Court of Appeal for Ontario
Date: 2019-11-22 Docket: C67162
Judges: van Rensburg, Paciocco and Thorburn JJ.A.
Between
Robins Appleby LLP Creditor (Respondent)
and
Todd Family Holdings Inc. Debtor (Appellant)
and
Roy John William Gardiner Garnishee
Counsel
Gary Sugar, for the appellants Todd Family Holdings Inc. and GMS Law Professional Corporation
Ellad Gersh and Joseph Jamil, for the respondent
Heard and released orally: November 20, 2019
On appeal from the order of Justice Laura A. Bird of the Superior Court of Justice, dated December 27, 2018.
Reasons for Decision
[1] Robins Appleby LLP ("Robins") represented Todd Family Holdings Inc. ("Todd") in a lawsuit against Mr. Gardiner. Robins attempted to get off the record, mid-trial, for non-payment of fees but was ordered to continue. Despite the rift between solicitor and client, Robins successfully pursued the lawsuit, securing a judgment of $2.2 million, and a massive costs award approaching $1 million. After trial, Robins was released as counsel of record.
[2] After continued non-payment of fees by Todd, Robins obtained a charging order and a summary judgment for unpaid fees ("fee judgment").
[3] In the meantime, Mr. Gardiner had appealed the trial decision. The appeal was allowed in part. Specifically, Todd had obtained control of Mr. Gardiner's business six years before the lawsuit was completed. Mr. Gardiner contends that the returns Todd received in doing so are greater than the damage award. Based on the evidence before it, this court has ordered an accounting and reconsideration of the damages award. The litigation continues.
[4] GMS Law Professional Corporation ("GMSL") is now acting for Todd in that continuing litigation pursuant to a contingency fee agreement. In the course of that continuing litigation GMSL secured a costs award against Gardiner in connection with a motion. Robins discovered this and issued 16 notices of garnishment, allegedly to intercept the costs owed to Todd.
[5] In response to the notices of garnishment, Todd and GMSL brought a motion seeking:
A declaration that GMSL has a charging order or lien pursuant to the Solicitor's Act, R.S.O. 1990, c. S-15, s. 34(1) ("charging order");
A declaration that the GMSL charging order has priority over Robins' charging order;
An order vacating the notices of garnishment; and
A sealing order.
[6] The sealing order request was made in response to the pleading and supporting materials filed by Robins. Todd alleges that these documents include confidential information. Robins does not admit that it improperly disclosed confidential information but consented to the sealing order. After a contested motion on the remaining issues, the other relief sought by Todd and GMSL in the motion was denied.
[7] Todd and GMSL now appeal all orders made in the motion decision, save for the sealing order. We would dismiss their appeals.
The Charging Order
[8] The motion judge denied the charging order because she was not satisfied that there was evidence that Todd cannot or will not pay GMSL's fees. Such a finding, including a finding that it is likely that the fees will not be paid without a lien or charging order, is a prerequisite to a charging order: Weenan v. Biadi, 2018 ONCA 288, 141 O.R. (3d) 276, at paras. 15, 24. The motion judge was entitled to come to the decision that GMSL had not met this burden. The motion record confirmed Todd's desire to pay GMSL, and the motion judge found the affidavit evidence relating to the ability of Todd to pay to be inconsistent. Moreover, depending on the terms of the contingency agreement, there may be no fees due and payable, or the agreement may make the risk of non-payment negligible. Yet the terms of the contingency agreement between Todd and GMSL were not proved by Todd and GMSL, who bore the burden of proving an inability to pay.
[9] Further, Todd and GMSL say that the contingency fee agreement is completely irrelevant and that the evidence about Todd's impecuniosity was uncontroverted. The existence of the contingency fee agreement was clearly material and relevant. The motion judge rejected the assertion that GMSL would not be paid, in part because of the contingency fee agreement. She noted that "the fact that GMSL entered into a contingency fee agreement with the debtor suggests that the law firm believes that it will secure a judgment from which it can recover its fees".
[10] In these circumstances, the motion judge was entitled to exercise discretion not to grant the GMSL the charging order. There is therefore no need for us to address the priority dispute.
The Garnishment Notices
[11] Nor did the motion judge err in refusing to vacate the garnishment notices.
[12] Todd's argument that the motion judge erred in this regard is predicated on Todd's claim that the garnishment notices contravene the continued duty of loyalty Robins owes to Todd. Todd argues that enforcement of the judgment would prejudice Todd's ability to pursue the action and would constitute an adversarial position against a former client relating to the previous retainer.
[13] We do not agree. Rather, we agree generally with the views expressed by the motion judge. Lawyers who have earned their fees in an action will not ordinarily be required to wait for that action to end before enforcing judgment for unpaid fees. Former lawyers have no control over the conduct or completion of the action and should not have to wait indefinitely for outstanding fees. Absent exceptional circumstances, enforcing payment pending completion of the action will not be inconsistent with the ongoing duty of loyalty or put the lawyer in an adversarial position relating to the previous retainer. The motion judge was not satisfied on the evidence before her that this was such a case. She found that Todd had not established that enforcement of the fee judgment would impede Todd's ability to maintain the action or constitute an adversarial position relative to Robins' former retainer. We see no error in that decision.
Confidential Information
[14] Nor was the motion judge obliged in resolving the issues before her to address Todd's claim that privileged and confidential information was wrongfully disclosed by Robins in its materials responding to the motion. The motion judge found that Todd and GMSL were not eligible for a charging order because of the inadequacy of their own evidence about Todd's ability to pay. We are not persuaded that the information the appellants contend is confidential is actually so. Even if it occurred, the disclosure of confidential information is not relevant to whether the garnishment notices should be set aside. The right to garnish arises from the debt created by the fee judgment, not from the materials filed in response to the motion to set aside the garnishment notices. Whether confidential information was improperly disclosed in connection with this motion has no bearing on whether the notices of garnishment should be vacated.
Conclusion
[15] The appeal of the motion decision is therefore dismissed.
[16] We would grant leave to appeal the costs order but deny the costs appeal. The motion judge was not obliged to treat success on the motion as divided, or to split responsibility for costs on this basis. We owe deference to the motion judge's discretion and would not interfere.
[17] The costs appeal is therefore also dismissed.
[18] Finally, we order, on consent, that the transcript of Todd's examination in aid of execution found at Tab 20 of the Exhibit Book and Tab 20 of the Appeal Book and Compendium be sealed and not form part of the record in this appeal.
[19] Costs in this appeal are ordered to be paid by the appellants in the amount of $15,000, inclusive of applicable taxes and disbursements.
K. van Rensburg J.A. David M. Paciocco J.A. Thorburn J.A.