Court File and Parties

Court File No.: CV-12-457350
Date: 20121218
Superior Court of Justice - Ontario

Re: Joseph Samuel Druck, Applicant

– AND –

Robins Appleby & Taub Professional Corporation, A. Lorne Greenspoon and Jonathan Zepp, Defendants

Before: Justice E.M. Morgan

Counsel:
Walter Kravchuk , for the Applicant
Robert S. Choi , for the Respondent

Heard: December 14, 2012

Endorsement

[ 1 ] What are the “special circumstances” that would warrant the assessment of accounts pursuant to sections 4 and 11 of the Solicitors Act , RSO 1990, c. S.15, where the Application was commenced a year and a half after the solicitors rendered their account and a year and two months after the client paid it?

[ 2 ] The Applicant is a dentist who retained the Respondent law firm (“Robins Appleby”) to represent him on the sale of his dental practice. The individual Respondents are the lawyers at Robins Appleby that were the Applicant’s principal contacts at the firm.

[ 3 ] Robins Appleby and the Applicant executed a retainer agreement on June 8, 2010. That agreement, together with a lengthy reporting letter issued by Robins Appleby on April 18, 2011, sets out the work done by the law firm on the Applicant’s behalf. It was a comprehensive retainer, with Robins Appleby not only attending to the contractual elements and the closing of the sale transaction, but doing the tax planning and related incorporation that the tax situation required.

[ 4 ] The dockets produced by Robins Appleby indicate that the Applicant was kept well apprised of the work being done on his behalf. Members of the law firm were not only in touch with him, but they were in frequent contact with his accountant. Indeed, it was the accountant who originally referred the Applicant to Robins Appleby.

[ 5 ] The firm rendered two accounts to the Applicant. The first account was dated June 30, 2010, and was in the amount of $12,760.07. The Applicant expressed no complaint about this account, and paid it in full by cheque on July 20, 2010. The second account was dated December 31, 2010, and was in the amount of $40,000.00.

[ 6 ] The sale of the Applicant’s dental practice closed on September 3, 2010. On September 8, 2010, Robins Appleby sent the Applicant a certified cheque in the amount of $615,294.00. A covering letter indicated that this represented the proceeds of sale “less a deposit retained for Robins LLP’s fees and disbursements, as discussed.”

[ 7 ] The total sale proceeds were somewhere just over $655,000.00. There is no suggestion by the Applicant that he was somehow unaware of the sale price that he had obtained for his own dental practice. Accordingly, when he received the covering letter and cheque of September 8, 2010, he was aware that the amount withheld for the law firm’s fees and disbursements was in the range of $40,000.00.

[ 8 ] The account rendered by Robins Appleby on December 31, 2010 confirmed that the amount of fees and disbursements was $40,000.00. Since the Applicant did not question this account in any way during the next few months, Robins Appleby paid its account on April 20, 2011 from the funds it had retained in trust. On that date it sent a trust statement and covering letter to the Applicant explaining the payment. This method of payment out of funds held in trust was specifically authorized in the retainer agreement.

[ 9 ] Several months later, the Applicant contacted one of the partners at Robins Appleby to complain that the fees were too high. The parties spoke on the phone, and on July 14, 2011, Robins Appleby issued a refund cheque in the amount of $5,200.00. The covering letter accompanying this cheque specifically says that it is being sent to the Applicant “as agreed”. Robins Appleby takes the position that this represented a one-time, agreed upon settlement of all outstanding matters regarding the account; the Applicant denies that this refund represents a final settlement of the dispute over the account.

[ 10 ] Robins Appleby did not hear from the Applicant again for over eight months. On March 5, 2012, the Applicant contacted the firm and requested that he be sent the time dockets relating to his file. The Applicant reviewed the dockets on April 12, 2012, and apparently did not like what he saw. He states at para. 19 of his affidavit that,

It was only after April 12, 2012 that I learned about a possible recourse, which is to refer statements of account no. 135566 and no. 136438 for assessment.

[ 11 ] The Notice of Application herein was issued on June 27, 2012, nearly 18 months after the second Robins Appleby account was rendered and over 14 months after it was paid.

[ 12 ] Section 4(1) of the Solicitors Act makes it clear that a client may assess a lawyer’s account within one year of its having been rendered. After twelve months no assessment of the account is possible “except under special circumstances to be proved to the satisfaction of the court or judge to whom the application for the reference is made.” Using similar language, section 11 of the Solicitors Act provides that, “[t]he payment of a bill does not preclude the court from referring it for assessment if the special circumstances of the case, in the opinion of the court, appear to require the assessment.”

[ 13 ] In keeping with these provisions, courts have indicated that, “[t]ime alone will not…preclude the examination of the suitability of a lawyer’s accounts where other circumstances compel a review of those accounts.” Guillemette v. Doucet (2007), 2007 ONCA 743 , 88 OR (3d) 90, at para. 36 (Ont CA). They have equally indicated, however, that the special circumstances that would permit a waiver of the 12 month deadline must be of an identifiably “exceptional nature”. Fiset v. Falconer , 2005 CarswellOnt 5312, at para. 37 (SCJ) .

[ 14 ] Indeed, in the case of accounts that have already been paid, the Court of Appeal has stated that the court’s jurisdiction under section 11 to waive the twelve month deadline is limited “to circumstances amounting to fraud or gross misconduct.” Fellowes, McNeil v. Kansa Canadian Management Services Inc. (1997), 34 OR (3d) 301, at para. 4 . The Applicant’s complaints about the Robins Appleby account is that it was too high and that several more lawyers worked on the file than he thought would be working on it. There is no serious allegation of fraud or gross misconduct, and there is no evidence whatsoever of any such egregious conduct in the record.

[ 15 ] That should end the matter, since the Robins Appleby account was paid on April 20, 2011. There is a presumption that once the account is paid it is accepted as a proper and reasonable account. Enterprise Rent-A-Car Co. v. Shapiro, Cohen, Andres, Finlayson (1998), 38 OR (3d) 257 (Ont CA). Applicant’s counsel argues that this does not apply to a payment made out of closing funds retained in trust, as this was not a voluntary payment in the usual sense. However, in Tripkovic v. Glober (2003), 64 O.R. (3d) 481 , at para. 55 , the Court of Appeal came to the opposite conclusion:

On a plain reading of s. 11 , there can be no doubt but that it applies. Payment occurred on July 31, 1996, by means of a transfer of trust funds; the application for assessment was not made within the ensuing 12-month period. It follows that, absent fraud or gross misconduct which are not alleged , the court below was precluded from referring the bill for assessment. [footnote omitted]

[ 16 ] Even in the event of an unpaid account, there must be “special circumstances” to justify the Applicant not having sought an assessment within twelve months of the date of the account. The Applicant here submits that he did not know until the account was paid in April 2011 what the real amount of the Robins Appleby account was. With respect, that defies what is patent on the face of the record. On December 31, 2010, the final Robins Appleby account was rendered and it clearly stated that the total amount of fees, disbursements, and HST was $40,000.00. The trust statement sent to the Applicant the following April simply confirmed what he already knew.

[ 17 ] In any case, the present Application was not commenced until the end of June 2012. The Applicant therefore did not make the twelve month deadline even if the starting date were taken to be the date of the trust statement (April 20, 2011) rather than the date of the invoice (December 31, 2010).

[ 18 ] The Applicant further submits that he commenced the Application within twelve months of complaining about the Robins Appleby account and receiving a refund in July 2012. This, however, does not meet the statutory requirement. The Solicitors Act requires that the assessment be commenced within a year of the rendering of the account by the lawyer, not within a year of the client expressing a complaint.

[ 19 ] Finally, the Applicant contends that it was not until he saw the Robins Appleby time dockets that he knew there was something to assess. His point is that only then did he realize that there were several lawyers working on his file other than the original three lawyers to whom he had been introduced at his first meeting with the firm. Again, this does not meet the requirements of sections 4 and 11 of the Solicitors Act ; moreover, it is contrary to the express language of the retainer agreement, which permits Robins Appleby to staff the file in its own discretion.

[ 20 ] The extra lawyers appear to have been tax lawyers who were involved in the tax planning and HST aspects of the transaction. It is not surprising that the client in his initial contact with the law firm met the corporate lawyers handling the deal, and that the tax lawyers who later became a necessary part of the legal team remained for the most part behind the scenes. Given that the Robins Appleby lawyers were in continuous touch with the Applicant’s accountant, it is doubtful that the work of the tax lawyers came as a complete surprise.

[ 21 ] In any case, the Applicant simply has not identified any circumstances that are special to his situation. As indicated above, his real contention is, as his counsel put it at para. 7 of his factum, “[t]he Applicant was not aware of the availability of a method of disputing accounts until retaining counsel on or about May 23, 2012.”

[ 22 ] One can surmise that virtually everyone who misses the statutory deadline is likely to have been unaware of it; it would be the rare instance where a person was advised of the twelve month deadline and delayed beyond it in any event. This court has held that, “[t]he court’s discretion to find ‘special circumstances’ is fact-driven, to be determined on the particular facts of a case.” Wachmenko v. Conroy Trebb Scott Hurtubise LLP , 2010 ONSC 2687 , at para. 26 (SCJ). Whatever else “special circumstances” might mean, it cannot mean circumstances that are common to virtually every case.

[ 23 ] The Applicant – a medical professional – may not be a lawyer, but he is not an unsophisticated individual. His circumstances are not in themselves “special”, and his failure to meet the statutory deadline is not the result of some circumstance of an “extraordinary nature”. Certainly, there is nothing in any way extraordinary in the record, and the Applicant’s counsel has not been able to point to anything that meets that standard.

[ 24 ] Accordingly, the Applicant has failed to meet the high section 11 test for waiving the deadline for accounts that have been paid, and has equally failed to meet the “special circumstances” test in section 4(1) for waiving the deadline for all other solicitors’ accounts.

[ 25 ] The Application is dismissed with costs.

[ 26 ] In my view, this is a case that calls for a very modest costs award. Robins Appleby was able to have one of its own lawyers act as counsel for the Respondents, and although his time is valued it is not the same kind of expense that a party incurs when it has to hire a lawyer to represent it. The Applicant is ordered to pay costs to the Respondents in the amount of $2,500.00, inclusive of disbursements and HST.

Morgan J.

Date: December 18, 2012