Court File and Parties

Court File No.: CV-11-427912
Date: 20121025
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MEAGHAN WARNICA v. CASEY VAN MOORLEHEM

BEFORE: Michael G. Quigley J.

COUNSEL:
S. J. MacDonald, for the Applicants
V. T. Bulger, for the Respondent

HEARD: In Chambers

COSTS ENDORSEMENT

[ 1 ] The issue on this application was whether an account rendered by a solicitor ought to be referred for assessment. Ultimately, I ordered it to be assessed and I granted the applicant the relief she sought, and as the successful party, awarded her partial-indemnity costs. However, the parties have been unable to agree, so these are my reasons for the costs I have awarded in favour of the applicant.

[ 2 ] In this case, Casey Van Moorlehem, represented Meagan Warnica in a tort claim she brought after she was injured in a motor vehicle accident. Meagan’s claims and those of another passenger in the vehicle were settled when the matter was mediated before trial, but there was only a limited amount of insurance funds available to compensate both Meagan and the other passenger of the vehicle because the City of Mississauga, who was allegedly at fault, would not admit any liability without going to trial. A decision was made not to pursue the City for damages for its alleged liability, given the costs risks associated with pursuing them alone. The Warnicas decided to settle the case.

[ 3 ] Under that mediated settlement, the two injured passengers had to share the available $1 million insurance limit. After costs, disbursements and the addition of a de minimis contribution by the City, on a without liability basis, Meagan Warnica’s action was settled for the all-inclusive amount of $569,750. Mr. Van Moorlehem received that amount directly from the insurer. He withheld 30% of the settlement amount as the percentage based compensation that had been agreed at the outset when he was retained. He remitted the balance to Meagan. Meagan and her parents thought the settlement should have been much larger, and they claim to have been told that it would be larger. They claimed that the fee was inappropriate relative to the result achieved.

[ 4 ] I found that the retainer agreement between Ms. Warnica and Mr. Van Moorlehem was a contingency agreement, but that he failed to comply with the disclosure and other requirements relative to contingency agreements under the Solicitors Act and regulations. I also found that court approval ought to have been obtained under Rule 7.08 for the fee agreement because the applicant was a minor. Finally, while the applicant did have some understanding of the retainer agreement she entered into with the solicitor, I found there to be special circumstances that justified the referral of the solicitor’s account for assessment.

[ 5 ] Since the applicant, Meagan Warnica, was entirely successful on the application, I awarded costs of the application to her on a partial-indemnity basis and I requested that counsel take reasonable steps to agree on the costs by a set date. I extended that time once to permit counsel to try to resolve the costs.

[ 6 ] Mr. Bulger, who has acted as counsel for Mr. Van Moorlehem on this matter, asked for an extension of that deadline and I granted it. Meanwhile, the applicant’s counsel provided Mr. Bulger with a proposal on costs. However, Mr. Bulger communicated that his client found the costs claimed to be excessive, even though he provided no counter proposal. He instructed Mr. Bulger to request that I fix the costs of the application. Further to that request, Mr. Bulger suggested that the applicant should deliver her Form 57A Bill of Costs on or before September 28, 2012, with the respondent’s response to that Bill of Costs to be served and filed on or before October 5, 2012, and any reply from the applicant by October 12, 2012.

[ 7 ] Counsel for the applicant prepared a full costs submission that was served on the respondent’s solicitor’s office. I was provided with copies of correspondence between Mr. MacDonald and Mr. Bulger and the applicant’s Bill of Costs dated September 12, 2012. The applicant seeks total costs relative to the argument of the motion and preparation in advance thereof initially totalling $36,652.42 of which $32,730.45 was fee-for-service to Mr. MacDonald and his firm, and the balance of $3,921.97 constitutes disbursements. However, now I have been advised the amount claimed is actually in excess of $38,000.

[ 8 ] About the third week of September, the applicant’s counsel wrote to me to inquire when he might receive my costs endorsement. I had received nothing from the respondent at that point. I decided to grant at least another week to see if any submissions came in from the respondent. None did. When the applicant wrote again asking for costs to be fixed, I agreed that I should not wait any longer. It seemed plain, given the tenor of Mr. Van Moorlehem’s response as reflected in earlier correspondence, that he had no intention of putting in any response to the Bill of Costs filed by the applicant.

[ 9 ] Consequently, I had prepared the initial version of this costs endorsement without input from the respondent, but then literally, as I put down my pen from signing it on October 17, correspondence arrived from Mr. Bulger, counsel for Mr. Van Moorlehem, asking when I was expecting to receive his responding cost submissions. Needless to say this surprised me. Given that he would have received Mr. MacDonald’s costs outline and submissions, and I would have thought was copied on the correspondence that came from Mr. MacDonald asking when my endorsement would be ready, it surprised me that Mr. Bulger claimed he did not know that the deadline for his responding submissions had passed.

[ 10 ] It is difficult for me to accept that Mr. Bulger did not know that his reply submissions were required on a schedule I had previously set. Nevertheless, out of an abundance of fairness, I agreed to receive submissions from him, provided they were received by October 18, which they were. I have now taken those submissions into account in fixing the amount of costs that will be payable to the applicant in respect of her success on having Mr. Van Moorlehem’s account referred for assessment.

[ 11 ] In determining the costs that should be awarded to a successful party, Rule 57 and the case law require the court to take into account a number of factors. These include the amount claimed and the amount recovered, the complexity of the proceeding, importance of the issues, the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding, if any, additional factors that are appropriate to consider, whether any step in the proceeding was improper or unnecessary, and a party’s denial of or refusal to admit anything that ought to have been admitted, together with the experience of the solicitors, the amount of time spent, the rate sought for costs and the rate actually charged, and any other matter relevant to the question of costs. Another important factor, however, is the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceedings for which costs are being fixed. That calls upon the court to consider whether the costs claimed are fair and reasonable in the circumstances. [1]

[ 12 ] A number of these factors are relevant in this case. First, it is plain that the applicant was entirely successful on her application to have the solicitor’s account referred to an Assessment Officer for an Assessment. As such, she was granted her costs on a partial-indemnity basis.

[ 13 ] This is a proceeding that should have been relatively straightforward and uncomplicated, but I agree with the applicant that the solicitor made it more complicated by insisting that the agreement was not a contingency agreement. Plainly it was. That raised steps that, in turn, put into issue the character of the agreement and required the affidavit evidence that was submitted, cross-examinations on those affidavits, and the full legal argument itself. I found that the agreement did not comply with provisions of the Solicitors Act , had not been approved by the court when it ought to have been since it involved the claims of an infant, and that there were clear special circumstances that called for the assessment of the solicitor’s account in this case.

[ 14 ] Clearly, these were issues that were of importance to the applicant. It is obvious that the amount of fees charged, along with disbursements and taxes, represent 37% of the entire amount that was awarded to the applicant by way of settlement. The total fees charged were $211,125.13 to be taken out of the total settlement award of $569,750. This represented a very significant portion of the recovery achieved by the applicant for her serious injuries, in circumstances where she and her family expected to achieve greater success, were continually assured by the solicitor, as reflected in my reasons, that they had a very strong case, and yet the amount of the award received was plainly inadequate to fully compensate the applicant for the injuries she sustained and the damages that resulted. That is why the independent review of the solicitor’s account is required in this case, apart from the fact that he failed to comply with provisions of the Solicitors Act relative to contingency fee agreements, and apart from the fact that he ought to have had the original agreement approved by the court under section 7 of the Rules in any event.

[ 15 ] The applicant’s solicitor’s cost submissions include four pages of recitation of detail relative to conduct of Mr. Van Moorlehem that they claim lengthened unnecessarily the duration and complexity of the proceeding. I do not plan to review all of this detail, in part to spare the parties the possible embarrassment of it being described in minutia in a costs endorsement such as this. However, it is also unnecessary to review it here in detail because the case law establishes that the amount in which costs are to be fixed is not simply a function of arithmetic dependent upon an aggregation of the hours worked multiplied by hourly rates. As the Divisional Court has stated, a party required to pay costs must not be faced with an award that was disproportionate and unreasonable relative to the amount of time and effort that the proceedings actually warranted. [2]

[ 16 ] It will suffice for present purposes to say that I agree with much of the content of the applicant’s submissions and I acknowledge that the conduct described at pages 2 through 5 of their Bill of Costs appears to display an uncooperative attitude from the solicitor, a seeming absence of service or customer orientation on this matter, and the failure to recognize that this applicant has a reasonable entitlement to question an account as large as that charged by the solicitor in the context of the overall success achieved here, having regard to the principles which the case law establishes ought to apply. In essence, the application of Ms. Warnica and her parents is for review of the reasonableness and fairness of Mr. Van Moorlehem’s account. It is an application made by a client who suffered a significant injury and who has sustained serious damages and who, at least arguably and by any reasonable standard, received less than full compensation for those injuries and damages.

[ 17 ] The absence of insurance beyond the limits that were available is not the solicitor’s fault. The “take no prisoners” litigation approach adopted by the City of Mississauga, which resulted in its unwillingness to acknowledge any potential liability or contribute meaningfully to the financing of the settlement, is also not the solicitor’s fault. Nevertheless, he had brought these clients along to believe that Meagan Warnica had a significant claim that would give rise to a very substantial award of damages, materially higher than the amount for which it was ultimately settled.

[ 18 ] This brings me back to the governing principles in the Court of Appeal’s decision in Price v. Sonsini , 2002 41996 (ON CA) , [2002] O.J. No. 2607. In circumstances where a client objects to a solicitor’s account, the solicitor should facilitate the assessment process rather than frustrating it. Public confidence in the administration of justice requires the court to intervene where necessary to protect the client’s right to a fair procedure for the assessment of the solicitor’s bill where the solicitor does not adhere to this standard of conduct. The court in that case relies on the sensible admonition of Orkin in The Law of Costs , 2 nd ed., (2001) at page 3-13, that the administration of justice will be brought into disrepute if the courts permit lawyers to avoid the scrutiny of their accounts for fairness and reasonableness.

[ 19 ] As counsel for the applicant argues, Mr. Van Moorlehem’s actions have not facilitated the assessment process in this case. Rather, his actions have made that process more difficult and protracted than it seems to me it needed to be. His actions have increased the costs associated with the application. It is surprising to me that Mr. Van Moorlehem continued to persist in his view for as long as he did that a fees agreement such as the one that was applicable in this case did not constitute a contingent fee agreement. Plain language establishes the contrary. Only on a tortured construction could it be considered that the retainer agreement concluded between himself and Meagan Warnica and her parents was not a contingent fee agreement within the meaning of the Solicitors Act .

[ 20 ] Nevertheless, turning to the quantum of fees itself, I have carefully reviewed the time entries and the total amount of time spent by the applicant’s solicitors. It is evident to me based on the time descriptions that a significant component of the cost was incurred owing to the conduct of Mr. Van Moorlehem in resisting rather than facilitating an assessment of his account in this case. On any fair assessment or review of the detail contained in the applicant’s Bill of Costs, I find it difficult to find particular or egregious fault with any of the claims made or amounts of time spent, in the context of the difficult relations that were ongoing with the solicitor. However, that is not the only question.

[ 21 ] The other important question, regardless of the importance the Warnicas may have attached to this proceeding, is whether the circumstances of the motion and the relief sought can justify a costs award of some $38,000 as sought by the applicant’s solicitor. In my view, it cannot, even taking account of the additional time and effort that may have been needed to be expended in response to Mr. Van Moorlehem’s seeming absence of cooperation in facilitating an assessment of his account.

[ 22 ] The respondent’s solicitor includes a costs outline totalling $14,529.51, including fees of $10,452 and the balance of disbursements and taxes, as representative of what Mr. Van Moorlehem would have anticipated paying. It appears to me, and Mr. Macdonald seems to admit, that much of the work was done by him rather than someone with a lower price point because of the importance of the matter to the Warnicas. Nevertheless, as the respondent points out in his submissions, the significance of the matter to the successful party may justify a significant expenditure of costs in obtaining legal advice and representation to pursue the matter, but the importance of the matter to the successful party cannot be determinative of what amount is fair and reasonable to be paid by the unsuccessful party.

[ 23 ] The point was best said by the late Justice Borins of our Court of Appeal in Moon v. Sher , 2004 39005 (ON CA) , [2004] O.J. No. 4651 (C.A.) at paragraph 33 :

If a lawyer wants to spend four weeks in preparing for a motion when one week would be reasonable, this may be an issue between the client and his or her lawyer. However, the client, in whose favor costs award is made, should not expect the court in fixing costs to require the losing party to pay for over- preparation, nor should the losing party reasonably expect to have to do so.

[ 24 ] In this case, regardless of the importance the Warnicas may have attached to this proceeding and the fact that Mr. Van Moorlehem’s actions have not facilitated the assessment process, but instead made that process more difficult and protracted than it needed to be, I find that the costs claimed by the applicant are excessive. Nevertheless, I also find that Mr. Van Moorlehem’s actions have increased the costs associated with the application. As such, I find that the partial-indemnity costs that should be payable to the applicant are less than the total amount of costs sought, However, I also find that the respondent’s Costs Outline could never represent adequate compensation to the applicant given the increased costs that have resulted from the respondent’s actions. The conduct of the respondent has not contributed to excess costs of his own solicitor, but rather for the applicant.

[ 25 ] Accordingly, considering the amount that the respondent ought reasonably to expect to pay as a fair amount in all these circumstances, I fix partial-indemnity costs payable in favour of the applicant in the sum of $27,500, including disbursements and taxes, payable forthwith.

[ 26 ] Order to go accordingly.

Michael G. Quigley J.

Released: October 25, 2012

[1] See Zesta Engineering Ltd. v. Clouthier , 2002 25577 (ON CA) , [2002] O.J. No. 4495 (C.A.) at para. 4 .

[2] See Gratton-Masuy Environmental Technologies Inc. v. Building Materials Evaluation Commission , 2003 8279 (ON SCDC) , [2003] O.J. No. 1658 (ON SCDC) at para. 17 .