Court File and Parties

COURT FILE NO.: CV-15-123122 DATE: 2016-04-18 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

PETER B. COZZI PROFESSIONAL CORPORATION Applicant

– and –

JEFFREY MARSHALL WRIGHT and TRACEY A. WATERS Respondents

COUNSEL: J. Sobel, for the Applicant Charles Baker, for the Respondents

HEARD: April 7, 2016

REASONS FOR DECISION

Overview

GILMORE J.:

[1] The applicant seeks declaratory relief by way of a charging order against the property of the respondent Jeffrey Marshall Wright (Mr. Wright) in the amount of his outstanding accounts for legal fees and disbursements in the amount of $95,569.11. The respondent Tracey A. Waters filed a Notice of Appearance in this matter but has filed no material.

[2] The applicant submits that it would be just and equitable for the court to exercise its discretion and grant a charging order because he was instrumental in preserving or recovering certain property for Mr. Wright. Further, without such an order there is a strong likelihood that the applicant would not be able to collect his outstanding fees and disbursements from Mr. Wright.

[3] Mr. Wright’s position is that his home is not for sale nor will it be listed for sale so there is no money in trust against which a charging order may attach. Mr. Wright submits as well that his former counsel, Mr. Cozzi, neither recovered nor preserved any property for him and therefore the requirements in s. 34(1) of the Solicitors Act, R.S.O. 1990 c. S. 15, have not been met.

[4] Finally, Mr. Wright submits that there is no information that he cannot or he will not pay Mr. Cozzi’s fees so long as they are reasonable.

[5] A costs assessment has been scheduled for this matter on April 18, 2016.

Background Facts

[6] The principal of the applicant corporation, Peter B. Cozzi, is a lawyer practicing in the province of Ontario. Mr. Cozzi represented Mr. Wright with respect to two matrimonial litigation matters. The first was for family court action FC-10-036394 in Newmarket for which he was retained on November 13, 2012. This litigation related to his former spouse, Susan Wright. The second family court matter was commenced in Lindsay, being court action FC-257-14. Mr. Cozzi was retained by Mr. Wright on this matter in January 2014. That family court litigation related to Mr. Wright’s former girlfriend Tracy Bennison.

[7] Mr. Cozzi seeks payment of his accounts in relation to the litigation against Mr. Wright’s former spouse in the amount of $47,699.37 based on an account dated June 16, 2015, and with respect to the litigation against Ms. Bennison in the amount of $47,869.74 as per the final account dated June 16, 2015. The total amount of both accounts is $95,569.11.

[8] Mr. Wright formerly owned a home in Sharon, Ontario, with his wife Susan Wright. On separation, Ms. Wright left the home and Mr. Wright purchased Ms. Wright’s interest in the home in June 2011. He sold that home on July 31, 2013 for $690,000.

[9] He purchased his current home in Little Britain for $499,000 and took possession of it on July 31, 2013. He used $160,000 from the sale of the Sharon property as a down payment to the Little Britain home. Mr. Wright continues to reside in that home with his girlfriend, the respondent Ms. Waters.

[10] Mr. Cozzi commenced litigation against Ms. Wright on Mr. Wright’s instructions in relation to issues of custody, access, and support. As a result of a motion brought by Ms. Wright, an interim order dated January 29, 2015 awarded sole custody of Mr. and Ms. Wright’s triplet children, born August 27, 2007 to Ms. Wright. The order also made provision for supervised access and child support.

[11] In addition, the order required Mr. Wright to list his property in Little Britain at 92 Cricket Hollow Road for sale within three months. From the sale proceeds he was to pay $3,000 in costs to Ms. Wright, any outstanding child support, and s. 7 expenses. He was also to provide certain financial disclosure to Ms. Wright.

[12] Mr. Wright’s position is that he was not satisfied with Mr. Cozzi’s representation on these matters. His position is that Mr. Cozzi should not have opposed the motion for custody and support nor brought a cross-motion. He adds that he was required to pay costs of $11,000 with respect to those motions.

[13] A further order was made in the Newmarket matter on October 13, 2015, requiring Mr. Wright to pay $33,731.72 for support arrears and court-ordered costs owing by him to Ms. Wright up to and including June 30, 2015. The order of Douglas J., dated January 29, 2015, was varied such that Mr. Wright was no longer obligated to list his house for sale.

[14] Ms. Bennison moved into Mr. Wright’s Little Britain home on July, 31 2013. In December 2013, there was an altercation between Mr. Wright and Ms. Bennison and the police attended. Mr. Wright was arrested and removed from the home. A term of Mr. Wright’s recognizance of bail prevented him from returning to the home. While that prohibition was in effect, Ms. Bennison remained in the home, boarded her horses there, took in tenants, and moved in her fiancé. She also attempted to sell Mr. Wright’s personal possessions on Kijiji. She ultimately left the home in early January 2015.

[15] Mr. Wright deposes that Mr. Cozzi contributed virtually nothing with respect to Ms. Bennison’s departure. Mr. Cozzi deposes something quite different.

[16] Mr. Cozzi submitted that in May 2014, after several letters requesting Ms. Bennison’s agreement to sell the home in Little Britain, he commenced an application on behalf of Mr. Wright for an order for the sale of the Little Britain home. On September 26, 2014 Timms J. granted an order for the sale of the home. A term of that order required that sale proceeds be held in trust subject to any written agreement between the parties or an order of the court. Ms. Bennison did not cooperate with the terms of the September 26, 2014 order. Mr. Cozzi brought a motion requiring her to vacate in December 2014. That resulted in the January 27, 2015 order of Ferguson J. requiring Ms. Bennison vacate the property and pay costs of $4,000.

[17] Mr. Cozzi’s position is that he was required to write multiple letters and commence legal proceedings against Ms. Benison in order to ensure that she vacated the property as she otherwise would not cooperate. Mr. Cozzi’s position is that without his assistance in obtaining court orders, Ms. Bennison would not have vacated the property when she did.

[18] In September 2014, Mr. Wright signed an irrevocable direction in favour of Mr. Cozzi in which he agreed to pay Mr. Cozzi’s legal accounts from the sale proceeds of his home in consideration of Mr. Cozzi continuing to represent him in his matrimonial proceedings.

[19] At the time of signing the irrevocable direction, the only account rendered to Mr. Wright had been an account on January 31, 2014 for $11,000. Mr. Wright had not received a bill in nine months and it was his position that he did not believe he was signing a direction that would result in him owing Mr. Cozzi close to $100,000 in legal fees.

[20] Mr. Cozzi rendered another account in November 2014, for a further $4,000. However, between February and June 2015, he delivered three more accounts for over $30,000. The further accounts totaled $54,000. Mr. Wright was unaware that the accounts would be so high at the time he signed a direction. The only account he had received at that time was for $11,000. No retainer agreement was ever signed between Mr. Cozzi and Mr. Wright.

[21] Although there is no actual date in September 2014 noted on the irrevocable direction, Mr. Wright does not deny that the direction was signed in September 2014. Mr. Wright is also not claiming that he did not understand the meaning of the direction other than he was not aware that the accounts would be so high.

[22] Mr. Cozzi’s position is that he was advised by Mr. Wright that he intended to sell the home in Little Britain because his severance pay ran out in March 2014, he had no other assets, and he wanted to move closer to where his children were living in Stouffville.

[23] Mr. Wright told the court that he continues to reside in his Little Britain home and has no intention of selling it. The issues related to outstanding support and costs owed to his former wife Ms. Wright were resolved by way of the order of Rogers J. dated October 13, 2015. Mr. Wright advises that he is able to pay the required $33,731.31 as per the October 13, 2015 order although there is no indication in his affidavit where these funds will come from.

[24] Mr. Cozzi is concerned that Mr. Wright intends to transfer a 50 percent interest in the subject property to his girlfriend Tracey Waters and use that money to pay out the required amounts set out in the October 13, 2015 order. Mr. Cozzi is concerned that Mr. Wright intends to make this transfer partly in order to defeat his claim for a charging order.

Charging Orders

[25] The legislation governing the issue of a charging order is s. 34(1) of the Solicitors Act. That section sets out as follows:

Where a solicitor has been employed to prosecute or defend a proceeding in the Superior Court of Justice, the court may, on motion, declare the solicitor to be entitled to a charge on the property recovered or preserved through the instrumentality of the solicitor for the solicitor’s fees, costs, charges and disbursements in the proceeding.

[26] A judge hearing an application for a charging order is required to make determinations of fact and law regarding the satisfaction of the conditions in s. 34(1) in order to grant the declaratory relief. In Aird & Berlis LLP v. Levy, 75 O.R. (3d) 44, at para. 4, the court read s. 34(1) as identifying three separate preconditions for the granting of a charging order:

1. The solicitor was at some time employed to prosecute or defend a proceeding;
2. The property was recovered or preserved in that proceeding; and,
3. The solicitor was instrumental in the recovery or preservation of that property.

[27] Pursuant to Langston v. Landen, 45 E.T.R. (3d) 283, at para. 29, there is no a requirement that the court be satisfied that the client cannot or will not pay the lawyer’s fees, but the solicitor must establish a prima facie case that he/she is unlikely to recover the fees.

The Newmarket Litigation

[28] I do not find that a charging order is appropriate with respect to the Newmarket litigation. While it is clear that Mr. Cozzi was retained with respect to that proceeding, I do not find that he was instrumental in the recovery or preservation of the Little Britain property in the context of the Newmarket litigation.

[29] The order of Douglas J., dated January 29, 2015, requires that the Little Britain property be sold in order to pay costs, outstanding child support, and s. 7 expenses. That order was subsequently varied by the October 13, 2015 order of Rogers J., in which the requirement that Mr. Wright sell his home was deleted. The amount of $33,731.72 was agreed upon as the amount outstanding for support arrears and court ordered costs.

[30] I am at a loss with respect as to how to equate the results of those orders to any form of preservation or recovery of property by Mr. Cozzi. The results of the Newmarket litigation are simple with respect to the Little Britain property. Originally, it was determined that the Little Britain property would need to be sold to pay outstanding support arrears and costs to Ms. Wright. Some eight months later it was determined that that was no longer necessary as Mr. Wright had funds available from elsewhere to pay that outstanding obligation.

[31] With respect to the irrevocable direction, I find that it is irrelevant with respect to the charging order sought for the Newmarket litigation. That is not to say that the irrevocable direction is invalid or cannot be enforced. However, it is not axiomatic that a signed irrevocable direction entitles one to a charging order.

[32] Therefore, the request for a charging order in relation to the account for court file FC-10-036394 is dismissed.

The Lindsay Litigation

[33] The charging order with respect to the Lindsay litigation is a different matter. In that case, it is clear that Mr. Cozzi was acting for Mr. Wright at the relevant time. The question was raised as to whether or not Mr. Cozzi’s efforts in ensuring that Ms. Bennison vacated the property are sufficient to meet the test that he was instrumental in the recovery or preservation of the Little Britain property. Although counsel in this case could not point me to a specific case supporting this contention it is my view that this court must interpret the terms “recover” and “preserve” broadly.

[34] At para. 52 in Menzies Lawyers Professional Corp. v. Doyle Salewski, 2014 ONSC 5438, 50 R.F.L. (7th) 357, leave to ONCA granted, 2015 ONCA 553, 337 O.A.C. 1, the court held that “[i]t is well established that solicitors have a prima facie right to their lien, and that they ought not be deprived of their charging order remedy unless there are exceptional circumstances.” At para. 53, the court held that “[a] solicitor’s lien must be related to assets preserved by the solicitor. Where a solicitor’s work results in their client retaining or obtaining an asset, the solicitor may have a lien claim over that asset where the client’s accounts are outstanding.”

[35] In this case Mr. Cozzi’s work resulted in Mr. Wright being able to regain possession of his property; Mr. Wright had been deprived of that right by Ms. Bennison.

[36] It is clear that Ms. Bennison was a recalcitrant and difficult tenant. According to the affidavit material filed, she decided to board her horses at Mr. Wright’s home, invited tenants to stay there, and brought in her new fiancé. She attempted to sell Mr. Wright’s personal possessions on Kijiji. She then made claims that she had status as a common law spouse and wanted spousal support. She took advantage of the fact that Mr. Wright was prohibited from returning to the home as a result of a bail term that related to criminal charges which he claims Ms. Bennison concocted.

[37] Ms. Bennison agreed to cooperate with the sale of the Little Britain property. She consented to an order dated September 26, 2014, which set out certain terms in relation to arrangements for sale. However, she did not cooperate. Mr. Cozzi, on behalf of Mr. Wright was compelled to bring a motion in December 2014 requiring Ms. Bennison to vacate. The court granted Mr. Wright $4,000 in costs for having to take this step. One can understand why Mr. Wright was concerned and upset about the fact that while he was not permitted to live in his home, Ms. Bennison was behaving as if she owned the property by taking in tenants and inviting her fiancé to stay there without Mr. Wright’s permission or consent. This court can infer that the Little Britain property was not being “preserved” while Ms. Bennison had possession of it.

[38] The question then becomes whether recovering possession of the property fits within the parameters of preservation or recovery under the Solicitors Act. In my view it does. Possession is an integral part of ownership of a home.

[39] I reject Mr. Wright’s argument that Ms. Bennison left voluntarily and therefore Mr. Cozzi had no involvement or was not instrumental with respect to any recovery or preservation of that property. It is clear from Mr. Cozzi’s accounts and from the material filed that Ms. Bennison would not have left without the significant pressure placed on her by court orders and Mr. Cozzi’s insistent correspondence.

[40] Mr. Wright’s counsel argued that one cannot preserve or recover property that is already in one’s own name. That is, Mr. Cozzi obtaining possession of the property for his client is not contemplated by s. 34(1) of the Solicitors Act. Mr. Wright continued to be the owner of the property. He was simply prohibited from going there because of a criminal court prohibition. I disagree. I find that gaining possession of a property wrongfully retained by another is not excluded from the meaning of recovery or preservation. While perhaps a novel application of s. 34(1), but I find it is in line with established jurisprudence, and more importantly, it accords with the pith and substance of the legislation. It is clear that the phrase “recovery or preservation” can pertain to something to which a client has been granted title as a result of the solicitor’s actions, there is nothing in the wording of s. 34(1), or subsequent judicial interpretation of it, that would suggest the framers meant to limit the wording of the provision in the way that counsel for Mr. Wright suggests.

[41] Mr. Wright’s solicitor also argued that Mr. Cozzi cannot obtain a charging order because there is not a fund from which to obtain the order. That is, there are no proceeds of sale being held in trust to which the charging order can attach.

[42] I respectfully disagree. The fact that the Little Britain property was never sold is not an essential element with respect to granting the declaratory relief.

[43] It well established law that a charging order can be placed on funds that might become payable at some future time. In Pino v. Van Roon, 80 O.T.C. 385, a charging order was granted over funds that might become payable to a former client in two actions. In that case, Pardu J. opined, at para. 13 that:

The wording of section 34(1) of the Solicitors Act permits this interpretation, and since this interpretation avoids multiplicity of proceedings, and facilitates payment of amounts properly due, with no prejudice to any person, I conclude that where the costs of the solicitor have been assessed, as they have in this case, a solicitor substantially involved in advancing the client's case, may be granted a solicitor’s lien upon amounts which may flow to the client in that case in the future. I have noted the historical limitations to the common law right to a solicitor's charging lien, and the several Ontario decisions which have refused a declaratory charging order in these circumstances, but with the greatest of respect for those who have reached a different conclusion, in my view, the availability of a garnishment order which binds amounts coming due in the future in any event, requires a reassessment of the availability of a charging order in favour of a solicitor against funds which may become payable in the future. [Emphasis added.]

[44] In conclusion, I find that Mr. Cozzi was instrumental in the “preservation” or “recovery” of the Little Britain property, which Ms. Bennison took over for her own use and was resistant in giving up.

[45] With respect to the final branch of the test, Mr. Wright submits that there must be evidence that his client will not or cannot pay the required fees. There is some disparity in the cases on this point. In Langston v. Landen, the court held that a solicitor moving for a lien or charging order does not have to show that he or she cannot recover costs from his own client in order to be entitled to a charging order. Mr. Wright’s counsel submits that Mr. Wright has never said that he will not pay Mr. Cozzi what he may be owed, he simply wishes to have his accounts properly assessed.

[46] Mr. Cozzi expresses some concerns about whether or not he will be paid. He advises that on June 15, 2015 at the trial management conference in the Lindsay matter, Mr. Wright advised him that the respondent, Tracy Waters, intended to purchase a 50 percent interest from him in the Little Britain Property. He is concerned that Mr. Wright intends to avoid his responsibility under the irrevocable direction that he signed in September 2014.

[47] As well, while Mr. Wright claims that he has other sources from which he can pay the accounts, again Mr. Cozzi is concerned about this statement. This is because he does not indicate the source of funds from which he will pay his former spouse as set out in the January 2016 order. Furthermore, there is no date in that order by which the amount owed to Ms. Wright is to be paid.

[48] Mr. Cozzi is aware that on January 17, 2013, Mr. Wright lost his job and was paid severance until July 14, 2014. In his financial statement sworn on June 3, 2015, Mr. Wright confirmed that his monthly income was $1,804 from employment insurance benefits and that his monthly expenses were $5,082. Mr. Cozzi is obviously concerned about how Mr. Wright will be able to pay his legal accounts as assessed or the outstanding child support owed to his ex-wife without making use of some of the sale proceeds of the Little Britain property.

[49] Mr. Cozzi deposes that the only source of funds available to Mr. Wright for any purpose are funds that he would receive from the sale of his home. He seeks a charging order on the sale proceeds, when available, to ensure that he will be able to enforce and collect on his legal accounts to Mr. Wright.

[50] While it is not necessary for Mr. Cozzi to incontrovertibly show that Mr. Wright is unable or unwilling to pay his accounts, I nonetheless find that under the present circumstances, there is some evidence that Mr. Wright may not be able to pay the required amounts without the sale of the subject property, based on his current financial situation.

Orders

[51] Based on all of the above I make the following orders:

1. The request for a charging order with respect to family court action FC-10-036094 Newmarket in the amount of $47,699.37, is dismissed.
2. The request for a charging order with respect to family court action FC-257-14 in Lindsay is allowed in the amount assessed.
3. When the respondent Jeffrey Marshall Wright decides to sell or transfer the Little Britain property for any reason, a copy of the irrevocable direction, dated September 2014, shall be provided to the solicitor acting on the sale and Mr. Wright shall communicate the name of the solicitor to Mr. Cozzi.

Costs

[52] In the circumstances I find that the results of this motion, on balance, were mixed. The applicant had some success but it was not complete. If counsel are unable to agree on the issue of costs and wish to make further written submissions, in addition to the costs outlines provided, they may do so by the following schedule: counsel are to provide written submissions (no more than two pages in length) on a seven day turnaround from the date of issue of this ruling, commencing with the applicant. If no additional costs submissions are received within the time frame set out above, the court shall rely on the costs submissions already provided.

Madam Justice C.A. Gilmore Released: April 18, 2016