CITATION: Merovitz Potechin LLP v. Bahimanga, 2017 ONSC 4993

COURT FILE NO.: 16-69994

DATE: 2017/09/06

SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF THE SOLICITORS’ ACT

BETWEEN: Merovitz Potechin LLP, the applicant (respondent to the motion)

AND

Jacques Bahimanga, the respondent (moving party on the motion)

BEFORE: Madam Justice H.J. Williams

COUNSEL: Caitlin Cardill, lawyer for Merovitz Potechin LLP

Jacques J. Bahimanga, self-represented

HEARD: July 20, 2017

ENDORSEMENT

1Section 3 of the Solicitors Act, R.S.O. 1990, c. S. 15 allows a lawyer to request an assessment of an account under certain circumstances:

Where the retainer of the solicitor is not disputed and there are no special circumstances, an order may be obtained on requisition from the local registrar of the Superior Court of Justice,

(c) by the solicitor, for the assessment of a bill already delivered, at any time after the expiration of one month from its delivery, if no order for its assessment has been previously made.

2This was a motion by a client to set aside a registrar’s order for assessment on the basis that, because a law firm’s retainer was in dispute and because there were special circumstances, the assessment officer had no jurisdiction to consider the law firm’s account.

Background:

Background

a. The relationship between the lawyer and the client:

The relationship between the lawyer and the client

3The moving party, Jacques Bahimanga (“the client”), is a lawyer himself.

4In March, 2015, the client retained Merovitz Potechin LLP (“the law firm”) to handle his purchase of a Toronto condominium unit.

5On March 20, 2015, a lawyer (“the lawyer”) with the law firm sent an email to the client which included the following information about the fees the client could expect to pay:

My rates are as follows:

− For a standard purchase (single family home or townhouse, no condominium), my fee is $1,200 + HST + disbursements. For a condominium purchase, I add $175 + HST for review of the status certificate.

6The purchase price of the condominium unit was $384,900.00.

7The client had paid a deposit of $56,535.00.

8The closing date was April 13, 2015.

9On April 1, 2015, the client told the lawyer that he had been unable to obtain financing. The client told the lawyer that he wanted to discuss the penalties if he were unable to close and the possible assignment of the agreement to purchase to a third party.

10The client was concerned about losing his deposit.

11The lawyer arranged an extension of the closing date and obtained authorization from the vendor for the client to assign the agreement to purchase.

12The lawyer and, when the lawyer went on vacation in the summer of 2015, one of the lawyer’s senior colleagues (“the senior lawyer”), arranged for several extensions of the closing date and the eventual assignment of the purchase agreement to a relative of the client.

13The law firm’s last services for the client were performed on January 13, 2016.

14On January 26, 2016, the law firm sent the client a reporting letter and a statement of account for $12,899.19, inclusive of disbursements of $172.40 and HST.

b. The November 16, 2016 hearing before the assessment officer:

The November 16, 2016 hearing before the assessment officer

15On September 23, 2016, the law firm served the client with a notice of appointment for assessment of costs and an order for assessment.

16At a first appearance hearing on November 1, 2016, the assessment hearing was scheduled, on consent, for November 16, 2016 at 9 a.m.

17It is evident from the transcript of the November 16, 2016 assessment hearing that the client did not appear at the appointed time and the hearing proceeded in his absence. However, just as the hearing was ending but before the assessment officer had endorsed the record, the client appeared and raised the issue of the assessment officer’s jurisdiction.

18It is evident from the transcript that the assessment officer had decided to award the law firm the entire amount of its January 26, 2016 account, plus interest as well as costs of the assessment. However, when the client arrived and argued that there was “no contract” between the law firm and the client and that the assessment officer therefore had no jurisdiction, the assessment officer adjourned the hearing to provide the client with an opportunity to bring this motion to obtain a ruling on the jurisdiction issue.

The issues:

The Issues

19The primary issue is on this motion is whether, because of the first nine words of s. 3 of the Solicitors Act, “where the retainer of the solicitor is not disputed”, the assessment officer had no jurisdiction to consider the law firm’s bill.

20A second issue is whether there were any “special circumstances” which would remove the matter from the assessment officer’s jurisdiction.

The parties’ positions on the motion:

The Parties' Positions on the Motion

(i) The client’s position:

The Client's Position

21The client argued that that the law firm’s retainer is in dispute because, although the law firm had agreed to charge a flat fee of $1,200.00, it was evident from the January 26, 2016 statement of account that it had billed him on an hourly basis.

22The client said that he had never been informed that he would be charged on a basis other than the flat fee he had been quoted. He said that the lawyer had quoted him a flat fee but no additional flat fee had been quoted for the work performed by the senior lawyer.

23The client said that before receiving the January 26, 2016 statement of account, he had not been aware of the lawyer’s hourly rate, which was $175.00, or of the senior lawyer’s hourly rate, which was $500.00.

24The client who, as I noted above, is a lawyer himself, referred to a $3,000.00 offer he had made to settle the account in April, 2016 and which he put in evidence on the motion. The client said that he had made the offer “in recognition that the transaction wasn’t easy” even though he got nothing from it.

25The client argued that the law firm markets itself by informing prospective clients that they will deal with lawyers and not law clerks. The client said that this means that work that could be done by a law clerk is done by the law firm’s lawyers. The client said that this was an attractive feature of the law firm, from his perspective, but only if he was paying on a flat rate basis; the client said that the law firm cannot expect clients to pay lawyers for what other law firms would consider to be law clerk work.

26Although the client placed little emphasis on this argument, he also suggested that “special circumstances” existed that would prevent the assessment officer from considering the law firm’s account. These special circumstances, according to the client, were that the real estate purchase did not close and that he had made an offer to settle in excess of the law firm’s quoted flat rate that had been rejected by the law firm.

(ii) The law firm’s position:

The Law Firm's Position

27The law firm argued that the retainer is not “disputed” in the sense contemplated by s. 3 of the Solicitors Act.

28The law firm argued that the client authorized the work the law firm performed on the client’s behalf and did not dispute the work described in the law firm’s account.

29The law firm argued that there may be a dispute over what portion of the law firm’s account relates to work covered by the flat fee that was quoted, over the appropriateness of the work that was performed or over the amount charged for the work not covered by the flat fee. It says that these issues all relate to the amount of the account, or the issue of “quantum”, an issue which is clearly within the jurisdiction of the assessment officer.

30In support of its position, the law firm pointed to the April 6, 2016 email in which the client made his $3,000.00 offer to settle and noted that the client had written the following:

I appreciate that you understood how high the bill was for a residential transaction. I acknowledge the fact that you spent a lot of time, but I was never informed neither of your rate nor the rate of Mr. Bram Potechin—high ranking professional—no doubt about that. You know that the deal went in a very unsure direction and that, in reality, I went out of it with nothing. However, you really did a great professional job.

For this moment, I’m experiencing severe financial difficulties. I lost legal aid clients and I’m back to the starting point of advertising myself for private clients.

I recognized and accept services rendered on my behalf, but, I’m asking you to once again reduce it to $3000 + taxes just to allow me to be able to pay. And without any doubt, I was very well represented and you’ll be the person (law firm) I refer to anyone who needs real estate services. You are very careful in your approach and realistic. You’re approachable and your administration is not too complicated which makes it easy to reach you. All those qualities will incite me to refer you to people.

Law and analysis:

Law and Analysis

31In Heydary Hamilton Professional Corp. v. Baweja 2011 CarswellOnt 2877, 2011 ONSC 2568, 201 A.C.W.S. (3d) 349, a case relied upon by both the client and the law firm, Master Dash considered the question of when a retainer is in dispute and an assessment officer has no jurisdiction and when the dispute relates only to the appropriateness of the amount of a lawyer’s account, in which case the determination is precisely the task with which the assessment officer is charged under the Solicitors Act.

32Master Dash wrote:

The matter before me is somewhat analogous to the facts in Aird & Berlis v. Federchuk¹ where the court held that a dispute over whether the lawyers agreed to a cap on fees or whether there was a second oral retainer for additional fees was a dispute over a term of the retainer that went solely to quantum. I repeat what the court said in that case: The assessment officer, in considering the client's expectations as a factor in determining a reasonable fee "must necessarily have jurisdiction to resolve factual issues including credibility and to determine the proper interpretation of oral and written communications from the solicitor in respect of fees in order to decide the reasonableness of the fee. In effect...the Officer is deciding whether there has been any agreement or understanding between the parties as to what the fee would be...This falls squarely within the matters of quantum which are within the jurisdiction" of the assessment officer (emphasis added).

33In Aird & Berlis v. Federchuk, supra, Justice Molloy reached the following conclusion in respect of the opening words of s. 3 of the Solicitors Act:

…the phrase “retainer of the solicitor is not disputed” must be interpreted as including not disputes with respect to the existence or terms of a retainer but not including disputes which are solely with respect to quantum.

34On the evidence on the motion before me, several relevant facts emerged:

− The client and the law firm agree that the client asked the law firm to do work that had not been contemplated when the client initially retained the law firm to handle a condominium unit purchase;

− The law firm’s work was done to the client’s satisfaction;

− When the client informed the lawyer that he had been unable to obtain financing for the condominium purchase and that he was worried about losing his deposit, at which point it should have been evident to both the client and the law firm that this was not going to be a typical real estate purchase transaction, the law firm’s flat fee quote was not revisited and there was no discussion about how the client would be charged; and

− The client and the law firm both agree that the law firm should be paid something for its work.

35I find that, in this case, to quote from Justice Molloy in Aird & Berlis v. Federchuk, supra, “the only disputed issue in connection with the retainer is one of quantum.”

36I find that this is not a situation in which the retainer is “disputed” within the meaning of s. 3 of the Solicitors Act.

37In Heydary Hamilton Professional Corporation v. Baweja, supra, Master Dash, citing Fiset v. Falconer, [2005] O.J. No. 4023 (Ont. S.C.J.) noted that “special circumstances” in s. 3 of the Solicitors Act may include any circumstances of an exceptional nature affecting the matter of costs or the liability of a lawyer’s client and must be considered on a case-by-case basis “with an eye to all of the relevant circumstances.”

38I find that there are no “special circumstances” in this case that would affect the assessment officer’s jurisdiction.

39In conclusion, I find that the assessment officer does have jurisdiction over the law firm’s account.

40The client’s motion to set aside the registrar’s order for assessment dated September 21, 2016 is dismissed.

41The matter is to be referred back to the assessment officer.

The costs of the motion:

The Costs of the Motion

42I have received costs outlines from both parties in sealed envelopes which I have not yet opened.

43If the parties cannot agree on the costs of this motion and if either of them wishes to make submissions with respect to costs in addition to the contents of its/his sealed envelope,

− the law firm may deliver written submissions with respect to costs of no more than three pages in length within 14 days of the date of release of this decision;

− the client may deliver written submissions in response of no more than three pages in length within 14 days of the date of receipt of the law firm’s submissions;

− the law firm may deliver any reply submissions of no more than three pages in length within seven days of the date of receipt of the client’s submissions.

44The costs submissions may be sent to my attention, care of the trial coordinator.

Footnotes

1. 1(1997), 1997 CanLII 12167 (ON SC), 34 O.R. (3d) 406 (Ont. Ct. (Gen. Div.)) per Molloy J.