in their personal capacity and their representative capacity. He expressed concern that fees and disbursements from the accident benefits file had “crept into this action”, that the $206,000 judgment was based on a contract entered into by a guardian with a conflict of interest, and that no determination had been made under rule 7[^1] as to Ms. Sheikh’s liability for the fees and disbursements.

[24] The settlement approval judge was also critical of the account from outside counsel, which he appears to have mistakenly described as $143,851.53 (as opposed to $64,941.66 disclosed in the appellant’s account) and which he said had been settled for $89,274.23.

[25] The settlement approval judge proposed that Ms. Sheikh’s liability to the appellant be fixed at $102,500 and that her liability to outside counsel be fixed at $41,000. He concluded his endorsement by stating that if all parties and law firms did not agree to his proposal, the settlement was not approved:

If the parties and law firms are not prepared to resolve matters as suggested, the settlement is not approved and all issues among all parties will have to be resolved in an active litigation process with independent representation for Ms. Sheikh….

[26] The appeal record does not include the material filed with the settlement approval judge nor does the affidavit filed by the representative of the respondent law firm who had carriage of the file (the “lawyer with carriage”) (not Mr. Quance or Mr. Waldman) disclose whether he or anyone else appeared before the settlement approval judge prior to the April 22, 2013 endorsement.

[27] However, in a letter dated April 23, 2013 from the lawyer with carriage to all interested counsel, which was appended to the lawyer with carriage’s affidavit, the lawyer with carriage states: “After several months of back and forth between [the settlement approval judge] and I in an attempt to resolve this matter, he has released a partially unsatisfactory endorsement.”

[28] In his letter, the lawyer with carriage goes on to explain that the settlement approval judge differed with him over the appellant’s account. To avoid having the matter “return to litigation” and because his clients had already agreed to the appellant’s account, he proposed a solution under which the appellant would receive an additional $76,000, consisting of $41,000 allocated by the settlement approval judge to pay outside legal counsel’s fees, which had already been paid, and $35,00 for future legal fees. The lawyer with carriage concludes his letter by acknowledging this would not leave the appellant with full payment of its account, but that he was trying to come as close to their previous proposal as possible and “keep the rest of us from being thrown back into the fray.”

[29] In his affidavit, the lawyer with carriage states that he offered to write to the settlement approval judge to advance his proposal but that the appellant’s response indicated it wanted to be paid in full and was contemplating submissions to the settlement approval judge, meeting with him or an appeal of his decision.

[30] A partial judgment dated June 3, 2013 signed by the settlement approval judge stipulates in para. 7 that the appellant “shall receive $102,500.00, inclusive of fees, disbursements and applicable taxes, in satisfaction of its outstanding account.”

[31] The lawyer with carriage does not describe in his affidavit what further steps were taken to obtain the partial judgment or to notify the appellant of the date of any planned attendance before the settlement approval judge or of the date when materials would be delivered to the settlement approval judge. Certain e-mail exchanges between the lawyer with carriage and the appellant, appended to the lawyer with carriage’s affidavit, indicate that the lawyer with carriage advised the appellant he intended to obtain a judgment consistent with the settlement approval judge’s endorsement and also demonstrate that the appellant contemplated the possibility of making submissions to the settlement approval judge or appealing any judgment he issued if it was inconsistent with the $206,000 judgment:

E-mail dated May 2, 2013, sent at 3:09 p.m. from the lawyer with carriage to a representative of the appellant

Here are the affidavits. They disclosed the amount the previous judge had ordered, and the Order for $206,000, plus interest was included as an Exhibit.

As a gesture of goodwill, I am willing to ask [the settlement approval judge] to order that your firm receive the additional $76,000 I set out in my letter, in addition to the $102,500 [the settlement approval judge] believed was reasonable. That is $178,500, which isn’t that far from the $206,000. Our clients really deserve some closure after twenty years, don’t you think?

The alternative is for me to settle as per [the settlement approval judge’s] endorsement, and then your firm can try to obtain the full $206,000 through him. However, if you intend to bring my clients into your battle with him over fees, the Public Guardian and Trustee (which recently reviewed and gave approval to the breakdown after [the settlement approval judge] pulled them back into the fold) and I will have to become involved and we may have to seek costs.

I have a draft letter to [the settlement approval judge] in accordance with my previous letter which is ready to go. Can I send it and ask him to allocate $178,500 to your firm, or must we delay closure for our clients (and our firms) even longer? [Emphasis added.]

E-mail dated May 14, 2013, sent at 11:03 p.m. from the representative of the appellant to the lawyer with carriage

I note your position that you will “settle on the terms” set out in [the settlement approval judge’s] endorsement. If you proceed in this fashion I trust you will hold the full amount of [the appellant’s] account as per the charging order obtained in this matter until our account is dealt with by way of agreement or assessment.

Any attempt to circumvent the charging order obtained will be opposed.

I am attempting to contact the Office of the PGT in order to determine their position. I will also wish to make submissions to [the settlement approval judge] regarding this matter. I understand His Honour is currently on holiday. [Emphasis added.]

E-mail dated May 15, 2013, sent at 12:07 p.m. from the lawyer with carriage to the representative of the appellant

When I said I would settle on the terms set out in [the settlement approval judge’s] endorsement, I meant that I would forward your firm the $102,500, and leave the extra funds as set out in my letter where they are (whether in Court, in Legacy’s[^2] hands, or in my trust account). Presumably there would be other excess funds temporarily held in one or more of those places too, since my draft Judgment set out a relatively exact breakdown.

I would take my firm’s fees as set out in my draft Judgment, and only allocate the extra [the settlement approval judge] gave to Mr. Sheikh and to my firm once everything is settled by his Honour.

E-mail dated May 15, 2013, sent at 4:17 p.m. from the representative of the appellant to the lawyer with carriage

If, and I don’t concede that it is, the [$206,000 judgment] is invalid, we continue to have a charging order against the file for the sum of $485,868.05, or in [sic] amount as assessed by an assessment officer. I think you would only be able to release funds in excess of the $485k until [the appellant’s] account is assessed.

I don’t understand how [the settlement approval judge] believes he has the authority to overrule another Judgment of the Court [the $206,000 judgment]. This is especially so when the Public Guardian & Trustee (representing Ms. Sheikh) has provided their blessing and made no objection. It may well be that it will be necessary to appeal any Judgment made by [the settlement approval judge] should it not include [the appellant’s] account confirmed by Judgment.

Believe me, I would much rather see this matter finished so that this long chapter can be closed. I only see that happening if we can arrange a meeting with [the settlement approval judge] (with yourself, [the appellant] and the PGT) so that this can be ironed out. [The settlement approval judge’s] endorsement has significant errors and misconceptions which need to be corrected. [Emphasis added.]

Let me have your thoughts.

E-mail dated May 15, 2013, sent at 5:37 p.m. from the lawyer with carriage to the representative of the appellant

I don’t think the charging order had any further effect once [the $206,000] Order came into existence, and certainly [the settlement approval judge] has the parens patriae jurisdiction to make a final Judgment in the best interests of Mrs. Sheikh and the Sheikh family, particularly in light of the fact that he has greater knowledge of the case and the financial issues than [the $206,000 judgment judge] ever did.

I think the clients have waited long enough. I will proceed to issue and enter a Judgment in accordance with [the settlement approval judge’s] endorsement, and I will allow the Court, Legacy Private Trust, and our office to hold onto those funds that are different from my draft Judgment (which left your firm with $206,000 plus interest at 3% from June 13, 2011). Everything else will be distributed once the Judgment is ready, including the immediate sum of $102,500 to your firm.

Your firm can argue with [the settlement approval judge] about the differential. [Emphasis added.]

[32] The appeal record does not reveal whether there were further communications between the respondent law firm and the appellant prior to the partial judgment being obtained or contain any details of what steps were taken to obtain the partial judgment.

[33] During a cross-examination on his affidavit filed on the rule 59.06(2)(c) motion, the representative of the appellant who dealt with the lawyer with carriage indicated that he (the representative of the appellant) assumed it would be incumbent on the lawyer with carriage to arrange a meeting with the settlement approval judge as the lawyer with carriage was dealing with the settlement approval judge.

(5) The appellant moves under rule 59.06 on June 26, 2014

[34] On June 26, 2014, the appellant brought a motion under rules 59.06 and 1.04 to carry into operation the $206,000 judgment by varying para. 7 of the settlement approval judge’s partial judgment to accord with the $206,000 judgment. The motion was later amended to add a request, based on s. 34(2) of the Solicitors Act, for an order declaring that the respondent law firm is jointly and severally liable with the personal respondents to pay the unpaid balance owing under the $206,000 judgment.

[35] According to the affidavit filed by the representative of the appellant who dealt with the lawyer with carriage, the appellant received the partial judgment on July 5, 2013 and also received $102,500 at some point. In the cross-examination on his affidavit, the appellant’s representative explained that the appellant did not take steps to address the partial judgment until June 2014 because the instructing partner became ill in the summer of 2013, was hospitalized for a number of months and did not return to his office until the beginning of 2014. After he returned to the office and was advised of what had taken place, the instructing partner began to seek out counsel to determine how to deal with the matter.

(6) The respondent law firm disburses funds under the partial judgment

[36] In his affidavit filed on the motion, after referencing the partial judgment and the e-mails quoted above, the lawyer with carriage states that “[a]s no further word, action or appeal ever issued from [the appellant], the settlement funds were ultimately disbursed by our firm in accordance with the decision of [the settlement approval judge]....”

C. Rule 59.06(2)(c)

[37] Rule 59.06(2)(c) provides: “A party who seeks to … carry an order into operation … may make a motion in the proceeding for the relief claimed.”

D. The motion judge’s reasons

[38] The motion judge dismissed the appellant’s motion. He found that rule 59.06(2)(c) does not authorize a Superior Court judge to determine which of two conflicting orders of that court is correct. He said this was not a case of varying an order to deal with a matter not adjudicated, as in Clarke v. Clarke, 2013 ONSC 5352, at para. 29. Nor was it a case of removing an impediment to reflect the true intent of the court, as in Phillips Estate v. Ontario (Public Guardian & Trustee) (1999), 102 O.T.C. 67 (Ont. S.C.), at para. 11. Rather, the orders reflected two different intents.

[39] The motion judge also rejected the appellant’s submission that he could rely on res judicata or the decision in Doucet-Boudreau v. Nova Scotia (Department of Education), 2003 SCC 62, [2003] 3 S.C.R. 3, at para. 81, to vary the 2013 judgment. He concluded that he was being asked to invalidate a subsisting order of the court. He said this was a matter for the Court of Appeal.

[40] The motion judge concluded his reasons by observing: “Why neither counsel went back to [the settlement approval judge] is a mystery.” He held this was not a case for costs.

E. Positions of the parties on appeal

(1) The appellant

[41] The appellant’s primary argument is that the motion judge erred in holding that rule 59.06(2)(c) does not authorize the variation of the partial judgment it seeks. In the alternative, if rule 59.06(2)(c) is not the correct rule, in oral argument on the appeal, the appellant asked that its notice of motion be amended to seek relief under rule 37.14 and that the relief it seeks be granted under that rule.

[42] The appellant submits that rule 59.06(2)(c) is broadly worded to permit a party “who seeks to carry an order into operation … to bring a motion in the proceeding for the relief claimed.” Under rule 1.03, “order” includes a judgment.

[43] In this case, the $206,000 judgment finally determined the amount owing under the appellant’s account: Ruetz v. Morscher and Morscher (1995), 1996 CanLII 7985 (ON SC), 28 O.R. (3d) 545 (Gen. Div.), at paras 14-15.

[44] Moreover, prior to the partial judgment being issued, the settlement approval judge stipulated that if all parties and law firms did not agree to the resolution he proposed, “the settlement is not approved” and the issues would have to proceed through a litigation process.

[45] The appellant did not consent to the resolution proposed by the settlement approval judge – and the record does not reveal that the settlement approval judge was informed of that fact.

[46] Absent the appellant’s consent, the settlement approval judge was without jurisdiction to vary a final order and it was never his intention to do so. Paragraph 7 of the partial judgment should thus be treated as ineffective and can properly be ignored: McIntosh v. Parent (1924), 1924 CanLII 401 (ON CA), 55 O.L.R. 552 (C.A.), at para. 26; Graham v. Canada (2000), 2000 CanLII 16582 (FC), 209 F.T.R. 22, at para. 32.

[47] In the particular circumstances of this case, rule 59.06(2)(c) permits a Superior Court judge to grant the relief claimed and the motion judge erred in holding otherwise.

[48] In support of its arguments relating to rule 59.06(2)(c), the appellant points out that in Clarke, the court held that that rule creates “an independent source of jurisdiction to give directions or make an order to carry an order into operation.” Further, in Phillips Estate, the court stated the subrule extends to any situation “where a party seeks to remove a perceived impediment to the operation of an order, thereby allowing it to reflect the true intention of the court which granted the order.” According to the appellant, no case law supports the proposition that rule 59.06(2)(c) cannot remove an impediment to the operation of an order just because the impediment is contained in a subsequent order.

[49] The appellant submits that the only relevant consideration is the intent of the court that issued the initial order and finally determined the issue under consideration. A final order cannot be called into question by a subsequent judge who lacks jurisdiction to adjudicate the matter.

[50] Finally, the appellant relies on Doucet-Boudreau, at para. 81, where the Supreme Court of Canada referred specifically to rule 59.06(2)(c) before observing that “the practice of providing further direction on remedies in support of a decision is known to our courts, and does not undermine the availability of appeal.”

[51] In the alternative, if rule 59.06(2)(c) does not afford a remedy, the appellant should be permitted to amend its motion on appeal to claim relief under rule 37.14. Rule 37.14 permits a party or other person affected by an order obtained without notice to move to vary or set aside the order. Although the rule provides that the person should move forthwith, delay is not a bar to relief being granted. It makes sense for this court to deal with the matter on the merits under rule 37.14 because the issues for the court are essentially the same as the issues raised on the appellant’s motion under rule 59.06(2)(c) as is the record.

(2) The respondents

[52] The respondents submit that it is well-established that rule 59.06(2)(c) does not confer the power to set aside a previous order of the court: Salvador v. Mather (1999), 37 C.P.C. (5th) 214 (Ont. Div. Ct.), at para. 13; Attis v. Canada (Minister of Health), 2009 CarswellOnt 7872 (S.C.), at para. 9. Moreover, the motion judge was correct in distinguishing the authorities to which he referred in that none involved a superior court determining which of two subsisting Superior Court orders is correct.

[53] In any event, the respondents dispute the appellant’s submission that the settlement approval judge lacked jurisdiction to review the $206,000 judgment. That judgment did not address approval of the settlement that had been reached as required under rule 7.08.

[54] The respondents point out that the lawyer with carriage informed the appellant of his intention to proceed with the settlement prior to obtaining the partial judgment. In its e-mails, the appellant contemplated the possibility of making submissions to the settlement approval judge or appealing his judgment. Despite ample opportunity both before and immediately after the partial judgment was issued, the appellant did nothing for about one year. The appellant has not demonstrated bad faith on the part of the lawyer with carriage. In all the circumstances, the appellant should not be permitted to re-open now a proceeding that extended over many years and has long been settled.

F. Analysis

[55] I would not accept the appellant’s submissions.

[56] As a starting point, I do not agree that rule 59.06(2)(c) affords a remedy to the appellant in this case.

[57] I acknowledge that the rules must “be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on the merits” and that, where matters are not provided for in the rules, “the practice shall be determined by analogy to them”: rules 1.04(1) and (2).

[58] Nonetheless, I do not think these broad interpretive principles support reading authority into rule 59.06(2)(c) to grant the relief requested so that para. 7 of the partial judgment would read that the appellant shall receive $206,000, instead of $102,500, in satisfaction of its account.

[59] Where the rules contemplate that an existing order may be set aside or varied other than by way of an appeal, they say so explicitly.

[60] For example, rule 37.14(2) provides that “the court may set aside or vary the order” (emphasis added) where it was obtained on a motion without notice, or where a party fails to appear on a motion through accident, mistake or insufficient notice. Rule 59.06(1) provides that an order “may be amended” (emphasis added) where it contains an error arising from an accidental slip or omission or where it “requires amendment in any particular on which the court did not adjudicate.” And rule 59.06(2)(a) permits a party to move to “have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made” (emphasis added).

[61] Unlike these rules, rule 59.06(2)(c) does not contain explicit language that would authorize the court to set aside, vary or amend the terms of a subsisting order.

[62] Further, contrary to the appellant’s attempts to characterize its request as nothing more than carrying the $206,000 judgment into operation, l agree with the motion judge that to do so, the motion judge would have had to choose between conflicting orders of the Superior Court and would have to invalidate a subsisting order of the Superior Court. Rule 59.06(2)(c) does not provide a Superior Court judge with authority to do so. I also agree with the motion judge, for the reasons he gave, that none of the authorities on which the appellant relied before the motion judge supported granting the relief requested.

[63] Finally, rule 59.06(2) specifies that “a party” may make a motion in the proceeding for enumerated relief. As the appellant is not a party to the personal injury action, it is not clear to me that it was entitled to apply in this proceeding for relief under rule 59.06(2) in any event.

[64] As I see it, the more difficult issue is whether the appellant should be permitted on appeal to amend its motion to claim relief under rule 37.14, a rule it did not rely on in the court below.

[65] Rule 37.14(1) provides, in part, that a person who is affected by an order obtained on motion without notice or who fails to appear on a motion through insufficient notice “may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.” Rule 37.14(2) provides that “[o]n a motion under subrule (1), the court may set aside or vary the order on such terms as are just.”

[66] Although granting relief under rule 37.14 is discretionary, the requirements of the rule make it clear that a party or other person affected by an order who seeks relief must proceed with dispatch and that any significant delay could militate against granting relief. Particularly in a case involving a final order, the requirement to move promptly serves not only to avoid prejudice, but also to preserve the important value of finality in civil litigation.

[67] Here, the appellant’s lengthy delay in taking steps to challenge the partial judgment together with its failure to advance any real explanation for much of that delay tells strongly against granting relief.

[68] The appellant received the partial judgment on July 5, 2013 but took no steps to challenge it until almost a year later on June 28, 2014. The only explanations provided for this lengthy delay are that the instructing partner was ill and out of the office through to the beginning of 2014 and that following his return he sought advice from counsel.

[69] I cannot understand why a multi-partnered law firm[^3] could not take appropriate steps to protect its own interests simply because a senior partner was ill. But even if the delay while the instructing partner was ill was reasonable, the further delay of six months to determine a course of action is not. Timelines for taking steps are an integral part of the Rules of Civil Procedure. Decisions have to be made in accordance with those timelines. In my view, the appellant has not provided an adequate explanation for its delay in taking steps to challenge the partial judgment.

[70] On the other hand, the appeal record does not disclose how the partial judgment was obtained in the absence of the appellant’s consent to the reduction of its legal fees or whether the lawyer with carriage advised the settlement approval judge of the lack of consent.

[71] The settlement approval judge said in his April 22, 2013 endorsement that if the parties and law firms did not accept his suggested resolution, the proposed settlement was not approved and “all issues among all parties [would] have to be resolved in an active litigation process with independent representation for Ms. Sheikh.” Considering the endorsement as a whole, the settlement approval judge was contemplating not only that the personal injury action would continue, but also that the $206,000 judgment would be challenged.

[72] In the face of this endorsement, it is difficult to understand how the partial judgment could have been obtained in the absence of the appellant’s consent.

[73] Moreover, based on this endorsement, in the absence of the appellant’s consent, advising the settlement approval judge that the appellant was not consenting to a reduction of its legal fees was not optional, it was mandatory. To the extent that the respondent law firm may be relying on its advice to the appellant that it intended to obtain the partial judgment as a justification for not informing the settlement approval judge that the appellant was not consenting, such reliance is ill-conceived. In the face of the settlement approval judge’s endorsement, the lawyer with carriage had an overriding duty to advise the court the appellant was not consenting, lest the court be misled. That is because the settlement approval judge had said the settlement was not approved unless all parties and law firms agreed with his proposal.

[74] If the lawyer with carriage did not advise the settlement approval judge that the appellant was not consenting, that omission, although possibly well-intentioned, could amount to serious misconduct that could potentially, of itself, justify an order setting aside the partial judgment, either in whole or in part, despite the appellant’s delay.

[75] In oral argument, the respondents did not dispute that a possible inference arising from the appeal record is that the lawyer with carriage did not advise the settlement approval judge that the appellant was not consenting to the settlement approval judge’s proposal. Another possible inference may be that the settlement approval judge changed his mind.

[76] That said, had the appellant moved under rule 37.14 to set aside all or part of the partial judgment, as it was entitled to do, the rule 37.14 motion record would properly have included all the material that was before the settlement approval judge both when he issued his April 22, 2013 endorsement and when he signed the partial judgment. That material was not included in the rule 59.06(2)(c) motion record. Nor, apparently, did the appellant cross-examine the lawyer with carriage on his affidavit filed on the rule 59.06(2)(c) motion to determine how he obtained the partial judgment in the face of the settlement approval judge’s April 22, 2013 endorsement and in the absence of the appellant’s consent. In the result, the appeal record does not include important evidence that would have been before the court on a rule 37.14 motion concerning how the partial judgment was obtained. Responsibility for this omission lies squarely at the feet of the appellant.

[77] Taking account of all the circumstances, I would not permit the appellant to amend its motion on appeal. The strongest argument favouring the appellant’s entitlement to relief under rule 37.14 on appeal lies in the possible inference that the lawyer with carriage did not advise the settlement approval judge that the appellant was not consenting to the reduction of its legal fees. But had the appellant moved under rule 37.14, that question would have been squarely before the court and could have been determined based on proper material. In the absence of a proper record, I conclude that it would be unfair to the respondents to permit the appellant to amend its motion on appeal to claim relief under rule 37.14.

[78] In any event, assuming the appellant may be entitled to relief under rule 37.14, it seems possible to me that the only proper remedy may be to set aside the partial judgment in its entirety. If that is the case, it would be necessary that the appellant also serve the defendants to the action with its notice of motion.

G. Disposition

[79] Based on the foregoing reasons, I would dismiss the appeal.

[80] As for costs, I would address the issue in two parts.

[81] In the first part, I would decline to award costs of the appeal to the respondent law firm relating to the issue of its joint and several liability for the balance claimed by the appellant under the $206,000 judgment. The question of how the lawyer with carriage obtained the partial judgment without the appellant’s consent in the face of the settlement approval judge’s endorsement cried out for an explanation to the court. The respondent law firm failed to provide that explanation. I would not therefore make an order for costs of the appeal relating to the joint and several liability issue in favour of the respondent law firm.

[82] In the second part, unless the respondent law firm has, or proposes to, waive its fees and disbursements to the personal respondents in connection with the underlying motion and the appeal, I would direct the respondent law firm to deliver brief written submissions within 14 days following the release of this endorsement concerning whether an order should be made under rule 57.07(1)(a) disallowing any costs of the appeal or the motion below as between the respondent law firm and the personal respondents and requiring the respondent law firm to reimburse the personal respondents for any such costs already paid, if any. The submissions should disclose the costs incurred for the motion and the appeal and should identify the costs attributable to the rule 59.06 issue and those attributable to the joint and several liability issue.

[83] The genesis of the underlying motion was the conduct of the lawyer with carriage in obtaining the partial judgment, apparently without the appellant’s consent. The personal respondents are innocent victims in the legal quagmire that has ensued. Moreover, if the partial judgment was obtained without advising the settlement approval judge that the appellant was not consenting, it is difficult to understand why the personal respondents should bear any responsibility for the costs of proceedings arising from that omission.

[84] Given the respondent law firm’s failure to explain how the partial judgment was apparently obtained without the appellant’s consent, the respondent should explain why the personal respondents should bear any of the costs of the appeal and the motion below. Depending on whether a rule 57.07(1)(a) order is made, the court will also require information necessary to make an order for costs of the appeal in favour of the personal respondents against the appellant in relation to the rule 59.06 motion but excluding any costs for the joint and several liability issue.

[85] Finally, even if a rule 57.07(1)(a) order is made in favour of the personal respondents, I would not consider making a rule 57.07(1)(c) order in favour of the appellant.

[86] The appellant was unsuccessful on the appeal. Further, the explanation provided for failing to take some steps on its own to make submissions to the settlement approval judge demonstrates a lack of diligence and initiative. The appellant also failed to cross-examine the lawyer with carriage on his affidavit filed on the rule 59.06 motion to determine how he obtained the partial judgment without the appellant’s consent in the face of the settlement approval judge’s endorsement. The appellant thus bears some responsibility for the partial judgment being taken out without its consent and significant responsibility for the inadequate record that is before the court.

Released:

“JUN 30 2016” “Janet Simmons J.A.”

“JS” “I agree H.S. LaForme J.A.”

“I agree Grant Huscroft J.A.”

[^1]: Rule 7.08(1) provides: “No settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge.” Rule 7.08(4) prescribes the material that must be filed on a motion for approval of a settlement involving a person under disability, which includes an affidavit of the litigation guardian and an affidavit of the lawyer for the litigation guardian.

[^2]: According to an affidavit filed by the lawyer with carriage, after being retained his “first step was to deal with the Public Guardian and Trustee’s office, which had concerns about how the Sheikh family was handling funds.” Eventually this led to Legacy Private Trust being engaged to manage funds earmarked for Ms. Sheikh.

[^3]: On his cross-examination, the appellant’s representative confirmed that he was a junior partner at the time of these events.