SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 10-CV-402597
MOTION HEARD: March 6, 2012

RE: Gardiner Roberts LLP

v.

Stipan Ivancic a.k.a. Steve Ivancic

BEFORE: Master Thomas Hawkins

COUNSEL:
Michael Hassell
for moving defendant
Fax No.: 416-342-1776

Ian R. Mang
for responding plaintiff
Fax No.: 416-531-3587

REASONS FOR DECISION

[ 1 ] This is a motion by the defendant under subrules 15.03(4) and (5) for an order that the plaintiff law firm has no right to a lawyer’s lien over certain documents belonging to the defendant.

[ 2 ] Subrules 15.03(4) and (5) provide as follows.

(4) A party may move, on notice to the party’s former lawyer of record, for an order determining whether and to what extent the lawyer has a right to a lawyer’s lien.

(5) In the order, the court may impose such terms as are just in connection with the lien and its discharge.

[ 3 ] The plaintiff law firm represented the defendant in two lawsuits. One action, (called the “house action”) is a dispute between the defendant and the former owners and current tenants of a house owned by the defendant. The law firm brought a successful motion for summary judgment which dramatically narrowed the scope of the defendant’s exposure in the house action. That action is now limited to a cliam for the fair value of improvements to the house which the former owners claim they made to the house.

[ 4 ] The second action (called the “loan action”) is one by the defendant against one of the former house owners for the balance owing on a promissory note.

[ 5 ] The house action has been to the Court of Appeal twice.

[ 6 ] The defendant refuses to settle either action.

[ 7 ] The defendant discharged the plaintiff law firm without cause in January 2010.

[ 8 ] Between February 8, 2006 and January 7, 2010 the plaintiff law firm sent the defendant nine accounts totalling $258,220.05 apart from interest. The plaintiff law firm acknowledges that against these accounts it has received payments from the defendant and court costs awarded to the defendant totalling $101,161.79 leaving a balance claimed due of $157,058.26.

[ 9 ] The plaintiff law firm is claiming a lawyer’s possessory lien over certain documents which the defendant delivered to the plaintiff law firm in the course of the house action and the loan action.

[ 10 ] I accept the defendant’s evidence that he cannot proceed to examinations for discovery and to trial of the house action and the loan action without gaining possession of the documents which are the subject of the lawyer’s lien asserted by the plaintiff law firm.

[ 11 ] In my view, since the defendant discharged the plaintiff law firm and there appears to be a material amount owing to the plaintiff law firm for services rendered to the defendant, the plaintiff law firm is entitled to assert a lawyer’s possessory lien over the documents in question.

[ 12 ] The defendant has raised a number of defences to this action which involve issues of credibility between the plaintiff law firm and the defendant. I am not able on this motion to resolve all of these issues of credibility. However some of the defences which the defendant has raised strain credulity.

[ 13 ] That said, the defendant has raised one issue which appears to me to have merit. This action was commenced on May 6, 2010. The defendant relies upon the two year limitation period found in section 4 of the Limitations Act 2002, S.O. 2002, ch. 24 Schedule B . He submits that the plaintiff law firm may not recover in respect of any account which is unpaid and was rendered prior to May 6, 2008. Given the nature of the plaintiff’s claim, the discoverability principle found in section 5 of the Limitations Act, 2002 does not operate so as to postpone the running of the limitation period.

[ 14 ] Of the nine accounts referred to in the statement of claim six accounts totalling $179,855.65 were rendered prior to May 6, 2008, and are thus statute barred if still unpaid. Applying the $101,161.79 in payments and court costs which the plaintiff has received against these accounts, there is a balance claimed owing in respect of these accounts of $78,693.86 which is statute barred. This reduces the defendant’s exposure to the plaintiff to a maximum of $78,364.40 apart from interest. (The total current claim of $157,058.26 less $78,693.86 equals $78,364.40.)

[ 15 ] The plaintiff law firm has made it clear that it will release its claim for a lawyer’s lien on the defendant’s documents if the defendant will provide the plaintiff with a collateral mortgage on one or more of the defendant’s properties in Mississauga, Ontario. The evidence before me indicates that such a collateral mortgage could be prepared for execution by the defendant and registered for a cost of less than $1,000. The defendant has rejected this solution to the plaintiff’s claim for a lawyer’s lien. I am confident that the cost to the defendant of bringing the present motion far exceeds $1,000. There is no evidence before me that giving the plaintiff law firm the collateral mortgage it proposes would work a hardship for the defendant.

[ 16 ] In my view, if the defendant rejects the plaintiff law firm’s proposed collateral mortgage solution to this motion in the terms set out below, the plaintiff law firm has no obligation under the rules of professional conduct to waive its claim to a lawyer’s lien.

[ 17 ] For all the above reasons, my disposition of this motion is as follows:

[ 18 ] If within 30 days of the final disposition of this motion, the defendant agrees to give the plaintiff a collateral mortgage on one or more of the defendant’s properties as security for payment of the plaintiff’s claims in this action in an amount not exceeding $75,000 (the properties to be subject to the security and the terms of the security to be prepared by the plaintiff law firm and to be agreed upon by the parties or approved by the court) an order will issue that forthwith upon registration of the security at the expense of the plaintiff law firm the plaintiff law firm do release its claim for a lawyer’s lien on all documents in its possession or control belonging to the defendant.

[ 19 ] If the defendant does not so agree, an order will issue dismissing this motion.

[ 20 ] At the conclusion of argument counsel jointly handed me a sealed envelope containing costs outlines and offers to settle this motion. They asked that I not open the envelope until I had ruled on all issues on this motion except cots.

[ 21 ] Having disposed of all issues except the costs of this motion, I then opened the sealed envelope and read the offers to settle. Neither side obtained a result on this motion which was equal to or more favoruable than its or his offer to settle.

[ 22 ] The plaintiff law firm has been substantially successful on this motion and is entitled to the costs of it. I fix those costs at $2,750 and order the defendant to pay such costs to the plaintiff within 30 days.

Master Thomas Hawkins

DATE: May 16, 2012