Court File and Parties

COURT FILE NO. : CV-18-00603813 DATE: 20181203 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MANUEL DAROCHA and MARIA DAROCHA, Applicants AND: COSTA LAW FIRM and COSTA LAW FIRM PROFESSIONAL CORPORATION, Respondents

BEFORE: Justice Glustein

COUNSEL: Peter M. Hamiwka, for the Applicants Yuce Baykara, for the Respondents

HEARD: November 20, 2018

REASONS FOR DECISION

Nature of application and overview

[1] The applicants, Manuel DaRocha and Maria DaRocha, bring this application for a declaration that the bills rendered by the respondents Costa Law Firm and Costa Law Firm Professional Corporation (collectively, “Costa”) be referred to an assessment under the Solicitors Act, R.S.O. 1990, c. S.15 (the “Act”). The applicants also seek ancillary relief for production of all bills rendered by Costa.

[2] The applicants submit that (i) no final bill was delivered by Costa, and as such they are entitled to an assessment under s. 3 of the Act; and (ii) alternatively, if a final bill was delivered by Costa, then “special circumstances” exist under ss. 4 and 11 of the Act to permit the applicants to obtain an assessment of the Costa account despite payment of the bills and the passage of the limitation period to assess the bills.

[3] Costa submit that (i) a final bill was delivered in October 2013; and (ii) no special circumstances exist under ss. 4 or 11 of the Act to permit an assessment after the expiry of the limitation period and payment of the bills.

[4] For the reasons that follow, I agree with the applicants and order an assessment of the Costa account. In brief, I find that:

(i) All of the bills delivered prior to October 15, 2013 were interim bills, so that the assessment period on such bills does not arise until a final bill is presented;

(ii) The October 15, 2013 bill was not a final bill. It was not sent as, nor intended to be, a final bill. It was an interim bill for payment for services in ongoing litigation. The file was not closed and Costa remained as counsel for the litigation at issue. A decision by Costa not to send a final bill upon the applicants’ termination of the retainer in 2017 does not convert the “last” bill in October 2013 into a “final” bill under the Act; and

(iii) Even if either the bills delivered prior to October 15, 2013 or the October 15, 2013 bill were “final”, special circumstances would exist to permit an assessment outside the limitation period. There are numerous concerns raised on the evidence as to the billing practices on the file, both from a review of the accounts and statements made by counsel at Costa.

Facts

[5] The affidavit evidence before the court was uncontested. Maria DaRocha swore an affidavit on behalf of the applicants. The respondents filed affidavits from (i) Ana Cardoso, a manager at the Costa firm, and (ii) Robert Aaron (“Aaron”), who acted as outside legal counsel for Costa from April 2017 to November 2017 in dealings with the applicants’ current counsel.

[6] Ms. Cardoso states in her affidavit that that the affidavit of Ms. DaRocha should be “inherently suspect” and its “execution deficient”, as Ms. DaRocha had a translator for examination for discovery and there was “no contemporaneous interpreter’s affidavit provided or otherwise addressed”. I do not accept this submission. Ms. DaRocha could easily have been capable to understand the contents of her affidavit but could have been more comfortable with oral discovery questions and answers in Portuguese. There is no evidence that Ms. DaRocha cannot read or understand English.

[7] Further, Costa chose not to cross-examine on the affidavit to address this issue.

[8] Consequently, I do not accept Costa’s position as to the purported “suspect” nature of the affidavit sworn by Ms. DaRocha.

a) The property dispute (first retainer)

[9] The applicants are husband and wife. They first retained Costa in April 2005 with respect to a property dispute with their neighbour. The applicants’ daughter, Lucy Davis (“Davis”) attended at the meeting. Mr. Fernando Teixeira (“Teixera”), a junior associate with the Costa firm, acted as counsel for the applicants.

[10] After a series of letters were exchanged between Teixeira and the neighbours and their counsel, the applicants believed that the matter was resolved and asked for the return of their remaining trust funds held by Costa.

b) The civil action (second retainer)

[11] In May 2006, the applicants were served with a statement of claim in an action brought against them by their neighbours, seeking $600,000 in damages for alleged physical and psychological injury resulting from their prior attempts to resolve the boundary dispute.

[12] The applicants attended at the Costa office and met with Teixeira. At that meeting, the applicants provided a monetary retainer of $5,000.

c) Payment of bills and conduct of the retainer until the last bill in October 2013

[13] The litigation then proceeded, with Costa providing frequent and regular bills. The applicants filed 36 bills but stated that they could not locate all of the bills. The respondents filed 39 bills.

[14] Consequently, there appear to be 39 bills in relation to the second retainer.

[15] The initial monetary retainer of $5,000 became exhausted. The applicants paid the bills promptly, because they were asked to do so. The bills were presented on Costa letterhead and initially signed by Teixeira.

[16] At some point after June 30, 2009, [1] Teixeira left the firm. Costa continued to send bills signed by other counsel, on the firm letterhead.

[17] By the time the applicants ended their relationship with the firm, 11 lawyers had worked on the file, each (except for Teixeira) for relatively short time periods. Each new lawyer billed the applicants several hundreds of dollars for “reviewing the file”, with the file then passed on to the next lawyer.

[18] Hourly rates billed by each of the lawyers differed. The applicants were never advised of each of the new lawyers’ rates when they would take over the file, but only learned of them once they were billed.

[19] The applicants paid each bill by cheque. Davis occasionally paid bills on their behalf when the applicants could not afford to do so. The applicants were charged interest even when a few days late. Costa did not always provide the applicants with receipts for the payments.

[20] There is some debate as to the total amount paid by the applicants to Costa over the course of the second retainer. The applicants claim that they paid in excess of $75,000 while the Costa client ledger indicates fees of approximately $44,000. The applicants have receipts for over $50,000 and gave uncontradicted evidence that they did not always receive receipts.

d) The applicants begin to question the accounts from Costa

[21] At a judicial pre-trial on September 9, 2013, [2] a lawyer from Costa “spoke candidly to [the applicants] about billing practices at Costa … and informed [the applicants] that she was soon leaving the firm, in part because of pressure that the junior lawyers were under from management to constantly submit accounts to the firm’s clients, regardless of the actual work performed on the file”.

[22] The applicants then began to question their accounts. When they demanded a more detailed accounting of one invoice, their lawyer at that time from Costa told them that Costa would “look into it” and that “from now on we’ll take care of [the applicants’ file] at no cost”.

e) The October 15, 2013 bill

[23] The last bill in the record is dated October 15, 2013.

[24] The format of the bill was no different than any of the other bills sent by Costa to the applicants. The description of the work related to (i) preparation for trial (e.g. “Review of correspondence and file regarding answers to undertakings”), and (ii) preparation and review of minutes of settlement and drafting the release.

[25] The bill was not labelled as a “final” bill. A “trust statement” attached with the bill reflected that the applicants maintained a trust balance with Costa of $1,556.20. There is no evidence that either the applicants or Costa believed that the second retainer was completed at that time.

[26] In essence, the bill was for work done at that stage of the action, as was the case for all of the other bills delivered to the applicants.

f) Steps taken after the October 15, 2013 bill until the applicants retained new counsel

[27] Upon receipt of the October 15, 2013 bill, there still remained post-settlement undertakings to be effected related to the applicants’ property.

[28] Davis wrote an email dated January 27, 2014 to Rachel Doran (“Doran”), her lawyer at that time from Costa. Davis advised Doran that Davis would attempt to address issues related to the settlement, stating that “Donna Wilson [a prior lawyer at Costa on the file] said … that once I have the easement, I should just do the application to committee of adjustments myself. I am so confused. If I can do that to save money, I will maybe once Karen is there and she can give me pointers?”

[29] Doran responded by email dated January 29, 2014 that “If you want to proceed to the Committee of Adjustments yourself, that is fine. I just wanted you to be aware that if you want the firm to undertake any work, that might be at additional cost”.

[30] At a meeting shortly after March 2014, Davis met with two junior lawyers at the firm and the firm’s principal, David Costa. At the meeting, (i) one of the junior associates asked Davis “Are you the Plaintiffs or the Defendants”; and (ii) David Costa demanded a further $5,000 from the applicants to continue the matter.

[31] By September 2015, the settlement matters had still not been completed. Costa had engaged in some correspondence with plaintiffs’ counsel in the civil action and with the surveyor, attempting to address settlement issues.

[32] On September 28, 2015, Mr. Misir of the Costa firm wrote a letter to the applicants (to the attention of Davis), stating that:

(i) “[T]he firm has invested significant time corresponding to bring the parties together to move forward”; and

(ii) “In order for our office to continue on this file, with the surveyor’s demand for more funds, we await the $5,000, as explained to you both, to cover this disbursement and ongoing time our firm expends. Of course, any remaining balance in trust would be reimbursed to you”.

[33] Mr. Misir further stated in that letter that the matter was ongoing. He wrote:

This shall also confirm that once this matter concludes, it is your decision as to whether you wish to attend the Committee of Adjustments independently or have someone from our office prepare the documents to be filed with the Committee of Adjustments on your behalf.

[34] By letter dated October 1, 2015, Mr. Misir wrote to the applicants (again to the attention of Davis). In that letter:

(i) Mr. Misir took the position that as a result of the applicants dealing directly with the surveyor after the September 21, 2015 meeting, [3] “[w]e take your action as your instruction that you do not require our assistance beyond achieving the settlement”; and

(ii) Mr. Misir asked Davis to “[p]lease advise our office when your parents will attend our office to pick up their file”.

[35] While Davis continued to act on her own to address post-settlement matters, Costa did not close the file nor return trust funds to the applicants. Costa continued to act as lawyers of record, [4] and did not send any bill denoting the end of the retainer.

g) The applicants retain new counsel/animosity between counsel

[36] In April 2017, the applicants retained their current counsel to assist in bringing the matter to a close.

[37] In his affidavit, Aaron sets out in detail his evidence about alleged personal animosity between the principal of the current law firm acting for the applicants and the Costa firm.

[38] Once the applicants retained their current counsel, there was a lengthy dispute with Aaron over terms of providing the file, with Costa insisting on fees for the transfer. The file was eventually transferred upon payment by the applicants of $1,864.50.

[39] On November 14, 2017, the applicants’ counsel advised Costa of their intention to seek an assessment of the Costa account, and asked Costa to either provide a “final” statement of account or consent to an assessment.

[40] Aaron, on behalf of Costa, refused to do so, stating in an email dated November 15, 2017, that:

You may also be aware that you are currently facing yet another Law Society complaint by my client [Costa] for your flagrant and continued abuses a [sic] against my client.

The absurdity of your new false claim that your recent clients the Da Rochas did not years ago receive their accounts (which they certainly did), further compounds your mounting belligerence, which will no longer be tolerated.

Accordingly, after both your past LSUC sanctions for deceit, and continued patterns of abuses, I see no reason not to file a follow-up Law Society complaint, unless you wish to submit an apology by return email. In the meantime, I direct that you immediately stop harassing and contacting my client.

In the event of your threatened litigation, you should be aware that my client will be issuing a third party claim against you and your firm to recover any damages and costs sustained by my client.

Govern yourselves accordingly.

[41] The applicants issued their notice of application dated August 22, 2018, seeking the assessment of the Costa accounts.

Analysis

[42] There are three issues before the court:

(i) Are the bills prior to October 15, 2013 “interim” or “final” under the Act?

(ii) Is the October 15, 2013 bill “interim” or “final” under the Act?

(iii) If any of the bills are final, have the applicants established “special circumstances” to permit them to apply for an assessment of accounts past the limitation period?

Preliminary issues raised by the respondents

[43] As I discuss at paragraphs 6 to 8 above, I do not accept Costa’s preliminary objection that the evidence of Maria DaRocha should be considered “inherently suspect” because she was examined for discovery with an interpreter.

[44] I also reject Costa’s submission that the court should find that the present application is frivolous or brought in bad faith, based on the personal history between counsel. As demonstrated by the tone of Aaron’s letter, and the history of respective complaints about each other to the Law Society of Ontario, there is no love lost between David Costa and the principal of the applicants’ current law firm. However, it is the applicants who seek an assessment before the court, and there is no evidence that they are acting in bad faith.

[45] Accepting the Costa submissions would lead to the conclusion that clients who already paid a significant amount for litigation bills are in some form of co-operation with their new counsel to harass Costa due to some personal history between counsel when there is no evidence of any such client involvement. Such a position finds no support in the evidence and is not a reasonable inference to draw from the evidence before the court.

[46] If the applicants have become caught in the middle of a long-standing feud between counsel, that should not deprive the applicants of their rights. The Law Society of Ontario can address any professional misconduct issues if they arise, and counsel for the parties have made it clear by their history that they are prepared to engage in that process.

Issues 1 and 2: The finality of the bills

[47] There is no limitation period issue or special circumstances doctrine to consider if (i) bills delivered before October 15, 2013 are not final and (ii) the October 15, 2013 bill is not a final account. Section 3 of the Act permits an assessment if a final bill is not delivered.

[48] While I analyze the issues of the finality of (i) the bills delivered before October 15, 2013 and (ii) the October 15, 2013 bill separately below, I begin with a review of the applicable law as to the finality of bills under the Act, which is relevant to both of these issues.

a) The applicable law

[49] Section 3 of the Act provides that the client may obtain a requisition for delivery and assessment of a solicitor’s bill “within one month from its delivery”.

[50] A client is not required to seek an assessment from interim bills, which are to be assessed only with the final bill.

[51] In Shapiro, Cohen, Andrews, Finlayson v. Enterprise Rent-A-Car Co., [1998] O.J. No. 727 (C.A.) (“Shapiro”), the client terminated the retainer on May 9, 1994, with the law firm sending its last bill on June 6, 1994. The firm had sent 16 bills for its accounts totaling over $1 million USD (Shapiro, at paras. 4-5).

[52] In Shapiro (at para. 9), the solicitors submitted that “each monthly or periodic bill was final”, and subject to the applicable limitation period. Enterprise submitted (at para. 10) that “all bills prior to June 6, 1994 were interim bills”.

[53] The court held that the interim bills were not final. Labrosse J.A. conducted a thorough review of the applicable case law on the issue of finality of accounts, from which the following principles can be derived:

(i) It is a question of fact as to whether prior accounts are, in the circumstances, to be treated as final for the purposes of the limitation period for seeking assessment (Shapiro, at para. 11; citing an earlier decision of the Court of Appeal in Fellowes, McNeil v. Kansa Canadian Management Services Inc., [1997] O.J. No. 2655, (1997), 34 O.R. (3d) 301 (C.A.) (“Fellowes”), at para. 7;

(ii) A solicitor has no right to render a final bill until the transaction is completed (Romer v. Haslam, [1893] 2 Q.B. 286, at p. 294; cited in Shapiro, at para. 11);

(iii) Accounts will not be final when they are rendered in connection with what is essentially one matter and one dispute (Lang, Michener, Cranson, Farquharson & Wright v. Newell, [1985] O.J. No. 272 (H.C.), affirmed [1986] O.J. No. 2459 (C.A.); cited in Shapiro, at para. 12);

(iv) When solicitors perform services for a client in relation to the same matter over a long period of time, all of the bills must be considered as interim for the purpose of taxation, The fact that the client paid a bill and did not complain does not convert interim bills into final bills (as per Craig J. in Lang; as cited in Shapiro, at para. 12).

[54] Labrosse J.A. concluded that the earlier bills were interim. He held (Shapiro, at para. 13):

The distinction between interim and final bills is well entrenched in our law and should be retained. There is quite a body of jurisprudence confirming the distinction, and it includes two cases from this court: Re Fellowes and Lang, Michener. Over time, litigation has become more complicated and lengthy, and the practice of sending periodic bills makes good commercial sense. The issue is not whether a solicitor can send periodic bills -- that is beyond controversy -- but whether those bills are interim or final. Again, this is a question of fact. It must be recognized that some periodic bills can be final. A periodic bill can be final if it was the clear intention of both parties that the bill be final, the bill was one to which the solicitor had committed himself or herself and was one that can be assessed. [Emphasis added.]

[55] Labrosse J.A. upheld the decision of the motions judge, who relied on the following findings of fact to conclude that all of the bills (except the June 6, 2014 bill sent after the client terminated the retainer) were not final (Shapiro, at para. 14):

(i) “[A]ll accounts relate to one piece of litigation”;

(ii) “The accounts were not marked as final accounts”;

(iii) “The final account of June 6, 1994 represents but a fraction of the work which was performed in regards to this litigation over a period of eighteen months”; and

(iv) “All accounts relate to the same matter; they are part of a continuum”.

[56] Labrosse J.A. rejected the solicitor’s position that there was a compelling presumption that payment of a bill constitutes acceptance of its reasonableness, particularly when tendered on a regular basis and paid over the course of several years (Shapiro, at para. 19). Instead, Labrosse J.A. held that such a presumption was “overstated”. The court preferred the reasoning in Minkarious v. Abraham, Duggan, [1995] O.J. No. 3494 (Gen. Div.) (“Minkarious”), at para. 27, citing Ladner Downs v. Crowley (1987), 41 D.L.R. (4th) 403 (B.C. S.C.) at p. 428:

[T]he solicitors intended that unless the client took steps to tax during the retainer, he should have no such right. They insisted on payment of their accounts although they had only partially performed their entire contract and now raise payment as a defence to taxation. They cannot in good conscience do so. In that context, good conscience is the conscience which a court of equity imposes […]

[57] Similarly, in Price v. Sonsini, [2002] O.J. No. 2607 (C.A.) (“Price”), the court allowed the appeal from the motions court judge who had quashed a registrar’s order on the basis that four of the five bills had been delivered more than one month before the order and as such did not fall within s. 3 (b) of the Act. Sharpe J.A. held (at paras. 16 and 19):

[…] Interim accounts are necessary as a matter of commercial reality, even though it may be difficult to assess the value of legal services before the solicitor's work is completed. A rule that required clients to move for immediate assessment of interim accounts would force clients into the invidious position of straining, if not rupturing, the solicitor-client relationship before the retainer has ended. Clients should not be forced to choose between harming the solicitor-client relationship and foregoing the right to have an interim account assessed. Rather, under s. 3, clients should be entitled to move for an assessment of an interim account within one month of delivery of the final account. […]

Public confidence in the administration of justice requires the court to intervene where necessary to protect the client's right to a fair procedure for the assessment of a solicitor's bill. As a general matter, if a client objects to a solicitor's account, the solicitor should facilitate the assessment process, rather than frustrating the process. See Orkin, The Law of Costs, 2nd ed. (2001), at p. 3-13. In my view, the courts should interpret legislation and procedural rules relating to the assessment of solicitors' accounts in a similar spirit. As Orkin argues, "if the courts permit lawyers to avoid the scrutiny of their accounts for fairness and reasonableness, the administration of justice will be brought into disrepute". 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. See Krigstin v. Samuel (1982), 31 C.P.C. 41 (Ont. H.C.J.) and Minkarious v. Abraham, Duggan (1995), 27 O.R. (3d) 26 (Gen. Div.) at 55-57. […] [Emphasis added.]

[58] I now apply the above principles to the issues in the present application.

b) The finality of the bills before October 15, 2013

[59] As I note above, Costa delivered approximately 40 bills to the applicants over the course of an eight-year retainer. I find that all of the bills prior to October 15, 2013 are interim accounts, which are not subject to individual assessment.

[60] I rely on the factors set out in the case law above and apply them to the present case. In particular, I find that:

(i) All of the interim bills were rendered with respect to the same litigation;

(ii) The services were performed over a long period of time in relation to the same matter;

(iii) As such, the fact that the applicants paid their bills does not convert those bills into final bills; and

(iv) None of those interim bills were sent with any intention to be final, with no such indication on the bill nor any evidence that such an intent could have existed given the lengthy ongoing litigation.

[61] I rely on the reasoning and factors set out in Shapiro and Price (and the cases cited therein), which are determinative of this issue given the uncontested facts I summarize above.

c) The finality of the October 15, 2013 bill

[62] For the following reasons, I also find that the October 15, 2013 bill was not the “final” bill. While it became the “last” bill sent, a subsequent decision by a client to terminate a retainer does not convert an interim bill sent years earlier into a final bill that precludes assessment.

[63] In particular, I rely on the following evidence:

(i) The October 15, 2013 account was not marked as a final bill;

(ii) There was no intention on either the part of Costa or the applicants that the bill would be final. Unlike in Shapiro, the applicants in the present matter did not terminate the retainer before receiving the last bill. To the contrary, the last bill was sent for work done to prepare for a trial and then towards a settlement. Work remained to be done to implement the settlement;

(iii) After the applicants raised concerns about costs and billing, Costa advised the applicants that Costa would not charge them if the applicants did the work themselves. However, Costa was clear that they would charge the applicants for any work they had to do in the file. In other words, Costa was remaining as solicitors on the file but with an unknown future scope of work; and

(iv) Costa had not completed their work on the file when they sent the bill. David Costa and Mr. Misir later sought additional fees for work Costa did perform in the file. At the meeting, David Costa claimed the firm had continued to do work on the file for which it had not been paid.

[64] In effect, Costa never closed the file. They kept the file open and never sent the applicants a final bill. Costa only took the position that the October 15, 2013 bill was final when the applicants’ new counsel requested a “final bill” for transferring the file, almost four years later.

[65] Costa submitted that even if the October 15, 2013 bill was not the “final” bill, the September and October 2015 correspondence (i) setting out Costa’s position that they were no longer retained and (ii) asking the applicants to pick up their files, “converted” the “last” bill of October 15, 2013 into a “final” bill. I do not agree.

[66] The correspondence did not terminate the Costa retainer. Costa remained as counsel of record for the applicants until present counsel was retained. Instead of choosing to remove themselves as lawyer of record, Costa told the applicants to pick up the file because “we take your action as your instruction that you do not require our assistance beyond achieving the settlement”. Regardless of whether the applicants still wanted or needed the “assistance” of Costa, I do not find that the solicitor-client relationship was terminated by the correspondence. Costa chose to stay as lawyer of record for the applicants, and did not terminate the retainer.

[67] In any event, even if Costa had terminated the retainer and been removed as lawyers of record, it would still not “convert” an interim bill into a final bill. Lawyers closing a file should send a final bill to their clients, setting out the final steps (if any) taken in the file and addressing the balance remaining in the client’s trust ledger. Simply telling a client that the lawyer considers himself or herself not retained, or being removed from the record, does not convert an interim bill sent years earlier into a final bill for the purposes of the applicable limitation period for an assessment under the Act.

d) Conclusion on finality issues

[68] For the above reasons, I find that Costa did not issue a final bill, either with respect to bills before October 15, 2013 or for the October 15, 2013 bill.

[69] Consequently, on this basis alone, I grant the application for an assessment under s. 3 of the Act, as the limitation period for an assessment under s. 4 of the Act did not apply.

Issue 2: Special circumstances

a) The relevant limitation period and retention of the doctrine of the special circumstances in light of the Limitations Act, 2002.

[70] In the present circumstances, the applicable limitation period is not directly relevant to issues before the court. If either (i) the bills delivered before October 15, 2013 or (ii) the October 15, 2013 bill is considered the final bill (or even if the September and October 2015 letters convert the October 15, 2013 bill into a final bill), then the assessment requested was sought outside both the twelve-month period under s. 4 of the Solicitors Act and the two year limitation period under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24 (the “Limitations Act”) so that the doctrine of special circumstances would then have to be considered.

[71] Nevertheless, I briefly set out the law on the limitation period.

[72] Under Guillemette v. Doucet (2007) 68 O.R. (3d) 90 (C.A.) (“Guillemette”), the two-year limitation period under s. 4 of the Limitations Act applies since s. 19 of that Act only preserves other limitation periods if expressly set out in the schedule to that Act, and the Solicitors Act is not so designated. Consequently, the two year limitation period “trumps” the 12 month period in s. 4 of the Solicitors Act.

[73] Further, the court in Guillemette also confirmed that the doctrine of “special circumstances” under s. 4 of the Solicitors Act [5] still operates to extend the limitation period to seek an assessment. The court relied on s. 20 of the Limitations Act which maintains any provision in other legislation that extends, varies or suspends a limitation period, even if that limitation period is no longer applicable under s. 19(1) of the Limitations Act (Guillemette, at paras. 24-25, 32-35).

[74] I now address the doctrine of special circumstances in the event it is found that ss. 4 or 11 of the Act apply (which I do not accept for the reasons I set out above).

b) The applicable law of the doctrine of special circumstances

[75] The applicable principles as to the doctrine of special circumstances are:

(i) Special circumstances include any circumstances of an exceptional nature affecting the matter of costs or the liability of a solicitor’s client which a judge, in the exercise of judicial discretion in each particular case, may consider to justify a taxation (Rooney v. Jasinski, [1952] O.R. 869 (C.A.) at 875; cited in Minkarious);

(ii) Special circumstances are not required to be “unusual”. Rather, the circumstances must be “particular” such that assessment is appropriate outside the two year limitation period (Tuckey v. Ledroit, at para. 8);

(iii) No single factor needs to be a special circumstance by itself. The totality of the circumstances must be considered (Davies Ward & Beck v. Union Industries Inc. (2000), 48 O.R. (3d) 794 (C.A.) (“Davies”), at para. 21);

(iv) Special circumstances can include the number of accounts delivered and whether delivered over a lengthy period of time (Davies, at para. 20); and

(v) Payment of the accounts is not a determinative factor, but can be considered by the court (Davies, at paras. 20-21).

[76] Costa submits that the court should not order an assessment unless there is evidence before the court raising a concern that the quantum of fees charged was excessive. Costa relies on the decision of Roy Wise v. Colaco, 2015 ONSC 5801 (“Wise”).

[77] However, Wise does not support that position. In Wise, the court decided an action for fees in which the reasonableness of the account was the issue before the court, taking into account the time spent, complexity of the matter, the importance of the matter to the client, the amount involved and the results achieved (at para. 29). The issue was not whether to exercise special circumstances to allow an assessment.

[78] I do not agree that it is the role of the court on an application for an assessment to pre-determine whether the fees sought appear unreasonable, as a pre-condition to grant an assessment. The full record of what would be required to assess costs is not before the court, and a pre-determination would raise the risk of conflicting decisions if the matter were sent for assessment.

[79] Costa’s submission that an apparent unreasonable fee is a precondition for an assessment is not supported by the case law or the general principles discussed above.

[80] Costa submits that the court should not find on the evidence that their fees were unreasonable, based solely on the quantum claimed in litigation ($600,000) and the fees charged (approximately $50,000).

[81] Even if a fee appears reasonable on its face (on which I make no determination in this matter as there is no means to determine the strength or complexity of the claim against the applicants), the fees may still be excessive if there are concerns raised in the application record, such as number of lawyers on a file, numerous docket entries for review of the file, or other factors which suggest that the fees charged were not appropriate.

[82] I reject Costa’s submission that “the Applicants are only relying on their need to request a discount”. On the evidence, the following “particular” or “exceptional” circumstances exist to warrant an assessment, even if the applicants are outside the limitation period to bring an assessment as of right under the Act:

(i) Costa delivered 39 bills to the applicants over the course of the retainer;

(ii) The litigation took place over a ten-year period;

(iii) There were 11 lawyers who worked on the file, many of whom billed the client for their review of the file;

(iv) The applicants were not advised in advance of the hourly rates of new lawyers who assumed carriage of the file;

(v) At a meeting late in the litigation, junior counsel did not know whether the applicants were the plaintiffs or defendants;

(vi) The applicants were informed by a junior lawyer at the Costa firm that junior lawyers were under pressure from management to bill for unnecessary work; and

(vii) The last bill of October 15, 2013 did not state that it was a final account. Costa continued to be retained in the matter and later requested an additional retainer for fees for further work, even though the applicants attempted to address post-settlement issues on their own to avoid costs.

[83] Under these circumstances, I am satisfied that on the totality of the evidence, there are special circumstances justifying an assessment, even though the applicants paid their bills. As in Davies, the payment of the bills does not preclude an assessment (Davies, at paras. 20, 23).

[84] For the above reasons, I find that if the applicable limitation period were to apply, the doctrine of special circumstances would be satisfied.

Order and costs

[85] For the above reasons, I grant the application and order that the Costa accounts be assessed. I order Costa to deliver to the applicants all accounts rendered to them from 2005 onwards.

[86] The applicants are entitled to costs of their application. The applicants sought $12,006.26 on a partial indemnity scale, and $16,639 based on an offer to settle served nine days after the notice of application was issued, asking for consent to the application, with partial indemnity costs up to the date of the offer and substantial indemnity costs thereafter.

[87] Costa sought costs of $27,535 on a partial indemnity scale and $39,095.50 on a substantial indemnity scale based on their offer to dismiss the application on a no costs basis.

[88] In Corona Steel Industry Private Ltd. v. Integrity Worldwide Inc., 2018 ONSC 4932, Cavanagh J. reviewed the law on offers made without an element of compromise. He concluded that the court was not required to strictly follow Rule 49.10 in such cases. He held (at para. 18):

IWW submits that Corona’s offer to settle was not a compromise, but a request for capitulation. An offer to settle need not contain an element of compromise and a plaintiff’s offer to settle for 100 per cent of a liquidated claim may result in an award of substantial indemnity costs. However, the absence of an element of compromise is a fact that the court may consider in exercising its discretion to “order otherwise”: Data General (Canada) Ltd. v. Molnar Systems Group Inc. (1991), 6 O.R. (3d) 409 (C.A.). The court should depart from the prima facie costs consequences in rule 49.10 only where, after giving proper weight to the policy of the rule and the importance of reasonable predictability and the even application of the rule, the interests of justice require a departure: Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd. (1987), 58 O.R. (2d) 773; Jarbeau v. McLean, 2017 ONCA 115; additional reasons 2017 ONCA 294.

[89] I adopt the reasons above.

[90] In the present case, there was no element of compromise by either side in their settlement offers. Each party in its offer sought the capitulation of the other from the outset of the application. This is not a claim for liquidated damages, but rather an issue of whether an assessment is appropriate, which both parties reasonably contested before the court. I find no egregious behaviour in the conduct of the litigation by either side.

[91] On that basis, I am not prepared to apply Rule 49.10 to award substantial indemnity costs to the applicants from the date of their offer to settle, made approximately one week after issuing the notice of application.

[92] As for the quantum of fees sought, I agree with both parties that the matter was complex, requiring legal research and preparation and review of affidavit evidence. The issues raised as to the finality of solicitors’ accounts and special circumstances were important to the parties. On that basis, I find that the $12,006.26 amount sought by the applicants reflects the amount that an unsuccessful party would reasonably expect to pay, as reflected by the bill of costs provided by Costa which was for more than twice that amount.

[93] For the above reasons, I grant the application and order the respondents to pay $12,006.26 (inclusive of taxes and disbursements) to the applicants within 30 days of this order.

GLUSTEIN J. Date: 20181203

[1] (the date of the last bill signed by Teixeira) [2] The date of the pre-trial conference is referred to in an entry from the September 10, 2013 bill. [3] The September 21, 2015 meeting between Mr. Misir and Davis is referenced in both the September 28, 2015 and October 1, 2015 letters. There is no direct evidence on this point but I accept, for the purposes of these reasons, that the meeting took place. [4] In fact, Teixeira was listed as lawyer of record with his new address after he left the Costa firm, even though Costa acted for the applicants after Teixeira’s departure from the firm and throughout the litigation until the applicants retained their current counsel. [5] Under s. 11 of the Solicitors Act no limitation period is raised but the provision allows the court to order an assessment if a bill is paid, “if the special circumstances of the case, in the opinion of the court, appear to require the assessment”. On the basis of the courts’ conclusions in Shapiro, Price, and the cases cited therein, payment of interim bills would not, in any event, preclude an assessment.