NEWMARKET COURT FILE NO.: CV-09-97681-00

DATE: 20121010

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

BALES BEALL LLP Moving Party (Solicitors)

Rebecca Jones, Lindsay Beck, for the Moving Party (Solicitors)

• and -

KAREN FINGRUT Respondent (Client)

Howard E. Warren, for the Respondent (Client)

HEARD: August 31, 2012

REASONS FOR DECISION

LAUWERS J.:

[ 1 ] Bales Beall LLP, a firm of solicitors, moves under s. 6(9) of the Solicitors Act , R.S.O. 1990, c. S. 15 and rule 54.09 of the Rules of Civil Procedure to oppose confirmation of Assessment Officer H.B. Boyd’s certificate dated February 14, 2012. The solicitors ask that the bill be allowed in the original amount rendered by the firm to Karen Fingrut, the client, or, in the alternative, that the court fix the appropriate fee. The client seeks confirmation of the Assessment Officer’s report.

[ 2 ] The solicitors were retained to assist the client in a matrimonial dispute. The Assessment Officer describes the situation generally:

Mrs. Fingrut retained the firm of Bales Beall LLP on or about October 7, 2007 to represent her interests in regards to a Family Law matter in regards to preparing separation agreements, obtaining an equalization of net family property, spousal support and other relief from her spouse Dr. Fingrut. At issue was Dr. Fingrut’s purported income in regards to medical fees received, rents collected from rental units, stipends received from various medical forums and services bartered with trade’s people. Dr. Fingrut was also an electrical engineer who may or may not have had registered patents in regards to medical devices. In an attempt to obtain full disclosure from Dr. Fingrut in regards to the above noted sources of income, resulted in five case conferences and a motion for contempt. Ultimately, the matter went to two days mediation and one day of arbitration to resolve the matter. The solicitor-client relationship ended on or about the 30 th day of November, 2011.

[ 3 ] The firm rendered 29 monthly accounts. The fees charged were $206,321.56, disbursements were $7,658.39, and GST was $10,777.33, for a total of $224,757.28. The client paid about $190,000.00 as of the date of the assessment leaving a balance owing of about $34,800.00.

[ 4 ] The Assessment Officer reduced the bills rendered by the firm to Ms. Fingrut from $224,757.28 to $101,111.00. The certificate obliges the firm to pay back $88,889.00. The Assessment Officer allowed for interest at the Courts of Justice Act, R.S.O. 1990, c. C. 43, rate from the date of his decision on September 29, 2011, and fixed costs of the six-day assessment at $25,000.00 including disbursements and HST.

[ 5 ] I conclude that the Assessment Officer’s decision is so fundamentally flawed, for the reasons set out below, that I will not confirm the certificate and will instead substitute my determination rather than refer it back to the original or another Assessment Officer.

The Jurisdiction of the Court

[ 6 ] Section 5 of the Solicitors Act provides:

(5) The amount certified to be due shall be paid by the party liable to pay the amount, forthwith after confirmation of the certificate in the same manner as confirmation of a referee’s report under the Rules of Civil Procedure .

(9) A motion to oppose confirmation of the certificate shall be made to a judge of the Superior Court of Justice.

[ 7 ] Rule 54.09 of the Rules of Civil Procedure sets out the process for confirming a referee’s report and sub-rule (5) provides that the court: “ may confirm the report in whole or in part or make such other order as is just.” While it appears that the reports of assessment officers are either routinely confirmed or referred back to the assessment officer for further disposition, it is open to the court to substitute its own opinion and to set the amount of the fee. In The Law of Costs (2d ed. Toronto: Canada Law Book, 2012), Mark Orkin states at 603.4(1):“[i]f a court finds an error in principle it should either correct the matter or refer it back for correction (footnote omitted).” In support of this proposition Mr. Orkin cites: Godbout v. Lisson (1988), 1988 3104 (BC CA) , 36 C.P.C. (2d) 182 (B.C.C.A.), Fraser & Beatty v. Raithby (2003), 38 C.P.C. (5 th ) 171 (Ont. S.C.) , Howie, Sacks v. Umicevic (2005), 138 A.C.W.S. (3d) 376 (Ont. S.C.) , and Lundrigan (Re) (1991), 1991 7470 (NL SC) , 48 C.P.C. (2d) 286 (Nfld. S.C.). And see Hooper v. Sheehan , [2012] O.J. No. 3380 per Milanetti J. at para. 34.

The Standard of Review

[ 8 ] Mr. Orkin states at section 603.4(1):

It is settled law that on an appeal from the assessment officer the court is only concerned with questions of principle, and not with mere questions of amount, or the manner in which the assessment officer has exercised his or her discretion, unless the amounts are so inappropriate or the assessment officer’s decision so unreasonable as to suggest an error in principle. [Citations omitted.]

[ 9 ] He adds that:

A motion to oppose confirmation is in the nature of an appeal. It is not a new trial or a re-hearing. It would fall under Ontario rule 62.01(1)(c) as an appeal to a judge under a statute and should be dealt with in the same way as an interlocutory appeal, that is to say, there should be no interference with the order below unless it is clearly wrong. The test has been characterized as one of palpable and overriding error. The judge hearing the motion should not retry the matter or interfere with the result unless the reasons demonstrate some error in principle, or unless there has been some absence or excess of jurisdiction, or some patent misapprehension of the evidence. [Citations omitted.]

[ 10 ] In Samuel Eng and Associates v. Ho , 2009 ONCA 150 , [2009] O.J. No. 6405 the Court of Appeal affirmed the “error in principle” test.

[ 11 ] The firm argues that the “error in principle” test must be deemed to have been superseded by the Supreme Court of Canada’s decision in Dunsmuir v. New Brunswick , 2008 SCC 9 () , 2008 SCC. 9, [2008] 1 S.C.R. 190, despite the later assessment-related decision of the Court of Appeal in Samuel Eng and Associates v. Ho . At paras. 43-50 the Supreme Court found that there are only two standards of review, being reasonableness and correctness. The solicitors submit that the applicable standard of review is “reasonableness,” as explained in Dunsmuir at para. 47 :

…certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range of acceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

[ 12 ] The firm argues that the Assessment Officer’s decision was unreasonable and falls outside the range of acceptable outcomes. If the firm is correct at law, then it stands to reason that, under the traditional test, the Assessment Officer made one or more errors in principle. I am not sure, on the facts of this case, that much turns on differences between the respective tests of “reasonableness” and “error in principle”.

[ 13 ] By contrast, the client argues that the court should defer to the Assessment Officer’s experience and expertise. Mr. Warren advises that the Assessment Officer has been the only one in Central East Region for the last six years, although August 31, 2012 was his last day.

The Factors to be Considered by an Assessment Officer

[ 14 ] The factors to be considered in the assessment of a solicitor’s account are set out in Cohen v. Kealey & Blaney, [1985] O.J. No. 160 (C.A.) at page 3 .

(a) The time expended by the solicitor;

(b) The legal complexity of the matters dealt with;

(c) The importance of the matters to the client;

(d) The degree of skill and competence demonstrated by the solicitor;

(e) The results achieved;

(f) The ability of the client to pay; and

(g) The reasonable expectation of the client as to the amount of the fee.

The Assessment Officer recited each of these factors in his reasons. The moving party challenges his reasoning, his findings and his conclusion.

[ 15 ] Checklists are useful to decision makers so long as they serve as triggers for analysis and not substitutes for it. The list is not to be applied in a rote fashion, thereby giving a patina of “justification, transparency and intelligibility within the decision-making process,” to use the words of Dunsmuir . The task of the reviewing court is to probe the reasoning and the evidence to ensure that the tribunal has gone beyond result-selective reasoning to grapple with the real issues. In Consky v. Farooq , 2011 ONSC 5148 , [2011] O.J. No. 3890, Corbett J. noted at para. 39, and I agree, that there must be real analysis, not simply “conclusory reasoning”; the decision must “demonstrate the path of reasoning taken by the assessment officer from facts to conclusion.”

Discussion

[ 16 ] In his reasons the Assessment Officer noted that: “[t]he monetary value of the issues at hand [was] substantial. One matrimonial home, one apartment complex, a cottage and a claim for spousal support from a spouse who was a medical doctor.” He added: “[t]he matter was very important to the client since she was a stay-at-home mother for 30 years and the outcome of this family law matter determined the financial level of her existence as she is approaching her retirement years.” I accept these observations. The evidence is that, knowing the stakes, the client considered some “high-end” Toronto matrimonial lawyers before choosing Karon Bales as her principal counsel.

[ 17 ] I set out below a number of the major flaws in the Assessment Officer’s analysis that led me to conclude that the certificate cannot be confirmed. An exhaustive critique would serve no useful purpose.

The Matter was Complex, not Simple

[ 18 ] It is common sense that simple matters should take less time to complete than complex matters. The Assessment Officer found that: “[t]his matter is not legally or factually complex. The matter may have been complicated by the alleged conduct of Dr. Fingrut in regards to nondisclosure…(page 10).” Mr. Warren submitted that this was a “simple case” because it dealt only with spousal support and property, not with the additional issues of custody and access that are often found in matrimonial disputes, and so persuaded the Assessment Officer.

[ 19 ] In my view, however, this was by any reasonable standard not a simple but a complex case. It was not a run-of-the-mill divorce involving, for example, a single source employment income and a matrimonial home.

[ 20 ] The agreed statement of facts is 17 pages in length. It notes the following: Dr. Fingrut had a number of sources of income apart from his income as a family doctor. There was a matrimonial home and a cottage. The parties jointly owned two investment rental properties that were entirely under the control of Dr. Fingrut. He also controlled the Fingrut Family Trust although neither he nor his wife was a beneficiary.

[ 21 ] Experts were retained to appraise the values of some of the properties. Real estate agents were retained to sell some of them. Private investigators were retained to investigate Dr. Fingrut’s potential assets and income. A chartered accountant was retained to analyze the information available to determine whether Dr. Fingrut owed Ms. Fingrut any net income for the rental properties from the date of separation. Both sides retained expert evidence to assess Dr. Fingrut’s income for support purposes.

[ 22 ] In short, there is no reasonable basis for the Assessment Officer’s description of the case as a simple one. This evaluation that the matter was “not legally or factually complex” was, however, fundamental to his assessment because it tends to justify an undervaluation of the solicitors’ work that needed to be done to ready the case for trial or mediation.

The Retainer Agreement Should Attract a Measure of Respect

[ 23 ] The relationship between the parties was structured by a retainer agreement that was signed by the client. It was written in plain language. The agreement sets out the hourly rates for the various lawyers and staff, that accounts would be rendered on a periodic basis, that the client is responsible for paying out-of-pocket expenses and appropriate taxes, and that hourly rates may be subject to an annual increase.

[ 24 ] Lawyer accounts are ordinarily a combination of hourly rates and time spent. In considering the “reasonable expectation of the client as to the amount of fee,” the Assessment Officer adverted to the retainer agreement signed by the client. He stated:

The solicitor prepared and the client executed a retainer agreement outlining in detail the hourly fees of the firm members. The solicitor provided regular interim accounts and yearly updates and to hourly fee increases. The client paid a substantial amount of the total account. Given these facts, it would appear that the client ought to have expected the fees invoiced to her.

[ 25 ] Instead of accepting the hourly rates and the updates as provided for by the retainer agreement, the Assessment Officer imposed an entirely new set of rates:

As I mentioned above, the hourly rate of K. Bales, senior counsel was between $500-550.00 per hour. I find that I agree with Mr. Warren’s position that $425.00 per hour is a fair and reasonable rate given that Ms. Bales is not a certified specialist by the Law Society of Upper Canada, the previous Costs Grid that allows up to $450.00 for the most experienced of counsel and complex of matters for counsel with K. Bales’ experience. The reduction takes into consideration of my findings in regards to the responsibility assumed by the solicitor, the legal complexity of the matter at issue, the skills and competence demonstrated by the solicitor and the results achieved.

In regards to junior counsel, I agree with Mr. Warren’s position that a fair and reasonable hourly rate would be $250.00 per hour giving consideration to the previous Cost Grid that allowed $225.00 for the most complex of matters with counsel with five years or less experience and my findings in regards to the factors.

In regards to the hourly rates of law clerks, I find that I will allow $125.00 per hour in consideration that the former Cost Grid allows for $125.00 for the most experienced of law clerks.

[ 26 ] The Assessment Officer justified this move on the following basis:

I consider that at the time of the execution of the retainer agreement that the client who was a stay-at-home mother for over 30 years and was unsophisticated in regards to legal matters and legal accounts. Throughout the relationship, the evidence provides that the client voiced her concerns as to the amount of legal fees, as the fees were not what she expected. She found the fees to be excessive. It is my view that the client did not reasonably expect to pay approximately $225,000.00 in legal fees for a two-year solicitor-client relationship that did not include the matter going to trial. That said, the client bears some responsibility for continuing the solicitor-client relationship and the fees that ensued.

[ 27 ] The “Previous Costs Grid” referred to by the Assessment Officer is found in O.Reg. 284/01, s. 38; O.Reg. 131/04, s. 27. It was abandoned effective July 1, 2005, under O.Reg. 42/05, s. 7(2). Many of the rates referred to by the Assessment Officer come from the “Substantial Indemnity Scale” in the Costs Grid. I am unable to determine where the Assessment Officer got the information that led him to conclude that a fair and reasonable hourly rate for junior counsel would be: “$250.00 per hour giving consideration to the old Costs Grid that allowed $225.00 for the most complex of matters with counsel with five years or less experience.” The old Costs Grid did not have an entry for lawyers with less than five years experience. It permitted a fee of up to $300.00 per hour for lawyers with less than 10 years experience on a substantial indemnity basis. The figure of $225.00 is the partial indemnity figure given for lawyers with less than 10 years experience.

[ 28 ] Mr. Warren submits that it was entirely within the Assessment Officer’s jurisdiction and discretion to impose lower hourly rates despite the retainer agreement, and that it was open to him to advert to the old Costs Grid for that purpose.

[ 29 ] I find that the Assessment Officer made an error in principle in using the figures from the old Costs Grid. Those figures related to disputes between parties and not to solicitor-client assessments. There is a difference between “substantial indemnity costs,” which are defined in rule 1.03 as “costs awarded in an amount that is 1.5 times what would otherwise be awarded in accordance with Part I of Tariff A,” and “full indemnity” costs, which are not defined but are generally considered to cover lawyer’s account in full (see Davies v. Clarington (Municipality) 2009 ONCA 722 , 100 O.R. (3d) 66 , at para. 15 ). In no sense was the substantial indemnity figure in the old Costs Grid intended to provide full indemnity to a client for costs incurred by the client to his or her own solicitor.

[ 30 ] I note that there was no evidence before the Assessment Officer on what the market rate for experienced matrimonial counsel in Toronto was at the relevant time. While I agree that the retainer agreement was not binding on the Assessment Officer, it seems to me that where a retainer agreement is not obviously overreaching, improvident or unreasonable, it should generally be respected. The retainer agreement in this case is none of those things; in my view a departure from it by the Assessment Officer in terms of hourly rates ought to be carefully explained by him (see Hooper v. Sheehan , [2012] O.J. No. 3380 per Milanetti J.). The Assessment Officer’s reasoning is, however, entirely result-selective, as shown in the following passage:

I assess this account at $101,111.00, which is inclusive of fees, G.S.T. and disbursements that are more than fair and reasonable for the services rendered.

I would add that had it not been for the significant monetary issue and that I consider that the client bears some responsibility for continuing the relationship with the firm for approximately two years, my findings would be closer to, if not less than, the amount of $75,000.00 submitted by Mr. Warren.

[ 31 ] As I read these words, it becomes apparent to me that the Assessment Officer was intent on reducing the account and reducing the hourly rates was one way to do it. The other way, which he also used, was to reduce the number of hours eligible to be billed; I consider the hours issue below.

[ 32 ] The Assessment Officer provides no reasoning for his reduction in hourly fees apart from the compendious phrase that a reduction is appropriate taking into account his negative observations about: “the responsibility assumed by the solicitor, the legal complexity of the matter at issue, the skill and competence demonstrated by the solicitor and the results achieved.” The reduction seems to me, quite frankly, to be arbitrary. The fact that he uses the old Costs Grid does not dispel that arbitrariness.

There was no Evidentiary Basis for Assessing the Degree of Skill and Competence Demonstrated by the Solicitor

[ 33 ] The degree of skill and competence demonstrated by the solicitor is a factor to be assessed by the Assessment Officer even though he is not a lawyer. I acknowledge that to some extent assessment officers may by experience develop some “field sensitivity” on the subject. However, once the issue gets beyond an egregious and obvious failure of a lawyer and into the nuances of a specialized field of the law; it seems to me that more is required by way of evidence before an assessment officer damns the skill and competence demonstrated by counsel.

[ 34 ] I observe that in negligence cases against lawyers, judges routinely require the expert evidence of lawyers to assist in determining the applicable standard of care and whether it was breached in a particular fact situation (see for instance Krawchuk v. Scherbak , 2011 ONCA 352 , 332 D.L.R. (4th) 310 , at paras 129-130 ; Precision Remodeling Ltd. v. Soskin, Soskin & Potasky LLP (2008), 2008 31411 (ON SC) , 168 A.C.W.S. (3d) 196 (SC) , at para 57 ; and Gauvreau v. Paci [1996] O.J. No. 2396 (CA) , at para 1 ).

[ 35 ] Such expert evidence is required even through the judge plainly was a lawyer, may have practised for a long time, and may even have practised in the very area under review. The court must, in final analysis, base its decision on admissible evidence. By parity of reasoning this is true for assessment officers. Accordingly, if there is to be a root and branch challenge to the solicitor’s skill and competence, there must be expert evidence.

[ 36 ] In this case, no such evidence was called by the client, although Mr. Warren asserted in oral argument that he practises family law and knows what he is talking about. He advised me that he had raised 38 different issues on which he argued that the solicitor had demonstrated poor skills and competence. This leads me to the disquieting conclusion that the Assessment Officer implicitly relied on Mr. Warren’s expertise to ground his critique of the firm’s competence. This is an error in principle and quite unfair since the challenge proceeded not on the basis of an expert’s report known beforehand but on Mr. Warren’s cross-examination and argument.

[ 37 ] Mr. Warren did try to advance some of the 38 issues in his submissions before me. These included: the firm’s failure to get a copy of Dr. Fingrut’s mortgage application on his new residence, which might have more accurately disclosed his income than the documents in the application; the failure to have Ms. Fingrut drain the joint account before Dr. Fingrut did so; the failure to poll tenants on cash taken by Dr. Fingrut for rent; the failure to find all of Dr. Fingrut’s other sources of cash income; allowing Dr. Fingrut to avoid FRO enforcement when, according to Ms. Fingrut, “there were a couple of incidents where he didn’t pay on time”; and the failure to equalize Dr. Fingrut’s Airmiles. Finding Dr. Fingrut’s off-book income was a concern both for Ms. Fingrut and the firm and efforts were made to do so. That said, quite frankly in the overall scheme of the application and the outcome I do not find these complaints to be material.

[ 38 ] The sense that, in the Assessment Officer’s view, the solicitor did not demonstrate the requisite degree of skill and competence permeates the decision. It comes out especially in the assessment of the results achieved. The Assessment Officer made the following comments:

Ms. Fingrut paid out approximately $170,000.00 in regards to the division of assets and received spousal support based on a yearly income of $350,000.00 by Dr. Fingrut. In effect, the division of assets and spousal support did not take into account any of positions presented by the client or her counsel (sic). Given the significant amount of time documented and legal fees incurred by the client to accumulate, prepare and put forth the client’s position for each case conference and mediation/arbitration dates and for the preparation of separation agreements, I fail to see how the results would be considered good.

[ 39 ] In fact the final outcome was a compromise that reflected neither party’s negotiating position. The firm’s factum accurately describes the outcome:

Dr. Fingrut’s starting point was that Ms. Fingrut should get nothing. In the result, she is receiving spousal support of $12,500 per month, based on an estimated yearly income of Dr. Fingrut of $350,000. Ms. Fingrut paid approximately $170,000 to Dr. Fingrut in an equalization payment. In exchange, she retained ownership of the matrimonial home, whose sale allowed her to buy a new home mortgage-free and put some $375,000 in the bank. She also has sole ownership of the five-unit rental property, which has the potential to generate income, retained her RRSP and was made beneficiary of Dr. Fingrut’s RRSP as security for his obligation to pay spousal support.

Any settlement is the result of compromise; the very nature of settlement means that no party gets everything that he or she would wish for. Yet the result of the settlement for Ms. Fingrut is a stable and comfortable lifestyle with home ownership, a monthly income stream in the form of spousal support and the potential to generate further income from the rental property.

[ 40 ] This outcome does not exhibit any obvious improvidence but instead reflects the kind of balance typical of matrimonial settlements. In my view, to reach and to justify such a negative conclusion on the outcome, it would have been necessary for the Assessment Officer to find that another skilled and competent lawyer would have done substantially better, and for him to identify the shortcomings with specificity. He did not do so and had no evidentiary basis for doing so.

[ 41 ] Ms. Bales gave evidence that the result was good for Ms. Fingrut:

Yes, I thought so at the time and I still believe that it is a good resolution for her. A trial would have been very, very difficult for her. It would have been very lengthy, given the issues that needed to be resolved, and there was a real – there was no question in my mind that she was entitled to spousal support, there was no question. The risk was on the income amount that would be used for Dr. Fingrut. Because of his age, because he was in his mid-60s or 67 or something, it – you know, a judge would find it hard to believe that he would continue working indefinitely. And so I felt it was a good result. There were a number of, you know, offsetting claims for the equalization payment. I thought we were able to reduce that significantly and that the net – net number at the end was a good number for her.

[ 42 ] Apart from his comments on the results obtained, the Assessment Officer made four specific criticisms in the section of his reasons on the skills and competence of the solicitor. First, he found that five case conferences aimed at getting disclosure from Dr. Fingrut were excessive. He found that the motion for contempt ought to have been brought sooner, and that the delay caused the client to incur extra legal costs. Second, the Assessment Officer stated that: “[t]he solicitor or the firm did not advise the client in writing that to keep her legal fees down she should refrain from calling the office to avoid being docketed for solicitor and staff time.” Third, the Assessment Officer criticized the solicitor for not permitting the forensic accountant retained on her behalf to speak to Ms. Fingrut directly. Fourth, the Assessment Officer remarked that he had “a concern that the solicitor agreed to have Mr. Bastedo as mediator/arbitrator against the instructions of the client.”

[ 43 ] I will address the first two criticisms below. With respect, the last three criticisms have nothing to do with the firm’s expertise, and the last two are not relevant to the assessment. There is no doubt that Ms. Fingrut agreed to the mediation and to the settlement. The validity of the agreement to mediate and of the settlement agreement itself was really beyond the scope of the Assessment Officer’s mandate.

Was the Time Spent by the Firm Excessive?

[ 44 ] A theme throughout the reasons is the Assessment Officer’s conviction that the client was billed for too many hours. The Assessment Officer challenged the hours spent on four bases:

1. The inappropriateness of the team approach in this case;

2. The firm’s insufficiently aggressive approach;

3. The firm’s failure to forewarn Ms. Fingrut about increasing costs; and,

4. Specific critiques of time spent.

I address each in turn.

Was the Team Approach Appropriate?

[ 45 ] The Assessment Officer was convinced, perhaps because he accepted Mr. Warren’s argument that the case was not complex, that the “team approach” was not appropriate.

[ 46 ] The team approach was one that the firm employed. It is typical both of large firms and of specialized firms. The concept is that the legwork will be done by employees at lower hourly rates and that senior counsel at higher hourly rates will supervise and attend to the more important matters. Such an approach reduces the overall fees to the client by ensuring that work is done at the lowest appropriate hourly rate. The approach requires good faith on the firm’s part because it is open to abuse.

[ 47 ] The retainer agreement clearly signals the firm’s team approach by listing the names and the billing rates of various staff members. Ms. Fingrut had considerable degree of contact with the family law clerk, for example.

[ 48 ] The Assessment Officer expressed the following criticism about the “team approach”:

I have found from my past cases that some law firms have taken to the practice of providing a team approach to providing legal services to their clients under the guise that this process will save the client money by making use of junior counsel, law clerks and paralegals. When implemented efficiently and effectively, support staff can reduce legal fees. Unfortunately, there are times when the team approach does not save the clients legal fees. It has been my experience that this process can increase fees as the client is docketed for each and every item by each and every team member whether it is necessary work or not. This is a process where the client is charged for interoffice discussions, telephone calls, emails and meetings whereby there is potential for double or triple billing. The client is docketed time by solicitors and support staff for review of the file, documents and correspondence, again a potential for double or triple billing. As in this particular assessment and others, the firm is chasing disclosure from an opposing side that is refusing to provide disclosure.

[ 49 ] Once the Assessment Officer made the assessment that the case did not warrant the team approach, then it became relatively easy for him to criticize and adjust for all the times at which firm members were involved in collaborative activities including interoffice meetings and discussions. The team approach is clearly not feasible if such activities including meetings are billed out at only the time and rates of the lowest rate person involved.

[ 50 ] In reviewing the dockets I see no basis for any suggestion that members of the team were inappropriately billing for supervision, meetings or other activities, with the exception noted below, nor is there any basis for the claim that there was excessive duplication.

[ 51 ] There is, in my view, no evidentiary basis on which the Assessment Officer could second-guess the staffing decisions of the firm. Given the complexity of this case, it was well-suited to the team approach. Indeed, if Ms. Bales had done all the work herself the account would have been considerably higher. The Assessment Officer’s rejection of the team approach in this case was plainly unreasonable and an error in principle.

Did the Firm take an Insufficiently Aggressive Approach?

[ 52 ] According to the Assessment Officer, there were too many case conferences that consumed time and therefore money:

A main concern is in regards to the five case conferences that took place in an attempt to obtain disclosure from Dr. Fingrut. By most standards, this is a significant number of case conferences. Ms. Bales in her evidence in chief provided, that she could not use the legal process to make Dr. Fingrut compliant. On cross-examination, Ms. Bales provided that she could not proceed to resolve the matter without disclosure but her evidence eluded that there was little that could have been about it. Eventually the solicitor brought a motion for contempt whereby an agreement was made to move the matter to mediation and arbitration. While Ms. Bales style appears to be nonaggressive, her responsibility is to advocate on behalf of her client to get results or attempt to get results in a timely fashion especially at an hourly rate $500.00 to $550.00. By the solicitor accepting disclosure in dribs and drabs and not bringing a contempt motion sooner, the client incurred extra legal costs.

[ 53 ] The Assessment Officer added: “[t]he matter may have been complicated by the alleged conduct of Dr. Fingrut in regards to the non-disclosure, but this issue is part of the nature of family law and an experienced family law counsel ought to have the expertise to use the tools available by the court to obtain said disclosure in a relatively timely manner”.

[ 54 ] The firm points out that the family law system is built on the expectation that matters must be negotiated before they are litigated. Matters cannot get to litigation until they proceed through negotiation. The solicitors point out that the case conferences were productive and two of the five were judicially ordered:

First, the case conferences were productive and, in two of the five, judicially ordered. The first was an emergency case conference on February 22, 2008 after Dr. Fingrut stopped depositing funds into the parties’ joint account and cancelled the Visa on the joint account. It resulted in an Order for payment of $10,000; assurances that Dr. Fingrut would continue to pay the mortgage, taxes and insurance on the matrimonial home; and a timetable for disclosure. After a second case conference on April 11, 2008, the following two (on June 2 and July 30, 2008) were ordered by Justice Wilson and were productive in resulting in the appraisal and sale of properties, as well as interim spousal support.

[ 55 ] I agree with the firm that bringing a contempt motion is a significant step and ought not to be done unless and until there is a substantial likelihood of success, otherwise the threat is useless. The goal of a contempt motion in a civil process is not to actually find a party in contempt, but to force compliance with the process of the court: Chiang (Trustee of) v. Chiang (2008), 2009 ONCA 3 () , 93 O.R. (3d) 483 at para. 11 (C.A.).

[ 56 ] I agree with the firm’s observation:

Given the serious nature of a motion for contempt, and the manner in which such a motion can increase animosity in proceedings that were already emotional and draining for the Client, it is unreasonable to question the Solicitors’ judgment regarding the timing of the motion. Moreover, it is not the Assessment Officer’s role to consider, with the benefit of hindsight, how the proceeding might have progressed more expeditiously.

[ 57 ] As it turns out, according to the firm: “[u]ltimately, much of the motion was resolved before argument, but Ms. Fingrut was awarded partial indemnity costs of $3,500 on the basis that the motion was prompted in part by Dr. Fingrut’s disclosure, which Justice Conway found to be “slow and not complete”.” This is not an unusual outcome for a contempt motion in a family proceeding and it shows that the firm’s approach was reasonable.

[ 58 ] The case conferences and the contempt motion ultimately set the scene for the mediation that resulted in the settlement. There is in my view no reasonable basis for the Assessment Officer’s determination that the number of case conferences was excessive.

Was Ms. Fingrut Adequately Forewarned about the Costs?

[ 59 ] Ms. Fingrut was evidently an engaged and demanding client who was in constant contact with members of the firm by telephone and email. The contacts are detailed at length in the monthly accounts. In my view there can be no reasonable argument that Ms. Fingrut was not fully aware that her repeated contacts with the firm were costing her money.

[ 60 ] Ms. Fingrut had considerable contact with the law clerk A. Ramoutar. In the course of her cross-examination, Ms. Ramoutar gave the following evidence:

Q. And in all these calls, did you ever make the client aware of the fact that she was being charged for this time?

A. She knew that she was charged because she would say to me that I know I’m asking you this again, but -- and it’s going to cost me more, but I need to know. And there were times when I spoke to her about her invoice and she would ask me, are you billing me for this? And I would say no, it’s your invoice we billed you, I cannot bill you for it.

[ 61 ] The Assessment Officer, however, stated:

I have concerns that the solicitor or the firm did not advise the client in writing that to keep her legal fees down she should refrain from calling the office to avoid being docketed for solicitor and staff time. This is particularly concerning as the client regularly voiced her concerns as to quantum of legal fees being billed to her.

[ 62 ] While this critique is found under the title “Degree of Skill and Competence Demonstrated by the Solicitor”, it seems more like an apologia for the Assessment Officer’s reduction in the number of hours properly billed by the firm. He seems to assume that a letter would have been more dissuasive of Ms. Fingrut in contacting the firm than the monthly accounts. Frankly this seems unlikely. There is no reasonable basis for this assumption. Indeed, the accounts were transparent, complete, plainly worded, detailed as to what each person did and when, and calculated expressly the fee for each person by disclosing and multiplying the hourly rate by the number of hours.

Specific time reductions

[ 63 ] The law clerk, Ms. Ramoutar, docketed a considerable amount of time. The Assessment Officer said this: “A. Ramoutar who docketed the lion’s share of law clerk time had five years experience as a family law clerk. There will be a substantial reduction to the law clerk hours and in particular, that of A. Ramoutar’s as a significant amount of time expended by the law clerk as secretarial in nature and considered to be office overhead.” Ms. Ramoutar’s time is critiqued in a number of places in the reasons. Most notably she docketed $490.00 for walking to and attending at the Toronto Police Headquarters to obtain a copy of a report, which I agree was unreasonable on any measure.

[ 64 ] With respect to Ms. Ramoutar in particular the Assessment Officer reduced her time from 296.7 hours docketed to 100 hours, and reduced her hourly rate from $160-200.00 per hour to $125.00 per hour.

[ 65 ] Dr. Fingrut changed counsel three times in the course of the matter adding to the difficulties and the time demands in running the file. The Assessment Officer criticized one docket entry stating: “I have concerns that the solicitor assumed the responsibility that the client was willing to pay costs associated with bringing Dr. Fingrut’s new counsel up to speed as provided in the docket dated May 5, 2008.” This response betrays his misapprehension of the evidence. New opposing counsel who are not well briefed on the state of the file might well take steps that would incur even greater legal costs for the client. It is completely normal for counsel to engage in discussions with new opposite counsel to advance the client’s interests and to keep costs down.

[ 66 ] The Assessment Officer allowed a student-at-law to bill out at $150.00 per hour but then reduced the amount of docketed time by 50 per cent for research “as it is not fair and reasonable that the client pay full rate for the training and learning experience that ultimately benefits the student-at-law and the firm that eventually hires them.” The Assessment Officer did not appear to appreciate that the time and training function for students-at-law is comprehended by their lower hourly rates.

[ 67 ] The Assessment Officer also refused to allow any time docketed by summer students on the basis that: “[t]his position is a learning experience for the student who provides functions that are secretarial or clerical in nature and the client ought not to be charged for it.” There is no basis in the evidence provided by the Assessment Officer for this assessment.

[ 68 ] In the result, the Assessment Officer made the following reductions in addition to those already noted:

In regards to the time docketed by Ms. Bales, Ms. Jamal and to a lesser extent Mr. Lund, I find that a significant amount of time docketed by junior counsel mirrored that of senior counsel and case law supports that in mirrors of duplication the lesser hourly rate stands. Therefore, I am reducing Ms. Bales’ hours by Mr. Jamal’s and Mr. Lund’s hours that I consider to be duplication of work. Further, said reductions in hours and fees, take into consideration my findings in regard to the above noted factors.

The Assessment Officer reduced Ms. Bales’ hours from 185 hours to 80 hours at the lower hourly rate of $425.00 per hour, although he did not specify precisely which of Ms. Bales’ hours he eliminated.

[ 69 ] In my view the reduction of Ms. Bales’ hours was unreasonable in light of my observation that the team approach was appropriate for this matter and was appropriately utilized.

Remedy

[ 70 ] I considered whether the case ought to be sent to another Assessment Officer in view of the fact that Mr. Boyd is no longer an Assessment Officer. Given his serious errors in principle and in apprehending the evidence, even if it were possible I would not send the matter back to him. In my view it would be a waste of time and money to force the parties back through a new assessment process. In the circumstances it would be best for the court to make the final determination.

[ 71 ] Having considered the material and had the benefit of the argument of counsel I make the following findings: I agree with the Assessment Officer that the hours of Ms. Ramoutar were excessive and must be reduced. He reduced them from 296.7 hours to 100 hours. I find that to be excessive in view of her activities and would reduce the hours by 100. In my view, however, it was wrong to reduce Ms. Ramoutar’s hourly rate to $125.00. That rate is most fairly established as the average between the billing rates that were charged over time at $180.00. That would reduce the overall fee account by $18,000.00, from $206,321.56 to $188,321.56. The GST would go from $10,777.33 to $9,697.33. I otherwise approve the fee component of the original accounts rendered by the firm.

[ 72 ] I accept the Assessment Officer’s adjustment of disbursements, except for his reduction of the Quicklaw fee of $967.00 by 50 per cent on the basis that “this research is a learning experience and a benefit to the firm”; there is no reasonable basis for such an evaluation. That would result in an overall disbursements figure of $4,803.39.

[ 73 ] In the result, the total amount owed by Ms. Fingrut is set out below:

Fees

$188,321.56

Disbursements

4,803.39

GST

9,697.33

Total

$202,822.28

Client Paid

190,000.00

Client Owes

$12,822.28

[ 74 ] I set aside the award of costs made by the Assessment Officer. In my view the firm has been substantially successful in this motion and, subject to any Offers to Settle, would ordinarily be entitled to costs. If costs cannot be agreed, I invite submissions in respect of the costs of the assessment and this motion on a 10-day turnaround beginning with the firm and ending with the firm’s reply.

Justice P.D. Lauwers

DATE: October 10, 2012