Gilbert's LLP v. David Dixon Inc.
Ontario Reports
Ontario Superior Court of Justice,
Dunphy J.
January 29, 2016
129 O.R. (3d) 395 | 2016 ONSC 753
Case Summary
Professions — Barristers and solicitors — Fees — Assessment — Section 23 of Solicitors Act not permitting solicitor to apply to Superior Court for order for payment of unpaid account where retainer agreement itself is not in dispute — Solicitors Act, R.S.O. 1990, c. S.15, s. 23.
The solicitors brought an application under s. 23 of the Solicitors Act for an order that the client pay outstanding accounts. There was no suggestion that the retainer agreement itself had been challenged by the client.
Held, the application should be dismissed.
Sections 23 and 24 of the Act do not permit a solicitor to bring an application to the Superior Court for an order for the payment of an unpaid account where the retainer agreement itself is not in dispute.
Jane Conte Professional Corp. v. Smith, [2014] O.J. No. 5033, 2014 ONSC 6009, 329 O.A.C. 96, 246 A.C.W.S. (3d) 706 (Div. Ct.), consd
Statutes referred to
Solicitors Act, R.S.O. 1990, c. S.15 [as am.], ss. 3 [as am.], 15 [as am.], 23 [as am.], 24, 28.1(8) [page396]
APPLICATION for an order for payment of unpaid accounts.
M. Frontini, for applicant.
D. Dixon, for respondent (self-represented).
[1] Supplementary endorsement of DUNPHY J.: — This endorsement is supplementary to the very brief handwritten endorsement made by me at the conclusion of the hearing of this application on January 28, 2016 and that of a closely related application by the same applicant in CV-15-540765. Both applications were dismissed as both were, in my view, an attempt to circumvent the assessment procedure prescribed under the Solicitors Act, R.S.O. 1990, c. S.15 by bringing an undisputed retainer agreement before the Superior Court pursuant to s. 23 of the Act.
[2] I think there is merit in expanding upon my reasons and I do so here. If there is to be uniformity of practice in these matters, decisions must be rendered publicly and be available.
[3] I fully recognize that the profession is currently experiencing a degree of frustration with the delays cropping up in the assessment process under the Solicitors Act. If the profession is frustrated, clients seeking to utilize the assessment system to adjust accounts from their solicitors are experiencing a similar degree of frustration. The delay required to obtain a hearing is, by all accounts, unacceptably long. However, the answer to a shortage of resources devoted to one part of the justice system cannot be to overload those devoted to another that has not been designed or staffed to deal with it.
Overview of Facts
[4] The applicant in both matters was a firm of solicitors, Gilbert's LLP. The applications sought declarations "that there is an agreement between the applicant and the respondents respecting the amount and payment of fees", declarations that the agreements are fair and reasonable and, in an admirable instance of burying the lead, "an order that the respondent pay" the outstanding accounts. The amounts claimed were $5,157.57 in this application and $9,373.68 in the companion application.
[5] In each case, the clients had signed a short and apparently fairly standard-form retainer agreement. The retainer agreements address the usual subject matters: the nature of the retainer, the manner of charging fees and hourly rates applicable, billing arrangements, the retainer deposit and similar matters. While I have not ruled on reasonableness, there was nothing apparently unusual or controversial in them. [page397]
[6] Both applications blacked-out information regarding the actual nature of the retainer or any information as to the services rendered for the fees claimed. This was done for understandable privacy reasons and to preserve solicitor-client privilege, but unfortunately has the added impact of creating a record entirely inadequate to the task of granting the principal relief sought (assessment of the accounts rendered).
[7] Entirely lacking from the application material is any suggestion that the retainer agreement -- by which I mean its actual terms and conditions and not the outstanding accounts rendered pursuant to it -- has been challenged by the client in any fashion. The "real" complaint of the solicitor is not an unusual one: the client has not paid the account in a timely fashion and the solicitor would like to be paid. The correspondence with the client filed merely discloses a client that was financially stretched and was seeking accommodations from its lawyer to raise the financing necessary to pay the accounts. There is no hint of a challenge to the retainer agreement itself.
Issues
[8] Can a solicitor apply to the Superior Court pursuant to ss. 23 and 24 of the Solicitors Act to seek payment of unpaid accounts where the retainer agreement itself is not actually in dispute?
Analysis and Discussion
[9] The Solicitors Act governs the relationship between solicitors and their clients in the Province of Ontario. As a statute, it seeks to strike a balance between the interests of both.
[10] Section 3 of the Act provides that, "[w]here 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" to have a solicitor's account assessed by either the solicitor or the client (among others). Various time limits are imposed. The assessment system, at least as designed, was intended to ensure both to solicitors and their clients access to a summary hearing system. At one time, this was a very attractive proposition when contrasted with the delays in the general court system.
[11] Sections 15 and following of the Act deal with written agreements between solicitors and clients. Although not so limited, these sections are clearly intended to provide a regime for dealing with the whole subject matter of contingent fee arrangements. Such agreements are quite different in kind from the "traditional" sort of fee arrangements that prevailed before [page398] contingent fee arrangements were approved. They are required to be in writing, and once in writing, are subject to review for, among other things, reasonableness.
[12] Sections 23 and 24 of the Act provide as follows:
No action shall be brought upon any such agreement, but every question respecting the validity or effect of it may be examined and determined, and it may be enforced or set aside without action on the application of any person who is a party to the agreement or who is or is alleged to be liable to pay or who is or claims to be entitled to be paid the costs, fees, charges or disbursements, in respect of which the agreement is made, by the court, not being the Small Claims Court, in which the business or any part of it was done or a judge thereof, or, if the business was not done in any court, by the Superior Court of Justice.
Upon any such application, if it appears to the court that the agreement is in all respects fair and reasonable between the parties, it may be enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit, but, if the terms of the agreement are deemed by the court not to be fair and reasonable, the agreement may be declared void, and the court may order it to be cancelled and may direct the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein to be assessed in the ordinary manner.
[13] Breaking them down, these two sections require the existence of (i) a "question respecting the validity or effect" of an agreement in order to commence an application (s. 23); and (ii) on such an application, permit the agreement to be "enforced or set aside" (s. 23) or "enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit" (s. 24).
[14] Did the legislature intend with ss. 23 and 24 to permit applications to be brought whose primary focus is simply the collection of invoices outstanding under a retainer whose validity or effect is not actually questioned? In my view, it did not.
[15] The jurisdiction being conferred by s. 23 was intended to be a supervisory and policy jurisdiction. Agreements in dispute may be assessed to see if they are reasonable. This will of course include contingent fee arrangements where there was considerable worry about the prospect of abuse in such arrangements when the amendments authorizing these were first enacted.
[16] In Jane Conte Professional Corp. v. Smith, [2014] O.J. No. 5033, 2014 ONSC 6009 (Div. Ct.), Nordheimer J. described s. 23 as being intended to create "a process by which the validity and enforceability of written fee agreements between lawyers and clients are to be handled" (at para. 16). However, in my view, if there is no dispute as to validity or enforceability, s. 23 ought to have no place. [page399]
[17] The scheme of the Act would potentially be undermined by a too-wide application of s. 23. The Act contemplates a requisition and assessment process followed by a possible appeal to the Superior Court on a confirmation motion. Short-circuiting the scheme of the Act by proceeding directly to the Superior Court risks affecting substantive rights of the clients (or the solicitor).
[18] The language of s. 23 itself makes it clear that a condition precedent to an application under that section is the existence of a "question respecting the validity or effect" of the agreement. It is the examination of those questions that is the proper object of an application under s. 23, not the simple assessment of an outstanding bill. Disguising one as the other will not change its true nature.
[19] In the present application, there can be no suggestion that there exists a bona fide question respecting the validity or effect of the retainer agreement. There is no evidence that the client has raised a dispute about either. Mere failure to pay an account in a timely fashion does not amount to a challenge of the validity or effect of the agreement. It may be evidence of a breach of the retainer agreement due to lack of financial resources, but that is an entirely different matter. The mere request for a declaration of the validity of an otherwise unchallenged retainer agreement cannot create a lis where none exists. If there is no lis as to the validity or effect of the written retainer agreement, there can be no proper application under s. 23.
[20] The applicant relied upon the decision of Nordheimer J. in Jane Conte (supra). In that case, the law firm had been retained on a contingent fee arrangement for a personal injury matter that provided for payment of fees on an hourly basis should the retainer be terminated. The retainer was in fact terminated and new counsel was appointed. The law firm sued in Small Claims Court to obtain payment of the invoice it rendered as a result of the termination of the retainer. Crucially, there was a dispute between the lawyer and the client both as to the reasonableness and enforceability of the retainer arrangement. The retainer was a hybrid contingent arrangement purporting to require immediate payment of fees upon changing firms rather than a contingent or deferred arrangement. When the Small Claims Court dismissed the client's motion challenging jurisdiction, the client appealed. Nordheimer J. allowed the appeal and found that the Small Claims Court did not have jurisdiction to enforce the account rendered under this disputed retainer agreement. He also found that [page400] the contingent fee arrangement in question required court approval under s. 28.1(8) of the Act and that the Small Claims Court lacked jurisdiction to approve it.
[21] I do not view Jane Conte as having any application to uncontested, non-contingent fee arrangements such as the one under consideration in this case. Where the client has not challenged the reasonableness or enforceability of the retainer agreement, the mere fact of an unpaid account is not sufficient to confer jurisdiction under s. 23 of the Solicitors Act. There must be evidence of a bona fide dispute between the solicitor and client as to the validity or effect of the written agreement.
[22] It would appear that efficiencies in the Small Claims Court system as well as our own Superior Court summary judgment and simplified procedure reforms in Superior Court have somewhat eroded the time and efficiency gains that the s. 3 Solicitors Act assessment process once promised to solicitors and their clients. The result has been that users of the system have been seeking imaginative means of avoiding it rather than seeking to reform it or obtain from government the allocation of the additional resources needed to bring it up to the standards now applying in other areas.
[23] Ensuring access to a quality system of justice in a cost-effective and efficient manner has been an extremely high priority of the Superior Court. Significant strides have been made. The court has a very broad mandate to fulfill and many miles to go before it can rest on its laurels.
[24] I do not wish to sound alarmist, but applications such as this can start as a trickle and soon develop into a flood. The applicant indicated that it has been successful in similar applications before other judges in the past. In my view, the mandate of the Superior Court does not extend to being an all-purpose alternative to assessment where the solicitor or the client find the current state of the assessment system no longer works to their liking.
Disposition
[25] For these (expanded) reasons, I dismissed both applications without costs and without prejudice to the solicitor bringing the accounts to be assessed under s. 3 of the Solicitors Act and or bringing any bona fide disputes regarding the retainer agreement (as opposed to the accounts) to the Superior Court in the manner contemplated by the Act.
Application dismissed.
End of Document