Tebyanian v. Jagtoo, 2016 ONSC 2172

CITATION: Tebyanian v. Jagtoo, 2016 ONSC 2172

COURT FILE NO.: CV-14-120876-00

DATE: 20160330

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Shahrokh Tebyanian Applicant

– and –

James Jagtoo Respondent/moving party

COUNSEL:

Acting alone [for the Applicant]

Acting alone [for the Respondent/moving party]

HEARD: March 3, 2016

RULING ON MOTION

CHARNEY J.:

Introduction

[1] This motion is brought by the respondent solicitor, James Jagtoo (the Solicitor) pursuant to s.5(9) of the Solicitors Act, RSO 1990, c.S.15 and Rule 54.09 of the Rules of Civil Procedure, opposing confirmation of the Report and Certificate of Assessment of the Assessment Officer Karen Howe dated November 5, 2015, ordering the Solicitor to repay the Client the sum of $8,079.02.

[2] The Solicitor asserts that the Assessment Officer made palpable and overriding errors in misapprehending or ignoring certain evidence, double counting various deductions, and reaching conclusions that conflict with her own findings of fact. He asks that the bill be allowed in its original amount or that the court substitute its own determination for the appropriate fee, or, in the alternative, refer the matter back to the Assessment Officer or a different Assessment Officer.

[3] I conclude for the reasons set out below that the Assessment Officer did make errors in principle that justify this court’s substitution of its own determination rather than refer it back to the original or another Assessment Officer.

Background Facts

[4] The Solicitor was retained by Shahrokh Tebyanian (the Client) on March 20, 2014, to deal with a Family Law Act matter involving the Client, his wife and their two children. The Client ran a warehouse business, had a corporate structure of a number of companies, and had income property. The wife had never worked and had no income.

[5] There was no dispute that the Client signed the retainer to retain the law firm of Jagtoo and Jagtoo Professional Corporation (the law firm) and agreed to pay the Solicitor at the hourly rate of $350.00, his junior associate Michael Jagtoo at the rate of $325.00 and a law clerk at the rate of $80.00.

[6] This family law dispute began in 2011. By the time the Solicitor was retained in 2014 the case had reached the case conference/settlement conference stage, and there was voluminous material for the Solicitor to review. The Solicitor had to move quickly to amend court documents and obtain full financial statements and an expert business valuation. The matter proceeded expeditiously and went to mediation/arbitration. The case was finally settled at the mediation on November 12, 2014. The work conducted by the law firm is summarized in the Assessment Officer’s reasons, and does not have to be repeated in detail in this decision.

[7] The solicitor’s bill came to $37,195.70 ($32,620 plus disbursements and HST). The Assessment Officer reduced it by $8,079.02, a reduction of approximately 22 percent.

[8] It is significant that the Assessment Officer, after hearing the evidence of the Client and the Solicitor, concluded (at para. 30) that she found the Client’s evidence “at times contradictory and difficult to follow. Having considered all of the evidence and the facts before me, on balance I prefer the evidence of the Solicitor as being more reflective of the events.”

The Standard of Review

[9] 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.

[10] These factors have been recently summarized by the Ontario Superior Court in Wilson v Edward, 2015 ONSC 596, at paras. 12 -14, where Lemon J. states:

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.

[11] 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.

[12] 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).

[13] Pursuant to Rule 54.09 (5), the court “may confirm the report in whole or in part or makes such other order as is just”, and it is open to the court to set the appropriate fee itself (Bales, para. 7, Wilson, para. 14).

[14] In considering the Assessment Officer’s reasons, I am also guided by Ricchetti J.’s statement in Kania v. Barhani 2014 ONSC 2855, at para. 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.

[15] Similarly, in Bales, at para 15, Lauwers J. (as he then was) stated (at para. 15):

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] O.J. No. 3890, Corbett J. noted at para. 39, and I agree, that there must be real analysis, not simply ʽconclusory reasoningʼ; the decision must ʽdemonstrate the path of reasoning taken by the Assessment Officer from facts to conclusion.ʼ

Analysis

[16] Notwithstanding her preference for the Solicitor’s evidence, the Assessment Officer reduced his fees for a number of reasons:

(a) A lack of time dockets;

(b) That the solicitor demonstrated a lesser degree of skill and competence with respect to billing procedures;

(c) The associate lawyer’s and law clerk’s time were reduced to zero;

(d) The Solicitor’s time for preparing a mediation brief and conducting research were excessive.

[17] As I review her reasons, it is apparent that the first three reasons really amount to just one reason: the alleged lack of time dockets.

[18] Her first reason for reducing the Solicitor’s fees (at para. 32) was that the Solicitor “did not provide dockets to support the time expended when working on the client’s behalf.” She stated: “In taking into account the evidence provided and in the absence of dockets being submitted in support of the bills, I am left with making my decision based on the bills themselves.” Accordingly, she concludes (at para. 34) “I am making a reduction to the Solicitor’s fees to reflect a lack of dockets being produced.”

[19] Then, at para. 35 of her reasons, she states that she has reviewed the Solicitor’s accounts, which “provide a breakdown by date, a brief description of activities performed, and the time attributed to that day’s activities summarized in hours and minutes.” The Solicitor points out that this information is exactly what is in his dockets. It sets out in time periods as low as 5 minutes the amount of time he spent on specific activities when working on the client’s files. This information referenced at para. 35 of the decision is the information the Assessment Officer complains is lacking in para. 34 of her decision. There is no suggestion by the Assessment Officer that these detailed accounts are inaccurate or unreflective of contemporaneous dockets. This error constitutes a palpable and overriding error.

[20] The Assessment Officer also complains (at para. 35) that the “entries do not identify who performed the work…It is impossible to determine who performed what activities.” This conclusion is incorrect, and also constitutes a palpable and overriding error. The entries all relate to work performed by the Solicitor personally, except where bracketed initials appear after the docketed time. There is one entry of .35 minutes with the bracketed initials MJ beside it. This work was performed by Michael Jagtoo, and the bill indicates that he “reviewed emails; email from Mr. Goldstein [the wife’s solicitor]; speak with court; prepare motion for adjournment” during this 35 minute period. $189.00 plus HST was charged for this work.

[21] The Assessment Officer was correct that no dockets were provided for the work performed by the legal assistant, only the total number of hours.

[22] Returning to para. 34 of the Assessment Officer’s reasons, she states, “I am making a reduction to the Solicitor’s fees to reflect a lack of dockets being produced.” She does not indicate the amount of that reduction. That is also an error.

[23] At paragraphs 38 and 39 of her reasons she states that neither Michael Jagtoo nor the legal assistant attended the hearing to give evidence of the work that they completed, and she therefore deducted the entire amount charged with respect to those persons: (35 minutes for Michael Jagtoo = $189.00 plus $24.65 GST and 12 hours for the legal assistant ($959.99 plus HST of $124.80).

[24] The total of these two deductions is $1,299.02.

[25] It is unclear from her reasons whether this deduction is in addition to the unspecified deduction already made for failure to produce dockets, or if this is the calculation of that deduction. If the former, it is double counting. She cannot reduce the bill by an unstated amount for failure to produce dockets and then deduct the same amount because the persons who did not provide dockets were not at the hearing to testify.

[26] If the latter, the Solicitor argues that it is unreasonable to expect every member of the law firm who may have worked on a file to be present to testify with regard to the work they did. The Solicitor was present for the 4 day assessment and as the lawyer primarily responsible for the file he gave evidence regarding the work performed by his associate and his law clerk. I accept this submission. The Assessment Officer refers to no authority for the proposition that every member of the law firm that worked on the file must attend the assessment or risk having all of their hours deducted from the bill.

[27] The Assessment Officer (at para. 40) found that the Solicitor’s hourly rate of $350.00 was “fair and reasonable given the evidence and his years of experience.” She then deals with the hours expended by the Solicitor, and concludes that the total hours expended (79 hours and 55 minutes) was “somewhat excessive given his years of experience, the 8-month duration of the retainer and the complexity of the issues”.

[28] She states that there were 10 meetings with the client, and at least three of the meetings were over two hours in length. She states: “The client submitted that he felt the meetings were drawn out and in some cases unnecessary”, but she makes no factual finding with regard to that submission by the client. Fairness requires that the Assessment Officer weigh the evidence and make a factual finding before relying on such allegations to reduce a solicitor’s bill.

[29] This error is significant in light of her decision that she preferred “the evidence of Solicitor as being more reflective of the events.” She also refers to the fact that the meeting between the Solicitor, the Client and the expert business valuator took 3 hours and 35 minutes. The length of this meeting is likely a reflection of how complicated the financial issues in the case were.

[30] She then states that the 14 hours the solicitor expended on the mediation brief was “excessive given the Solicitor’s years of experience, the previous time spent reviewing the file, and the Solicitor’s direct knowledge of the facts of the case”. She makes no reference to the documents that the Solicitor had to review in order to prepare this brief, including the Financial Statements of various businesses and Business Valuation Reports. The mediation brief was lengthy, consisting of 17 exhibits, for a total of 79 pages. The financial and non-financial (custody) stakes were high for both parties. The Net Family Property was determined to by $845,754.00. The mediation lasted a full day.

[31] The Assessment Officer indicated that it was her “practice” to consider research time expended by a solicitor as a benefit to both the client and the solicitor for reference to future cases and allow only half of the time expended. She noted: “there was a minimal amount of time of 1.50 hours billed for research”. Her reasons do not suggest that she considered the specific facts of this case or whether her “practice” to allow only half the time expended was appropriate to the facts of this case. It was an error of law to apply this “practice” without any consideration of whether it was appropriate in the specific case.

[32] On this basis she made a global reduction of the Solicitor’s fee in the amount of $5,000 plus $650 HST for “lack of dockets, excessive time and research” (para. 42). This represents a reduction of 14.25 hours. Assuming that she reduced research time by her standard “practice” of one half the time billed, .75 hours of this reduction represents reduced research time. This means that she reduced the 14 hours the solicitor spent on preparing the mediation brief by 13.5 hours, leaving him only 30 minutes of preparation time. The Solicitor argues that this is a palpable and overriding error, and I agree.

[33] The Assessment Officer found that the Solicitor expended “somewhat excessive” hours, but apart from the preparation of the mediation brief she fails to identify where those hours were excessive. Nor does she explain why preparation time for the mediation brief should be reduced by 96 percent. This is an example of the error identified in Bales, where the Ontario Court of Appeal stated (at para. 15):

In this case, the assessment officer’s holding that counsel’s docketed time was excessive was conclusory only. His reasons reveal no cogent basis for his sweeping reductions of the hours billed by the senior solicitor, save for his own sense that the services at issue were duplicative. This is not a defensible basis for material reductions in the hours billed by the senior solicitor.

[34] In addition, her reasons are unclear with respect to the issue of complexity. At para. 44 of her reasons she stated that “for the most part” the issues in this case were of “average complexity”. She then notes: “where the matters became more complex was in determining business valuation and imputing income.” The Solicitor points out that the matters of business valuation and imputing income were primarily what the dispute between the parties and the mediation was all about. These issues determined the division of net family property and the amount of spousal support to be paid by the Client. On this basis, the Assessment Officer identified neither evidence nor principle for reducing the Solicitor’s fees.

[35] With regard to “degree of responsibility assumed by the solicitor” (para. 45) the Assessment Officer states that “for the most part” the Solicitor assumed the proper degree of responsibility, yet fails to identify any area where he did not assume the proper degree of responsibility.

[36] With respect to the factor “Degree of Skill and Competence Demonstrated by the Solicitor” the Assessment Officer, once again, uses the phrase “for the most part” in describing the Solicitor’s skill and competence. She praises the Solicitor’s skill in that he “was successful on behalf of the Client in having the NFP reduced thereby reducing the amount the Client was required to pay his wife, and was successful in bringing the matter to med/arb and avoiding what could have been a costly, multi-day trial.”

[37] Notwithstanding this skill and competence, the Assessment Officer finds that the Solicitor had a “lesser degree of skill and competence…in respect to his billing procedure. The bills do not provide sufficient breakdown and explanation of who performed the duties.” Accordingly she makes an additional reduction in fees “to reflect a lesser degree in skill and competence”, (para. 50) reducing the total bill to $29,116.68 (including HST and disbursements) (para. 58).

[38] Three points with regard to this final deduction. First, this is the second, perhaps third time in her reasons where she reduces the bill because of the alleged lack of dockets. She reduces the bill for lack of dockets at paras. 34, 38-39, 42 and 49-50. While it is not clear whether this is double or triple counting, it is an error in principle to deduct cumulative amounts for the same matter.

[39] Second, as indicated above, the Assessment Officer is incorrect with respect to her conclusion that the invoices do not accurately breakdown the time spent and duties performed by the Solicitor and his associate. She is correct with regard to the legal assistant, but she has already deducted the entire amount ($959.99 plus HST of $124.80) charged in relation to the legal assistant.

[40] Finally, the Assessment Officer states that “the Client submitted that he was unsuccessful in his attempts to communicate with the Solicitor for an explanation of his bills”, but she reviews none of the evidence in relation to this allegation nor does she venture to make any factual finding in this regard. It is unclear from her reasons whether this was even one of her reasons for the reduction in fees for reflecting a lesser degree in skill and competence. Findings of this nature cannot be based on mere allegations, and fairness requires that the Assessment Officer weigh the evidence and make a factual finding before relying on such allegations to reduce a solicitor’s bill.

Conclusion

[41] These errors by the Assessment Officer were errors in principle based primarily on palpable and overriding errors on factual matters, misapprehension of evidence and failure to provide reasons for her conclusions. In these circumstances I decline to confirm the Assessment Officer’s report and certificate.

[42] In my view, given the Assessment Officer’s general finding that she preferred the evidence of the Solicitor to the evidence of the Client, there is nothing to be gained from sending this matter back to the Assessment Officer or to a different Assessment Officer. The record of the Assessment Officer indicates that this assessment took 4 days of hearings. In light of the amount of money at issue, forcing the parties to undergo a second assessment process would not be cost effective.

[43] Having considered the arguments of both sides, I will not disturb the finding of the Assessment Officer regarding the deduction of fees attributable to the legal assistant. While she should not have deducted the entire amount of these fees, the Assessment Officer was exercising her discretion when she decided that some reduction was appropriate to reflect the lack of dockets for the legal assistant. I am not in a position to determine what the appropriate reduction should be. The choice then is to send it back to the Assessment Officer for reconsideration, or just allow the entire deduction. Given the amount of money at issue I have determined that the most appropriate course of action is to allow the entire deduction.

[44] The balance of the Assessment Officer’s decision to reduce the Solicitor’s fee by $8,079.02 is overturned. In the result, the Solicitor’s fees are to be reduced by $1,084.79 ($959.99 plus HST of $124.80).

Costs

[45] Since the Solicitor has been substantially successful on this motion he would normally be entitled to costs. If costs cannot be agreed upon the Solicitor may make submissions limited to two pages plus any offers to settle and costs outline within 20 days of the release of this decision, and the Client may reply within 10 days thereafter on the same terms.

Justice R.E. Charney

Released: March 30, 2016

CITATION: Tebyanian v. Jagtoo, 2016 ONSC 2172

COURT FILE NO.: CV-14-120876-00

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Shahrokh Tebyanian Applicant

– and –

James Jagtoo Respondent/moving party

RULING ON MOTION

Justice R.E. Charney

Released: March 30, 2016