COURT FILE NO.: 09-CV-380885
DATE: 20140304
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Stephen M. Labow, Lawyer/Respondent
AND:
Chester Baker, Client/Applicant
BEFORE: PENNY J.
COUNSEL:
M. Rosenbaum for the Lawyer/Respondent
Chester Baker on his own behalf
HEARD: February 26, 2014
ENDORSEMENT
The Motion
[1] This is a motion opposing confirmation of the report and certificate of assessment of assessment officer Chiba dated May 31, 2011 (the Certificate).
[2] Section 5 of the Solicitors Act provides that a motion to oppose confirmation of the certificate shall be made to a judge of the Superior Court of Justice.
[3] It is well settled that this kind of motion is in the nature of an appeal. The court is only concerned with questions of principle and not with mere questions of amount or the manner in which the assessment officer 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.
[4] The motion to oppose confirmation is not a new trial or a rehearing. There should be no interference with the order below unless it is clearly wrong. This requires an error of law or a palpable and overriding error of fact. The judge hearing the motion should only interfere with the result if the assessment officer’s reasons demonstrate some error in principle, there has been some absence or excess of jurisdiction or a patent misapprehension of the evidence.
Background
[5] The lawyer acted for the client in connection with the criminal offense of “break and enter with intent,” in the context of a domestic relationship with the client’s former girlfriend. He also acted for the client in connection with a civil matter, also in the context of the same domestic relationship, essentially involving the client’s claim to a half interest in the home, allegedly purchased jointly with the former girlfriend, into which he is alleged to have sought to “break and enter.”
[6] In this case, the lawyer delivered four accounts in these two matters, the total of which was a little over $29,000. The assessment officer reduced the amount to which the lawyer was entitled to $6,854.40, in spite of the fact that over $24,000 had already been paid. Thus, the assessment resulted in an order that the lawyer re-pay the client almost $18,000, plus interest.
[7] It is conceded that between $4,500 and $6,300 of the amount billed was never paid. The lawyer does not seek recovery of the unpaid amount.
[8] There are two issues raised in the motion to oppose confirmation:
(1) whether the assessment officer had jurisdiction to conduct the assessment; and
(2) whether the assessment officer committed palpable and overriding errors in her decision to reduce the lawyer’s account by 77%.
Jurisdiction
[9] Section 3 of the Solicitors Act provides that where the retainer of the solicitor is not disputed and there are no special circumstances, an order may be obtained on requisition from the local registrar of the Superior Court of Justice by the client for the assessment of a bill already delivered, within one month from its delivery.
[10] Section 4 of the Solicitors Act provides that no reference shall be directed upon application made by the party chargeable after 12 months from the time such bill was delivered, except under special circumstances to be proved to the satisfaction of the court or judge to whom the application for the reference is made.
[11] The lawyer argued that all of his bills were delivered to the client more than 30 days prior to the assessment being initiated; in the case of the criminal matter, his two bills were rendered, and paid, almost 2 years prior to initiating the assessment. He therefore argued before the assessment officer, and in this court, that the assessment officer had no jurisdiction to proceed with the assessment in the absence of an order of this court permitting the client to do so, based on a showing of “special circumstances.”
[12] Periodic bills have been treated as interim if the fairness and reasonableness of later bills could not be assessed without reference to the earlier ones. In other cases, it has been held that the reasonableness of the later accounts could be determined without reference to the earlier bills. It is said to be a question of fact.
[13] The assessment officer’s reasons on the issue of jurisdiction are difficult to follow. On page 5 of the Assessment, the assessment officer states that the preliminary issues raised by the lawyer were “essentially related to quantum, for which I have jurisdiction.” This statement, on its face, is incorrect as the issues raised by the lawyer were clearly not related to quantum but, rather, compliance with the time limitations provided under ss. 3 and 4 of the Solicitors Act, matters which were critical to the assessment officer’s jurisdiction.
[14] The assessment officer characterized the retainer as one matter involving two issues – first, the criminal charges involving the attempt to enter the home; second, the civil claim for a 50% interest in the home.
[15] In my view this characterization was manifestly in error. The evidence simply does not support this conclusion. The uncontroverted facts before the assessment officer establish that there were two separate retainers involving two distinct legal proceedings. While there were some common facts, the proceedings were legally, procedurally and, to a large extent, factually distinct.
[16] The client first went to see the lawyer in January 2007 as a result of the criminal charge. The day after their first meeting, the lawyer sent a letter to the client summarizing their meeting and enclosing a standard retainer. The client acknowledged receiving the letter and retainer although he did not sign and return that retainer to lawyer at that time. It was made clear that the lawyer charged by the hour at the rate of $400.
[17] The lawyer attended in Oshawa for court appearances on two occasions. On the second occasion, March 21, 2007, the Crown Attorney offered to withdraw the charges if the client entered into a Criminal Code s. 810 peace bond. After discussing the matter with the lawyer, the client accepted that offer and entered into a peace bond.
[18] The lawyer rendered two accounts to the client relating to the criminal matter, dated March 1, 2007 and March 22, 2007, in the total amount of $11,060.61. The client paid those accounts in full by installments, the last of which was made on February 22, 2008.
[19] There was a minimal amount of time docketed with respect to the civil matter between January 23, 2007 and March 22, 2007 such that these two invoices reflect total charges on the civil matter of only $500.
[20] Commencing in April 2007, the lawyer proceeded to address the clients concerns relating to the property dispute with his former girlfriend. The client signed the lawyer’s standard retainer in connection with this matter on September 11, 2007.
[21] Two accounts were rendered dealing with the civil matter (April 23, 2008 and March 30, 2009) in the total amount of $17,260.95. The client paid, by installment, $12,690.83.
[22] On these facts, only one conclusion is legally possible; the criminal matter was concluded on March 21, 2007, finally billed on March 22, 2007 and fully paid by February 22, 2008. On June 12, 2009, therefore, when the assessment was initiated, well over 12 months had elapsed since both the delivery and payment of the lawyer’s account for his services in defence of the criminal charge. Thus, the assessment officer had no jurisdiction to proceed with the assessment in connection with that matter. The client’s only option, at that point, was to seek leave to proceed with an assessment from the Superior Court of Justice on a showing of “special circumstances.”
[23] I find, therefore, that the assessment officer’s Certificate, to the extent it relates to the criminal defense retainer (that is, all matters in relation to the March 1, 2007 and March 22, 2007 accounts), must be set aside. The amount billed (and paid) of $11,060.61 must stand.
[24] There was a dispute in the evidence about when the client received the lawyer’s last bill. It was, on its face, rendered on March 30, 2009. The client took the position that he did not receive this account until after he obtained the registrar’s order on June 12, 2009 for the delivery of all the accounts. While it is true that, in cross-examination, it became clear that the client already had the original account in his possession (such that it is clear he did not receive it for the first time pursuant to the registrar’s direction), it was not established in the evidence when the client actually did receive that account. Accordingly, it is not possible to determine from the evidence whether more than 30 days had elapsed since delivery of that account prior to the client’s initiation of the assessment on June 12, 2009
[25] The lawyer also gave evidence that on April 29, 2009, the client attended at his office and was given photocopies of all the accounts sent by the lawyer to client.
[26] The Solicitors Act does not specify what happens to the assessment of an account commenced after 30 days, but before the expiry of 12 months, following delivery. In any event, given the brief period of time that elapsed after March 30, 2009, the client is entitled to the benefit of the doubt.
[27] In connection with the civil matter, there was evidence sufficient to support the assessment officer’s implicit conclusion that the April 23, 2008 account was an interim account and that the fairness and reasonableness of the last bill, dated March 30, 2009, could not be assessed without reference to the earlier one.
[28] I find that the assessment officer had a reasonable basis to assert jurisdiction and to proceed with the assessment of the lawyer’s April 2008 and March 2009 bills in connection with the civil matter.
The Alleged Errors
[29] The assessment officer correctly set out, and structured her reasons around, the factors in Cohen v. Kealey and Blaney (1985), 26 C.P.C. 211 (Ont. C.A.). These include the time expended by the solicitor, the legal complexity of the matters to be dealt with, the degree of responsibility assumed by the solicitor, the monetary value of the matters in issue, the importance of the matters to the client, the degree of skill and competence demonstrated by the lawyer, the results achieved, the ability of the client to pay and the client’s expectation as to the amount of the fee.
[30] The lawyer alleges that the assessment officer committed numerous errors in principle or fundamentally misapprehended the evidence on a number of issues. I shall deal with the principal complaints of the lawyer below.
[31] The assessment officer was critical of the lawyer’s accounts on the basis that they were “incomplete and unsatisfactory.”
[32] While views may differ about quality and sufficiency of accounts, the Solicitors Act, in s. 2(3) stipulates that a solicitor’s bill of fees is sufficient in form if it contains a reasonable statement or description of the services rendered, a lump sum charge and a detailed statement of disbursements. In an action on the bill, further details may be ordered. By any reasonable test, the lawyer’s bills met the Solicitors Act threshold.
[33] The assessment officer found that a “significant” amount of the fees charged were for secretarial or other non-legal services such as drafting of receipts and giving “instructions to assistant to call you.” She also found that the lawyer charged the client for the drafting of the pro-forma retainer agreement and for correspondence and discussions with the client involving the retainer and the client’s legal accounts. All of this, she found, should not have been subject to charges or fees “as they are considered part of the cost of doing business or overhead costs and [are] thus subsumed within the lawyer’s fee.”
[34] These findings are all well within the assessment officer's discretion and, on the evidence, she was entirely entitled to reach these conclusions. The difficulty with these findings is not that they represent errors in principle or are unsupported by any evidence but, rather, that the assessment officer failed to attach any specific monetary consequences to these particular findings.
[35] I will return to this issue later in these reasons.
[36] The assessment officer was critical of the lawyer for creating a relationship with the client which became excessively passive and detrimental from the client’s perspective. She relies, for this observation, principally on the fact that the lawyer did not forward copies of his correspondence to opposing counsel or of opposing counsel's correspondence to him. Rather, he adopted the approach of sending reporting letters to the client which summarized his dealings with opposing counsel. The assessment officer concluded that:
such practices demonstrate a serious lack of responsibility on part of the solicitor. Mr. Labow had a positive duty to apprise the client of all substantial communications either from himself or from others by providing Mr. Baker with photocopies of all such correspondence. The failure to do so not only increased unnecessarily Mr. Baker’s legal costs but also contributed to the client’s excessive dependence on his lawyer whose own conduct reflected more concerned about his legal accounts being paid than about serving the interests of his client.
[37] She went on to find that by the end of the retainer in April 2008, it was clear that Mr. Baker wanted to proceed with litigation and had instructed Mr. Labow to do so but that Mr. Labow had no intention of representing Mr. Baker in any litigation proceedings.
[38] I am unable to find in the record any evidentiary support for most of these conclusions. The assessment officer herself recognized, earlier in her decision, that the client was becoming less and less concerned about recovering any money or chattels from his former girlfriend and was increasingly focused on subjecting his former girlfriend to “litigation for its own sake.” It need hardly be said that responsible lawyers should discourage clients from prosecuting litigation on this basis and, indeed, in most cases should refuse to do so. Further, the evidence is very clear that Mr. Labow consistently took the position in communications with the client that he was not prepared to commence litigation (and thereby become solicitor of record) until he had been fully paid and had at least a monetary retainer against future disbursements.
[39] While it well it may well be a best practice for solicitors to forward copies of all correspondence sent and received directly to the client, there was no evidence that this created any prejudice or difficulty for the client apart from, possibly, some modest increase in cost, since the lawyer had to summarize his dealings with opposing counsel in his own reporting letters. Again, however, the assessment officer failed to identify any specific monetary impact associated with this need to summarize the correspondence.
[40] It became clear from lawyer’s negotiations with opposing counsel early on that there were two mortgages on the property and that there was very little equity. Accordingly, short of challenging the propriety of the mortgages, it became evident that the client’s claim to a 50% interest in the property had little value. It also became clear that, if he succeeded in his claim to a 50% interest, he would likely become liable for 50% of the liabilities associated with the property. As noted above, the client, at least in retrospect, took the view that, irrespective of value, he wanted to proceed with litigation “at all costs.”
[41] The assessment officer appears to criticize the lawyer both for his failure to identify the lack of equity earlier and for his failure to prosecute the client’s claim in accordance with the client’s instructions. I find these criticisms somewhat contradictory and puzzling. The evidence reveals that the lack of equity due to the mortgages became apparent early on. The lawyer identified the potential weaknesses in the client’s case and urged the client to assemble documents to deal with those issues; that is, his contributions to the purchase and carrying costs of the property and his lack of knowledge or benefit from the second mortgage and the refinancing.
[42] The assessment officer was, however, entitled to weigh the amount billed against value received in order to determine whether the billings were appropriate. She concluded:
Given the likelihood of there being little or no equity in 6 Poulton, and without any material evidence to support Mr. Baker’s other property claims, one must seriously question what if any strategy Mr. Labow was pursuing on behalf of his client and what he thought he could realistically achieve for his client in the circumstances. By the end of his retainer, and after billing Mr. Baker almost $18,000 in additional costs, Mr. Labow achieved very little if any results for Mr. Baker.
[43] She also put this observation in the context of what the client might reasonably have expected to pay, referring to the lawyer’s correspondence in which he advised the client that issuing a statement of claim and obtaining a certificate of pending litigation in the civil matter would likely cost at least $6,0000 to$10,000. In this particular case, the lawyer ran up a bill of almost $18,000 without doing either.
[44] The assessment officer’s findings on the facts are entitled to considerable deference. I have found that some of her specific criticisms, which are entitled to deference as being supported by some evidence, were, however, not specifically tied to any amount that should be taken off the account. I also found that some of her criticisms, for example, regarding the lawyer’s competence in handling the file, were not supported by the evidence.
[45] Given my findings that the lawyer’s accounts for the criminal matter were beyond the jurisdiction of the assessment officer, the net effect of the assessment officer’s reduction in the lawyer’s accounts on the civil matter is that the lawyer received nothing for the work he did on the civil matter.
[46] Whatever can be said about the lawyer’s charges in relation to the benefit the client received and the lack of any substantial result, or even significant progress in advancing the litigation, it was, in my view, an error in principle to allow the lawyer absolutely nothing for the services he did perform.
[47] As a result of the lawyer’s services and negotiations with the former girlfriend’s lawyer, the client was made aware that: a) there was little equity in the property; b) the client potentially faced a claim by the former girlfriend for child support; c) the client signed a deed of “gift” to the former girlfriend of $25,000 (the client had told the lawyer that this $25,000 was his contribution to the purchase of the home); and d) the former girlfriend took the position that the client had never lived in the property at 6 Poulton. In short, the client was not going to prevail in any claim to the property without a fight and serious exposure to contrary claims.
[48] Faced with these potentially negative facts, the lawyer tried, correctly in my view, to explore settlement and succeeded in obtaining an offer to settle from the girlfriend’s lawyer. While this offer was not acceptable to the client, it was the product of the lawyer’s efforts on the client’s behalf.
[49] Although one option would be to send the matter back to address these shortcomings in the assessment officer’s Certificate, this would merely add to the serious delay and cost which has been occasioned by this process to date. It is for this reason alone that I decline to do so.
[50] It appears to me that the specific items identified by the assessment officer relating to “overhead” should be valued at approximately $2,500. The lawyer has, in effect, also already voluntarily reduced the amount of his bills by over $4,500 by virtue of the fact that he was not paid and is not seeking payment of this amount billed.
[51] The discrepancy between the remaining amount billed to and paid by the client and the value obtained by the client for the services represented in those billings is matter of judgment and difficult to define. Having regard to all of the circumstances, in my view the appropriate reduction for the factor of result achieved and the value received for fees expended, in addition to the “overhead” charges of $2,500, is a further $5,000 for a total rebate payable to the client of $7,500 with interest from May 26, 2009.
Conclusion
[52] In the result, therefore, the Certificate is varied by providing for no rebate to the client in connection with the criminal matter and a rebate to the client from the lawyer regarding the civil matter in the amount of $7,500 with interest from May 26, 2009.
Costs
[53] There being divided success, I make no order as to costs.
Penny J.
Date: March 4, 2014