ONTARIO SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-15-4819-00 DATE: 2017 04 21
BETWEEN:
NANAKSAR SATSANG SABHA OF ONTARIO Plaintiff
H. Dhaliwal, Counsel for the Plaintiff
- and -
RAGHBIR SINGH, SUNIL AHUJA and TEJPAL SAHNI, also known as TEJPAL SAINI - and - SIMMONS da SILVA LLP and RAJESH RAI THAPAR Defendants
A. Ronan, Counsel for the Defendants, Raghbir Singh, Sunil Ahuja and Tejpal Sahni also known as Tejpal Saini M. Belanger, Counsel for the third parties R. Dunsmore, for Dunsmore Wearing LLP A. Munro for the Gray Whitley van der Valk firm
AND BETWEEN:
NANAKSAR SATSANG SABHA OF ONTARIO Applicant
J. Keith and H. Dhaliwal, for the Applicant
-and-
DUNSMORE WEARING LLP, TEPLITSKY, COLSON LLP AND CARTERS PROFESSIONAL CORPORATION Respondents
C. Allen, for the Respondents
HEARD: April 3, 2017
REASONS FOR JUDGMENT
LEMAY J
1I am the case management judge in the above noted actions and application. This is one in a continuing line of decisions and endorsements that I have issued in order to move the actions forward. The issue that presents itself on this application is effect of the assertion of a solicitor’s lien under the Solicitor’s Act in the face of a production request during litigation.
2There is a long history to the underlying action in this case, which is set out in a previous decision (see Dhadda v. Dhaliwal (2015), 2015 ONSC 4139, 126 O.R. (3d) 459). In brief, the Plaintiff Nanaksar Satsang Sabha of Ontario is a Sikh Gurdwara in Brampton. I will refer to it as the Gurdwara in these reasons. In the fall of 2015, there was a leadership change at the Gurdwara that has been the subject of much litigation.
3The group of directors who had been removed from control of the Gurdwara in the fall of 2015 challenged the right of the newly installed directors to remain as directors. I ultimately dismissed the application brought by the removed directors. However, issues remained between the parties.
4Ultimately, as a result of the case management process, the issues that remained were reduced to a series of disputes over legal fees and the legal advice given to the Gurdwara and to the individual directors. These disputes were made more complicated by the fact that there were third parties involved, as well as the fact that one dispute had been commenced in Superior Court, a second had been commenced in Small Claims Court and a third had been commenced as an assessment before an assessment officer.
5I consolidated all of these proceedings before me as a case management judge and the matters are moving forward towards a resolution. However, the Applicant has sought production of files from four law firms that were involved in providing advice to the Gurdwara prior to my decision in Dhadda in the summer of 2015.
6As a result of a previous appearance before me in March, I directed counsel for the Gurdwara to formally put all of the law firms on notice that they would be seeking production of the files in the law firms’ possession. As a result, a further application was commenced by the Gurdwara seeking this production, and I have directed that this application is to be consolidated with the other actions that I am case managing.
7The law firms that the Gurdwara is seeking production from are all taking different positions on this application. One firm has provided a consent to this production, one firm did not appear on the application and two of the firms have opposed the production of the files.
8For the reasons that follow, I am directing that all of the law firms provide copies of their files to the Applicant for inspection. In some cases, I am setting out the terms under which this inspection will take place.
9Given the complexities of this case, and the unique circumstances that arise, I will address the position of each law firm separately. At the end, I will set out some directions relating to other issues that flow from the case conference and the argument of this motion before me.
The Files in the Possession of Carters LLP and Dunsmore Wearing
10The Applicant is seeking files from both of these firms. Carters LLP has not been involved in this action in any way, but has provided a consent for the production of its file. As a result, a consent order will issue.
11Dunsmore Wearing LLP is involved in this action. It is the firm that sought to enforce its claim for unpaid fees through an assessment proceeding. They were properly served with the Application but did not attend at the hearing. As a result, I am of the view that they are not opposed to disclosing their file.
12In any event, I am of the view that the Dunsmore Wearing file should be disclosed. In an assessment hearing, the assessment officer will review the entire file in assessing whether the costs are reasonable. As a result, the entire file would be available to any party involved in the assessment proceeding. The outcome should be no different here.
The Gray Whitley Van Der Valk File
13The Gray Whitley firm is also involved in the ongoing litigation before me. They have made a claim for unpaid legal fees through a Small Claims Court action. They resist the production of the file on three grounds. First, there is a potential claim of privilege over the file. This issue arises because there is an open dispute between the Simmons Da Silva firm, the Defendants to the main action, and the Gurdwara about who retained the Gray Whitley firm. As a result, there is an issue about who can authorize the release the file.
14Second, the Gray Whitley firm argues that they have a Solicitors Act lien over their file. The firm has never gotten off the record, and has billed for work but has not been paid. As a result, the Gray Whitley firm argues that ordering production of their file would negate their lien.
15Finally, the Gray Whitley firm argued that this was a request for production from a third party under Rule 30.10. Given that discoveries have not yet taken place in this matter, the Gray Whitley firm asserts that the request for production was premature.
16As a preliminary matter, I note that the Gray Whitley firm was not a party to the Application brought to obtain the lawyers files. In my view this is not relevant as the Gray Whitley firm has been made a party to these actions. My order of October 20th, 2015 consolidated these actions, including the Small Claims Court action. As a result, I have jurisdiction over the disclosure issues raised by the Gray Whitley file.
17On the issue of privilege, I canvassed the position of all of the interested parties on the record. Unsurprisingly, neither the Gurdwara nor Simmons Da Silva was prepared to acknowledge that they had retained the Gray Whitley firm. Neither party was prepared to acknowledge that the fees invoiced by the Gray Whitley firm were properly incurred. However, both parties were (on a without prejudice basis) prepared to waive any privilege that they might have had to the file. In other words, although neither party claimed a right to privilege in the file, if they had such a right they were prepared to waive it. As a result, there is no merit to the privilege argument being advanced by the Gray Whitley firm.
18This brings me to the second issue, which is the prejudice that the Gray Whitley firm would suffer if their file was ordered to be produced and the fact that they claim a solicitor’s lien.
19I struggle to see what prejudice the Gray Whitley firm would suffer if their file was disclosed. Part of the struggle comes from the fact that one of the other arguments Mr. Munro made was that most, if not all, of the Gray Whitley file was already in the possession of the Simmons Da Silva firm, and therefore would be produced in the main action in any event.
20I also struggle to see what prejudice the Gray Whitley firm would suffer by disclosing their file because the Small Claims Court proceeding is a proceeding taken to enforce the lien and collect on the outstanding accounts. In order to collect on those accounts at trial, the Gray Whitley firm will have to provide evidence to justify them.
21Mr. Munro argues that the Rules of the Small Claims Court do not require the Gray Whitley firm to disclose any documents other than those attached to their claim, that they are relying on in the Small Claims Court matter. While I accept that this position was correct when the litigation commenced, I also note that section 107 of the Courts of Justice Act permits a Small Claims Court matter to be transferred to the Superior Court where there are multiple proceedings with issues in common. This is such a case. As part of assuming jurisdiction over this case, I had determined that all of the proceedings would be dealt with in one process. We had not yet determined exactly how that process would unfold, as that was part of the purpose of the conference scheduled for September of this year.
22However, I am of the view that this is now a proceeding in the Superior Court, where the Rules would ordinarily provide for both documentary and viva voce discovery. As a result, this Court (as opposed to the Small Claims Court) would have the jurisdiction to order production of the entirety of the Gray Whitley file.
23In my previous endorsements, I had (with no objections from any party) indicated that neither the Dunsmore Wearing nor the Gray Whitley firm had any obligations to deliver an Affidavit of Documents or to participate in discovery, except to the right to obtain the discovery transcripts at their own cost. However, the fact remains that this is a Superior Court proceeding. I have jurisdiction to order the Gray Whitley firm to produce documents, and to participate in discovery.
24This brings me back to the question of prejudice. I am of the view that any prejudice that might be suffered by the Gray Whitley firm in disclosing their file can be addressed by directing that the file is only to be disclosed for the purposes of this action. In my view, limiting the use that can be made of the file will assure that production does not negate the lien that the Gray Whitley firm has claimed over the file.
25Finally, there are the arguments advanced by Mr. Munro that the request for documentation under Rule 30.10 is premature as discoveries have not yet taken place. I reject that argument for two reasons. First, the Gray Whitley firm is a party to the underlying actions in this case. As a result, they have production obligations in this case, as I have set out above.
26Second, this action is being case managed. Part of the role of a case management judge is to ensure that the action moves forward in as efficient a manner as possible. Discoveries are scheduled for later this spring, and there is a full-day judicial mediation scheduled with me this fall. Acceding to the argument that this production request is premature will unduly delay this action.
27Accordingly, the Gray Whitley firm is directed to produce an entire copy of their file to counsel for all of the parties in this case. In order to preserve the value of the lien until the end of the action, counsel will not copy those files or provide the originals to the clients. The copies are to be returned at the conclusion of the action, unless the Gray Whitley firm is paid all amounts that the Court finds are owing to it.
28As a final matter on the Gray Whitley file, I would note that the arguments that were made by Teplitsky Colson, discussed below, do not apply to the Gray Whitley file because of the fact that Gray Whitley has commenced a legal action against the Gurdwara and other parties.
The Teplitsky Colson File
29This file raises the most challenging issues. It is useful to set out the legal positions of the parties as well as the evidence that I have on the Application.
30I note at the outset that, unlike the Gray Whitley and Dunsmore Wearing firms, Teplitsky Colson is not participating at all in the actions before me.
a) The Positions of the Parties
31The Gurdwara argues that it is entitled to production of the Teplitsky Colson file because there is no longer a valid solicitor’s lien on the file, if there ever was one. The Gurdwara argues that Teplitsky Colson has no claim for a lien because they are the ones that ended the solicitor-client relationship. In the alternative, the Gurdwara argues that the limitations period for Teplitsky Colson to enforce the account has passed and, as a result, the lien has expired.
32Teplitsky Colson argues that they have a valid lien in this case. The firm also argues that although the limitations period has passed, the lien is a stand-alone lien and, as a result, continues to exist even though they have taken no proactive steps to enforce it.
b) The Relevant Facts
33I start by noting that Teplitsky Colson did not file any materials on the Application. As a result, I have accepted the facts as set out in the Affidavit attached to the Application Record.
34Teplitsky Colson represented the Gurdwara from September 8, 2014 until it got off the Record on December 19, 2014. The Order removing Teplitsky Colson from the record was made as a result of a motion brought by the firm.
35The Gurdwara has no records of the work performed by Teplitsky Colson, as the former directors took all of those records with them when control of the Gurdwara changed at the end of November 2014.
36On February 6, 2015, the Gurdwara’s new counsel wrote to Teplitsky Colson requesting a complete copy of the file. Teplitsky Colson refused, and claimed a solicitor’s lien over the file on the basis of unpaid legal fees. However, no action was commenced to recover the fees claimed by Teplitsky Colson. The Gurdwara’s counsel also made no application to the Court under Rule 15.03, and took no other steps to obtain the file.
37On February 23, 2017, the Gurdwara’s counsel made a second request for a complete copy of the file. There was no response to this request. The Application was commenced, and Teplitsky Colson opposes handing over the file.
c) Statutory Provisions
38The relevant provision of the Solicitor’s Act is as follows:
6 (6). Upon payment by the client or other person of what, if anything, appears to be due to the solicitor, or if nothing is found to be due to the solicitor, the solicitor, if required, shall deliver to the client or other person, or as the client or other person directs, all deeds, books, papers and writings in the solicitor’s possession, custody or power belonging to the client. R.S.O 1990, c. S.15, s. 6 (6).
39In addition, Rules 15.03 and 15.04 of the Rules of Civil Procedure state:
Notice of Intention to Act in Person
(3) Subject to subrule 15.01(1) or (2), a party who has a lawyer of record may elect to act in person by serving on the lawyer and every other party and filing, with proof of service, a notion of intention to act in person (Form 15C) that sets out the party’s address for service and telephone number.
Claim for Lawyer’s Lien
(4) A party may move, on notice to the party’s former lawyer of record, for an order determining whether and to what extent the lawyer has a right to a lawyer’s lien.
(5) In the order, the court may impose such terms as are just in connection with the lien and its discharge.
40In terms of case law, neither counsel was able to refer me to any cases that directly address the question of whether a lien expires as a result of the expiry of the limitations period for commencing an action for fees. Both counsel were in agreement that the limitations period for Teplitsky Colson to commence an action had passed.
d) Analysis
41The first question that must be answered is whether Teplitsky Colson has asserted a valid solicitor’s lien. Master Haberman set out some relevant principles in Metrin Mechanical Contractors Ltd. v. Big H., [2001] O.J. No. 1319, where she stated (at paragraphs 51 and 52):
It seems to me that the rationale behind a solicitor’s lien is largely to prevent a party from “lawyer shopping” mid-way through a matter, after running up an account. Where a party, of his own volition, chooses to change counsel in a context which cannot objectively be viewed as counsel’s fault, the latter should have some means to ensure that, at the end of the day, his account is paid. A solicitor’s lien is the mechanism that has been devised to apply some pressure to the client who initiates such a process.
The focus, then, in assessing whether or not such a mechanism is available, is on whether or not the client voluntarily initiated the process. If that is the case, one then must continue by exploring whether the termination of services was justified from the client’s perspective.
42As noted in Linauskas v. Linauskas (1998), 38 O.R. (3d) 113 (Ont. Ct. J. (Gen. Div.)), if the solicitor is discharged by the client without just cause, then the solicitor is entitled to a lien. A solicitor can also remove himself or herself for cause or be constructively dismissed and still maintain a lien. In a case where the solicitor removes himself or herself from the record, without cause, then the lien is lost.
43As a result, in this case, I have to determine whether the solicitor discharged himself without cause or whether the client discharged the solicitor. I have no evidence from the solicitor on this question, and very little evidence from the client either, as the directors of the client changed right around the time that the solicitor brought a motion to remove himself from the record.
44One fact, however, is key. The solicitor brought a motion to remove himself from the record. As a result, there is prima facie evidence that the solicitor was the one who removed himself from the record and, with no evidence filed on this Application that there was cause for the removal, that the solicitor caused the lien to be lost.
45The Gurdwara’s evidence is that, because of the change of directors, they do not have any information on the work that was done by Teplitsky Colson. In other words, the Gurdwara has a reasonable explanation for why it knows nothing more than the fact that there is an outstanding invoice from Teplitsky Colson. In my view, it is now incumbent upon Teplitsky Colson to rebut the presumption that they chose to get off the record.
46In response to that argument, counsel for Teplitsky Colson argues that, given there were nearly $35,000 in outstanding fees by February of 2015, I can draw a reasonable inference that Teplitsky Colson was required to get off the record because it was not being paid. I disagree.
47There is no evidence of any efforts on the part of Teplitsky Colson to seek payment for the work they had performed between the time that control of the Gurdwara changed in November of 2014 and the correspondence in February of 2015. There is also no evidence of the reasons why Teplitsky Colson got off the record, or of any connection between these reasons and unpaid fees. In short, in the face of a reasonable explanation from the Gurdwara as to why it has no information about why Teplitsky Colson got off the record, the firm remains silent.
48It is axiomatic that he who asserts must prove. I am not prepared to accept that it was the Gurdwara that caused Teplitsky Colson to be removed from the record either directly or constructively in the absence of any evidence from Teplitsky Colson to support that conclusion or to challenge the Affidavit evidence I do have before me.
49As a result, Teplitsky Colson does not have a valid solicitor’s lien, and is directed to release its file to the Gurdwara forthwith.
50Given my conclusions on the existence of a lien, it is not necessary for me to consider the limitations period issue, and I decline to do so.
Case Management and Ongoing Orders
51First, the production orders flowing from this application are as follows:
a) On consent, an Order will go directing Carters LLP to produce a copy of its solicitor’s file to counsel for the Gurdwara.
b) Unopposed, Dunsmore Wearing LLP is directed to produce its file to counsel for the Gurdwara within ten days of the release of these reasons. Counsel for the Gurdwara is responsible for ensuring other parties obtain a copy of this file.
c) Gray, Whitley, van der Valk is directed to produce an entire copy of its file to counsel for the Gurdwara and the other parties in this action within ten days of the release of these reasons. No copies are to be made of these productions, and they are to be returned to the Gray Whitley firm at the end of the action unless the fees found to be owing to the Gray Whitley firm are paid.
d) Teplitsky Colson LLP is directed to produce a copy of its file to the Gurdwara within ten days of the release of these reasons.
e) The Defendants were to have delivered a signed Affidavit of Documents by April 13th, 2017, and I hereby direct them to do so by that date.
f) The Defendants were to have addressed the issue of the Bloomberg Siegel file by April 13th, 2017, and I hereby direct them to do so by that date.
52Second, at this stage in the process, we have scheduled a full-day pre-trial in this matter to take place before me on September 29, 2016. The purpose of this appearance is to attempt to resolve the matters. If they cannot be resolved, then we will address how this proceeding is to be litigated before a trial judge, likely in January of 2018.
53Third, there is the issue of a further appearance before me. I believe we have scheduled one for June 9, 2017 at 9:00 am to ensure that the litigation is moving along. If there are any issues with that date or if I am mistaken about it, the parties are to advise my judicial assistant forthwith.
54Finally, there are the costs of the Application before me on April 3rd, 2017. It appears to me that no costs should be payable by or to either Dunsmore Wearing LLP or to Carters LLP.
55In addition, I note that the Defendants in the main action and Simmons Da Silva (the third party) took no position on this application except to make it clear that they were not making any privilege claims. It would also appear to me that costs should not be payable by or to either of these parties.
56If any of the parties identified in paragraphs 54 and 55 are seeking costs, they must write to all other parties and advise of this fact within seven (7) days of the release of these reasons, and they must provide their submissions in accordance with the deadline set out in paragraph 57.
57Costs submissions from the Applicant Gurdwara are due fourteen (14) days from the release of these reasons. These submissions are not to exceed two (2) single-spaced pages, exclusive of case law, bills of cost and offers to settle.
58Costs submissions from the Respondents Gray, Whitley, van der Valk and Teplitsky Colson LLP are due fourteen (14) days after the submissions from the Applicant are received. Again, these submissions are not to exceed two (2) single-spaced pages, exclusive of case law, bills of cost and offers to settle.
59There shall be no reply submissions on costs without my leave.
LEMAY J
Released: April 21, 2017