Court File and Parties
COURT FILE NO.: CV-15-521793 DATE: 20180724 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Eileen Newell, Applicant – AND – Lawrence Sax, Sax Lawyers, Respondent
BEFORE: E.M. Morgan J.
COUNSEL: Robert Tanner, for the Applicant David Sloan, for the Respondent
HEARD: July 12, 2018
Amended Endorsement
The changes in the Amended Endorsement are:
(i) the addition of “less a 20% reduction in respect of two specific ‘deficiencies’” to paragraph 6 and “less 20% for certain errors” to paragraph 17;
(ii) the addition of “The cross-appeal by the Respondent is dismissed.” to paragraph 27;
(iii) the removal and replacement of the original paragraph 29; and
(iv) the addition of paragraphs 32-35 addressing the amendments to the endorsement.
Background
1The Applicant moves pursuant to section 6(9) of the Solicitors Act and Rule 54.09 to oppose confirmation of the Report and Certificate of Assessment Officer A. Palmer dated October 6, 2017. The reasons of the Assessment Officer were released on August 17, 2017.
2The Respondent represented the Applicant in her sale of an investment property. It was the Respondent’s evidence that although the matter was not overly complicated, there were a number of problems that made it “hectic”. For example, two days before closing the tenants of the property retained lawyers, which caused the Respondent to have to run around during those last couple of days getting estoppel certificates from each of the tenants.
3An examination of the Respondent’s bill reveals that this real estate transaction must have been very hectic indeed. In his account dated December 31, 2014, he charged total fees of $165,000 for what he estimated to be just under 75 hours of docketed time – the Respondent had no actual time dockets on which to rely, but rather testified that he had estimated and recreated his dockets for the purposes of the assessment hearing. In any case, taking the Respondent’s own estimation of time seriously, his 75 hours of billable time works out to a rate of $2,220.00 per hour.
4Respondent conceded in his testimony that he never explained his bill to the Applicant or inform her of the basis for his account. In fact, he likely could not have done so; three years after the transaction at issue was completed he still could not explain his bill at the assessment hearing.
5At para 67 of her reasons for decision, the Assessment Officer states candidly that, “the Solicitor determined what his fees should be based on criteria that could not be demonstrated or explained to the Court.” In fact, in his testimony the Respondent admitted that in calculating his fees he included “a significant amount of time” spent prior to the dates shown on the account – going back up to 10 years – on work that pre-dated and was entirely unrelated to the present transaction. None of that previous work was described or itemized in the bill. Given the magnitude of the account and its disproportion to the transaction to which it purportedly pertained and the amount of time ostensibly devoted to this file, the Assessment Officer’s comment about the inexplicability of the account appears to be an understatement.
The Assessment Hearing
6Despite the shortcomings of the Respondent’s account and of his evidence in support of it, the Assessment Officer upheld the account as payable less a 20% reduction in respect of two specific “deficiencies”. While it is hard to fathom how this could occur, the Assessment Officer’s reasons do give some insight. It would seem that the Applicant, who is 92 years old and was 91 at the date of the Assessment hearing, did not attend on the first day of the proceeding. She did, however, retain counsel who attended on her behalf the first day and advised the Assessment Officer of his client’s advanced age and indicated that he was ready to proceed. The matter did then proceed without delay, and the Applicant’s counsel attended the hearing diligently every day for the duration of the Assessment.
7Despite the fact that the Applicant’s non-attendance caused no delay in the proceeding, the Assessment Officer seems to have taken umbrage at the fact that the Applicant was not present. In fact, she devoted four paragraphs in her reasons for decision to a discussion of the “failure of the client to appear at the hearing”.
8In the course of these paragraphs, the Assessment Officer was highly critical of the Applicant. Counsel for the Applicant submits that she exhibited what can only be described as an inexplicable animus toward the Applicant. From a reading of the Assessment Officer’s reasons for decision, I am compelled to agree.
9At one point in her reasons, the Assessment Officer went so far as to admonish the Applicant’s counsel for not submitting a doctor’s note on the Applicant’s behalf. In doing so, she effectively treated the Applicant like a child in school whose teacher is skeptical that she really stayed home with a cold. The Assessment Officer then stated, at para 10 of her reasons, that she was drawing an adverse inference from the Applicant’s non-attendance – the “adverse” nature of the inference apparently being that a 91 year-old litigant sending a lawyer to represent her rather than personally sitting through a litigious proceeding could only be explained by the 91 year-old having something to hide.
10The Assessment Officer went on to state that since the Applicant did not attend to hear the Respondent’s evidence, she will not be able to testify as to the reasonableness of that evidence. As a consequence, the Assessment Officer stated that she will be compelled to accept all of the Respondent’s evidence at face value.
Analysis
11As Applicant’s counsel points out, this approach misapprehends the overall structure and content of the assessment process; indeed, it misapprehends legal process at large. In the first place, there is no obligation on a client to testify at a solicitor-client assessment. It is for the solicitor to prove his or her case with respect to a legal bill. The client may testify or not, at their own choice. For that matter, there is no obligation on a client to attend at the hearing if they retain counsel who attends on their behalf. While counsel may benefit from having the client present in order to provide on-the-spot instructions, that is for the client and her counsel to decide.
12Where parties such as the Applicant do choose to testify, they provide evidence as to their version of events, but they do not typically testify in order to comment on the opposing party’s version of events. Witnesses do not do that; that is counsel’s job. The Applicant retained counsel to represent her. Her counsel cross-examined the Respondent when he testified, and made submissions on, among other things, the reasonableness of the Respondent’s position. There was no reason for the Assessment Officer to draw an adverse inference or to feel compelled to accept the Respondent’s evidence – poor as she conceded that it was – at face value.
13As it turned out, the Assessment Officer was not particularly interested in any real exploration of the Respondent’s evidence. She specifically limited Applicant’s counsel’s cross-examination, stating that she would not allow any cross-examination questions that were not in direct response to matters raised by the Respondent in his examination-in-chief. That, of course, is not the law, and effectively cut off Applicant’s counsel from a large part of what he legitimately would have covered in his cross-examination.
14Needless to say, cross-examination is opposing counsel’s chance to test the veracity of the witness’ evidence. In doing so, counsel conducting the cross-examination is entitled to explore not only what was said in chief but what was left out. In approaching the matter the way that she did, the Assessment Officer required Applicant’s counsel to abandon any questions about matters on which the Respondent was silent in his examination-in-chief, thereby allowing the Respondent to cherry pick the facts that he wanted to emphasize and never be questioned on those that might cast doubt on his testimony. By denying Applicant’s counsel half of his cross-examination, the Assessment Officer effectively denied him the right to cross-examine.
Denial of Natural Justice
15A solicitor-client assessment is a statutorily authorized judicial proceeding to which the rules of natural justice apply: Skeggs v Aloe-Gunnell, 2015 ONSC 2743, at para 12. It is an elementary principle of legal process that “the rules of natural justice are pre-eminently concerned with a fair hearing”: R v Villota, [2002] OJ No 1027, at para 93 (SCJ).
16The Assessment Officer’s approach to this proceeding amounted to a denial of natural justice for the Applicant. The loss of objectivity in admonishing an elderly party’s non-attendance when counsel attended on her behalf, the taking of an adverse inference from a party’s decision not to testify and instead to rely on her counsel’s cross-examination and legal submissions, and the denial of the right to engage in a meaningful cross-examination, all violated the audi alteram partem principle in that they cumulatively denied the Applicant her right to be heard: Harelkin v University of Regina, [1979] 2 SCR 561, 598. As L’Hereux-Dubé J. has put it, “This [audi alteram partem] rule is so fundamental in our legal system that I do not think there is any necessity to discuss it at length”: Supermarchés Jean Labrecque Inc. v Flamand, [1987] 2 SCR 219, 233-34.
17Since the Assessment Officer’s decision undermined due process of law, it cannot be left to stand. As this court has noted in other contexts, “a final decision made in circumstances of a denial of the right to be heard almost inevitably raises the spectre of prejudgment and a reasonable apprehension of bias”: Villota, supra, at para 108. That observation aptly describes the situation here. At para 36 of her reasons, the Assessment Officer acknowledged that she could not determine the Respondent’s time with any degree of certainty; nevertheless, she awarded him the amount that he contended that he had billed to the file less 20% for certain errors. She could come to this decision only by failing to hear Applicant’s counsel and by deeming the Respondent’s testimony to be acceptable at “face value”.
Assessment of Fees
18Applicant’s counsel submits that given the age of his client it would be unduly onerous to send this matter back to another Assessment Officer for a re-hearing. Rather, he contends, I should follow the route set by Lauwers J. (as he then was) in Baes Beall LLP v Fingrut, 2012 ONSC 4991 , [2012] OJ No 4762, at para 5: “I conclude that the Assessment Officer’s decision is so fundamentally flawed, for the reasons set out below, that I will not confirm the certificate and will instead substitute my determination rather than refer it back to the original or another Assessment Officer.”
19I agree with this approach. As Applicant’s counsel suggests, I can fix costs in this matter based on a quantum meruit analysis. Accordingly, I will start with the 75 hours that the Respondent estimates he spent on this transaction. I will then take account of the clear evidence in the record of false and extravagant time estimates and time that is attributable to other old files. I will also take account of the Respondent’s admission during his testimony that he included in his bill time spent on unbillable clerical tasks such as looking for files in his storage system. This reduces the number of hours by roughly one-third, to a total of 50 billable hours.
20As a next step, it is necessary to come to an acceptable billing rate per hour. The Respondent in his testimony at one point stated that his rate was $650/hr and at another point state that it was $850/hr. As indicated earlier, his overall fee came to something far more exorbitant than that. None of the Respondent’s figures are credible; he was obviously making it all up as he went along.
21I note that this court found in 867799 Canada Inc. v Paul A. MacLeod Barrister Solicitor, [2016] OJ No 4396 that a senior real estate solicitor would charge a reasonable rate of $450 per hour. Applying this reasonable hourly rate, the Respondent’s fee would come to $22,500. I will add to this $3,375 in HST plus another $500 as a round-off for the figure that the Respondent quotes for his disbursements.
22This amount adequately reflects the widely accepted factors for solicitors’ accounts outlined in Cohen v Kealy & Blaney (1985), 26 CPC (2d) 211 (Ont CA):
(a) time expended by the solicitor; (b) legal complexity of the matters to be dealt with; (c) degree of responsibility assumed by the solicitor; (d) monetary value of the matters in issue; (e) importance of the matter to the client; (f) degree of skill and competence demonstrated by the solicitor; (g) results achieved; (h) ability of the client to pay; and (i) the client’s expectation as to the amount of the fee.
23In particular, a fee derived on this basis is proportional to the work done on the transaction, the degree of skill brought to bear on the matter, the legal complexity of the file, and represents a realistic assessment of the time spent on the matter. It also reflects the importance of the matter to the client. I do not know the Applicant’s financial state, but I understand from the evidence in the record that a very elderly person beyond the years where she can work for a living was selling an investment property. That suggests that the matter was of some financial importance to her.
Importance of the Issues and Conduct of the Parties
24I note that counsel for the Respondent addresses the issue of ‘importance’ in several paragraphs toward the beginning of his written costs submissions. Under the headings “The importance of the issues” and “The conduct of the parties”, Respondent’s counsel states:
The issues were extremely important to the Solicitor but the same cannot be said for the Client since the Client did not even bother to show up at the assessment hearing to give evidence or to complain and no reason for the failure to show was ever given. Obviously, the matter could not be deemed to be that important to the Client.
The failure of the Client to appear on a proceeding that she instituted should be considered as being inappropriate. Even if the Client had nothing to say, she should have been present in the proceedings to show her interest and confirm that importance of the process to her…
25I cannot overstate how oblivious that submission appears to be. A person in her 90’s has rights, just like a more robust person, even if she does not make the kind of personal appearances that she might have done at an earlier age. To assume that a person at that stage of her life is indicating anything untoward, or that she somehow attaches minimal importance to a proceeding by hiring a lawyer and having him appear in her place, is to display a blindness for the human condition.
26I have already found that the Assessment Officer expressed a lack of objectivity in the course of drawing an adverse inference from the Applicant’s failure to personally attend the hearing; Respondent’s counsel should likewise know better. Respondent’s counsel’s duty is to advocate his client’s cause, but it does not help his client to take a position that causes one to recoil at his disregard of common sense.
Disposition
27The Report and Certificate herein dated October 6, 2017 are hereby set aside. The cross-appeal by the Respondent is dismissed.
28The Respondent’s fee for the services in his account dated December 31, 2014, including disbursements and HST, is assessed at $26,375. The Applicant has paid the Respondent a total of $187,044.40 in respect of this account. The Respondent shall therefore refund $160,669.40 to the Applicant.
Pre-judgment Interest
29The Respondent’s account was paid by the Applicant by means of a series of four payments between August 7, 2014 and December 4, 2014 withdrawn by the Respondent from funds he held in trust for the Applicant. Along with the refund described above, the Applicant is entitled to pre-judgment interest as a reflection of the time value of the money that the Respondent has had in his possession since paying himself in this way. The Respondent shall therefore pay pre-judgement interest at the applicable Courts of Justice Act rate, non-compounded, on the amount of each of the four payments out of trust, less $26,375 from the first payment on August 7, 2014 (reflecting the determination here of the amount to which the Respondent was entitled), from the date of each of the payments. This interest shall continue to run post-judgment until the Respondent has paid the refund as set out in the paragraph above.
Costs
30Counsel for the Applicant has submitted a Costs Outline seeking an all-inclusive amount of $13,439.25 in partial indemnity costs for this Application. He also seeks costs of the Assessment proceeding in the amount of $35,096.04 on a partial indemnity basis. Both of those figures are lower than what the Respondent would seek for this Application alone, being $37,064.00. Given that the Assessment hearing was a multi-day proceeding, the Respondent will not be taken by surprise at the modest costs requests of the Applicant: see Rule 57.01(1)(0.b) of the Rules of Civil Procedure.
31I will therefore exercise my discretion under s. 133 of the Courts of Justice Act to order that the Respondent pay the Applicant costs of this Application in the amount of $13,439.25 and costs of the Assessment proceeding in the amount of $35,096.04. The combined costs of $48,535.29 are likewise to be added to the Respondent’s refund to the Applicant.
Amendments to the Endorsement
32As a final matter, I will note that this is an Amended Endorsement that has been issued in order to reflect a number of factual errors and oversights in the original endorsement. The matters that have been corrected are: the amount awarded by the Assessment Officer, the costs awarded by the Assessment Officer, dismissal of the cross-appeal, and an oversight with respect to pre-judgment interest.
33Counsel for the Applicant brought these matters to my attention after the original endorsement was issued but prior to a formal order being drawn up or issued and entered by the court. At this stage I am not yet functus officio.
34In response, counsel for the Respondent submits that it is nevertheless too late for changes and that any factual errors in the endorsement should remain in place. This argument, however, was effectively addressed by the Supreme Court of Canada in Chandler v Alberta Association of Architects, [1989] 2 SCR 848. As Sopinka J. explained it:
The general rule that a final decision of a court cannot be reopened derives from the decision of the English Court of Appeal in In re St. Nazaire Co. (1879), 12 Ch. D. 88 … The rule applied only after the formal judgment had been drawn up, issued and entered”.
35Factual details such as those corrected in this amendment are not in themselves controversial; that is, the Respondent takes issue with their timing, not their content. These are the very type of things that a motions judge should properly correct if drawn to his attention when he still has authority to do so. Given that there is not yet a final order in this matter, I am in a position to make the amendments contained herein.
Morgan J.
Date: July 24, 2018