CITATION: Markovski v. Hanuka, 2015 ONSC 1968
COURT FILE NO.: CV-15-523306
DATE: 20150326
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Blagoja Markovski
Applicant
– and –
Ben Hanuka
Respondent
Unrepresented
Ben Hanuka, for the Respondent
HEARD: March 26, 2015
REASONS FOR JUDGMENT
SEAN F. DUNPHY, J.
[1] This is an application under the Solicitors Act, R.S.O. 1990, c. S-15 by the client/applicant Blagoja Markovski to refer for assessment the accounts of his (former) solicitor, the respondent Ben Hanuka (practicing as Law Works P.C.).
[2] The background is comparatively simple. Mr. Markovski retained the respondent by way of a retainer dated on or about August 23, 2012 to act in his behalf in defending a law suit between neighbours (Portelli v. Markvoski, CV-12-460166).
[3] As (unfortunately) often happens in litigation, there was a flurry of initial activity followed by a somewhat lengthy period of dormancy. The Statement of Defence appears to have been filed by March, 2013.
[4] The file reveals that the client paid a total of $15,000 in retainers at the beginning of the matter. Against this, accounts were rendered on September 25, 2012, January 16, 2013, February 28, 2013 and April 1, 2013. At this point, there remained $457.51 of the original $15,000 retainer unapplied.
[5] On April 9, 2013, the respondent sent his client a letter requesting a further retainer in the amount of $15,000. This amount was said to be needed to cover finalization of his own affidavit of documents. review of the plaintiff’s (as yet undelivered) affidavit of documents and productions, two days of discovery preparation and two further days of discovery. The letter suggested that counsel was in the “advanced stages” of preparing an affidavit of documents listing the (handful) of documents in the applicant’s possession. The applicant was warned that failure to find the funds requested might result in a slow-down of the litigation schedule which the plaintiff might not agree to and which might result in prejudice and noted the intention of the applicant to speak to his bank about financing in order to enable him to “continue aggressively defending this lawsuit”. Notably absent from this letter was any suggestion that the plaintiff was taking any steps to advance this litigation through its paces. Mr. Markovski’s position is that the plaintiff appeared to be interest in the matter and he (Mr. Markovski) wished to “let sleeping dogs lie”.
[6] The respondent sent the applicant a further letter dated May 2, 2013 confirming his instructions from the applicant to take no further steps in the litigation until further instructions are received. The letter contains extensive warnings from the respondent to his client against adopting this course of action. The letter states “I advised you in great detail the likely negative consequences that such a long inactivity may have on your defence of the plaintiff’s claim against you”. The letter mentions a number of milestones provided for in the Rules of Civil Procedure and suggests that the defendant might suffer consequences of failing to force the potentially dormant plaintiff through, suggesting somehow that the defendant’s failure to force the plaintiff to act will cause the plaintiff to “smell blood”. The letter concludes with a plea that the applicant reconsider and a warning that failure to provide instructions may lead to the respondent firm having to seek an order removing themselves from the record. The letter contains no discussion of the possible benefits of a “let sleeping dogs lie” approach and is quite clear and unequivocal in pressing for a go-ahead on an aggressive style of pursuit of the defence of the case.
[7] On May 29, 2013 a further account was rendered which consumed the balance of the original retainer amount leaving a balance due of $1,519.99. This was paid by cheque dated June 10, 2013 and cashed a few days later.
[8] The respondent ultimately followed his client’s advice to let sleeping dogs lie– or mostly so – and docketed no time after July 3, 2013. The plaintiff showed no signs of life from March, 2014 until June 12, 2014 when the plaintiff apparently returned to life, doubtless spurred on by fears of a status hearing. Requests for a timeline, discovery schedule etc. appear to have been made. Notably absent from the plaintiff’s efforts at reviving interest, however, was an affidavit of documents.
[9] I pause here to note that in the post-Hryniak[^1] world, letting “sleeping dogs lie” may seem counter-intuitive. However, this defendant in a law suit of his neighbour’s confection which was threatening to consume many thousands of dollars in legal fees on an issue whose value may objectively be a fraction of that amount, could well decide that a “wait and see” approach is more appropriate than shaking the tree as vigorously (and expensively) as possible to see whether the plaintiff will make an advantageous settlement offer or decide to fold his or her tent and go home. Effective litigation is no longer scored by the number of motions brought but by the efficiency with which a dispute is resolved. If a matter is destined to die on the vine, a defendant need not water it.
[10] The balance of the story can be quickly told – over the summer of 2014, the respondent pressured the applicant to deliver a Notice of Intent to Act in Person. Eventually, the applicant did so. The respondent delivered a further and final account dated August 15, 2014. The account lists $1,700.65 in fees and disbursements but, inexplicably, the last page of the bill refers to “total fees, disbursements & HST” of $1,661.54 and a “previous balance” of $9347.51. Neither figure has any support whatsoever in the account rendered nor even from prior accounts. Whatever the explanation, the only amount sought by the respondent was $1,661.54.
[11] In a letter dated December 11, 2014, the respondent replied to the applicant’s request to pick up his file by indicated that he would need to address the payment of the outstanding invoice of $1,661.54 from August 15, 2014 and offered to waive collection of this amount “if we are able to amicably settle the outstanding A/R”. On January 7, 2015, the respondent delivered the original materials received from the client back to the applicant. The cover letter makes no mention of “an amicable resolution of the A/R issue” having been reached.
[12] There are three issues to be resolved on this application:
What use, if any, can be made of the affidavit of Josie Ponzo filed by the respondent on this application?
May any or all of the accounts in question be treated as “interim accounts” under the Solicitors Act?
Do special circumstances exist warranting the referral of the accounts to assessment notwithstanding their payment?
Issue 1: Affidavit of Ponzo
[13] The respondent filed an affidavit of his clerk, Josie Ponzo. The affidavit contains numerous instances of improper hearsay information without so much as a statement in the belief as to their truth. I cannot accept an affidavit from the respondent’s law clerk attesting to the content of telephone conversations between Mr. Hanuka and Mr. Markovski.
[14] The respondent – as a Certified Specialist in Civil Litigation - ought to know better. Accordingly, I am striking out all but the first sentence of paragraph 9, all of paragraph 17, 18, 21 and 24 of Ms. Ponzo’s affidavit. Those paragraphs do nothing more than recite matters within Mr. Hanuka’s knowledge and are entirely improper.
Issue 2: Interim Accounts
[15] The decision of Lederman J. in Coventree Inc. v. Stockwoods LLP, 2012 ONSC 2737, contains a very succinct summary of the law relating to assessment of solicitor’s accounts. As Justice Lederman noted in that case, there is a limitation period of one year imposed by Section 4 of the Solicitors Act but the time period does not begin to run until the final account is rendered where interim accounts are rendered. It is a question of fact in each case as to whether prior accounts are, in the circumstances, to be treated as interim or final for the purposes of the s. 4 limitation period (c.f. Coventree at paras. 16, 17 and 20).
[16] I have concluded that the accounts rendered by the respondent in this case listed above should be treated as interim accounts with the “final” account being the account of August 15, 2014, rendered at the point where the solicitor-client relationship had broken down and steps had been taken to remove the respondent from the record in the pending litigation.
[17] This is not a case like Coventree where, although the accounts were rendered in that case in the context of on-going proceedings, the clients were sophisticated and had their own legal advice and counsel. The retainer in this case was in relation to a single piece of litigation. The plaintiff had provided an initial retainer of $15,000 which was progressively drained by successive accounts and the relationship appears to have foundered on the insistence of the respondent for a new retainer.
[18] There was no on-going relationship between the parties relating to multiple matters. This was a “one-off” situation. The accounts rendered were silent as to whether they were “interim” or “final”.
[19] I am persuaded by the reasoning of the Court of Appeal in Price v. Sonsini, 2002 CanLII 41996 (ON CA) which considered the matter of interim accounts (at para. 16, emphasis added):
“(16) The respondent submits that this general principle has no application to the one-month limitation period found in s. 3 and that the appellant was required to obtain an order for assessment from a judge pursuant to s. 4 or s. 11 of the Solicitors Act. I would reject that submission. Interim accounts are necessary as a matter of commercial reality, even though it may be difficult to assess the value of legal services before the solicitor's work is completed. A rule that required clients to move for immediate assessment of interim accounts would force clients into the invidious position of straining, if not rupturing, the solicitor-client relationship before the retainer has ended. Clients should not be forced to choose between harming the solicitor-client relationship and foregoing the right to have an interim account assessed. Rather, under s. 3, clients should be entitled to move for an assessment of an interim account within one month of delivery of the final account.”
[16] It would be unreasonable to expect the applicant in this case to risk the on-going solicitor-client relationship upon which he depended to protect his interests in the pending litigation by stopping the process in mid-stream to assess his solicitor’s accounts each month or two, particularly where he only developed an understanding of his objections to the accounts as his experience and familiarity with the progress of his own case grew over time.
[17] It seems reasonable to me to find that legal accounts rendered to an unsophisticated client from time to time in the context of a retainer restricted to a discrete matter (i.e. not part of an on-going relationship) will be treated as presumptively interim absent an informed understanding by the client of the difference between interim and final accounts especially where the accounts themselves are not so identified. While payment of accounts (as in Coventree) may be an indication of client satisfaction with value received for services rendered, that assumption is less valid where an upfront deposit of a retainer is being consumed over time (as here) or where the client is unaware of the potential of losing rights to question accounts by reason of their payment.
[18] I find that Mr. Markovski has acted with reasonable diligence in proceeding to enforce his right as client to have the accounts assessed after the final account was rendered and the relationship terminated in August, 2014. I find that each of the accounts rendered by the respondent with the exception of the August, 2014 account, were interim. I am exercising my discretion under the Solicitor’s Act to order the accounts be referred for assessment notwithstanding their prior payment.
Issue 3: Special Circumstances
[19] By reason of my finding on the interim account issue, I am not required to find additional special circumstances in order to exercise my discretion to send these accounts to assessment as requested. I shall however briefly review the special circumstances I also find exist.
[20] Mr. Markovski raised two main circumstances for consideration. Firstly, he notes that while his written retainer agreement authorized charging of clerk time at $175 per hour for senior clerks, he was charged $200 per hour with no indication of the level of the clerk in question. While the amounts in question may appear small to some, they are not small to him. This ground would appear to me to be justified. Secondly, he points to the overall assessment that his lawyer charged him more than $15,000 for advice when, at the end of the day, all that was accomplished was the filing of a statement of defence by the time the relationship was severed. None of the other matters billed resulted in any benefit to him or advancement of the case.
[21] Upon a review of the file before me – and bearing in mind that Mr. Hanuka has not yet responded on the merits to the concerns raised (that will be for the assessment officer to consider), I find that Mr. Markovski’s second ground has sufficient prima facie merit to warrant exercising my discretion and referring the matter for assessment.
[22] The accounts reflect a significant level of activity but very little in the way of concrete results in terms of advancing the matter. Motions are considered and even drafted but not pursued; the preparation of an affidavit of documents is repeatedly referenced notwithstanding the fact that the client only had a handful of documents and some photos. At the end of the day, the respondent advanced the case only to the point of filing a statement of defence and then refused to proceed further without a further $15,000. The applicant has thus had to pick up the pieces and proceed to a status hearing on his own. He questions whether the fees are reasonable having regard to the progress made and steps taken. I think there are prima facie grounds for his questions that he ought to have the right to examine.
[23] There are at least some grounds to suspect that the respondent solicitor has been more concerned to create activity than to ascertain and advance his client’s interest. Litigation strategy after all must consider the objectives and means of the client in light of the importance of the issues to the client. If, as the applicant says, he had a reasonable belief that his neighbour was losing interest in pursuing the litigation and that, accordingly he (the applicant) wished to let sleeping dogs lie and see what signs of life the plaintiff might show, the respondent’s letters of May 2, 2013 and April 9, 2013 suggest ad advocate seeking to pursue a more aggressive course than his client wanted or needed. These will be matters for the assessment officer to consider.
[24] The amounts at issue in this case may not be great by the standards of litigation, but they are and were significant by the standards of the pocket book of the client. Pursuit of action for its own sake, exaggeration of efforts required (the were almost NO documents in this case and yet the process of preparing an affidavit of documents was being needlessly portrayed as requiring significant efforts) - all of this raises reasonable questions as to whether all or part of the accounts in question reflect a lack of focus on the client’s interest and possible wasted effort to little concrete effect. I would find special circumstances exist to question the value of the work being billed in the circumstances of this case.
Disposition
[25] In the result, I am satisfied that special circumstances exist, the accounts rendered are to be treated as interim and all of them should be referred for assessment as requested.
[26] Costs for the application are fixed at $500 payable to Mr. Markovski forthwith.
Sean F. Dunphy, J.
Released: March 26, 2015
CITATION: Markovski v. Hanuka, 2015 ONSC 1968
COURT FILE NO.: CV-15-523306
DATE: 20150326
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Blagoja Markovski
Applicant
– and –
Ben Hanuka
Respondent
REASONS FOR JUDGMENT
Sean F. Dunphy, J.
Released: March 26, 2015
[^1]: Hryniak v. Mauldin [2014] S.C.R. 87