RULING ON AN ASSESSMENT
COURT FILE NO.: CV-13-5285-00 AND COURT FILE NO.: CV-14-513579-00 (Toronto) DATE: 2016 08 29
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF the Solicitors Act; AND IN THE MATTER OF Anushika Anthony Professional Corporation
B E T W E E N:
VAHID HOSSEINI
- and -
ANUSHIKA ANTHONY PROFESSIONAL CORPORATION
A N D B E T W E E N:
VAHID HOSSEINI Plaintiff
- and -
UNIFUND ASSURANCE COMPANY Defendant
HEARD: June 29, 2016
Justice Thomas A. Bielby
INTRODUCTION AND JURISDICTION
1The Applicant, Mr. Hosseini, seeks an assessment of the account of Anushika Anthony, of Anushika Anthony Professional Corporation whom I will refer to as the Respondent. Ms. Anthony represented the Applicant in this action against Unifund Assurance Company, which action has been settled. The retainer was in the form of a contingency fee agreement (CFA).
2The settlement amount was $785,000.00, together with $65,000.00 in costs.
3On October 7, 2014, the Applicant attended at the court house in Toronto and obtained an order for the Delivery and Assessment of his lawyer’s account (court file number CV-14-513759). The account presented indicated the Applicant was billed a total of $233,539.50, which was made up of $149,150.00 in fees (19% of $785,000.00) plus $19,389.50 for GST/HST plus $65,000.00 for disbursements and costs, the latter being the amount paid by Unifund for costs.
4The majority of the settlement monies (70%) were used to finance a structured settlement. In regards to the balance, after the Respondent deducted her bill, the Applicant received, in cash, $21,460.51.
5The matter went before an assessment officer in Toronto and on March 4, 2016, the assessment officer ruled he did not have jurisdiction to conduct an assessment stating it can only be conducted by a Superior Court judge.
6Further, the assessment officer noted that, under O. Reg. 195/04 sec. 10, the prescribed time to apply to a Superior Court Judge is within six months after the delivery of the legal account which in this case is dated August 1, 2014. The officer concluded,
“Accordingly, and if the Client still wishes to have his legal account assessed, notwithstanding any applicable limitation periods, he is free to apply to a Superior Court Judge for an assessment.”
7The Applicant’s motion before me is dated June 3, 2016, only three months after the assessment officer released his ruling.
8Clearly this application for an assessment should not be considered a procedure within this action, especially since this action, pursuant to the settlement and prior to the assessment process, was dismissed without costs. The request for an assessment should have been transferred to the Superior Court in Toronto under the file number issued for the assessment procedure. Given the circumstances, however, I agreed to hear the matter.
9In regards to any limitation argument, section 28.1(11) of the Solicitors Act stipulates that a client, in this case the Applicant, may apply for an assessment within one year after payment. The account was paid in August, 2014, and the Order for Assessment obtained in October, 2014, well within the limitation period.
10In regards to the finding of the assessment officer that the limitation period set out in section 10 of Ontario Regulation 195/04 is applicable, the Order was obtained within six months of its delivery.
11I find that these proceedings were brought within the applicable limitation period as the Applicant initiated his application for an assessment prior to any limitation period expiring and that this assessment is a continuation of those initial assessment proceedings.
12If I am wrong in that conclusion I will rely on section 25 of the Solicitors Act and find that special circumstances exist to allow the court to reopen the issue of the CFA and the fees and disbursements charged.
13As noted in the Respondent’s factum, paragraph 55, special circumstances are considered to ensure fairness and public confidence in the administration of justice. The Applicant originally obtained his order for assessment well within any limitation period, that is to say within a few months of the Respondent being paid.
14The assessment officer did not release his ruling that the matter ought to be before the Superior Court of Justice until March 2016. The Applicant, who is now self-represented, brought this motion without any undue delay. I find that he brought his application for an assessment in good faith and as a result, if he has run afoul of a limitation period the special circumstances exist to allow for this assessment.
FACTS
15The Applicant was involved in a motor vehicle accident in 2007. Unifund Assurance Company was the Applicant’s own insurer and this action was in relation to accident benefits.
16The matter was resolved through mediation and at all times the Applicant was represented by the Respondent.
17On April 22, 2010, the Applicant signed the Respondent’s CFA. The Applicant agreed to pay his lawyer 25% of what he recovered. The paragraph in which a client would also agree to pay all disbursements was waived by the Respondent, although the Applicant was responsible for the, at the time, GST (Tab A, Motion Record).
18The Applicant was unhappy with the original CFA and renegotiated its terms with Ms. Anthony. The new agreement was entered into in May, 2012 but was back-dated by the Applicant to April 22, 2010. This second CFA reduced the contingency percentage to 21% inclusive of disbursements. GST/HST remained the responsibility of the Applicant (Tab B Motion Record).
19Interestingly, there is at the bottom of page 2 of the second CFA, the handwritten notation, “-GST. The solicitor is allowed to accept cost from insurance company.” This notation as a large stroke through it and is noted as waived.
20I want to reiterate that both the first and second agreements dictate that disbursements were included in the appropriate contingency fee percentage.
21On September 18, 2013, the agreement was again, for the third time, renegotiated, at the insistence of the Applicant. The agreement, in draft, was sent to the Applicant by Ms. Anthony. The Applicant amended the draft agreement, citing a contingency fee of 19% along with other amendments. The amended agreement, signed by the Applicant was returned to Ms. Anthony for her signature (Tab C. Motion Record).
22The Respondent acknowledges that she signed the amended third retainer agreement but either did not notice or did not read the changes. She believed she had agreed to a fee of 19% and HST as well as the $65,000.00 received as costs.
23Within the third agreement, at page 2, paragraph 2, the Applicant added the following amendment:
“The contingency fee paid by the client to AAPC is equal to Nineteen percent (19%) of all amounts recovered on behalf of the client for the client’s claim, including disbursements (out of pocket expenses) inclusive of HST, regardless of the source of the said recovery whether by way of the settlement of the client’s claim or by way of judgment following a trial.”
24The difference in this agreement over the other two, apart from the change in percentage, is that the 19% was not only to include disbursements but HST as well.
25Thereafter, the following example, authored by the Applicant, was set out:
Damages plus interest $100,000.00 Costs 10,000.00 Disbursements 10,000.00 Total $120,000.00
26The example then went on to state that the client would receive $91,000.00 and the lawyer, $29,000.00, the latter number being a fee of $19,000.00 (19% of $100,000.00) and the cost component of $10,000.00.
27This example, in regards to the allocation of the cost component, is in conflict with paragraph 3 on page 4 of the third CFA which is entitled, “The Partial Indemnity Costs Paid by the Other Side”. I believe this paragraph was included to comply with section 28.1(1) of the Solicitors Act R.S.O. c. s.15. The paragraph concludes as follows:
“The amount of the contingency fee payable herein to AAPC shall exclude any amount awarded or agreed to that is separately specified as being in respect of costs and disbursements.”
28On page 3 of the third retainer agreement, and in conflict with the Applicant’s amendment, and contrary to the previous CFA’s, the client was to be responsible for the payment of all disbursements including HST.
29On August 1, 2014, the matter went to mediation and the matter was settled. Minutes of Settlement were signed by the parties. The Minutes of Settlement refers to the global amount of $850,000.00 inclusive of interest and costs. Within this document there is no amount noted for costs.
30On the same date the plaintiff signed an Authorization and Direction. The document instructs counsel to settle the action for $785,000.00 plus assessable disbursements and costs of $65,000.00, along with the applicable HST. This document is in part typed, and in part hand-written (Tab E, Motion Record).
31The Authorization and Direction goes on to read that the Respondent, from the amount of $785,000.00, was to receive $149,150.00 together with HST of $19,389.50 and the balance, $616,460.50, was to be paid to the Applicant (the majority of which funded a structured settlement).
32While the Authorization did not specifically allocate the cost portion of $65,000.00, it was used by counsel to set off against disbursements.
33Upon receiving the cash portion of the proceeds the Respondent deducted the aforementioned and delivered to the Plaintiff a cheque for $21,460.50.
34As a further complication, at the time of the renegotiation of the third retainer agreement, the Respondent alleges that the Applicant insisted on hiring a lawyer from Bay Street in Toronto, and in fact met with and retained, as co-counsel, Mr. Paul Miller of Will Davidson LLP.
35The Applicant submits he did not retain Mr. Miller and submits he has never been to Mr. Miller’s office and only met him for the first time at the mediation. He argues it was the respondent who retained Mr. Miller, an allegation she denies.
36Mr. Miller participated in the mediation process and originally presented an invoice for $90,015.80, which he reduced to $72,998.00. The Respondent submits that this amount was paid from the $65,000.00 recovered for costs with the balance of $12,998.00 being paid from the contingency fee she recovered.
37There is also an issue in regards to who is to pay an outstanding account of $19,533.53 payable to Canadian Chiropractic Rehabilitation Clinic. This is found at Tab N of the Respondent’s Motion Record. The account is addressed to Ms. Anthony at Anushika Anthony Professional Corporation, noting the Applicant as the claimant. The Applicant provided a written authorization to counsel not to pay this account from the settlement monies.
ANALYSIS
38Section 28.1(8) of the Solicitors Act dictates that a CFA shall not include in the fee payable to the solicitor in addition to the fee payable under the CFA an amount awarded for costs as part of a settlement.
39Section 28.1(8) does allow for an exception to this if the parties agree and there are exceptional circumstances, neither of which criteria apply to this matter and requires a court order.
40In other words, counsel is not entitled to take a contingency fee and the cost portion of the settlement without agreement and court approval.
41The following authorities confirm the operation and impact of this section.
42Oakley & Oakley Professional Corporation v. Aitken, 2011 ONSC 5613, is a decision of Perell J. in which section 28.1(8) was considered.
43The applicant in Oakley applied to the Superior Court of Justice, with the consent of its clients, for permission to include in its contingency fee agreement any award of costs citing exceptional circumstances. At paragraph 16 the judge notes that the purpose of the section 28.1(8) is to prevent double dipping.
44From paragraph 17 I quote,
“It appears that in authorizing the court to allow a lawyer to obtain both a contingency fee and to recover the costs awarded to his or her client in “exceptional circumstances,” the Legislature recognized that there will be cases where having regard to the nature of the litigation and the associated risks, a contingency fee alone would not fairly compensate the lawyer for taking on the case.”
45In Hodge v. Neinstein, 2015 ONSC 7345, from paragraph 23, I quote,
“Of particular importance in this case is s. 28.1(8), which uses the same kind of proscriptive language as the subsection prohibiting contingency fees in criminal and family law cases. This subsection prohibits a lawyer from entering into an agreement under which he gets a fee and also any portion of costs recovered in an award or settlement. The same “shall not” language is used, but with a provision that the solicitor and client can apply to a judge for approval to include such a term in an agreement in exceptional circumstances. However, without such approval, such a term shall not be included in a contingency fee agreement.”
46From Williams v. Bowler, 2006 19466 (ON SC), paragraph 24, I quote,
“On December 9, 2002, Bill 213, the Justice Statute Law Amendment Act, 2002, received Royal Assent. Schedule A of this legislation amends the Solicitors Act to regulate contingency fee agreements. It contains broad regulation-making power relating to contingency fees, and includes the following regulatory controls:
- Requires all contingency fee agreements to be made in writing;
- Prohibits contingency fees in criminal, quasi-criminal and family law matters;
- Precludes lawyers from collecting both the pre-determined contingency fee and legal costs, unless approved by a judge;”
47In regards to the third retainer agreement, the Respondent submits that she ought not to be bound by it because as a result of the Applicant’s amendments beyond reducing the amount to 19%, it was not the standard agreement which was ordinarily presented to clients. While the Respondent acknowledges she agreed to 19% she argues this was not to include disbursements and HST. She included in her material draft, standard retainer agreements as evidence as to her normal practise in contingency matters.
48In that regard, the draft or standard agreements are not helpful. I believe the Respondent is bound by the third retainer agreement, as amended. She chose to sign an agreement that she initially prepared, was then amended by the Applicant and thereafter signed by the Respondent without, admittedly, reading the amendments.
49The Applicant submits he ought not to be held to the Authorization and Direction. He argues that pursuant to the third retainer agreement, the Respondent should receive only 19% of all amounts recovered on his behalf ($850,000.00), inclusive of disbursements and HST which amounts to, $161,500.00, as opposed to the $233,539.50 deducted by the Respondent for fees, disbursements and HST.
50The Applicant argues he was rushed into signing it to finalize the settlement. He suffered a head injury in the motor vehicle accident and he argues he needed time to consider the document before signing. This was the same man however who successfully renegotiated the retainer agreement on two occasions. I accept the submissions of the Respondent that the Applicant, when attending at the mediation was accompanied by his brother and actively participated in the mediation.
51In my opinion the Applicant is bound by the Authorization and Direction. I accept he actively participated in all discussions and understood the nature of his actions. There is no evidence to the contrary. There was no medical evidence filed on this motion.
52On the cusp of a settlement it is not unusual, when considering the acceptability of any settlement offer, for a lawyer and his or her client to discuss and agree, set out in writing, the respective amounts to be paid to counsel and to the client. Such arrangements may differ from the original financial arrangements.
53The issue then becomes how to reconcile the two documents. Each of the parties wishes one of the agreements to be binding but argues they ought not to be bound by the other. They both insist the document which respectively favours them ought to be enforced but the document that does not benefit them ought to be rejected.
54I find that by virtue of the third retainer agreement, as amended by the Authorization and Direction, the Respondent was to receive a 19% fee, inclusive of disbursements plus HST.
55As noted previously the first two CFA’s the contingency fee agreements were inclusive of all disbursements. I recognize that there is ambiguity in the third CFA in that notwithstanding the amendment, further on in the agreement it notes the Applicant is responsible for disbursements and HST. The Respondent is the original author of the agreement and any ambiguity is to be interpreted against the interests of the Respondent.
56It was clearly the intention of the Applicant in the amending paragraph he inserted in the third CFA that the 19% was to include disbursements and HST and I would apply the agreement in that manner.
57Thereafter, the Authorization and Direction amended the third CFA by requiring the Applicant to be responsible for the HST over and above the 19% fee allocation.
58The issue then to be determined is how to allocate the cost contribution of $65,000.00, which the Respondent used to pay the majority of Mr. Miller’s account. This is dependent on finding who retained Mr. Miller and the impact of Section 28.1(8).
59In regards to whose responsibility it is to pay Mr. Miller’s account, it would have been helpful if either of the parties had obtained a sworn statement from Mr. Miller in which he would clarify the nature of his retainer and by whom he was retained.
60I am required however to rule on this issue on the evidence presented to me.
61Mr. Miller’s accounts, which were mailed to Respondent, refer to the account as an “agency matter” which suggests he was retained by the Respondent (Tab M, Respondent’s Motion Record).
62On page 3 of the third CFA the Respondent was authorized to retain counsel, agents or experts as they deem necessary and to honour their disbursements and accounts.
63On March 13, 2014, Mr. Miller served and filed a Notice of Appointment of Lawyer (Tab H, Respondent’s Motion Record) which states that he was appointed by the Applicant, as co-counsel of record.
64I find that Mr. Miller was an agent of the Respondent and his fee ought to be paid out of the contingency fee paid to the Respondent. The payment of the Miller account was not the responsibility of the Applicant.
65The Notice of Appointment of Solicitor was to give Mr. Miller official status and allowed him to participate in the mediation proceedings. At best it is neutral as to the issue of who hired Mr. Miller. The Notice was the authority needed by Mr. Miller to participate in the proceedings but, as evidence, it is less persuasive than the account referenced Mr. Miller’s involvement as an agency matter and which account was sent to the Respondent for payment.
66The Respondent should not have used the monies paid as costs to pay any portion of Mr. Miller’s account.
67I find that the $65,000.00, paid as a contribution to costs, ought to have been paid to the Applicant in order to comply with section 28.1(8) of the Solicitors Act, notwithstanding the example included by the Applicant in the third CFA whereby the monies paid for costs were part of the Respondent’s compensation. As noted previously this example is in conflict with another paragraph of the third CFA. I find that there was no agreement between the Applicant and the Respondent in regards to the Respondent receiving the portion paid as costs and certainly no court order without which the monies were to be paid to the Applicant. Further, I would not categorize the circumstances as exceptional.
68The effect of this order results in a financial burden to the Respondent and may result in counsel being under paid. A contingency fee of 19% is at the low end of the scale. However, more important attention ought to have been paid to the written documents to properly set out the financial arrangements between client and lawyer.
69In regards to the Chiropractic Clinic account, the evidence before me to decide responsibility is slim. What I have is an account delivered to Ms. Anthony’s office which asks her to provide payment. I also have an authorization signed by the Plaintiff not to issue any payment to the Clinic. I cannot make any determination and will leave it to the Clinic to pursue whomever they feel responsible for the account. The account remains unpaid.
RULING
70Given my findings, the Respondent’s account is assessed at $149,150.00, inclusive of disbursements, including the agency account of Mr. Miller. The Respondent was also entitled to recover HST of $19,389.50. The $65,000.00, awarded as costs, is to be reimbursed to the Applicant. Put another way, the Respondent’s account, as charged and collected, is reduced by $65,000.00.
71The assessment portion of this file is to be returned to Toronto under file number, CV-14-513759-00.
Bielby J.
Released: August 29, 2016