Court File and Parties
COURT FILE NO.: 90711/15 DATE: 2015-11-06
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Ann Clancey and William Michael Joseph Clancey Applicants
– and –
William Kelly and Deborah Ann Kelly Respondents
Counsel: Andrew Ostrom, for the Applicants William F. Kelly, for the Respondents
HEARD: June 16, 2015
BEFORE: Salmers J.
Reasons and Rulings
Introduction
[1] These reasons deal with three matters. Firstly, the applicants (the clients) wish to have an assessment of the accounts of their former lawyer, the respondent William Kelly (the lawyer). The second matter is the clients’ request for the release of the lawyer’s file. The third issue is enforcement of the clients’ $80,000 mortgage given in favour of the lawyer’s spouse.
The Assessment Matter
[2] The lawyer was the clients’ counsel in Oshawa action CV-05-38950 in which the clients were the plaintiffs. In this application, the clients request an order for assessment of all of the lawyer’s accounts rendered in the action commencing with the account dated June 2, 2010.
[3] The lawyer consented and I have already ordered assessment of all his accounts rendered on and after November 27, 2012. The remaining issue is whether there should be assessment of the lawyer’s 14 accounts that were rendered prior to November 27, 2012.
[4] Whether under s. 4 or s. 11 of the Solicitors Act, assessment of those accounts may be ordered if there are special circumstances that in the opinion of the court appear to require an assessment. Applications for assessment of this nature must be looked at from the perspective of the client, rather than from the perspective of the lawyer.[^1]
[5] In paragraph 1(n) of the notice of application, the clients submitted there were six special circumstances that supported their request for assessment of the lawyer’s accounts.
[6] The first alleged special circumstance is that the circumstances of this case do not justify the inference that the clients accepted the lawyer’s accounts. For the following reasons, I disagree. The evidence satisfies me that the clients did not complain about the lawyer’s accounts until February 2015 when served with a statement of claim in which the lawyer was suing the clients for the unpaid accounts. The evidence is that over the years, the clients may have had difficulty paying the lawyer’s accounts. But, there is no evidence that the clients ever complained about the amount of the 14 accounts.
[7] The second alleged special circumstance is that the lawyer repeatedly failed to keep the clients apprised of developments in the case. There is some evidence that in October and early November 2010, the lawyer did not respond to enquiries of the clients. In 2011, the clients wrote the lawyer asking of updates with respect to an expert witness and trial preparation. There is no evidence about the lawyer’s failure to respond to these enquiries by the client. Apart from those issues, there is no evidence of the lawyer failing to keep the client apprised during the time period that is the subject of the 14 accounts in question.
[8] The third alleged special circumstance is an alleged billing irregularity in June 2012 that the clients discovered in February 2015. The evidence before me is insufficient to satisfy me that there was in fact double billing as is alleged. However, I will order that during assessment of the lawyer’s accounts, the assessment officer shall conduct a further limited assessment to determine whether in fact the alleged double billing did occur. If double billing did occur, then the clients shall be given the appropriate credit against monies owing to the lawyer.
[9] The fourth alleged special circumstance is the allegation that the lawyer pressured the clients to grant the aforesaid mortgage by threatening to cease work on their file until the executed mortgage was received. I find that this allegation is true. However, there is no evidence that at the time of giving the mortgage, or at any time prior to the mortgage, the clients complained about the value of the lawyer’s services or the amounts of his accounts.
[10] The fifth alleged special circumstance is the allegation that the lawyer failed to comply with court-ordered deadlines. This allegation may be true. However, on the evidence before me, any missed deadlines were not significantly late. In any event, any missed deadlines took place during the period for which the lawyer has already consented to assessment of his accounts. The issue of missed deadlines can be considered during that assessment. The evidence does not satisfy me that there were any missed deadlines in the time period contemplated by the 14 accounts that are in question. For these reasons, I am not satisfied that the alleged missed deadlines support a finding of special circumstances.
[11] The sixth and final alleged special circumstance is the allegation that all invoices were interim and not final. Each of the lawyer’s accounts dealt with a specific time period. There is no evidence that the lawyer would render any further accounts for time periods covered by previous accounts. The accounts may be interim in that they were rendered prior to the lawyer completing all work for the clients. However, the accounts are final with respect to each time period covered in an account. From a client’s perspective, such accounts are valuable because they enable a client to clearly understand how much the litigation is costing and how much it may cost to complete the litigation. I am not satisfied that such accounts, rendered more than three years ago and 27 months prior to any complaint by the clients, are any support for the suggestion that they are or contribute to special circumstances requiring an assessment.
[12] None of the clients’ alleged special circumstances are allegations that the lawyer spent excessive or unnecessary time on the clients’ case, particularly in the time periods covered by the 14 accounts in question. Apart from the isolated allegation of double billing, which may be a simple mistake, none of the clients’ alleged special circumstances are allegations that the amount of any of the 14 accounts is excessive.
[13] The clients last paid the lawyer in December, 2012, at which time the clients knew the amount that the lawyer had charged them for services provided prior to that date. By December 2012, the trial of the clients’ action was well underway. All pre-trial matters, including productions, discoveries, undertakings, interlocutory motions, and pre-trials had been completed. Also, the trial of the action commenced on May 25, 2012 and was heard for several days at those sittings and again for several days at the autumn 2012 sittings. In December 2012, the clients were aware that more trial time was required and that the trial would continue at sittings in May 2013.
[14] Prior to the May 2013 sittings, the clients were aware that $63,625.99 remained unpaid on the lawyer’s accounts that had been rendered. Approximately two weeks before the May 2013 sittings, the clients advised the lawyer that they were unable to pay the outstanding account and that they did not have any money to pay for continuation of the trial. The lawyer and the clients agreed that the clients would give a mortgage for $80,000 to pay the outstanding amounts owed and provide some additional retainer monies for the continuation of the trial.
[15] The evidence before me clearly shows that the lawyer repeatedly told the clients that they should reduce their demands and make efforts to settle the case. The lawyer repeatedly confirmed to the clients that a pre-trial judge and a mid-trial settlement conference judge (being me) had both strongly encouraged the clients to make efforts to settle their case. Notwithstanding having been repeatedly told to reduce their demands and make settlement efforts, the clients refused to reduce their demands and the matter continued until the trial was completed.
[16] As part of his attempts to encourage settlement efforts, the lawyer repeatedly wrote and told the clients of the very serious costs consequences that would ensue if they were unsuccessful in their claim. The lawyer at least once told the clients that the costs consequences might result in the clients’ house being at risk. Notwithstanding being aware of the very serious costs consequences that would follow if they lost the action, the clients refused to reduce their demands and chose to continue until the trial was completed.
[17] The 14 accounts in question were rendered at regular intervals. At all times, the clients were well aware of the ongoing high costs of the litigation and the high costs of continuing the litigation. The clients knew that if they were unsuccessful, they would not be compensated for their legal costs. Notwithstanding this knowledge, the clients refused to reduce their demands and chose to continue until the trial was completed.
[18] Prior to the clients retaining the lawyer, the clients had engaged four experts to provide opinion evidence on their behalf at the trial. To date, the clients have not fully paid any of those experts, one of whom has obtained judgment against the clients for his unpaid account. The evidence does not disclose any good reason why the clients have not paid these experts.
[19] The lawyer’s accounts from the commencement of his retainer until the completion of the trial total $262,010.80 of which $44,284.91 remains unpaid. There were at least nine weeks of trial followed by detailed written submissions. In my experience, the total amount of the lawyer’s accounts is not unusual or unreasonable for an action, including nine weeks of trial and written closing submissions.
[20] On all of the evidence and for these reasons, I find that the clients’ perspective was that they had a very strong case that they did not wish to compromise notwithstanding any opinions and recommendations of people with legal training and experience. The clients were aware of the costs of their litigation. They have refused to fully pay experts who have testified on their behalf. The clients did not complain about the lawyer’s accounts until February 2015, after being served with the lawyer’s statement of claim for his unpaid accounts. It was only then, for the first time that the clients complained. Even after complaining, the clients’ perspective was that the lawyer should continue to represent them without any payment on an ongoing basis.
[21] I further find that the clients’ perspective was that they were satisfied with all accounts of the lawyer, but the clients wished to delay and avoid payment by commencing this application for assessment. This is consistent with the clients’ pattern of non-payment of the other professionals who have completed their work for the clients. I find that the clients’ perspective with respect to payment of the lawyer and other professionals is, at best, unrealistic. At worst, their perspective is deceitful. The clients’ perspective is that they can pay professionals at times and in amounts convenient to the clients, notwithstanding that the clients’ probably unreasonable instructions are the reason for the amount of the professionals’ accounts. This application for assessment of the lawyer’s accounts is consistent with the clients’ perspective.
[22] Considering the totality of the evidence and for all of these reasons, I find that, from the clients’ perspective, the requested assessment of the 14 subject accounts is necessary only to give them a further opportunity to delay and possibly reduce payment of the lawyer’s accounts with which they were satisfied until the lawyer actually tried to collect payment in an action. In these circumstances, after considering the totality of the evidence and for all of these reasons, the clients have not satisfied me that there are special circumstances requiring assessment of the 14 subject accounts, except for the very limited and specific assessment concerning the alleged double-billing. Accordingly, apart from that very limited and specific assessment, there will be no assessment of the 14 subject accounts rendered prior to November 27, 2012.
The Lawyer’s File
[23] In this case, the lawyer brought a motion to be removed as the clients’ counsel. I granted that motion as I was satisfied to do so was in the interests of both the lawyer and the clients as there was an irreparable breakdown of the lawyer-client relationship when both the lawyer and client had brought court proceedings against each other.
[24] The trial of this action is completed, including delivery of written closing argument. The trial judge has delivered her reasons for judgment; although I have not read them and I do not know the outcome of the trial. The only remaining matters would be the issues of costs of the action and the bringing of an appeal, if any. The clients have requested the lawyer’s file for those purposes. The lawyer claims a solicitor’s lien on the file as security for his unpaid fees.
[25] However, it was the lawyer’s motion and his desire to terminate the lawyer-client relationship. As unreasonable as it might have been in the circumstances, the clients wished that the lawyer continue to represent them. In these circumstances, the lien is lost.
[26] Both the lawyer and the clients require the file for preparation and attendance at proceedings for the collection of unpaid accounts and assessment of accounts.
[27] The lawyer must deliver the file to the clients for the time periods for which the clients have already paid the lawyer’s accounts. However, an account for photocopies will be prepared for all photocopies made at the request of the clients for time periods covered by accounts not yet paid by the clients.
[28] On consent, I previously ordered assessments of all accounts commencing with the lawyer’s November 27, 2012 account, until his final account dated October 31, 2014. Depending on the outcome of the assessments, the clients may or may not remain liable for a) the entire amount claimed as outstanding by the lawyer, or b) a lesser amount, possibly including part of the accounts for which the clients granted the $80,000 mortgage, the absolute maximum of which will include only some of the lawyer’s accounts dating back as far as November 27, 2012.
[29] Accordingly, if requested, the lawyer will deliver all contents of his file for time periods from and including the account dated June 2, 2010 up to and including the account dated November 20, 2012. If the lawyer wishes to make photocopies, such copies will be made by him at no cost to the clients. The clients have paid for this work and will require the file contents when preparing and making costs submissions on the action and for the bringing of an appeal if necessary.
[30] Further, if requested by the clients, the lawyer shall deliver to the clients the contents of his file for the time periods from and including his November 27, 2012 account to and including his final account dated October 31, 2014. The lawyer may make photocopies for himself. The lawyer shall prepare an invoice for any such photocopies, but the liability for payment of the photocopies will be a matter to be determined by the assessment officer as part of his assessments of the lawyer’s accounts for those time periods.
Enforcement of the Mortgage
[31] As discussed above, depending on the outcome of the assessments, the clients may or may not remain liable for amounts of the lawyer’s accounts which might include not only the full amount claimed by the lawyer in his action but also for a portion of the accounts that were covered by the $80,000 mortgage. Until the outcome of the assessments, it cannot be said that the full $80,000 value was received by the clients for the giving of the mortgage. Accordingly, at present, enforcement of the mortgage is stayed. However, interest continues to run on the mortgage and will be payable on whatever amount of the $80,000 was found to be the value received by the clients.
Summary
[32] For these reasons, an order shall go as follows:
there shall be a very limited and specific assessment of the lawyer’s account to determine the issue of whether the lawyer incorrectly added rather than subtracted $4,141.87 from his June 30, 2012 account. The only documents required to perform this very limited assessment are copies of the account itself and copies of the lawyer’s trust ledger;
apart from the very limited and specific assessment ordered in 1) above, there shall be no assessment of the lawyer’s accounts rendered prior to November 27, 2012;
if requested, the lawyer will deliver all contents of his file for time periods from and including the account dated June 2, 2010 up to and including the account dated November 20, 2012. If the lawyer wishes to make photocopies, such copies will be made by him at no cost to the clients;
if requested by the clients, the lawyer shall deliver to the clients the contents of his file for the time periods from and including his November 27, 2012 account to and including his final account dated October 31, 2014. The lawyer may make photocopies for himself. The lawyer shall prepare an invoice for any such photocopies, but the liability for payment of the photocopies will be a matter to be determined by the assessment officer as part of his assessments of the lawyer’s accounts for those time periods; and
enforcement of the $80,000 mortgage is stayed pending further court order.
[33] If there is no agreement, then the lawyer and client shall contact the trial coordinator to schedule an appearance before me to make costs submissions.
Salmers J.
Released: November 6, 2015
[^1]: Echo Energy Canada Inc. v. Lenczner Slaght Royce Smith Griffin LLP, 2010 ONCA 709, 2010, 104 O.R. (3d) 93, C.A.