Court File and Parties

Court File No.: CV-17-133493 Date: 2018-08-13 Ontario Superior Court of Justice

Between: Sassan Emam, Applicant – and – Dutton Brock LLP, Respondent

Counsel: Marc Linett, for the Applicant Deanna M. Stea, for the Respondent

Heard: April 18, 2018

Reasons for Decision #2

Charney J.:

Introduction

[1] This Application relates to a dispute between the applicant, Sassan Emam (the client) and his former law firm, the respondent, Dutton Brock LLP (the solicitors), regarding the terms of the solicitors’ retainer.

[2] The client retained the solicitors with respect to a medical malpractice claim against a hospital. The client’s case settled at a pre-trial conference on December 19, 2016 for a total of $366,000.

[3] The client contends that he retained the solicitors on a contingency fee basis on August 16, 2011. The terms of the contingency fee were 20% if the case settled before trial, 25% if the case proceeded to trial.

[4] The solicitors contend that they were retained on or about April 12, 2011, on an hourly-rated basis at $600 per hour.

[5] The solicitors’ account of $205,953.97 was paid in full by the client from the settlement funds, and the client was provided with the balance of $160,040.03.

[6] The issue before me on this application is whether the solicitors were retained on a contingency fee basis as contended by the client, or on an hourly-rated basis as contended by the solicitors.

Procedural History

[7] On February 15, 2017, the client obtained an Order for Assessment of the solicitor’s account pursuant to s. 3 (b) of the Solicitors Act, R.S.O. 1990, c. S.15. Section 3(b) permits the client to have a solicitor’s bill assessed “where the retainer of the solicitor is not disputed…”

[8] The assessment came before an Assessment Officer on June 6, 2017. Since the retainer is in dispute, the assessment was adjourned by the Assessment Officer to allow a hearing to be held before a Superior Court judge “to provide direction regarding terms of retainer”.

[9] The client commenced this Application by Notice of Application on November 16, 2017. There is no dispute that the Assessment Officer did not have jurisdiction to determine the terms of the retainer and that the matter is appropriately before this Court for determination (see: Calin A. Lawrynowicz Barristers & Solicitors v Marino Estate, 2016 ONSC 2065 at para. 105). Nor is there any dispute that the matter may proceed by way of application.

[10] The sole issue on this Application is whether the client retained the solicitor on a contingency fee basis or on an hourly-rated basis.

[11] The Application proceeded before me on April 18, 2018. The client relied on his own affidavit dated November 17, 2017, as well as the affidavit of the client’s previous lawyer, Jeffrey Neiman, dated March 16, 2018. The respondent relied on the affidavit of the solicitor, Brian Brock, dated April 4, 2018, and an affidavit of Mr. Brock’s legal assistant, also dated April 4, 2018.

[12] In response to Mr. Brock’s affidavit of April 4, 2018, the client swore a supplementary affidavit dated April 10, 2018, which was served and filed one week before the application was to be heard.

[13] Neither side sought to cross-examine on any of the affidavits, and this case proceeded as scheduled on April 18, 2018.

[14] The day after the hearing (April 19, 2018) I wrote to counsel to raise certain concerns about a possible misunderstanding between counsel in relation to the client’s April 10, 2018 supplementary affidavit, and I invited counsel to make further submissions in writing on this issue.

[15] On April 25, 2018, Ms. Stea, counsel for the respondent, responded with two pages of submissions and a four page supplementary affidavit sworn by Mr. Brock on April 24, 2018. My correspondence to counsel of April 19, 2018 did not invite the filing of an additional affidavit, but, in the circumstances, I permitted the filing of the new affidavit and gave the applicant an opportunity to cross-examine Mr. Brock on this additional affidavit.

[16] On May 14, 2018 I issued an interim ruling pursuant to Rule 38.10 of the Rules of Civil Procedure, R.R.O 1990, Reg. 194, adjourning the application on the following terms:

i. The applicant may cross-examine Mr. Brock with respect to his affidavit dated April 24, 2018, within 30 days of the release of this decision, or on a later date if agreed to by counsel. Cross-examination may proceed orally or by written questions, at the election of the applicant. ii. All undertakings arising from the cross-examination must be answered within 15 days of the cross-examination, or on a later date if agreed to by counsel. iii. Counsel may file supplementary factums of no more than five pages each to address any additional issues arising from the cross-examination. iv. The applicant’s supplementary factum and supplementary application record will be served within 20 days of the cross-examination or answers to undertakings, which ever is later, or on a later date if agreed to by counsel. v. The respondent’s supplementary factum and supplementary application record will be served within 15 days after the service of the applicant’s supplementary factum, or on a later date if agreed to by counsel. vi. Counsel will advise the Court, through the Trial Coordinator, whether they require time for additional oral argument (not to exceed one hour – 30 minutes each) or whether they are content to proceed on the basis of their additional written arguments. If additional oral argument is requested, arrangements should be made through the Trial Coordinator’s office.

[17] Pursuant to these directions, the cross-examination of Mr. Brock was conducted on June 21, 2018, and the applicant filed a supplementary factum on July 16, 2018.

[18] On July 19, 2018 counsel for the respondent filed a second supplementary affidavit of Mr. Brock, sworn on July 18, 2018. Counsel for the applicant objects to the filing of this second supplementary affidavit on the ground that my ruling of May 14, 2018 did not provide for the filing of additional affidavit material by either party. Nor did counsel for the respondent bring a motion to seek to file an additional affidavit. It is obviously unfair for the respondent to file additional affidavit material after the due date for the applicant’s factum. There is no rule of civil procedure that permits a party to an application to file additional affidavits after an application has been heard by the Court, and there is no basis for the filing of the July 18, 2018 affidavit without the applicant’s consent or leave of the court.

[19] On this basis, I will disregard the content of the July 18, 2018 affidavit, as requested by counsel for the applicant.

Facts

[20] The applicant was a plaintiff in a medical malpractice claim against a hospital in relation to two attendances to the Emergency Department in December 2006. The facts relating to that claim are not relevant to the issue in this application.

[21] The applicant initially retained Michael Smith as counsel, and Mr. Smith issued a Statement of Claim on December 2, 2008, but was unable to continue with the case because he could not locate an expert witness to provide an opinion dealing with the issue of causation.

[22] The applicant then retained Jeffrey M. Neiman in January/February of 2009. Mr. Neiman was able to find an expert witness who provided a written medical report to support the plaintiff’s malpractice claim against the hospital.

[23] Mr. Neiman does not practice in the area of personal injury or medical malpractice, and given the complexities in the case, suggested to the applicant that he consider retaining new counsel with expertise and a “name” in medical malpractice litigation. Mr. Brock’s name was recommended by an expert witness who had been retained to review the claim for economic loss, and a meeting with Mr. Brock was arranged.

[24] On March 16, 2011 the applicant and Mr. Neiman met with Mr. Brock at Mr. Brock’s offices. Mr. Neiman attended the meeting to help Mr. Emam determine whether he would retain Mr. Brock. The meeting ended with Mr. Brock advising that he would let Mr. Emam and Mr. Neiman know whether he would take the case, and on what terms.

[25] Mr. Emam states that they discussed Mr. Brock taking over the case on a contingency fee basis, but Mr. Brock states that he made it clear at that meeting that he would not represent Mr. Emam on a contingent fee basis.

[26] Both Mr. Neiman and Mr. Emam were favourably impressed by Mr. Brock, and Mr. Neiman suggested to Mr. Emam that Mr. Emam look into retaining Mr. Brock. At no time, however, did Mr. Emam instruct Mr. Neiman to negotiate the terms of the retainer with Mr. Brock. Mr. Neiman’s affidavit states: “it would be up to Mr. Emam to move things forward with Mr. Brock and negotiate his retainer agreement with Mr. Brock. I was to be a passive participant in the matter unless instructed otherwise.” Given that Mr. Neiman was not cross-examined on his affidavit, I accept this evidence as true.

[27] Within a few days of the March 16, 2011 meeting, Mr. Emam asked Mr. Neiman for his file. Mr. Emam advised Mr. Neiman that he had been in touch with Mr. Brock and/or his support staff, and wished to provide the file to Mr. Brock for his review. Mr. Neiman provided the file to Mr. Emam on March 23, 2011. Mr. Emam’s affidavit states that he provided the file to Terry Wilson of Mr. Brock’s office around the end of March 2011, although Mr. Brock states that he did not receive the file from Mr. Emam until after April 12, 2011.

[28] On this latter point I prefer the evidence of Mr. Neiman and Mr. Emam. Mr. Brock’s dockets include a notation dated April 12, 2011: “1.00 hrs. X 600.00. To review of file and medical records.” This notation is consistent with Mr. Emam having delivered the file, including the medical records, to Mr. Brock’s office prior to April 12, 2011.

[29] Mr. Neiman states that Mr. Brock telephoned him on April 12, 2011 to discuss the file. Mr. Brock takes the position that it was Mr. Neiman who telephoned him on that date. I am not sure that much turns on who called whom, but I prefer the evidence of Mr. Neiman on this point. Mr. Brock’s dockets indicate that he spent one hour reviewing Mr. Emam’s file and medical records immediately before the phone call. It would be an incredible coincidence if Mr. Neiman just happened to call Mr. Brock immediately after Mr. Brock’s review of the file. It is more likely that Mr. Brock reviewed the file and then called Mr. Neiman.

[30] Mr. Neiman states that Mr. Brock provided his views of the merits of the case and stated that he would be interested in taking the matter on at a fee of $600 per hour, and would consider switching to a contingency fee arrangement after discoveries had taken place. Mr. Neiman advised Mr. Brock that he would inform Mr. Emam of the contents of their conversation. At no time did Mr. Neiman advise or suggest to Mr. Brock that his retainer terms were acceptable or that he had instructions to accept these terms on Mr. Emam’s behalf. Nor did Mr. Neiman ever have such authority.

[31] Mr. Neiman reported the gist of the conversation to Mr. Emam. Mr. Neiman’s evidence is that he “mentioned the retainer issue in passing”, and focused on Mr. Brock’s assessment of the merits and whether Mr. Brock was prepared to accept the file. It was Mr. Neiman’s understanding that Mr. Brock and Mr. Emam would speak directly regarding the terms of the retainer. This supposition was a reasonable one on Mr. Neiman’s part.

[32] On April 15, 2011 Mr. Brock sent a letter to Mr. Neiman, confirming their conversation. The letter addressed the merits of the case, but also outlined Mr. Brock’s proposed terms for assuming the case. The relevant portions of this letter state:

…I would also like to thank you for considering retaining me on behalf of Mr. Emam to move this matter forward and I am sorry I did not get back to you sooner.

As I indicated when we spoke about the matter on April 12, 2011, I am certainly prepared to go forward on the case through the examinations for discovery.

While we did discuss going forward together on a contingent fee basis, the outline of the nature of the case and the risk involved including the amounts are not yet clear to me. I am quite prepared to review the issue of contingent fee as we proceed, when the answers to the questions become a little clearer…

However, I am prepared to go forward, as I stated to you, on an hourly basis through the examinations for discovery. My hourly rates are $600.00 an hour. My law clerk, Terry Wilson’s rate is $150.00 an hour and my associate, Paul Martin, who would also be working with me on this case, hourly rate is $250.00…Mr. Emam would not be required to pay these amounts as they were incurred, but we would generally keep track of the time that is being spent and the total of that time as accumulated is available to him throughout.

We would, however, expect that he would pay the disbursements incurred within a reasonable time from their being incurred…

In short, I am prepared to go forward on an hourly rated basis through the examinations for discovery and we will re-visit the issue of cost and expense at that time.

During that period, disbursements as incurred will be paid by Mr. Emam and time will be recorded for this review. If our retainer is terminated at any time before the case is concluded, one way or another our entire docketed time would then become due and payable. Clearly, it would also be payable on its conclusion.

I did call Ms Parghi at Borden Ladner [counsel for the defendant hospital]. I indicated to her my interest in the case and that subject to the conclusion of retainer agreement, I would be back in touch with her.

[Emphasis added]

[33] Mr. Neiman acknowledges receiving this letter, and agrees that it accurately summarizes the terms of his telephone conversation with Mr. Brock. Mr. Neiman did not reply to this letter nor did he have any further conversation with Mr. Brock. Mr. Neiman states that he did not send a copy of the letter to Mr. Emam. Mr. Neiman did not understand that this letter was intended to be a retainer letter since there was no request or line at the end of the letter for Mr. Emam’s signature to evidence his acceptance of its terms. Moreover, the final sentence quoted above specifically notes that Mr. Brock was, at this point, interested in the case, but that his involvement was “subject to the conclusion of retainer agreement”.

[34] Mr. Neiman states in his affidavit that he never agreed that the letter would serve as a retainer agreement. At no time did Mr. Neiman purport to negotiate the terms of any retainer between Mr. Emam and Mr. Brock, at no time did Mr. Neiman communicate to Mr. Brock his acceptance of the terms proposed in the letter, at no time did Mr. Brock suggest to Mr. Neiman that this letter was intended to be a retainer letter or retainer offer. As far as Mr. Neiman was concerned, it was now for Mr. Emam and Mr. Brock to sort out the terms of any retainer agreement, should Mr. Emam decide to retain Mr. Brock.

[35] Mr. Brock’s letter of April 15, 2011 was not copied to Mr. Emam. Mr. Brock felt, correctly in my view, that it would have been improper for him to write directly to Mr. Emam while Mr. Emam was still Mr. Neiman’s client. Mr. Emam’s evidence is that the letter was not provided to him until four months later, on August 16, 2011, when Mr. Emam attended the offices of Dutton Brock LLP.

[36] Significantly, the April 15, 2011 letter to Mr. Neiman was the last work that Mr. Brock docketed on the file until August, 2011. Mr. Brock did not write to Mr. Emam in April 2011 to confirm his retainer, nor did he meet with Mr. Emam until August 16, 2011. No retainer was signed by Mr. Emam until August 16, 2011. Mr. Brock did not file a Notice of Change of Solicitors or contact counsel for the defendant to advise that he had been retained until August 2011.

[37] On April 13, 2011, the day after his telephone conversation with Mr. Neiman, Mr. Brock also made a memo to file. This memo was not provided to Mr. Emam until after the fee dispute arose. The memo to file confirms Mr. Brock’s position at that time that he was not prepared to take the case on a contingent fee basis at this stage of the proceedings and that he would “go forward on an hourly rated basis. I would not require the client to pay a retainer or to pay the accrued time as we went along, but did expect them to pay disbursements”. The memo to file concludes:

In the result, I said that I would take it on on an hourly basis through discoveries and then would try to answer the questions and have another talk about costs, fees and expenses. He thought that was reasonable. He did not want to send me the materials or confirm until I had sent him a retainer letter, which I dictated.

[38] The memo to file is helpful to confirm Mr. Brock’s intentions and understanding at the time, but since the memo to file was not communicated to the client or to Mr. Neiman, it does not assist me in deciding what Mr. Brock actually communicated to Mr. Emam at the relevant time. Moreover, it is unclear from the memo to whom the words “he” and “him” refer, although, given the context and timing (the day after the April 12, 2011 phone call), they likely refer to Mr. Neiman rather than Mr. Emam. In any event, the memo to file, like the April 15, 20011 letter to Mr. Neiman, indicates that no agreement had been reached in the April 12, 2011 telephone conversation, and that the retainer was still subject to confirmation.

[39] Mr. Emam and Mr. Neiman both dispute the statement in the memo to file that “He did not want to send me the materials… until I had sent him a retainer letter...” They each say that the client’s file had already been delivered by Mr. Emam to Mr. Brock’s office at the end of March 2011, so that Mr. Brock could review the file and decide whether he was interested in taking on the case. As indicated at para. 28 of these Reasons, I accept the evidence of Mr. Emam and Mr. Neiman that the file was delivered to Mr. Brock prior to April 12, 2011. To this extent, at least, Mr. Brock’s memo to file is unreliable.

[40] On his cross-examination Mr. Brock took the position that he was retained by Mr. Emam on or about April 12, 2011.

[41] Based on the evidence before me, I find that the retainer was not agreed to on April 12, 2011. This finding is based on:

i. Mr. Neiman’s evidence that at no time did he advise or suggest to Mr. Brock that the retainer terms were acceptable or that he had instructions to accept these terms on Mr. Emam’s behalf, ii. the statement in Mr. Brock’s letter of April 15, 2011 that his involvement was “subject to the conclusion of retainer agreement”, iii. that neither Mr. Neiman nor Mr. Emam responded to the letter of April 15, 2011, iv. that after sending the letter Mr. Brock did not docket any time to the file until August 2011, v. that Mr. Brock did not write to Mr. Emam in April 2011 to confirm his retainer, nor meet with Mr. Emam until August 16, 2011. vi. Mr. Brock’s dockets indicate that the Retainer was drafted in August 2011. vii. Mr. Brock did not file a Notice of Change of Solicitors or contact counsel for the defendant to advise that he had been retained until August 2011.

[42] I also find that Mr. Neiman did not forward a copy of the April 15, 2011 letter to Mr. Emam. This is Mr. Neiman’s evidence and Mr. Emam’s evidence, and neither were cross-examined on their respective affidavits.

[43] Finally, I find that in his dealings with Mr. Emam between August 2011 and December 2016, Mr. Brock proceeded on the understanding that as of April, 2011, Mr. Emam had read, understood, and agreed to the terms set out in the April 15, 2011 letter. As indicated above, I find that Mr. Brock was mistaken in this regard. This misunderstanding appears to be the source of the dispute between the parties, and appears to have resulted in other miscommunications as the case progressed.

[44] On August 15, 2011, Mr. Neiman, who was still counsel of record, received a Status Notice from the Registrar’s Office. Mr. Emam contacted Mr. Brock and made an appointment to see him on August 16, 2011 to discuss the claim.

[45] Mr. Emam states that at the August 16, 2011 meeting he was introduced to Mr. Brock’s law clerk, Karen Spence, who was also present. Mr. Brock explained to him how malpractice cases worked and what steps were necessary to move the case forward. At the end of the meeting Mr. Brock informed Mr. Emam that the law clerk would take Mr. Emam to her office upstairs to sign a retainer agreement and various authorizations and directions that the law firm needed to start on the file.

[46] Mr. Emam states that he went to the law clerk’s office and read the retainer, but the retainer did not state what percentage Dutton Brock LLP was charging or anything at all about fees. He asked the law clerk, who advised him that he needed to speak to Mr. Brock directly. Mr. Emam was taken back downstairs to Mr. Brock’s office, and he asked Mr. Brock what percentage he was being charged. Mr. Emam states that, in the presence of the law clerk, Mr. Brock “advised that I would be charged 20% if the case takes its normal course and 25% if the lawyers for [the defendant] were jerks and would not comply with their undertakings or he had to bring a lot of motions or lastly, if the case went to trial.”

[47] Mr. Emam states that it was his “clear and unequivocal understanding” that Mr. Brock and his firm were retained on a contingency basis and that he was to be billed in accordance with this understanding.

[48] Mr. Brock denies that this conversation occurred. He states that he gave a copy of his April 15, 2011 letter to Mr. Emam, who said he was familiar with it and that Mr. Neiman had provided him with a copy of it. Accordingly, Mr. Brock made the following notation on his file copy of the letter: “Copy to S.E. [Sassan Emam] confirmed 8/16/11. Sent to him by J.N. [Mr. Neiman] on its receipt”. There is no evidence that Mr. Brock or anyone at Dutton Brock LLP reviewed the contents of the letter with Mr. Emam.

[49] The “Retainer and Directions” signed by Mr. Emam on August 16, 2011 is silent with regard to the financial terms of the retainer. Nor does it make any reference to the April 15, 2011 letter. The retainer reads as follows:

I HEREBY retain DUTTON BROCK LLP, Barristers and Solicitors…as my solicitors with respect to a medical malpractice incident which occurred on December 3, 2006.

AND I HEREBY authorize and direct my said solicitors to take any action, institute any legal proceedings, conduct any investigations, and take any steps they deem necessary on my behalf regarding the said incident

[50] Mr. Emam acknowledges that when he met with the law clerk on August 16, 2011, the law clerk did provide him with an envelope enclosing a copy of his signed retainer as well as a copy of Mr. Brock’s April 15, 2011 letter to Mr. Neiman. He states that he did not read the letter to Mr. Neiman until after he got home from the meeting with Mr. Brock. Since the letter discussed a number of issues and was not addressed to him, he thought that the fee proposal set out in the letter had been overtaken by his discussion with Mr. Brock and was no longer relevant.

[51] I note that Mr. Brock’s April 15, 2011 letter did state that he was “quite prepared to review the issue of contingent fee as we proceed”, suggesting that his hourly fee proposal was not the last word on the issue. This could lead Mr. Emam to conclude that, given the passage of time since the letter was sent, the proposal in the letter was overtaken by their alleged discussion on August 16, 2011.

[52] Mr. Emam states that, contrary to the terms set out in the April 15, 2011 letter, at no time before the final settlement of his case on December 19, 2016, was he provided with any interim account or asked to pay for any disbursements. Nor was he ever provided with any information or a summary of billable hours or a pre-bill to show his indebtedness for services rendered on the file. Nor did Mr. Brock “re-visit” the terms of the retainer following Mr. Emam’s examination for discovery on April 18, 2012.

[53] Counsel for Mr. Emam argues that this total lack of interim accounts or request for payment of disbursements over a period of six years supports Mr. Emam’s understanding that Mr. Brock had agreed to proceed on a contingency fee basis rather than the terms set out in the April 15, 2011 letter.

[54] As indicated below, Mr. Brock does not dispute the assertion that Mr. Emam was not provided with any interim accounts or asked to pay disbursements prior to December 19, 2016. Mr. Brock does, however, take the position that Mr. Emam was provided with a Statement of Account on December 19, 2016, immediately before the commencement of the pre-trial conference that day.

[55] The first mediation was held on May 14, 2014. Mr. Brock indicates that he arranged for a “Pre-Bill” to be printed prior to that date. The Pre-Bill displayed his incurred fees and disbursements up to May 12, 2014. As of that date his fees totalled $129,825.70 and disbursements totalled $9,188.36. By the end of May 14, 2014 the total fees and disbursements equalled $146,113.32. There is no evidence that Mr. Emam was ever provided with a copy of this “Pre-Bill”.

[56] Following the May 14, 2014 mediation, Mr. Emam made an appointment to meet with Mr. Brock on May 26, 2014. They discussed whether Mr. Emam should continue with the lawsuit and whether they should have another mediation. Mr. Brock states that Mr. Emam was adamant that he did not want to end the lawsuit and commented “that doing so would add to his burden because he would then owe us money.” Mr. Brock also states that Mr. Emam indicated that he understood that “if he were to lose, he would have to pay me and he would also have to pay the other side.” This statement was recorded by Mr. Brock in a memo to file dated May 26, 2014. The solicitors argue that this statement is evidence that Mr. Emam knew that he was to be billed on an hourly basis. Since Mr. Emam was not cross-examined, this assertion was not put to Mr. Emam.

[57] The first Pre-Trial Conference proceeded on October 3, 2016. The case did not settle.

[58] In November, 2016 additional expert evidence was filed by Mr. Brock on behalf of Mr. Emam.

[59] The second Pre-Trial Conference was held on December 19, 2016. Mr. Brock and Mr. Emam met at Mr. Brock’s office before the conference. Mr. Brock states that “in preparation for the Pre-Trial Conference, I arranged for Mr. Emam’s draft Statement of Account to be printed on December 16, 2016. At the time, fees, disbursements and HST totalled $339,452.36.” This was comprised of approximately $307,000 in fees and $32,500 disbursements. Mr. Brock states that he reviewed the December 16, 2016 Statement of Account with Mr. Emam at that meeting before the Pre-Trial Conference.

[60] Mr. Emam states that he attended the Pre-Trial Conference on December 19, 2016. At the pre-trial counsel for the defendants offered to settle the case for a total of $366,000 ($350,000 plus $16,000 costs). When Mr. Emam asked Mr. Brock how much he would receive if he accepted the offer, Mr. Brock showed him the December 16, 2016 Statement of Account. Mr. Emam states that this was the first time that he had ever seen this document.

[61] Both parties agree that Mr. Brock advised Mr. Emam that he would reduce his fees from approximately $300,000 to $150,000 plus HST and disbursements, leaving Mr. Emam with approximately $180,000 (subject to disbursements and the OHIP subrogated claim).

[62] Mr. Emam authorized Mr. Brock to settle his file for $366,000 all-inclusive and the Minutes of Settlement were signed.

[63] Mr. Emam states that when he returned home he tried to calculate the percentage he was being charged in terms of the contingency fee agreement. He met with Mr. Brock on December 23, 2016, and asked for an explanation on how he was being billed. Mr. Brock advised him that he was being billed on an hourly basis of $600. Mr. Emam reminded Mr. Brock that they had agreed to a contingency fee of 20% to 25%, and that if he had known that he would be charged on an hourly basis he would have found another lawyer.

[64] In contrast, Mr. Brock states that when he and Mr. Emam returned to his office after the settlement, Mr. Emam asked if he could receive $200,000 as opposed to $180,000. Mr. Brock explained to Mr. Emam that the $180,000 was not a final number, and that the final number would be less than that amount. He reminded Mr. Emam that he had already reduced his fees by over $150,000, and stated that he would not reduce them further.

[65] On January 5, 2017, Mr. Emam emailed Mr. Brock, asking again if Mr. Brock would give Mr. Emam $200,000 and “keep the rest for yourself”.

Position of the Parties

[66] The solicitors take the position that Mr. Brock’s April 15, 2011 letter to Mr. Neiman forms the basis of the retainer agreement between the solicitors and the client. Moreover, at no time did Mr. Brock agree to assume the case on a contingency fee basis, and he made this clear in all of his communications with the client. The solicitors take the position that Mr. Emam accepted the terms of the April 15, 2011 letter “by his conduct over the course of approximately six years between 2011 and 2016”, and that he is now estopped from taking the position that he is not bound by the terms of that agreement.

[67] The client takes the position that he never agreed to the terms proposed in the April 15, 2011 letter to Mr. Neiman. Mr. Emam was advised by Mr. Brock that he would be charged a contingency fee of 20% to 25% when he met with Mr. Brock on August 16, 2016. The maximum he would be charged was 25% plus HST and disbursements. Mr. Emam was not given a copy of the April 15, 2011 letter to Mr. Neiman until after he had signed the retainer on August 16, 2011, and he did not read the April 15, 2011 letter until after he and Mr. Brock had agreed to proceed on a contingency fee basis. It was his understanding that his discussion with Mr. Brock on August 16, 2011 confirmed the contingency fee arrangement, and that the fee proposal in Mr. Brock’s letter of April 15, 2011 was no longer relevant.

Analysis

[68] In this case the retainer agreement is the document signed by Mr. Emam on August 16, 2011. That document does not set out the financial terms of the retainer agreement or make any reference to the letter of April 15, 2011. There is no documentary evidence that Mr. Emam accepted the terms of the April 15, 2011 letter.

[69] In the case of John Doe v MacDonald, 2015 ONSC 4850, at paras. 14-20, aff’d 2016 ONCA 319, Faieta J. reviewed a number of cases outlining the nature of the onus falling on the solicitor in cases where a dispute arises between a solicitor and a client over the nature of an oral retainer:

In upholding a client’s understanding regarding the terms of a retainer, the Ontario Court of Appeal in Plater v. Arenson (1999), 175 DLR (4th) 102, at para. 5, adopted the following statement:

The Solicitors’ Act and the common law are founded on the premise that the client should be protected. It is also well settled law that when there is any doubt or ambiguity, it is to be resolved in favour of the client.

Given the fiduciary nature of the solicitor-client relationship, the imbalance of legal knowledge between solicitor and client, and the fact that a solicitor knows, or should know, the risks involved, the courts have given more weight to a client’s understanding of the terms of an oral retainer rather than that of the solicitor.

Lord Denning in Griffiths v. Evans, [1953] 1 W.L.R. 1424 (C.A), at 1428, explained this principle and its rationale as follows:

On this question of retainer, I would observe that where there is a difference between a solicitor and his client upon it, the courts have said, for the last 100 years or more, that the word of the client is to be preferred to the word of the solicitor, or, at any rate, more weight is to be given to it…The reason is plain. It is because the client is ignorant and the solicitor is, or should be, learned. If the solicitor does not take the precaution of getting a written retainer, he has only himself to thank for being at variance with his client over it and must take the consequences. [Emphasis added.]

Griffiths remains good law in England. See Fladgate LLP v. Harrison, [2012] EWHC 67 (Q.B.) where the Court stated, at para. 55:

The Defendant submitted that, where a dispute arises between a solicitor and a client over the nature of an oral retainer, the client’s version of the retainer should prevail, citing… Griffiths v. Evans … However, that principle does not preclude me from finding against the client, where his case is clearly contradicted by other documentary and witness evidence. [Emphasis added.]

In Ontario, this principle is well-established. In Re Eccles (1868), 1 Ch. Cham. 263, at 264 the Court stated:

It is the practice of this court that where a retainer is asserted by a solicitor and denied by the alleged client, to give weight to the denial of the client as against the solicitor. It is very careless of solicitors not to take a written retainer from clients, as they render themselves liable at any moment to have their claim for costs disputed, especially where the party sought to be charged is not the party to the suit; if solicitors are so incautious as not to take a written retainer, they must submit to the loss. [Emphasis added.]

More recently, the Ontario Court of Appeal adopted this principle in Rye and Partners v. 1041977 Ontario Inc., [2004] O.J. No. 2480, at para. 2:

…when a solicitor fails to reduce to writing the terms of his or her retainer and a dispute arises, there is a heavy onus on the solicitor to establish a retainer. [Emphasis added.]

Similarly, in Ellyn Barristers v. Stone, [2006] O.J. No. 1242, aff’d 2007 ONCA 565, [2007] O.J. No. 3114 (C.A.), this Court, at para. 18, adopted Griffiths as trite law for the principle:

…where a solicitor fails to reduce his or her retainer to writing, and a dispute arises, there is a heavy onus on the solicitor to satisfy the court that his/her version of its scope ought to be preferred. [Emphasis added.]

[70] Accordingly, the onus in this case falls on the respondent solicitors to prove that Mr. Brock’s April 15, 2011 letter to Mr. Neiman forms the basis of the financial terms of the retainer agreement between the solicitors and the client.

[71] Based on my review of the affidavit evidence and my findings of fact where the evidence is in conflict, it is my view that the solicitors have failed to meet the “heavy onus” placed on them to prove that Mr. Emam accepted the terms set out in the April 15, 2011 letter.

[72] I accept that Mr. Brock believed that Mr. Emam had read and accepted the terms of his April 15, 2011 letter on or about the time he sent the letter in April, 2011, and that Mr. Brock proceeded in August 2011 and thereafter on the basis of this misapprehension. However, as indicated above at para. 43 of these Reasons, I find that Mr. Brock was mistaken in this regard. The letter of retainer signed by Mr. Emam on August 16, 2011 was silent with regard to the financial terms of the retainer, and this resulted in a misunderstanding between the solicitors and the client in relation to the precise terms of the retainer. As a result of this misunderstanding, the client came away thinking that he would be charged no more than 25% plus HST and disbursements.

[73] I reject the solicitors’ position that Mr. Emam accepted the terms of the April 15, 2011 letter “by his conduct over the course of approximately six years between 2011 and 2016”. Mr. Emam’s conduct was, in my view, equally consistent with his stated belief that the solicitors had agreed to assume this case on a contingency fee basis.

[74] Moreover, I note that the solicitors failed to conduct themselves in accordance with the terms of the April 15, 2011 letter. Contrary to the terms set out in Mr. Brock’s letter, Mr. Emam was not asked to pay disbursements as they were incurred and Mr. Brock did not “re-visit the issue of cost and expense” following the April 18, 2012 examination for discovery.

[75] Finally, s. 28.1(4) of the Solicitors Act, R.S.O. 1990, c. S-15 requires that contingency fee agreements must be in writing. Mr. Brock would, of course, know this, and this fact supports his contention that he did not agree to take this case on a contingency fee basis.

[76] The issue for this court, however, is not what Mr. Brock knew, but what the client knew, and there is no evidence that Mr. Emam knew that contingency fee agreements must be in writing.

[77] Section 28.1(4) is provided for the protection of the client. While s. 28.1(4) of the Solicitors Act “makes oral contingency fee agreements unenforceable at the instance of the lawyer, the same result does not necessarily follow when the party seeking to rely on the agreement is the client”: Condilis v. Grimanis at para. 23 and cases cited therein.

Conclusion

[78] For the foregoing reasons, I conclude that the solicitors have failed to prove that Mr. Emam accepted the terms set out in the April 15, 2011 letter. I find that Mr. Emam understood that the solicitors were retained on a contingency fee basis, and that he would be charged no more than 25% of the final settlement plus HST and disbursements.

[79] In these circumstances, I conclude that 25% is the appropriate percentage to be applied.

[80] The applicant has asked the court to calculate the final fee owing to the solicitors on the basis of this ruling, and has provided his calculation of what that amount should be. The respondent has not responded to this proposed calculation. It is not clear whether the respondent accepts the applicant’s calculation in this regard. Accordingly, I leave it to the parties to try to reach an agreement on the final fee to be charged on the basis of this ruling. If they cannot reach an agreement on this issue, I may be spoken to.

[81] The applicant is presumptively entitled to costs of this application. If the parties cannot agree on costs, the applicant may file costs submissions of no more than three pages plus costs outline and any offer to settle within 30 days of the release of this decision, and the respondent may file responding submissions on the same terms within 20 days thereafter.

Justice R.E. Charney Released: August 13, 2018