Court File and Parties
COURT FILE NO.: CV-18-00007579 DATE: 20180827
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Rosemarie Hall Applicant – and – Joseph P. Marcuccio Respondent
Counsel: Applicant, self-represented Linda Laakso, for the Respondent
HEARD: August 17, 2018
Decision on Application for Leave to Have Solicitor’s Accounts Assessed
Gauthier J.:
Overview
[1] Rosemarie Hall (“the applicant”) seeks an Order for assessment of her former counsel’s account, more than one month after payment of same, pursuant to the Solicitors Act, R.S.O. 1990, c. S.15.
Facts
[2] I have borrowed liberally from the “Facts” section of the respondent’s Factum.
[3] The applicant was a respondent in the application of her sister, Helena Schewechuk (“Schewechuk”) to pass her accounts with respect to her management of the property of their mother, Helena Hall (since deceased), at the conclusion of which the presiding Judge ordered that Schewechuk pay $55,064.99 to the estate of Helena Hall, that Schewechuk pay the sum of $15,158.21 to the applicant on account of her costs of the application, that is, the legal fees she had paid to another law firm for services provided to her, leading up to the hearing of the Application for Passing of Accounts, and pre-judgment interest on those amounts.
[4] The applicant had consulted the respondent for advice concerning the application to pass accounts, although the applicant represented herself at the hearing of the application. Subsequent to the court order referred to above, the applicant retained the respondent to assist her in collecting the amounts ordered to be paid by Schewechuk.
[5] The respondent was successful in:
a. Recovering the full amount under the Judgement;
b. Persuading Schewechuk to disclaim her interest in the Estate of Helena Hall, in the amount of $18,355, to offset unpaid Post-Judgment interest owing by Schewechuk on the Judgment (approximately $8,300), to the benefit of the applicant and the only other beneficiary, Thomas Hall; and
c. Persuading Thomas Hall to forego $1,497.06 from his one-third share of the estate, to compensate the applicant for her efforts in recovering the debt owed to the estate by Schewechuk.
[6] From the time that the applicant first consulted the respondent about the upcoming Passing of Accounts, until all of the above funds were collected and disbursed by the respondent, he rendered three accounts (I will refer to the fee portion of the accounts only):
a. $1,000 on September 13, 2017;
b. $10,531.98 October 10, 2017; and
c. $3,500 January 2, 2018.
[7] The $10,531.98 represents fifteen percent of the total recovered on the Judgment, being $70,213.20. The respondent prepared his account for same, dated October 10, 2017, and included it with his correspondence to the applicant, dated January 15, 2018. The account bears the signature of the applicant.
[8] On February 20, 2018, the respondent once more corresponded with the applicant, enclosing the final amount due to her from the estate and from the two other beneficiaries, and also enclosing his Trust Account Statement, reflecting the disbursement of the funds collected on behalf of the applicant. The Trust Statement bears a stamp: “APPROVED BY:” and is signed by the applicant.
[9] According to the applicant, she attempted, on more than one occasion, to speak with the respondent to complain about his fees, and attempted to have him reduce his accounts, without success.
[10] The applicant then submitted a complaint to the Law Society, and, on April 18, 2018, wrote to the respondent, suggesting that he should not have charged her more than $7,800, and that his failure to agree would result in the Application to have his accounts assessed.
[11] The respondent did not agree and thus, there is before me the Application for leave to have the accounts assessed, pursuant to the Solicitors Act, issued on May 30, 2018.
Applicant’s Position
[12] Firstly, the applicant complains about the length of time it took the respondent to complete the work she retained him for. The Judgment was issued on September 11, 2017. The respondent was retained on September 13, 2017, and the matter was concluded, in full, including the securing of a greater share of the estate for the applicant, by February 2018. (I note that $10,000 had been remitted to the applicant by the respondent before Christmas 2017.)
[13] The matter was not complex and does not justify the fees charged by the respondent.
[14] The respondent should have applied to the court to have the applicant appointed as Estate Trustee for the estate of Helena Hall. (This submission is of no relevance on the Application before me).
[15] The respondent should not have been permitted to charge more than seven percent. Seven percent would have been “more than fair”.
[16] The retainer agreement was not in writing and therefore is in breach of the rules governing contingency agreements, specifically, because it was not in writing as required by the Solicitors Act.
[17] The respondent did not keep the applicant informed as to the work he was doing on her behalf, and he “just did what he wanted to do”.
[18] The respondent did not provide a detailed account, such as the one the applicant had received from her prior lawyer.
[19] The applicant was not a sophisticated client, or one who was familiar with legal matters.
Respondent’s Position
[20] The applicant had begun consulting the respondent about one year before the hearing of the Application to Pass Accounts, which was heard in May and June 2017, and which resulted with the Judgment on Passing of Accounts on September 11, 2017.
[21] The dealings between the applicant and the respondent were informal and, according to the respondent, he and the applicant had developed what he thought was “a mutual and trusting relationship”.
[22] The applicant retained the respondent to assist her in enforcing the Judgment of September 11, 2107, and the understanding between the applicant and the respondent was that the latter would charge the former fifteen percent on the sums of $55.064.99 and $15,148.21, only if he was successful in recovering those sums.
[23] Given the nature of the relationship between the applicant and the respondent, no formal or written retainer agreement was entered into. Further, given the fixed fee agreement, the respondent did not docket the time he spent working on collecting on the Judgment.
[24] The retainer agreement was not a contingency fee agreement, such as that contemplated by the Solicitors Act, because the amount of money to be collected had already been ascertained. The only issue was whether the applicant would be successful in collecting on the Judgment.
[25] The respondent obtained and registered a writ of seizure and sale on Schewechuk’s real property. He negotiated with Schewechuk for payment of the Judgment in full. He persuaded Schewechuk to forego her one-third interest in the estate of Helena Hall ($18,355), in exchange for the estate not enforcing its right to collect the pre-judgment interest. This resulted in the applicant and the only other beneficiary, Thomas Hall, becoming entitled to an additional $6,809.99 that they otherwise would not have received.
[26] Even with that result, the applicant was not satisfied. She believed it to be inequitable that she and Thomas Hall share equally in the estate, as, in her view, the only reason there was any estate to distribute was because of the applicant’s efforts alone.
[27] The respondent did not take any material step in the matter, nor did he charge or take funds from his trust account without the applicant’s written approval, as evidenced by the signatures on the Account and Trust Statement.
[28] The respondent acted with “great speed” in concluding the matter in a manner very favourable to the applicant, (her net costs earlier incurred and more than her one-third share in the estate), and the fees charged are more than justified.
[29] The applicant is not an unsophisticated individual, having been a school teacher by profession. By virtue of her personal involvement in the hearing of the Application to Pass Accounts, she was aware of the workings of the legal process.
[30] The Application, commenced on May 30, 2018, is well beyond the one month limitation period set out in the Solicitors Act, and there are no special circumstances warranting such assessment.
[31] Finally, the applicant did not at any time express any dissatisfaction with the respondent’s services, the time it took to finalize the matter, or the amount of fees charged, until after the respondent had concluded the matter in accordance with the applicant’s instructions.
Solicitor’s Act
[32] Sections 3, 11 and 28.1 of the Solicitors Act, are the relevant statutory provisions in this matter. The provisions state the following:
- Where the retainer of the solicitor is not disputed and there are no special circumstances, an order may be obtained on requisition from a local registrar of the Superior Court of Justice,
(a) by the client, for the delivery and assessment of the solicitor’s bill;
(b) by the client, for the assessment of a bill already delivered, within one month from its delivery;
(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.
- The payment of a bill does not preclude the court from referring it for assessment if the special circumstances of the case, in the opinion of the court, appear to require the assessment.
28.1 (1) A solicitor may enter into a contingency fee agreement with a client in accordance with this section.
(2) A solicitor may enter into a contingency fee agreement that provides that the remuneration paid to the solicitor for the legal services provided to or on behalf of the client is contingent, in whole or in part, on the successful disposition or completion of the matter in respect of which services are provided.
(4) A contingency fee agreement shall be in writing
(11) For purposes of assessment, if a contingency fee agreement,
(a) is not one to which subsection (6) or (8) applies, the client may apply to the Superior Court of Justice for an assessment of the solicitor’s bill within 30 days after its delivery or within one year after its payment; or
(b) is one to which subsection (6) or (8) applies, the client or the solicitor may apply to the Superior Court of Justice for an assessment within the time prescribed by regulation made under this section.
Issues and Analysis
[33] The first issue which was identified by the respondent’s counsel was the nature of the retainer. Was it or was it not a contingency fee agreement, in accordance with the provisions of the Solicitors Act.
[34] Definition: A contingency fee agreement is one in which any part of a lawyer's compensation is dependent on the successful disposition or completion of the matter for which the lawyer was retained. (Jackson v. Stephen Durbin and Associates, 2018 ONCA 424) A percentage based fee is not sufficient to establish the existence of a contingency fee agreement. (Warnica v. Van Moorlehem, 2012 ONSC 4241, at para. 33)
[35] At first glance, the law does not seem to preclude non-litigation related legal services from contingency agreements. In fact, the law includes the “disposition or completion of the matter for which the lawyer was retained”. The ordinary sense of the words does not seem to exclude collection or execution only matters.
[36] However, the French version of the law does seem more restrictive. The French version seems to be targeting solely litigation matters as it requires “décisions” or “règlements” instead of disposition or completion:
28.1 (2) Le procureur peut conclure une entente sur des honoraires conditionnels qui prévoit que la rémunération qui lui est versée pour les services juridiques qu’il a rendus au client ou en son nom est subordonnée, en tout ou en partie, à une décision favorable concernant l’affaire à l’égard de laquelle les services ont été rendus ou au règlement favorable de celle-ci.
[37] In the context of legislative interpretation of bilingual provisions, the common meaning of both provisions must be favoured. (R v. Daoust, 2004 SCC 6). The common meaning seems to me to be the narrower French version which seems to require a decision or a settlement.
[38] Whether or not the agreement between the applicant and the respondent about the retainer constituted a contingency fee agreement, as I will explain further, is immaterial to the Application before me.
[39] Even if it purported to be such an agreement, as it was not in writing, the provisions of the Solicitors Act pertaining to contingency fee agreements would not apply.
[40] The next issue is whether or not there was an agreement (oral or otherwise) whereby the respondent would receive, as his remuneration, fifteen percent of the amount recovered.
[41] The onus is on the respondent to prove the retainer and the terms thereof. Teplitsky, Colson v. McCrea.
[42] On the facts before me, I conclude that there was an agreement as described by the respondent. Firstly, there is the assertion of this fact by the respondent, who is an officer of the court. I have no reason to question his integrity in this regard. Secondly, the applicant signed both the account and the Trust Statement, and did not raise any issue about the fees charged until after the matter had been completed. Thirdly, given the nature of the work to be performed by the respondent, being a combination of pure legal services (securing the applicant’s interest in the judgment by way of writ of seizure and sale) and collection services (negotiation and actual receipt of funds), it is not unusual for a percentage to be the basis of the retainer agreement. Fourthly, the applicant’s own material suggests an agreement that the respondent’s fees be fixed at fifteen percent. (see page 2, Tab 3 of the Application Record: “The 1/3 the two of us were to get was what was left after Mr. Marcuccio took his fees off the $55,000 (15%)”. There is no explanation or reason put forward to explain why the stated percentage should apply to only part of the amount recovered in the Judgment.
[43] Having concluded that there was an agreement as submitted by the respondent, I move to the next issue of whether or not I have jurisdiction to entertain the applicant’s request. The respondent’s counsel suggested that if there is no valid contingency agreement, then the Solicitors Act does not apply, and the matter of the respondent’s fees would have to be dealt with on a quantum meruit basis.
[44] I disagree.
[45] I am not convinced that the agreement in question is a contingency fee agreement to begin with.
[46] As indicated earlier in these Reasons, not all agreements that refer to compensation as a percentage will be contingency agreements as contemplated in s. 28 of the Solicitors Act. As Strathy J. (as he then was) indicated, when distinguishing between a “bonus” and a contingency fee, in Teplitsky:
While contingency fee agreements are frequently based on a percentage, the calculation of a part of the lawyer’s compensation by reference to a percentage, does not make the agreement bad as a contingency fee agreement.
[47] Even if I am mistaken in characterizing the retainer agreement, I have concluded that the parties agreed to the terms of the retainer, being fifteen percent of the amount recovered. The lawyer’s account is subject to review, whether it be by way of the Solicitors Act or as a result of the court’s inherent jurisdiction.
[48] As was stated in Clatney v. Quinn Thiele Mineault Grodzki, 2016 ONCA 377 (Ont. C.A.):
The courts have inherent jurisdiction as well as jurisdiction under the Solicitors Act to order lawyers’ accounts to be assessed. Both sources of jurisdiction respond to the public interest component of the rendering of legal services and lawyers’ compensation, and the importance of maintaining public confidence in the administration of justice.
[49] Sharpe J.A. explained in Price v. Sonsini (2002), 2002 CarswellOnt 2255, 215 D.L.R. (4 th ), 577.
The court has an inherent jurisdiction to control the conduct of solicitors and its own procedures. This inherent jurisdiction may be applied to ensure that a client’s request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities.
[50] Clatney instructs that the “special circumstances” test will apply, regardless of whether I assess the merits of the within application for assessment pursuant to the Solicitors Act or as a function of the court’s inherent jurisdiction.
…I view the authorities and the objectives of the Solicitors Act as supporting the following broader test: “Special circumstances” are those in which the importance of protecting the interest of the client and/or public confidence in the administration of justice, demand an assessment.
[51] The issue of whether special circumstances exist to grant the order for assessment must be approached from the perspective of the client, rather than the perspective of the lawyer. Clancey v. Kelly, 2015 ONSC 6873, 2015 CarswellOnt 18754.
[52] I have considered what the applicant suggests would be special circumstances, and I conclude that those matters raised by her do not amount to “special circumstances” such as to justify the assessment of a lawyer’s account, previously approved as evidenced by the signatures, and already paid, more than four months after the relationship between the applicant and the respondent ended.
[53] The entire matter, from the time of the respondent’s retainer, until completion, took less than six months. This is not, as the applicant would have it, an inordinate amount of time in which to collect on a judgment, in full, and negotiate the forfeiture of one beneficiary’s share, and a reduction of another beneficiary’s share in the estate.
[54] Although not duly complex, this matter did require both legal skills and negotiating skills. The writ of seizure and sale was placed against Schewechuk’s land in a timely manner, and the negotiations then began. In fact, the respondent also had to negotiate with the other one third beneficiary, Thomas Hall. He did so, and he did so successfully.
[55] I disagree with the applicant’s bald statement that she was not kept informed by the respondent who “did what he wanted to do.” The evidence shows that the applicant was copied on correspondence with Thomas Hall’s lawyer, and was advised of the concessions made by the other two beneficiaries.
[56] I likewise give no weight to the argument that the lawyer’s account was not detailed enough. Given the nature of the retainer, and the type of work this retainer required, the lack of detail in the account does not on the facts before me constitute a “special circumstance”.
[57] Finally, I reject the notion that the applicant, a retired teacher, who had just recently successfully represented herself in a judicial proceeding which lasted twelve days, is an unsophisticated client who did not understand what she agreed to with the respondent. It is simply not logical.
[58] On all of the facts before me, I conclude that there is no special circumstance which would justify an order for the assessment of the respondent’s account or accounts.
[59] For these reasons, the Application is dismissed.
Costs
[60] If the parties cannot agree on costs, the respondent may make written submissions as to costs within 15 days of the release of these reasons for decision. The applicant has 10 days after receipt of the respondent’s submissions to respond. All such written submissions are to be forwarded to me at my chambers at 155 Elm Street, Sudbury, Ontario. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.
The Honourable Madam Justice Louise L. Gauthier
Released: August 27, 2018