Davisville Bridge & Road Works Limited v. Kramer Simann Dhillon LLP, 2015 ONSC 7402

CITATION: Davisville Bridge & Road Works Limited v. Kramer Simann Dhillon LLP, 2015 ONSC 7402

COURT FILE NO.: CV-14-513753

MOTION HEARD: June 17, 2015

SUPERIOR COURT OF JUSTICE – ONTARIO

Re: DAVISVILLE BRIDGE & ROAD WORKS LIMITED Applicant

v.

KRAMER SIMAAN DHILLON LLP and JEFFERY KRAMER Respondents

BEFORE: Master Lou Ann M. Pope

APPEARANCES: Mr. A. Minkin, Kramer Simaan Dhillon LLP, for moving respondent aminkin@kramersimaan.com

Ms. P. McLean, Dickinson Wright LLP, for responding applicant pmclean@dickinsonwright.com

REASONS FOR ENDORSEMENT

[1] The only issue to be determined by this court is whether the respondent’s legal accounts are interim or final for the purposes of section 3(b) of the Solicitor’s Act, R.S.O. 1990, c. S.15.

[2] The applicant obtained an ex-parte Order For Assessment – Client’s Application on requisition from the registrar on October 7, 2014 pursuant to s. 3(b). The order refers for assessment nine accounts, being all of the respondents’ accounts rendered to the applicant in the course of its retainer. The respondent seeks to have the order for assessment set aside in respect of eight of the nine accounts. The subject accounts are dated between March 18, 2013 and August 6, 2014.

[3] A master’s jurisdiction to set aside a registrar’s order for assessment is not in dispute. (Heydary Hamilton Professional Corp. v. Baweja, 2011 CarswellOnt 2877, 2011 ONSC 2568; Ali Karimi v. Bosada & Associates, 2011 CarswellOnt 11630, 2011 ONSC 6067)

[4] The grounds for the motion are that the registrar had no jurisdiction to issue the order for assessment, more than one month had passed following delivery of the eight accounts, and the order was granted without notice to the respondent. The respondent submits that all the accounts are final accounts and that the registrar lacked jurisdiction to order an assessment of the accounts except the most recent account dated September 26, 2014. They assert that a registrar has jurisdiction to order an assessment of a solicitor’s bill only within one month from its delivery. Only the most recent account was delivered within one month of the registrar’s order.

[5] The respondent also submits that for the purposes of the Solicitor’s Act, the limitation period for assessment begins to run from the date of the final account. Accordingly, they contend that the registrar’s order ought to be set aside with respect to all accounts except the most recent account dated September 26, 2014.

[6] On the other hand, the applicant’s position is that all of the accounts were interim accounts as they referenced interchangeably the matters the respondent was working on for the applicant, none of the accounts were marked final, there is no evidence of a clear intention of both parties that the accounts were final, and several matters were still being worked on by the respondent when the applicant terminated the retainer.

[7] The only evidence filed on this motion is the affidavit of the respondent, Jeffrey W. Kramer, sworn February 12, 2015. Thus, there is no evidence as to the applicant’s intention regarding whether the accounts were interim or final.

Background

[8] In or about January 2013 the applicant retained the respondent to represent it and its directors in nine legal proceedings which stemmed from the applicant’s contracts with the City of Quinte West and the Township of Tiny for bridge rehabilitation work. Three subcontractors brought lien claims and/or trust actions against the applicant and its directors. In addition, Glenn Rogers (“Rogers”), the former vice-president of the applicant, brought four actions against the applicant including two lien claims.

[9] The parties did not sign a retainer agreement.

[10] Between January, 2013 and September, 2014, all but three of the lawsuits resolved. The respondent obtained orders in Barrie and Belleville discharging the Rogers’ claims for lien and dismissing one of Rogers’ actions, with significant cost awards in favour of the applicant. At the time the applicant terminated the retainer, the three actions brought by Rogers did not appear to be proceeding as Rogers was in default of multiple cost awards and he had no solicitor of record.

[11] Between March 18, 2013 and September 26, 2014 when the applicant terminated the retainer, the respondent rendered nine accounts to the applicant. The applicant paid all accounts in full.

[12] The following are characteristics of the accounts. Each account relates to a specific time period. They were based upon the hourly rates and the hours spent, not on the results achieved. They were payable upon delivery as set out below the signature line. They all reference the same file number; namely 132368, and Re line; namely, 1404810 Ontario Limited cob CRS Contractors Rental Supply. There is no indication on the face of the account whether it is an interim or final account. Based on the description of work performed in each account, the respondent billed for work completed on all of the legal proceedings during a specified time period. In other words, the respondent did not bill the client for work performed on each legal proceeding separately.

[13] It is the uncontroverted evidence of the defendants that there was no prospect or agreement that the accounts would be adjusted based on what might subsequently happen in the various proceedings. No adjustments were made to any of the accounts following delivery.

[14] The respondent brings this motion pursuant to rule 37.14 (1)(c) of the Rules of Civil Procedure, R.S.O. 1990, c. C.43, which provides that a person who is affected by an order of a registrar may move to set aside or vary the order by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

[15] There is no issue that the respondent brought this motion immediately after being served with the order for assessment.

[16] Section 3(b) of the Solicitor’s Act states:

3. Where the retainer of the solicitor is not disputed and there are no special circumstances, an order may be obtained on requisition from a local registrar of the Superior Court of Justice,

(b) by the client, for the assessment of a bill already delivered, within one month from its delivery.

Whether the eight accounts are interim or final accounts

[17] The issue on this motion is in regard to s. 3(b); that is, whether the accounts were requisitioned for assessment within 30 days of delivery.

[18] Our courts have a long history of dealing with the distinction between interim and final accounts. The Ontario Court of Appeal in Price v. Sonsini, 2002 41996 (ON CA), 2002 CarswellOnt 2255, [2002] O.J. No. 2607, at para. 15, reiterated the principle established by our court of appeal since 1976 that “where interim accounts are rendered in connection with the same matter, the limitation period for assessment under the Solicitor’s Act begins to run from the date of the final account, even if some of the interim accounts have been paid.” (Lang, Michener, Cranson, Farquharson & Wright v. Newell, [1985] O.J. No. 272 (Ont. H.C.), aff’d., [1986] O.J. No. 2459 (Ont.C.A.) and Lipsett, Re (1976), 1976 879 (ON SC), 15 O.R. (2d) 35 (Ont. Master), aff’d., (1976), 15 O.R. (2d) 35n (Ont.H.C.))

[19] In Enterprise Rent-a-Car Co. v. Shapiro, Cohen, Andrews, Finlayson, (1998) 1998 1043 (ON CA), 38 O.R. (3d) 257 (C.A.), the court of appeal upheld the application judge’s order for assessment which held that the bills were interim accounts. Enterprise had retained the law firm to conduct litigation to enjoin a Canadian competitor from using the trade names and trademarks. Over a period of two years, the law firm rendered 16 bills for work performed on motions in that matter. In reaching its conclusion, the court referred to the court of appeal’s decision in Lang, Michener where Craig J. stated at pp. 3-4 O.J.:

It is my view that all of the accounts except those rendered prior to December 9, 1981, were rendered in connection with what is essentially one matter and one dispute between the respondent and her husband; that is, in relation to the issues between the husband and wife mentioned earlier.

[20] The court also referred to the decision of Master Davidson in 1985 in Lipsett in which the headnote stated:

Where solicitors render interim accounts relating to the same matter, the effective date for the purposes of calculating the limitation period under s.10 of the Solicitors Act, R.S.O. 1970, c.441, within which the client must obtain an order to tax the accounts is that of the final account and the client is entitled to have the interim accounts taxed notwithstanding the fact that they were rendered more than 12 months prior to the date the application for taxation was made.

[21] In Price v. Sonsini, 2002 41996 (ON CA), 2002 CarswellOnt 2255, [2002] O.J. No. 2607 (C.A.), our court of appeal set aside the lower court’s order quashing the registrar’s assessment of the solicitor’s accounts and allowed the assessment to proceed finding that the lawyer’s four accounts were interim accounts. In that matter, the lawyer had been retained to represent the client in a family law proceeding and over the course of one year, the lawyer rendered five accounts. Notably, in his accompanying letter to the client, the lawyer described the first four accounts as “interim accounts.” Further, the solicitor raised no objection to the order for assessment until five years after the assessment hearing in which the lawyer participated and where the assessment officer gave an adverse result. The court stated at para. 16:

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.

[22] In a 2005 decision of Perell J. in Fiset v. Falconer, 2005 CarswellOnt 4519, [2005] O.J. No. 4023, the facts involved a retainer between a corporate plaintiff and its director and the law firm for two purposes: (1) to attempt to restore the statute barred claims in the action against the Toronto Police Services Board; and (2) to commence an action for solicitor’s negligence against the clients’ former counsel. The law firm rendered four accounts over the four-year period of the retainer. Ultimately, Perell J. held, at paragraph 41, that the accounts were final accounts such that it was too late for the client to have them assessed since there were no circumstances to justify an assessment, no special circumstances to justify an assessment and no evidence of fraud or gross misconduct. His reasons were that the evidence established that the law firm made it clear to the client that each of the law firm’s accounts was a final account, and for all the accounts, there would be no adjustment based on what might subsequently happen in the proceedings that were the subject matter of the retainer. Further, it was held that the accounts were not provisional accounts and the client understood this from the commencement of the retainer.

[23] At paragraphs 24-25, Perell J. opined about the area of law regarding solicitor-client assessment as being “unusually complicated with much to confuse lay people, lawyers and judges alike.” In referring to earlier decisions of our court of appeal in Fellowes, McNeil and Enterprise Rent-A-Car Co., he stated the following regarding the distinction between interim and final accounts:

In this area of the law, we discover that much turns on whether an account is “final” or “interim.” Unfortunately, the word “interim” is used in an ambiguous way. It turns out that an account that is “interim” in one sense may actually be a “final” account. Thus, an account is “interim” in the sense that it comes before the last or “final” account may nevertheless be “final” in the sense that the amount of the account is not provisional but is fixed. Thus, an account this is “interim” in a temporal sense can be “final” in a monetary sense.

An account rendered during an ongoing matter will be a final account if it was clear that the amount of the account was not provisional and subject to later adjustment.

[24] Perell J. also addressed the “scheme of time limits” in the Solicitors Act by stating that the policy of the Act is to make it more difficult to obtain an assessment of a paid account than an unpaid account. Further, when a client pays an account, he or she is presumed to have accepted the account as proper and reasonable. There is a rebuttable presumption that if a client pays an account, it is a reasonable account. Lastly, he held that when an account has been paid, the client must show “special circumstances” to justify an assessment of the account.

[25] Perell J. was referring to sections 3, 4 and 11 of the Act. Section 3 is set out above. Sections 4 and 11 state as follow:

s. 4(1) No such reference shall be directed upon an application made by the party chargeable with such bill after a verdict or judgment has been obtained, or after twelve months from the time such bill was delivered, sent or left as aforesaid, except under special circumstances to be proved to the satisfaction of the court or judge to whom the application for the reference is made.

s. 11 The payment of a bill does not preclude the court from referring it for assessment if the special circumstances of the case, in the opinion of the court, appear to require the assessment.

[26] In yet another decision, the court held that the lawyer’s accounts were final for the purposes of the limitation period in the Solicitor’s Act. In Coventree Inc. v. Stockwoods LLP, 2012 CarswellOnt 5833, 2012 ONSC 2737, the corporate client, a large public company, retained the law firm to represent it with respect to an OSC proceeding. The retainer spanned two and a half years. Over that time, the law firm delivered 24 monthly accounts which the client paid without complaint for more than two years. All the accounts were rendered with respect to the OSC proceeding.

[27] In reviewing the governing principles arising from the Solicitors Act and the jurisprudence, Lederman J. noted that it is a question of fact as to whether the prior accounts are, in the circumstances, to be treated as interim or final for the purposes of the limitation period for seeking assessment.

[28] In reaching his decision that all of the accounts were final accounts, Lederman J. found that the client was a “sophisticated client and could appreciate the nature of the services as the bills were rendered.” (para. 23) He further found that the client had every opportunity to assess and evaluate the work billed for in the monthly accounts on an ongoing basis, the accounts were all paid by without complaint, they were not labeled “interim” and were payable immediately upon delivery. In addition, each account related to a specified time period. (para. 24) He concluded that on the facts of that case, each account was considered final and that in those circumstances an assessment officer would be in a position to determine fairness without having regard to all of the accounts. (para. 25)

[29] Given that the client had paid all accounts, Lederman J. noted that s. 11 of the Solicitors Act clearly implies that assessment after payment will be the exception rather than the rule because payment is an implied acceptance of the reasonableness of the account. (para. 26)

[30] In my view, the obvious distinction between the facts in the within proceeding and the facts in the majority of the above-noted cases is that the retainer between the applicant and the respondent herein was a general retainer. In other words, the client retained the lawyer to represent it on numerous legal proceedings, not one matter. Thus, the respondent did not render accounts on each matter separately. Each account was for work performed on some or all of the legal proceedings for a specified period of time. In support of my finding that the retainer between the herein parties was a general retainer, which does not appear to be in dispute, I note the reference in the respondent’s prebilling reports at the conclusion of the Time Summary to “GENERAL RETAINER.”

[31] The decisions relied on by the parties where the courts ruled that the accounts were interim accounts involved retainers whereby the solicitors rendered accounts relating to the same matter. For example, in Enterprise, the law firm was retained to conduct litigation regarding the client’s trade names and trademarks. This involved one matter. In Lang, Michener, the lawyer’s accounts involved work on one matter between the husband and wife. In Fiset, the retainer involved acting for the client with respect to two specific legal proceedings. Again in Coventree, the lawyer was retained to represent the corporate client with respect to one matter, the OSC proceeding.

[32] None of the cases relied on by counsel herein dealt with a general retainer between solicitor and client where the solicitor’s accounts involved periodic billing for work performed on a variety of services. Having said that, I note that reference is made in Price, at paragraphs 14-15, to our court of appeal’s decision in Davies, Ward & Beck v. Union Industries Inc. (2000), 2000 5722 (ON CA), 48 O.R. (3d) 794, where the court set aside the registrar’s order for assessment for lack of jurisdiction. In that action, the court set aside the order for assessment because there were “special circumstances” within the meaning of s. 3 and the client was required to obtain an order for assessment on notice to the solicitor. The client had obtained an ex-parte registrar’s order for assessment on requisition of 29 bills rendered over a 12-year period for a variety of services. Similar to the within facts, the solicitors moved immediately to set aside the order for assessment on the ground that only the last bill fell within the one-month limitation period in s. 3. The Davies, Ward & Beck decision appears to be the only decision of all the cases relied on by counsel or referenced within a decision that dealt with a general retainer and accounts rendered for a variety of services.

[33] The difficulty with ruling that the respondent’s eight accounts are all interim accounts is that during the term of the retainer, some of the legal proceedings were resolved or finalized while, at the same time, the other matters proceeded. For example, I refer to the November 20, 2013 account where on November 8, 2013 the description states “Attendance at motion to discharge Tiny Lien and reporting to client.” Also on November 18, 2013, the description states “Preparation of garnishment.” Again in the September 26, 2014 account, the description of work performed on August 14, 2014 states “Drafting motion materials for dismissal motions, discharge Valley Waterproofing lien.” I am unable to determine from a review of the accounts which matters were finalized as the motion evidence does not particularize the details of every legal proceeding in which the applicant was involved. However, there does not appear to be any dispute that several of the proceedings were finalized at different times throughout the period of the retainer between January 2013 and September 2014. Therefore, it is reasonable to conclude that of the eight accounts in dispute, some or all of them included work on matters that were finalized. Thus, to consider all of the eight accounts in issue as interim accounts, would be inconsistent with the facts that several of the legal proceedings were finalized at different times throughout the period of the retainer and billed.

[34] I find therefore for the above reasons that where a lawyer performs work under a general retainer as described above, and accounts are rendered for specified periods of time for work performed on all matters for that client, the periodic accounts are presumed to be final accounts. This presumption is rebuttable, for example, in circumstances where it was made clear that the accounts were interim accounts and subject to adjustment at some point in the future.

[35] In the instant case, the evidence is that there were no adjustments made to any of the eight accounts in dispute, there was no intention on the part of the respondent that the accounts would be interim accounts, the applicant did not complain about or enquire about any entry or amount in any of the accounts, the applicant paid all the accounts in full within a reasonable amount of time after delivery. Further, the accounts are based on time only and not the result. The accounts set out clearly the name of each lawyer who worked on the file, that lawyer’s hourly rate, the date and amount of time spent on each step by each lawyer, and a time and fee summary. In addition, the accounts include a prebilling report for the relevant period of time which is essentially the dockets that itemize clearly the exact date, lawyer, description, time and value for work performed on behalf of the applicant.

[36] In my view, all of the evidence points to the eight accounts in issue being final accounts. It is my finding therefore that the eight account are final accounts. Thus I conclude that the registrar had no jurisdiction to order the eight accounts for assessment as the date of the accounts are not within the 30-day timeline under s. 3 of the Solicitors Act.

Whether the respondent frustrated the assessment process

[37] The applicant submits that the respondent failed to facilitate and cooperate with the assessment process and sought to frustrate it by seeking an order for security for costs.

[38] The applicant relies on Price, at paragraph 19, for the principle that lawyers are encouraged to cooperate with the efforts of dissatisfied clients to obtain an assessment. Further, if a court permits lawyers to avoid scrutiny of their accounts for fairness and reasonableness, the administration of justice is brought into disrepute. (principle affirmed by court of appeal in McCarthy Tetrault LLP v. Guberman, 2012 ONCA 679, at para. 13 ())

[39] In November 2014, approximately one month after the applicant obtained the ex-parte order for assessment from the registrar, the respondent brought a motion for security for costs. The applicant argues that this step delayed the assessment process. With respect, there is simply no evidence to support that assertion. On January 19, 2015, at a preliminary assessment appointment, the assessment hearing was scheduled for five days from May 2 – 6, 2016. In my view, there is no evidence that the assessment hearing was delayed by any steps taken by the respondent.

[40] In conclusion, given my finding that the eight accounts in issue are final accounts for the purposes of the s. 3 of the Solicitor’s Act, the registrar had no jurisdiction to order the eight accounts for assessment as the date of the accounts are not within the 30-day timeline under s. 3. Therefore, the registrar’s Order For Assessment – Client’s Application granted on October 7, 2014 is hereby set aside only with respect to the eight accounts rendered from March 18, 2013 and August 6, 2014.

Costs

[41] The respondent shall be entitled to its partial indemnity costs of this motion fixed in the amount of $2,991.39, payable within 30 days.

(original signed)________

Released: December 2, 2015 Master Lou Ann M. Pope