CITATION: Pathfinder Property Corporation v. Mannella, 2017 ONSC 5932

COURT FILE NO.: DC-17-836

DATE: 20171013

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Pathfinder Property Corporation and Ron Mason, Appellants (Plaintiffs)

A N D:

Salvatore Mannella and Salvatore Mannella Professional Corporation, Respondents (Defendants)

BEFORE: The Honourable Madam Justice N. J. Spies

COUNSEL: Pathfinder Property Corporation and Ron Mason, Self-Represented

Juliet Mohammed, as Agent for the Respondents (Defendants)

HEARD: October 3, 2017 in Hamilton

E N D O R S E M E N T

Overview

[1] The appellants brought this appeal pursuant to ss. 19(1) and 19(1.1) of the Courts of Justice Act, R.S.O. 1990 c. C.43, (CJA). They appeal Assessment Officer Robert Stevens’ $1,000.00 award of costs to the respondents, which was made on April 11, 2017 (Costs Award).

[2] At the outset of the hearing, this appeal came before a full panel of the Divisional Court. The respondents contested the Divisional Court’s jurisdiction to hear the appeal, arguing that the appeal should be before a judge of the Superior Court of Justice. Mr. Mason pointed out that he had been advised by a Registrar of the Divisional Court that his appeal must be heard by a panel of the Divisional Court. Unfortunately that information was not correct.

[3] I advised Mr. Mason that he had brought the appeal in the wrong court. I also advised the parties that given the amount in issue that one of our panel members was prepared to sit as a judge of the Superior Court to deal with the appeal, to avoid the parties incurring further costs, if the parties agreed to this. The parties did agree and on that basis I proceeded to hear the appeal as a judge of the Superior Court.

Facts

[4] On behalf of Pathfinder Property Corporation (“Pathfinder”), Mr. Mason signed a Retainer Agreement, set out in a letter to him dated June 17, 2014, from Salvatore Mannella on behalf of Salvatore Mannella Professional Corporation (collectively referred to as “Mr. Mannella”). That Retainer Agreement was for assistance on a motion by Pathfinder for leave to appeal to the Court of Appeal and provided that a retainer of $4,500.00 “be held in trust and applied to your account for my [Mr. Mannella’s] fees and disbursements.”

[5] Mr. Mason alleges that before any account was rendered, he emailed Mr. Mannella on July 11, 2014 advising him that he was not to use the funds held in trust for payment of any account to Pathfinder because he was dissatisfied with the services provided by him. Nevertheless, an account was rendered by Mr. Mannella to Pathfinder on July 15, 2014 (July 15 Account) and the funds in trust received from Mr. Mason, on behalf of Pathfinder, were used to pay that account. The July 15 account totalled $4,496.28 for fees, disbursements and taxes, resulting in a cheque for $3.72 dated July 15, 2014 being returned to Mr. Mason.

[6] Since this event, Mr. Mason has made several attempts to challenge what Mr. Mannella did and the quantum of the July 15 Account. By Notice of Appointment for Assessment dated August 13, 2014, Mr. Mason, on behalf of Pathfinder, sought an assessment of Mr. Mannella’s July 15 Account. The matter proceeded before Assessment Officer Stevens on September 9, 2014. Based on the transcript of the proceedings it appears that at the outset Mr. Mannella advised the Assessment Officer that he and Mr. Mason had had a discussion and that Mr. Mason’s position was that the Retainer Agreement itself was in dispute. Mr. Mason advised the Assessment Officer that “there is a trust account retainer and that is an issue”. The Assessment Officer then agreed with Mr. Mannella that he did not have jurisdiction to deal with such a dispute. He adjourned the assessment without a date returnable on seven days’ notice, with an endorsement that noted “retainer in issue”.

[7] Mr. Mason brought the matter back on before Assessment Officer Stevens on December 8, 2015. This time Mr. Gurizzan represented the respondents. I understand that he is a 2014 year of call and so I presume he was an associate with Mr. Mannella at the time. Mr. Gurizzan reminded the Assessment Officer that on September 9, 2014 he had made it quite clear in his endorsement that the retainer was in dispute. Mr. Gurizzan also advised the Assessment Officer that no motion had been brought to the Superior Court to clarify what the retainer was and that he, therefore, did not know why they were there. Mr. Mason was clearly confused given the earlier order that the matter had been adjourned on seven days’ notice as there was no discussion on August 13, 2014 that he had to go to a judge to determine the retainer issue. It is unfortunate that Mr. Mannella did not provide some guidance to Mr. Mason in advance of this second attendance as to how Mr. Mason could go about having his concerns about the July 15 Account dealt with, given Mr. Mason was self-represented.

[8] This time, however, Assessment Officer Stevens advised Mr. Mason that he adjourned the assessment so that he could go to a judge to deal with the retainer issue. The possibility of that being done in the Small Claims Court was discussed as a possible option, but Assessment Officer Stevens was careful to advise Mr. Mason to get legal advice.

[9] On this second attendance, with respect to costs, Mr. Gurizzan asked for costs on the first hearing, Assessment Officer Stevens stated that he had not made that endorsement; I presume he said this as he had not ordered any costs on the first attendance and that that was why he was reserving costs “for today.” The Assessment Officer endorsed the record “Costs of today reserved, see September 9/14 endorsement.” [Emphasis added]

[10] After this attendance, Mr. Mason brought an action in the Small Claims Court on behalf of himself and Pathfinder. AS only Pathfinder was responsible for the July 15 Account, I assume that he added himself as plaintiff as he was the one who paid the retainer. I do not have a copy of the claim but he did include in his Appeal Book an endorsement made on August 22, 2016 at a Settlement Conference in the Small Claims Court. On that occasion the deputy judge adjourned the matter to October 12, 2016 with a note that the plaintiff had an ongoing assessment proceeding putting in issue the quantum of the account charged by the defendant. The endorsement concludes, “Plaintiff must elect before then which venue he wishes to proceed in with respect to this issue. No costs.”

[11] At a further Settlement Conference on October 12, 2016, before the same deputy judge, the deputy judge endorsed that Pathfinder had still not made the election as ordered on August 22, 2016. The deputy judge then ordered that the plaintiffs make their election on or before November 30, 2016 with notice in writing to the defendant, failing which the plaintiffs’ claim might be struck.

[12] By Notice of Discontinuance dated November 25, 2016, Mr. Mason and Pathfinder wholly discontinued the assessment action in the Superior Court, referring to the fact that it had been “required” by the deputy judge in the Small Claims Court. The Notice also stated that Mr. Mason and Pathfinder elected to maintain their Small Claims Court action.

[13] As I understand it, Mr. Mason does not dispute signing the Retainer Agreement on behalf of Pathfinder and so in that sense the retainer is not in dispute. He is, however, asserting a breach of trust claim given his position that he alleges that he instructed Mr. Mannella not to apply the trust funds to any account to Pathfinder and in the face of that email Mr. Mannella paid out the funds to pay his account. Mr. Mason did not get an opportunity to explain this to the Assessment Officer but in my view that is an issue the Assessment Officer did not have jurisdiction to deal with.

[14] It was in this context that the respondents served a Notice of Appointment for Assessment dated December 30, 2016 in the same assessment action that Pathfinder had discontinued. Attached to that Notice of Appointment was a copy of the July 15 Account from Mr. Mannella in the amount $4,496.28, not an account for costs thrown away, as a result of the discontinuance of Pathfinder’s assessment action. Setting aside whether or not Mr. Mannella was required to bring a motion for costs, as contemplated by Rule 23.05 of the Rules of Civil Procedure, which applies when an action is discontinued, reliance on the July 15 Account was clearly improper and was not proper service on Pathfinder of the costs Mr. Mannella ultimately asked the Assessment Officer to assess. This is particularly concerning when dealing with a party that is self-represented as Mr. Mason could not be expected to understand what was intended by this further Appointment before the Assessment Officer.

[15] This assessment was to be heard on April 11, 2017 by Assessment Officer Stevens. In a letter to Mr. Mason dated January 24, 2017, the litigation clerk of Mr. Mannella’s firm confirmed that the purpose of the April 11, 2017 hearing was “to have the Court address our firm’s claim for costs against you as a result of your discontinuance of the matter.” The email went on to state that the firm would be preparing their Bill of Costs “shortly.”

[16] Mr. Mason alleges that it was only as the assessment hearing was beginning on April 11, 2017 that he received a Bill of Costs from the respondents seeking costs on a partial indemnity basis of $6,676.51, $9,432 for costs on a substantial indemnity basis and over $12,000 on a full indemnity basis (Bill of Costs). As I will come to, I find that Mr. Mason was not properly served with the Bill of Costs.

[17] At the outset of the assessment hearing Mr. Gurizzan advised the Assessment Officer that the firm was seeking to have their costs of the discontinued solicitor’s matter, referring to Pathfinder’s assessment, assessed. Mr. Gurizzan stated that they were seeking their costs for “having to appear on the solicitor matter because we had several court appearances” and he confirmed the Assessment Officer’s clarification that he was asking for the costs for having to appear on the assessment. At that point Mr. Gurizzan advised Assessment Officer Stevens that he had provided a Bill of Costs to Mr. Mason. Mr. Mason responded “just this morning” and that was acknowledged by Mr. Gurizzan. Accordingly, I accept Mr. Mason’s position that he had only received a copy of this Bill of Costs at the start of the hearing or shortly before.

[18] In seeking costs, Mr. Gurizzan advised the Assessment Officer that Mr. Mason had brought the assessment in Kitchener even though the matter was in Toronto and that they had had five court appearances for the matter with lawyers appearing. Mr. Gurizzan then provided a copy of the Bill of Costs to the Assessment Officer. There is no doubt in my mind that the Bill of Costs Mr. Gurizzan provided to the Assessment Officer was the Bill of Costs that claimed $6,676.00 on a partial indemnity scale.

[19] The Bill of Costs sets out the three lawyers from the firm that had purportedly worked on the matter, their year of call and hourly rates as well as a law clerk. I also note that it showed both Pathfinder and Mr. Mason as the applicants for an assessment even though the Retainer Agreement and the July 15 Account was for services purportedly rendered to Pathfinder. This was an improper attempt to make Mr. Mason personally responsible for the Costs Order and that was something Mr. Mason had no opportunity to appreciate given he was ambushed with the Bill of Costs and is something that the Assessment Officer did not appreciate either although he did not state in his oral reasons who was to pay the Costs Order.

[20] My other concern about the Bill of Costs is that the detail of how it was arrived at is not very informative. Although it included “travel to and from, attendance at court for settlement conference…” I have only been able to determine that this was a reference to the Small Claims Court action because I have copies of the two endorsements made by the deputy judge. However Mr. Gurizzan did refer to the two attendances in the Small Claims Court before Assessment Officer Stevens, and he advised the Assessment Officer that he had two endorsements from the Small Claims Court “where it was made clear to Mr. Mason he has to choose between the two.” This must have been a reference to the two endorsements from the deputy judge who conducted the settlement conferences that I have already referred to. Mr. Gurizzan however also advised the Assessment Officer that there were two orders in the Small Claims Court “when they didn’t show up”; suggesting that Mr. Mason did not attend, when that was clearly not the case based on the endorsements of the deputy judge that conducted the two settlement hearings.

[21] The Assessment Officer at this point stated that he was not “here for Small Claims Court” and he proceeded to look at his earlier two endorsements. He rejected Mr. Gurizzan’s submission that travel time was necessary as he disagreed with his submission that the assessment should have been brought in Toronto. The Assessment Officer then made his decision that there should be costs to the respondents as a result of the discontinuance. He referred to the fact that there had been two attendances and that he had specifically reserved costs on the December 8, 2015 attendance. He did not note that that endorsement specifically referred to costs of “today” as being reserved. The Assessment Officer stated that costs would be on a partial indemnity scale and he commented that the costs set out “here”, a reference to the Bill of Costs, were “patently excessive”. He continued, “[t]here were short attendances involving a matter that… the client brought on for an assessment and has since discontinued.” He awarded costs all-inclusive to the solicitors fixed in the amount of $1,000 payable forthwith (Costs Order).

Standard of Review

[22] As stated in Samuel Eng and Associates v. Ho, 2009 ONCA 150, at para. 1:

It is settled law that on an appeal from an assessment officer, the court is only concerned with questions of principle not with questions of amount or how the assessment officer exercised his discretion unless the decision is so unreasonable as to amount to an error in principle.

[23] To the extent that some of the grounds of appeal in this case raise matters of procedural fairness it is not necessary to engage in a standard of review analysis.

Analysis

[24] The appellants raise a number of grounds of appeal in support of their request for an order setting aside the Costs Order. Several relate to the Assessment Officer’s decision to decline jurisdiction which I will not deal with as it is the Costs Order that is under appeal.

[25] In my opinion, the Costs Order cannot stand. My reasons for this conclusion are as follows.

[26] The appellants were not properly served with the Bill of Costs in advance of the hearing and so were essentially ambushed by Mr. Gurizzan when he presented it to Mr. Mason just before the commencement of the hearing. The Assessment Officer did seem to appreciate this issue even though Mr. Mason stated that he had only received the Bill of Costs that morning, the file would presumably have only contained the Notice of Appointment that attached the July 15 Account and the Assessment Officer himself had to ask for a copy of the Bill of Costs. I accept Mr. Mason’s ground for appeal that in these circumstances the Assessment Officer should not have accepted the Bill of Costs and proceeded to award costs, particularly as Mr. Mason was self-represented. This was more than an irregularity and resulted in serious procedural unfairness to Mr. Mason and Pathfinder.

[27] Mr. Mason also argued that the respondents’ Notice of Appointment for Assessment, even if it had attached the Bill of Costs, was served out of time. I agree with that submission. The Notice of Appointment that the respondents used to reopen the matter was filed on December 30, 2016. The Notice of Discontinuance, however, had been served on November 25, 2016. Excluding Christmas and Boxing Day, the Notice of Appointment for Assessment was filed 33 days, not 30 days after the Notice of Discontinuance as required by Rule 23.05 of the Rules of Civil Procedure.

[28] Ms. Mohammed submitted that I should not rely on this ground of appeal as this issue was not raised by Mr. Mason before the Assessment Officer. That is true but had the Assessment Officer appreciated the fact that the Bill of Costs was only served on the appellants on the day of the hearing I expect he would have determined that the respondents were well out of time in asking for costs resulting from the discontinuance. The Bill of Costs was served almost six months after the Notice of Discontinuance. I do not accept Ms. Mohammed’s submission that the Assessment Officer could have extended the time for a motion as required by Rule 23.05.

[29] Furthermore, the Assessment Officer was given a Bill of Costs that included costs that did not deal with costs flowing from the discontinuance. It included costs for attendances at the Small Claims Court which Ms. Mohammed conceded could not be claimed. This should have been clear to Mr. Gurizzan and his attempt to persuade the Assessment Officer that there had been five court appearances that lawyers had appeared on was in my view an attempt to secure an unreasonable amount for costs. Although Mr. Gurizzan did refer to the fact that his claim for costs included attendances in the Small Claims Court, his statement that Mr. Mason had not attended on those occasions was also false. Furthermore, the only way one would know that the Bill of Costs included time for those attendances was the reference to attendance at a settlement conference. Only a careful reading of the Bill of Costs would have alerted the Assessment Officer to this. Although the Assessment Officer rightly pointed out that he would not deal with costs in the Small Claims Court, this is not something I would have expected Mr. Mason to appreciate and since those costs were not separated out, the actual time the respondents might have been entitled to was improperly inflated and obscured in the Bill of Costs.

[30] Although the Assessment Officer appreciated that there had been only two appearances for the assessment, he was clearly and understandably confused about the relief Mr. Gurizzan was seeking. This is particularly clear from the transcript at the start of the hearing. In my view the lack of proper service, which hampered Mr. Mason’s ability to properly address the issues, and the attempts by Mr. Gurizzan to persuade the Assessment Officer to rely on a Bill of Costs and oral representations that were misleading and included irrecoverable court attendances could well have improperly impacted on the ultimate decision reached by the Assessment Officer. The transcript reveals that the two attendances were very brief. The transcript for the first is only a page and a few lines long and the second is five and one half pages long. The attendances were a matter of minutes. When Mr. Mason said they were “two minutes” Mr. Gurizzan said they were longer because of travel time.

[31] Although as I will come to Assessment Officer Stevens rejected Mr. Gurizzan’s position that he was entitled to travel time, he did not have the transcript available to him that I have and the Bill of Costs did not provide any guidance as to how long the actual attendance was. Even using the hourly rates in the Bill of Costs, Mr. Mannella’s hourly rate was $390 on a partial indemnity scale and Mr. Gurizzan’s was $195. Given the hourly rates the award of $1,000, even if an award for both assessments was warranted, is clearly excessive given the Assessment Officer’s decision that travel time was not recoverable. In my view the Assessment Officer was influenced by the excessive costs claimed in a way that he would not have been if the Bill of Costs had been properly and fairly prepared.

[32] Mr. Mason argued that costs could only have been awarded for the second attendance before the Assessment Officer. Ms. Mohammed argued that since the first attendance was adjourned that costs could still be awarded for that attendance once the matter came back before Assessment Officer Stevens. That is not clear however from the discussion about costs at the end of the second attendance and the fact the Assessment Officer made it clear that he was only reserving costs of “today”; namely the second attendance before him. The Assessment Officer failed to consider at this assessment whether or not he had authority to award costs for the first attendance when costs had not been awarded or reserved at the time of that attendance. In my view this issue should at least have been considered.

[33] Mr. Mason also argued that the Assessment Officer did not give reasons for his Cost Award. The Rules of Civil Procedure, the Solicitor’s Act, and the CJA are silent on the requirement to give reasons for the costs of an assessment. The only mention of awarding costs for an assessment can be found in Rule 58.05(6) of the Rules of Civil Procedure, which states that “an assessment officer has the discretion to award or refuse the cost of the assessment to either party and to fix those costs.” There is, otherwise, no mention, either in the Rules or the case law, about a requirement to give reasons for a cost award.

[34] To substantiate their argument, the appellants cite the case Sahota v. Sahota, 2015 ONSC 2640 at paras. 6-7, which is a case in which the Divisional Court found that not giving reasons in dismissing a motion to enforce a settlement agreement – which the Court argued was a motion equivalent to a motion for summary judgment – is an error in law. That case is clearly distinguishable from the case at bar. Further, in looking at the transcripts, Assessment Officer Stevens did give some reasons for how he arrived at his Costs Order, principally referring to the fact that costs would be on a partial indemnity scale, that the amount claimed was patently excessive and that the two attendances were short. The lack of reasons in my view is not a reason to set aside the Costs Order save that the Assessment Officer ought to have dealt with the issue of whether he had jurisdiction to award costs of the first attendance.

Conclusion

[35] For all of these reasons I find that in arriving at the Costs Order the Assessment Officer made a number of errors in principle and that the conduct of the respondents, which he did not appreciate resulted in a serious breach of the appellants’ rights to basic procedural fairness. Accordingly the Costs Order is set aside.

[36] In my view, given the Notice of Appointment for Assessment was served beyond the time period permitted and that what was served was a nullity in that the appellants did not serve Mr. Mason with the Bill of Costs until the hearing almost six months later means that the attempt by the respondents to obtain costs following the discontinuance was well beyond the time permitted. On this basis alone there is no basis to send the matter back to an Assessment Officer for a rehearing. In my view, the conduct of Mr. Gurizzan, which was clearly intended to ambush Mr. Mason and confuse the Assessment Officer, is another reason not to send the matter back for rehearing. To allow the respondents another opportunity to seek costs resulting from the Discontinuance would be an abuse of process.

Further Issue

[37] There is one further issue that I intend to address, particularly given that Mr. Mason has experienced great difficulty in determining the proper avenue to address his dispute with the July 15 Account. Mr. Mason expressed concern that once his action goes to trial that the Small Claims Court might decline jurisdiction. He advised me of a decision of Nordheimer J., as he then was, in Jane Conte Professional Corporation v. Josephine Smith, 2014 ONSC 6009. Mr. Mason was concerned in particular about para. 24 of that decision. Although the language in that paragraph seems broad that decision does not apply to the case at bar as it concerned a solicitor who sued a former client for an unpaid account based on a contingency fee agreement.

[38] Justice Nordheimer revisited this case in a recent decision of the Divisional Court, Gilbert’s LLP v. David Dixon Inc., 2017 ONSC 1345, where at para. 32 he stated that insofar as he used language in the Jane Conte decision that could be seen as applying to all written fee agreements that this was in error and that a simple or usual written fee agreement does not fall within the scope of various sections of the Solicitors Act. On that basis he held that a lawyer could commence an action to recover his fees pursuant to a simple written fee agreement. The Retainer Agreement in this case is a written simple fee agreement. Similarly in my view the client can sue when the remedy of an assessment is not available where, as here, the appellants are complaining about what amounts to a breach of trust claim.

[39] There is nothing in the Solicitors Act that would prevent the Small Claims Court from hearing the appellants’ breach of trust case. Furthermore, there is nothing that prevents the Small Claims Court from hearing a case on a breach of trust issue. In fact the Small Claims Court case of Wallis v. Steven D. Gadbois Professional Corporation, 2015 4333 (ON SCSM) is quite similar to the case at bar. In that case the plaintiff sued her lawyer for breach of trust due to his alleged misappropriation of some funds held in his trust account following a mortgage discharge transaction. The lawyer took the position that he was entitled to take the money over the plaintiff’s objection in payment of his account. The deputy judge considered whether or not the lawyer was entitled to take the plaintiff’s trust money-the main issue that I understand Mr. Mason wishes to argue on behalf of Pathfinder.

[40] I note that in Wallis there was an assessment of the lawyer’s account also pending and that was to be heard after the decision by the deputy judge. The deputy judge rejected the lawyer’s argument that in light of this the Small Claims Court action was an abuse of process. I would hope that in this case, given the position taken by the deputy judge who conducted the two settlement conferences that Mr. Mason needed to discontinue his assessment action, that the deputy judge who hears the trial this matter will not only decide the breach of trust claim but will also determine, if necessary, what amount Mr. Mannella should be entitled to if any, for services rendered.

[41] As a result, in my view there does not seem to be any impediment to the Small Claims Court hearing Pathfinder’s action. Hopefully at that time, a decision can be made on the merits of the appellants’ claim and put this dispute to rest.

Costs

[42] As the appellants have succeeded on this motion they are entitled to costs. Mr. Mason advised that if he succeeded on the motion that he would be content with no costs but that it had cost him $425 to file the appeal. Ms. Mohammed advised that if successful the respondents were seeing $2,500 in costs although she did not have a Costs Outline.

[43] Given the success of the appellants, I order that the respondents pay the appellants costs of this motion in the amount of $425, forthwith.

Spies J.

DATE: October 13, 2017