Court File and Parties
CITATION: Romero v. Turnbull, 2015 ONSC 3638
COURT FILE NO.: 8029/12
DATE: 2015/06/04
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Custodio Moreno Romero (Plaintiff)
AND: Max Turnbull (Defendant)
BEFORE: Justice B. W. Miller
COUNSEL: K. Arvai, for the plaintiff/moving party S. Li, for the responding party, Patey Law Group
HEARD: May 26, 2015
ENDORSEMENT
[1] The plaintiff, Custodio Romero, brings this motion for an order requiring his former solicitor, Patey Law Group (“Patey”), to deliver his files to his new solicitor, Karl Arvai Professional Corporation (“Arvai”).
[2] Following a breakdown in the solicitor-client relationship between Mr. Romero and Patey, Patey requested Mr. Romero to obtain new counsel. Mr. Romero agreed and retained Arvai. What is in issue is the terms of a solicitor’s lien asserted by Patey for fees and disbursements incurred on Mr. Romero’s behalf.
[3] Mr. Romero has agreed to pay Patey’s fees and disbursements, subject to assessment, out of any settlement or litigation proceeds from this action. He agrees that Patey’s fees and disbursements are to be protected by a first charge against the settlement or litigation proceeds, and he has directed Arvai accordingly. Patey is content with Arvai’s undertaking with respect to fees, but takes the position that either Mr. Romero or Arvai should pay the disbursements incurred by Patey to date, in the amount of $4,358.56, as well as a $300 file duplication charge.
Background
[4] The underlying litigation is a claim for damages arising from a motor vehicle accident on August 29, 2010.
[5] Mr. Romero retained Patey on February 18, 2011 and executed a retainer agreement (the “Retainer Agreement”).
[6] The Retainer Agreement is set out in a single page. It is, in essence, a contingency fee agreement. The relevant sections relating to payment of disbursements are set out below:
In the event that I decide in the future to terminate your services, I agree to your hourly fees for all work conducted on my matter, plus disbursements, plus H.S.T. on all services performed up to the date of termination of your services.
PATEY LAW GROUP reserves the right to charge you at its full hourly rate and demand a retainer in the event: you wish to continue with litigation against our recommendation to do so; and/or have misrepresented your claim with respect to any issues involved; and/or should you withdraw your claim at any time prior to settlement; and/or become noncompliant with our and/or the defendant/insurer’s reasonable requests.
I agree to pay to you your proper processing fees and disbursement plus H.S.T. on all services performed and to pay an interest penalty of 2% per month/ 24% per annum on all overdue accounts.
I acknowledge having read and received a copy of this retainer and that I am liable for payment of your fees and disbursements incurred in this matter.
[7] Mr. Romero was on social assistance prior to the accident, and since the accident has been receiving support through the Ontario Disability Support Program. He is impecunious and has deposed that he cannot afford to pay the outstanding disbursements, and that he never expected that he would be called on to pay them prior to settlement or conclusion of the litigation.
[8] Patey dismissed Mr. Romero as a client in January 2015. It has been holding Mr. Romero’s file since that time.
[9] Arvai has advised that although it is willing to fund Mr. Romero’s disbursements going forward, it is not prepared to pay the disbursements incurred to date, and will not take on Mr. Romero as a client if it is required to do so.
[10] Patey has asked that I take judicial notice of Mr. Romero’s ability to obtain financing from commercial enterprises in Ontario that exist to finance litigation. I am unable to do so, and there is no evidence before me about the availability of credit to fund litigation generally, or whether any lender would be willing to fund Mr. Romero.
Analysis
[11] Rules 15.03(4) and (5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, permit the court to determine the right of a former solicitor to a lien and ‘to impose such terms as are just in connection with the lien and its discharge.’
[12] Several factors are significant in determining what is just in these circumstances, including the terms of the Retainer Agreement, the interests of former counsel in being reimbursed, the interests of new counsel, and any prejudice that might be caused to the plaintiff (Kupnicki v. Macerola (2007), 2007 CanLII 23912 (ON SC), 86 O.R. (3d) 468 (Master Glustein)).
(i) The Retainer Agreement
[13] The terms of the Retainer Agreement are an appropriate place to begin the analysis. Although the court is not bound by it, the Retainer Agreement evidences the intentions and expectations of the parties. Absent some compelling reason to the contrary, the Retainer Agreement should be respected.
[14] Patey takes the position that clause 10 of the Retainer Agreement generates an obligation to pay disbursements at the time an account is rendered, with the timing of the account being at the discretion of Patey.
[15] Clause 10 suffers from a number of ambiguities and its meaning is not entirely clear. On my reading, it is an agreement to pay (1) ‘processing fees’ (although it is not clear from the agreement what these might be), (2) disbursements, (3) HST on fees and disbursements, and (4) interest on overdue accounts.
[16] That is all that it provides. It is silent as to when these amounts become due and payable. Patey has argued that clause 10 creates an obligation to pay these amounts on receipt of an invoice.
[17] I cannot agree with that submission. There is nothing in clause 10, and nothing in the entirety of the Retainer Agreement, that speaks to when disbursements are payable. Fees, in the ordinary course, are calculated on the basis of a percentage of settlement proceeds, as per clause 4. Presumably, then, fees are payable at the conclusion of the matter. It would be reasonable to expect that, absent any specific provision in the Retainer Agreement to the contrary, disbursements would be payable at the same time.
[18] There is nothing in the Retainer Agreement that requires payment of disbursements on an on-going basis, or on demand, and in fact, no demand for payment was ever made by Patey to Mr. Romero prior to the breakdown of the relationship.
[19] What is the effect of termination of the retainer? The Retainer Agreement does not address termination by Patey. On termination by the client, per clause 6, the client agrees to pay fees on an hourly basis, and to pay disbursements that have been incurred. But even if Mr. Romero was the party terminating the retainer, the Retainer Agreement is silent as to when those fees and disbursements are to be paid.
[20] On reading the Retainer Agreement it would be reasonable for Mr. Romero to believe, as he evidently did, that changing lawyers (at the instance of either party) would not generate an account that would be immediately payable.
[21] The Retainer Agreement is only one factor to consider, although an important one.
(ii) Prejudice to the former solicitor
[22] Patey’s interests are clear enough. No longer having conduct of the file, it wishes to reduce its financial exposure. Contingency fee arrangements are inherently risky, but it was willing to carry the risk of non-payment of its fees and disbursements in the expectation of a reward if successful. Now that the litigation is no longer in its hands, it is willing to continue carrying the risk of non-payment of fees (indeed it has no choice given that no fees are currently payable under the terms of the Retainer Agreement), but believes that either Mr. Romero or his counsel should carry the cost of disbursements.
[23] As in Kupnicki, supra, Patey ‘could have insisted on the plaintiff paying for disbursements prior to them being incurred, or immediately thereafter.’ It could have done this through the Retainer Agreement. If it had done so, it would have risked losing Mr. Romero as a client because of his financial inability to accept those terms. It offered terms that it believed would be mutually advantageous to both Mr. Romero and Patey. There is no unfairness in holding Patey to its bargain.
[24] The interests of Patey can be sufficiently protected by a charging order against the proceeds of settlement or litigation. It is of course possible that there will be no such proceeds, but this is a risk that Patey had undertaken in any event.
(iii) Interests of new counsel
[25] Patey objects that it is unfair that it is now partially funding litigation that is carried on by Arvai, and over which it has no control. This cuts both ways. Arvai is now doing work that may ultimately benefit Patey on settlement. In any event, Arvai cannot be forced to take on a client on terms that it does not accept, and it does not choose to bear the risk of Mr. Romero’s outstanding disbursements.
(iv) Prejudice to the plaintiff
[26] Mr. Romero was not expecting to have to immediately pay an account for disbursements on the termination of the retainer. He did not arrange his financial affairs accordingly, nor could he have done so given the precariousness of his circumstances. The solicitor who is willing to take on his file is not willing to assume the disbursements. There is no evidence before me that any other person or entity is willing to do so. The only prospect that is before me is that his retainer of Arvai would be terminated if Arvai were required to pay the disbursements as a condition of the release of the file, and he would be self-represented.
Conclusion
[27] Taking into account all of the above, and particularly the terms of the Retainer Agreement and the opportunity that Patey had to arrange matters differently on entering the retainer had it so wished, I grant the plaintiff’s motion requiring Patey to deliver the files to Arvai within 30 days. Arvai is to pay the reasonable fees of Patey for copying the file, which I accept to be $300.
[28] Costs of the motion are payable to the plaintiff in the amount of $1,000 inclusive of disbursements and HST.
“Justice B. W. Miller”
Justice B.W. Miller
Date: June 4, 2015