SUPERIOR COURT OF JUSTICE - ONTARIO
CITATION: Wilson and Edward, 2015 ONSC 596
COURT FILE NO.: CV-09-5587-00
DATE: 2015-01-26
RE: DAVID S. WILSON and MARIA EDWARD
BEFORE: LEMON J.
COUNSEL: Mr. R. Plate, for the Applicant
Mr. J.W. Bruggeman, for the Respondent
HEARD: December 10, 2014
ENDORSEMENT
The Issue
[1] Mr. Wilson provided his legal account to Ms. Edward. Ms. Edward had the account assessed by an assessment officer. Mr. Wilson brings this motion to oppose the confirmation of that report and the certificate of assessment.
[2] While a number of accounts were before the assessment officer, the only dispute that I am to deal with relates to an account dated October 17, 2009. This account was for services performed by Mr. Wilson for Ms. Edward relating to litigation with Allstate Insurance Company of Canada. The account in total, inclusive of fees and disbursements, was $336,626.13. After assessment, the account was reduced to $205,376.13.
[3] Mr. Wilson says that the assessment officer was wrong in that determination.
Background
[4] Ms. Edward retained Mr. Wilson with respect to her claim for motor vehicle accident benefits. He had taken over the file from an earlier lawyer. That lawyer had been able to obtain a proposed settlement from Allstate in the amount of $50,000 plus costs of $7,500 plus GST and disbursements. Ms. Edward responded to that offer advising “try to get more, otherwise we accept this offer”. That settlement did not proceed and Ms. Edward changed lawyers. After further extensive work carried out by Mr. Wilson, the matter was settled by Allstate paying $800,000 in addition to $252,000 for costs.
[5] Following the settlement, Mr. Wilson delivered a summary account in the amount of $300,000 plus GST of $15,000, plus a disbursement account of $20,632.46, plus GST for a total account of $336,626.13. In his evidence before the assessment officer, Mr. Wilson said that one part of that account was a $100,000 premium for significant success on his part.
[6] The bill delivered by Mr. Wilson was described by the assessment officer as:
“a brief thirty-word description of services and a promise ‘particulars of services to be provided at a later date’. There is no indication as to how the sum charged for fees was calculated. Details of the bill as contained therein are as follows:
October 17, 2009
Re: M.V.A. dated March 4, 1996
-Edwards v. Allstate insurance of Canada
Fees $300,000.00
GST on fees $ 15,000.00
Disbursements $ 20,632.46
Applicable GST $ 993.67
Total $336,626.13
The bill indicates on its face that it was paid from funds of the client which Wilson held in trust.
[7] The reasons for the assessment officer’s decision relating particularly to this account was as follows:
In exercising my statutory authority in assessing a bill pursuant to the Solicitors Act, I must always be mindful of and be guided by the factors for consideration by assessment officers approved by the Court of Appeal in Cohen v. Kealey & Blaney, (1988), 26 C.P.C. (2d) 211, as follows:
The time expended by the solicitor;
The legal complexity of the matters 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 solicitor;
The results achieved;
The ability of the client to pay; and
The reasonable expectation of the client as to the amount of the fee.
I have carefully considered the evidence before me in the context of all of the nine factors.
Bill dated October 17, 2009 – Settlement with Allstate
and
Bill dated December 1, 2009
Wilson’s evidence is that a total of 295.68 hours of his time is attributable to the services covered by this bill and the bill dated December 1, 2009. I have rounded that figure to 300 hours. It would not be unusual or unreasonable for a solicitor of Wilson’s experience obtaining excellent results to be paid $500.00 per hour through at least a substantial portion of the period of the Client’s retainer. I have applied that rate for a resulting figure of $150,000.00 and added $50,000.00 as a premium for outstanding success. I have pro-rated the resulting $200,000.00 for total fees between the two bills in the approximate proportion of the two gross recovery amounts.
Without dealing specifically with each factor in detail, I have carefully applied the above-noted nine factors I am required to consider. I have also considered the risks incurred by Wilson.
It is difficult to undertake the exercise herein required of me by law without appearing to be arbitrary in establishing the amount which I allow on assessment for fees, charges or disbursements. It would be a hopelessly unsuccessful attempt to delude myself and the world to apply some mathematical formula to arrive at the allowance on assessment. As unsatisfactory as the process may appear, I have, in assessing bills for nearly thirty years, discovered no scientific method to replace mere experience and objectivity in arrive at a decision in an assessment pursuant to the Solicitors Act.
I take comfort and confidence in the fact that my methodology appears to have a more discernible and objective basis than that applied in the preparation of the bills as delivered and ordered before me for assessment.
For the reasons I have outlined, I allow the bill dated October 17, 2009, pertaining to the Allstate settlement as follows:
Fees $175,000.00
GST on fees $ 8,750.00
Disbursements $ 20,632.46
Applicable GST $ 993.67
Total $205,376.13
The sum of $336,626.13 having been paid, the Client is entitled to a refund of $131,250.00.
Positions of the Parties
[8] Mr. Wilson agrees that there was no written retainer and that he was not operating on a contingency agreement. His position is that the account was to be based on an hourly basis plus a correspondence fee, disbursements and a premium based on success.
[9] However, he submits that the assessment officer provided insufficient reasons for his determination, failed to consider all nine factors in Cohen despite a proforma listing of the factors. In particular, the assessment officer failed to refer to evidence given by Allstate’s counsel relating to the legal complexity of the matter, the degree of skill and competence demonstrated by the solicitor and the results achieved. Finally, the assessment officer failed to consider that the bill as assessed was less than the amount paid by the defendant.
[10] In response, Ms. Edward submits that the reasons are sufficient and, taken in context, the assessment officer considered the appropriate factors. Taking the reasons as a whole, there was no error in principle and deference should be given to his assessment.
Legal Authorities
[11] The factors to be considered in the assessment of solicitor’s accounts are set out in Cohen v. Kealey & Blaney, (1985), 10 O.A.C. 344,[1985] O.J. No. 160 (C.A.) and Bales Beall LLP v. Fingrut, 2012 ONSC 4991; at para. 14, [2012] O.J. No. 4762,aff’d on appeal, 2013 ONCA 266, [2013] O.J. No. 1917.
[12] On a motion for the confirmation of an assessment, considerable deference is to be paid to the assessment officer’s decision. The assessment officer’s decision will not be altered unless it is clear that the assessment officer applied a wrong principle or came to a wrong conclusion. In Rabbani v. Niagara (Regional Municipality), 2012 ONCA 280, [2012] O.J. No. 1868, the Court of Appeal said at para. 6:
The standard of review on an appeal from an assessment officer’s decision is well established. The order below is discretionary. The hearing is an appeal, not an opportunity for the reviewing court to rehear the assessment and come to its own conclusion as to what is reasonable, absent an error in law, misapprehension of the evidence, palpable and overriding error on a factual matter, or an assessment amount that is so unreasonable as to constitute an error in principle. The assessment officer’s decision was entitled to considerable deference absent such error. See Samuel Eng & Associates v. Ho (2009), ONCA 150 ().
[13] This court cannot deal with questions of amount or how the assessment officer reached his conclusion unless there is:
a) an error in law;
b) misapprehension of the evidence;
c) palpable and overriding error on a factual matter; or
d) the assessment is so unreasonable as to constitute an error in principle.
See Mark M. Orkin, The Law of Costs, 2nd ed. looseleaf (Aurora Ont.: Canada Law Book, 2013), at para. 603.4 (1).
[14] I have the jurisdiction to confirm the Report, refuse to confirm the Report and refer the matter back for a further assessment, or to assess the costs myself: see Bales, at para. 7.
[15] Justice Ricchetti had an opportunity to review the same assessment officer’s reasons in Kania v. Barhani 2014 ONSC 2855. There he said:
[88] An Assessment Officer is required to set out his or her reasons for the assessment. This requires an analysis of the appropriate factors and a proper review of the evidence. Failure to do so is an error in principle. This was described by the court in Gardiner v. Field, [1999] O. J. No. 3790 (S.C.), at para. 7:
I am satisfied, however, on the facts of this case, that the Assessment Officer did in fact err in not providing an analysis of the actual time spent by the solicitors, and that his reasons for the drastic 77% reduction in the accounts are totally inadequate, and indicative of an arbitrary determination to reduce the accounts to the $16,000 already paid by the client. This lack of analysis and proper review of the evidence to arrive at a result is, I find, arbitrary and an error in principle. It is the duty of an Assessment Officer to review in detail the evidence presented, and to provide detailed reasons for his findings.
For these reasons the report of the Assessment Officer is therefore not confirmed. [Emphasis added.]
[89] The failure to set out the application of the relevant factors to the relevant evidence in the case before the assessment officer was also found to be an error in principle in Hooper v. Sheehan, 2012 ONSC 4315,[2012] O.J. No. 338, at paras. 19-21 and in Consky v. Farooq, 2011 ONSC 5148, at para. 39.
[90] Justice Lauwers in Bales, described the assessment officer’s failure to demonstrate his path of reasoning to be an error in principle. Justice Lauwers stated the following:
[15] Checklists are useful to decision makers so long as they serve as triggers for analysis and not substitutes for it. The list is not to be applied in a rote fashion, thereby giving a patina of “justification, transparency and intelligibility within the decision-making process,” to use the words of Dunsmuir. The task of the reviewing court is to probe the reasoning and the evidence to ensure that the tribunal has gone beyond result-selective reasoning to grapple with the real issues. In Consky v. Farooq, 2011 ONSC 5148, 2011 ONSC 5148, [2011] O.J. No. 3890, Corbett J. noted at para. 39, and I agree, that there must be real analysis, not simply “conclusory reasoning”; the decision must “demonstrate the path of reasoning taken by the assessment officer from facts to conclusion.”
[91] In this case, while Assessment Officer Canning set out the applicable factors, there was no analysis of any of the factors. In fact, Assessment Officer Canning appeared to have simply used his experience to arrive at a number at p. 16:
As unsatisfactory as the process may appear, I have, in assessing bills for nearly 30 years, discovered no scientific method to replace mere experience and objectivity to arrive at a decision in an assessment pursuant to the Solicitors Act.
Analysis
[16] I do not accept that the assessment officer necessarily erred simply because his assessment was lower than the costs agreed upon by Allstate. The factors to be considered are different in each process. See: Regan v. Petryshyn [2007] O.J. No. 3942 (S.C.J.).
[17] In my view, however, the assessment officer’s reasons, apparently prepared in a “cut and paste” (See: Kania) method are insufficient to allow for appellate review. He has failed to consider the necessary factors, but instead, has simply applied his “mere experience and objectivity”. While he may “take comfort and confidence “ in his methodology, that methodology has not been set out in his reasons. There are, in fact, no intelligible reasons setting out how this particular bill was reduced by over $100,000.00. It is not clear how he applied the usual nine factors. As such, it cannot be confirmed.
[18] Rather than send this five year old account back for a further assessment, I will carry out the assessment myself based on the facts as found and the materials provided:
- The Time Expended by a Solicitor.
[19] There seems little dispute that the solicitor’s account was based on hours plus correspondence, plus a premium for success. Mr. Wilson’s evidence was that he spent 295.68 hours on the file; rounding that to 300 hours is satisfactory. There appears to be no dispute with respect to the disbursements of $20,632.46.
- The Legal Complexity of the Matters Dealt With
[20] Although Ms. Edward and her spouse disputed that the file was complex, there is no doubt that it was. Motor vehicle accident benefit law is exceedingly complex. Here, there were a number of legal and factual issues, most of which, on their own, could have proved disastrous for Ms. Edward had they been determined against her.
- The Degree of Responsibility Assumed by the Solicitor
[21] Mr. Wilson was the sole counsel for Ms. Edward when he acted on the file. If he had not been successful on her behalf, both would have gone without remedy.
- The Monetary Value of the Matters in Issue
[22] Prior to taking over the file, Ms. Edward’s former counsel had obtained an offer to settle the claim for approximately $60,000.00. Ms. Edward was prepared to accept that offer. Once Mr. Wilson was involved and carried out his efforts, the matter was settled for $800,000.00 in addition to payment of $252,000.00 for costs. The monetary value was significant to Ms. Edward.
- The Importance of the Matters to the Client
[23] Given the figures set out above, this was obviously important to the client.
- The Degree of Skill and Competence Demonstrated by the Solicitor
[24] The results speak for themselves. Further, at the assessment, Mr. Wilson called counsel who acted for the Allstate. That counsel testified to the significant skill and expertise of Mr. Wilson.
- The Results Achieved
[25] One can see that the results were significant when compared to the first offer and to the possibility of losing outright.
- The Ability of the Client to Pay
[26] Ms. Edward was impecunious and, without success, would be unable to pay any account to Mr. Wilson.
- The Reasonable Expectation of the Client as to the Amount of the Fee
[27] Herein, the real issue to be considered.
[28] The only written document pertaining to fees was a May 5, 1997 letter sent to Ms. Edward’s spouse. At that time, Mr. Wilson was acting for both. In that letter he indicated that his fees were based on an hourly rate of $300.00 an hour, plus a correspondence fee of $20.00 per letter sent and $10.00 per letter received.
[29] With respect to this issue, the assessment officer said:
While a client may have a right to rely on the general terms of a retainer to continue to apply until a new agreement is reached or, at least, notice of a change is given, it would be unreasonable to believe that an hourly rate will continue to apply for 12 ½ hours. It might be argues that it was an error in principle to allow increases in an hourly rate where there has been no notice, even to the extent of escalating rates being disclosed in a series of interim bills. However, it would be patently unreasonable to find any client so naïve as to believe that an applicable hourly rate would not escalate over the passage of 149 months.
[30] The assessment officer went on, as set out above, to allow Mr. Wilson the rate of $500.00 per hour. In my view, he was not wrong in finding that to be a reasonable expectation of the client.
[31] It is clear that Mr. Wilson did not provide Ms. Edward with any assessment as to what the premium might be. The assessment officer did find that “for outstanding success”, $50,000.00 was the appropriate amount.
[32] That amount, to one surviving on public assistance, is a staggering premium. While it may be that Mr. Wilson would have a reasonable expectation of a $100,000 premium, that is not the test. If he expects such a premium, he has an obligation to bring that to the attention of the client, preferably in writing. For his own reasons, as set out in his evidence, he generally does not use a written retainer. That may be honourable, but it is bad business in these circumstances.
[33] I do accept the evidence of Mr. Wilson that a premium was discussed; the evidence of Ms. Edward and her spouse cannot be relied upon. Given that the assessment officer allowed for a premium, he too did not accept their evidence on this point. In light of the significant success, a premium of 10% of the recovery could be expected. See: Treyes v. Ontario Lottery and Gaming Corporation (2007) 49 C.P.C. (6th) 400 (Ont. S.C.J.). The premium is allowed at $100,000. Accordingly, the fee is determined to be $250,000.
[34] The report and certificate of the assessment officer dated April 24, 2014 is otherwise confirmed.
Lemon J
DATE: January 26, 2015
CITATION: Wilson and Edward, 2015 ONSC 596
COURT FILE NO.: CV-09-5587-00
DATE: 2015-01-26
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: DAVID S. WILSON
BEFORE: LEMON J.
COUNSEL: Mr. R. Plate, for the Applicant
Mr. J. W. Bruggeman, for the Respondent
ENDORSEMENT
LEMON J
DATE: January 26, 2015