COURT FILE NO.: CV-19-1214-0000
DATE: 2019 11 18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GLUCKSTEIN PERSONAL INJURY LAWYERS
Jonah Waxman, for the Applicant
Applicant
- and -
ELIZABETH VERLAAN-COLE
R. Lee Akazaki and Mahdi Hussein, for the Respondent
Respondent
HEARD: July 24, 2019
REASONS FOR JUDGMENT
Fowler Byrne J.
[1] The Respondent Elizabeth Verlaan-Cole (“the Client”) seeks an Order declaring that her Contingency Fee Retainer Agreement (“CFA”) with the Applicant Gluckstein Personal Injury Lawyers (“Gluckstein”) was terminated improperly and as a result, she is not liable to pay any fees or disbursements in respect of that agreement. She also seeks a stay of the reference to an assessment officer.
BACKGROUND
[2] The Client was involved in a motor vehicle accident on December 10, 2008. She retained Lorne Farovitch of the Capp, Shupak Law Firm to commence an application for statutory accident benefits and to commence a civil action for damages, identified as Court File No. CV-10-405720 in Toronto. She became dissatisfied with Mr. Farovitch’s services and on May 29, 2012 decided to represent herself.
[3] On January 8, 2014, the Client retained Gluckstein and signed the CFA. The relevant provisions of the CFA are as follows:
I acknowledge being advised that the provisions of the common law and the Rules of the Law Society of Upper Canada govern the relationship between Lawyers and their clients and these protections are applicable to the contingency fee agreement.
I understand that I am giving GLUCKSTEIN PERSONAL INJURY LAWYERS P.C. the authority to incur disbursements on my behalf in order to advance my case. I understand that upon settlement of my case that I will be responsible to repay all incurred disbursements, and that disbursements are a first charge on any settlement proceeds. Disbursements include such things as photocopying, scanning, medical reports, expert opinions, etcetera.
I understand that the Lawyer shall not recover an amount for fees greater than the amount of damages awarded to me.
I understand that this contingency agreement means that if my case is successful I am required to pay GLUCKSTEIN PERSONAL INJURY LAWYERS P.C. a percentage of my award representing their fees for service plus all disbursements as determined by this agreement.
I acknowledge and agree that the legal fees will be 33% of the total amount recovered plus applicable taxes and disbursements not recovered. The 33% of the total amount will be calculated on the amount recovered for damages excluding amounts that are separately specified as being in respect of costs and disbursements.
I acknowledge being advised of the availability of the services of the Superior Court of Justice to have this account assessed. Applications for assessment must be made within 30 days of receiving the final bill.
I acknowledge and agree that should I terminate the services of GLUCKSTEIN PERSONAL INJURY LAWYERS P.C., by for example discontinuing my claim or choosing another law firm to represent me, that I will pay their full account based on an hourly rate.
I understand that GLUCKSTEIN PERSONAL INJURY LAWYERS P.C. is free to terminate this retainer agreement should they have cause to do so. Specifically I understand that cause to terminate this agreement can include, but is not limited to, such things as reaching a fundamental disagreement with GLUCKSTEIN PERSONAL INJURY LAWYERS P.C. with regard to the direction of my case or my failure to cooperate or communicate with all persons handling my case. Should GLUCKSTEIN PERSONAL INJURY LAWYERS P.C. wish to terminate this agreement, where it is possible to do so, they will advise me of their intention in writing and I will be responsible to pay for their services based on an hourly rate.
[4] The Client maintains that during the meeting in which the CFA was signed, she was told that if she did not recover anything in her legal proceedings, she would not have to pay any fees or disbursements. Otherwise, she claims the CFA was not explained with much detail. She claims she understood that Gluckstein could not recover fees before she did. The solicitor with carriage, Ms. Jan Marin (“Marin”), disputes this and claims she reviewed the CFA in detail with the Client, as was her practice.
[5] Marin maintains that the solicitor-client relationship started to experience strain in 2015. They disagreed over the scope of the economic loss report as well as the nature of the medical legal expert reports the firm could acquire. Marin believed that the variety of financial losses that the Client wanted to claim were too remote. Marin states that the Client accused Marin of failing to protect her in the advancement of these claims at her discovery.
[6] I have reviewed some of the correspondence between the Client and Gluckstein. From this, it is clear that in March 2015, the Client expressed dissatisfaction with the accounting expert hired on her behalf. She stated, “Remember, I am the one who is being forced to depend on Collins Barrow’s shoddy work, using an inappropriate model, to explain my business in discovery and trial. I will not stand for it.” At the end of the email she states, “I advise that no discovery dates be set until we have the financials completed by an accounting firm that takes its accountability to all clients seriously.”
[7] In July 2015, in correspondence to Angela at Gluckstein, the Client states that she believes she was poorly represented at discovery. In the midst of this email she states, “It is time to begin taking care of me Angela”.
[8] In August 2015, she wrote to Angela again stating, “Everything I have experienced so far in the legal system is a lack of systematic approach by all those involved and then a convenient, blaming of the client in the court.” She then goes on to state that the need for a new economic loss report, “…was caused by all of you – not planning and controlling your work.”
[9] In October 2015, she wrote to Angela again citing Gluckstein’s failure to follow through with promises. She also stated, “Do you know the definition of stupid? It is doing the same thing over and over and expecting different results. I am not stupid. Are you?”
[10] In January 2017, the client sent an email to Marin stating, “I am also deeply scared that you have completely lost touch with our level of suffering.”
[11] In August 2017, Marin advised the Client that they were having difficulties establishing the necessary medical evidence and how this would impact their ability to prove her claim at trial. Marin claims that the Client was not receptive to this information. The Client was also advised that Marin was soon starting a maternity leave.
[12] Following this communication in August 2017, Marin confirmed their conversation in writing. This letter, dated August 14, 2017, stated as follows:
We commenced the call with a discussion regarding your confidence in the Gluckstein Firm continuing as your representative. I explained the importance of trust in the lawyer-client relationship as it is an essential component. You confirmed that you have no intention of seeking alternative counsel, and that you continue to have trust in our services. I encouraged you to seek an independent legal opinion if you have any concerns or doubts, or if you would like a second opinion, as it is your right to do so. You expressed your intention to “follow our advice”, understanding key decision making must nevertheless be made by you. We also discussed the necessity of reasonably prompt responses when giving or receiving instructions.
[13] The Client maintains that she underwent some difficult years between 2016 and 2018. Not only was she suffering the effects of her motor vehicle accident, but she was diagnosed with an unrelated tumor in August 2017, which was surgically removed in September 2017. Her elderly mother also broke her hip and required multiple hospital attendances. Her mother eventually passed away. The Client maintains that during this time she had no communication with Gluckstein that would indicate that their relationship had broken down.
[14] Gluckstein maintains that they were in contact with the Client through phone calls and emails during this time. Despite that, the Client did indicate her concerns that she was not being adequately represented or that she did not have confidence in the approach being taken by the law firm.
[15] Mr. Gluckstein, the principal who maintained carriage of the file while Marin was on maternity leave, also experienced some difficulties with the Client. In an email to Mr. Gluckstein dated May 6, 2018, she stated,
At the time of the mediation you referred to Dr. Rundle’s assessment without regard for Dr. Wong’s diagnosis. The weight you appeared to be placing on Dr. Rundle’s assessment has been a concern to me ever since. This example leads me to the conclusion that you need a full briefing on the history of by health condition, the interventions which have been made by health professionals and the complex unresolved dynamic of neuromuscular functioning in my body ever since the accident.
I am at the point where I need an advocate to speak on my behalf because I am not heard. ….
[16] From October 22, 2018 to November 12, 2018, the Client and various members of the Gluckstein law firm exchanged e-mails in order to set up a meeting to prepare for the upcoming pre-trial in March 2019. The Client was unable to go to Gluckstein and asked that the appointment take place at her residence at a certain time. The lawyers from Gluckstein were unable to meet on the day and time that the Client wanted. Eventually an appointment was set up for November 12, 2018.
[17] On the morning of the appointment, the Client wrote to Marin and asked for a written status report on her accident benefits claim in advance of their meeting. She asked for specific details. She indicated that the written report would be the basis of their meeting. Marin has indicated in her Affidavit that she interpreted that request, especially in the context of earlier discussions, as indicative of the client’s desire to assess their account and take her file elsewhere. Accordingly, Marin responded by e-mail to indicate that the meeting could not proceed and asked the Client to call her. When the Client responded by asking for a written report again, Marin repeated her request for the Client to call her. After a further exchange, Marin sent the following e-mail:
Hello Elizabeth,
I would very much prefer to discuss this following rather than send by email but you seem not to be up for a call.
After much consideration, Charles and I have decided that the best course of action is to part ways. We are not able to satisfy your requests. It is very clear that your relationship with the Gluckstein firm has suffered irreparable damage. The purpose of today’s meeting was to review the status of your file and discuss this breakdown in relationship. However, you indicated you required a full breakdown and explanation of your accident benefits claim prior to proceeding with such a meeting. I have drafted a letter detailing some of the major disagreements, which is attached. A copy f this letter will follow by registered mail tomorrow.
We are fully prepared to help you obtain new counsel should you wish for that assistance. I know this is certainly not what you want to hear but we firmly believe it is for the best for all concerned.
[18] The Client received a letter dated November 12, 2018 outlining the grounds on which Gluckstein felt it was appropriate to terminate their retainer agreement. Gluckstein maintains that they could not agree on the direction that the Client’s case should take. They stated that at times, the Client was difficult to contact or not readily able to provide instruction or sign authorizations. Gluckstein stressed that they had significant causation issues in her tort action and that they have had difficulty obtaining a medical opinion that would support her claim. The Client was very particular about what expert she would meet with. They also had difficulties agreeing on the Client’s economic loss as result of the accident, and the Client was unsatisfied with the expert Gluckstein retained. Gluckstein also maintains that the Client would not accept their opinion with regards to the unpredictable nature of jury trials. With respect to her accident benefits claim, Gluckstein did not believe that she would be found as having a catastrophic impairment that would allow her accident benefits to continue.
[19] Gluckstein had hoped that the Client would agree to sign a document ending their retainer agreement and that they would file a Notice of Intention to Act in Person at that time. At the time of this conversation, a pre-trial conference was scheduled for March 2019 and a three-week jury trial was set to commence on May 20, 2019. However, the Client would not agree to sign the document. According to the Affidavit filed by Mr. Upenieks, counsel for Gluckstein in these proceedings, the client has also made allegations of professional misconduct as against Gluckstein.
[20] After a number of attendances, Gluckstein obtained an Order from Dunphy J. removing them as solicitors of record on May 7, 2019. The Client maintains that Gluckstein was initially not successful because of the pending trial date and the large account left with her, but eventually it obtained the Order. Gluckstein maintains that the motion was adjourned on three occasions to allow the Client time to speak with and retain counsel. The Client states that she has attempted to find other counsel, but she states they are hesitant to take her case due to the large outstanding Gluckstein invoice.
[21] Gluckstein was able to vacate the pre-trial conference date and trial dates in order to allow the Client to retain counsel to represent her.
[22] On January 29, 2019, Gluckstein sent the Client an interim account wherein they charged the Client $77,474.21 in fees, plus H.S.T., and $43,106.66 in disbursements, plus H.S.T., for a total of $121,410.87. Gluckstein subsequently applied for an Order for Assessment of this account. This was originally scheduled for May 31, 2019. The assessment was then adjourned to June 21, 2019 to allow the client an opportunity to speak with a lawyer, and then adjourned again to July 26, 2019.
ISSUES
[23] The following issues must be determined on this motion:
a) Did Gluckstein terminate the CFA and withdraw their representation of the Client without just cause and in breach of the CFA?
b) Is Gluckstein entitled to their fees and disbursements in relation to their representation of the Client?
c) Is the reference to the assessment officer improper or premature?
ANALYSIS
I. Issue 1: Termination of the CFA
[24] The CFA allows Gluckstein to terminate the CFA “should they have cause to do so.” Examples of “cause” are outlined in para. 22 of the CFA, as recited herein.
[25] Rule 3.7-1 of the Rules of Professional Conduct of the Law Society of Ontario states, “A lawyer shall not withdraw from representation of a client except for good cause and on reasonable notice to the client.” The CFA reflects this rule.
[26] Further, Rule 3.7-2 of the Rules of Professional Conduct states, “Subject to the rules about criminal proceedings and the direction of the tribunal, where there has been a serious loss of confidence between the lawyer and the client, the lawyer may withdraw.” Commentary [1] of Rule 3.7-2 states:
A lawyer may have a justifiable cause for withdrawal in circumstances indicating a loss of confidence, for example, if a lawyer is deceived by their client, the client refuses to accept and act upon the lawyer's advice on a significant point, a client is persistently unreasonable or uncooperative in a material respect, there is a material breakdown in communications, or the lawyer is facing difficulty in obtaining adequate instructions from the client. However, the lawyer should not use the threat of withdrawal as a device to force a hasty decision by the client on a difficult question.
[27] I have reviewed the record provided by both parties. There is ample evidence that the Client was critical of the Gluckstein firm and did not believe they were adequately representing her. It is clear that she had lost confidence in their ability to represent her to the standards that she demanded. She did not agree with their advice and would not accept the perceived deficiencies with her case. Accordingly, I find that Gluckstein had good cause to terminate the CFA.
[28] In addition, this issue has already been determined by Dunphy J. when he made an Order on May 7, 2019 removing Gluckstein as solicitors of record for the Client. If Dunphy J. had felt the evidence did not support the termination of the relationship for good cause, he would not have made the order removing Gluckstein as solicitors of record. The pre-trial conference and trial dates were adjourned so as to prevent any immediate prejudice to the client.
[29] I have no evidence that the client has appealed the Order of Dunphy J. Accordingly, the solicitor-client relationship as between Ms. Verlaan-Cole and the Gluckstein Personal Injury Lawyers has been properly terminated and this issue will not be re-examined.
II. Issue 2: Validity and Enforceability of the CFA
[30] Pursuant to s. 23 of the Solicitors Act, R.S.O. 1990, c. S.15, questions regarding the validity or effect of a contingency fee agreement are to be decided by this court.
[31] The Client maintains that Gluckstein improperly terminated the CFA and accordingly, is entitled to no fees or disbursements. I have already determined that the termination of the solicitor-client relationship was proper. Accordingly, this argument must fail.
[32] The right of Gluckstein to collect its hourly fees and disbursements are then dependant on the interpretation of the CFA and whether the provisions of the CFA permit Gluckstein to seek its full hourly fees and disbursements in these circumstances.
a. Payment of Disbursements
[33] The Client authorized Gluckstein to incur disbursements on her behalf in order to advance her case. She indicated that she understood that she would be responsible to pay for these disbursements, and that these charges would be a first charge on her settlement funds (see s. 6 of the CFA). It appears clear that she is responsible for any disbursements incurred whether or not there was a settlement.
[34] This is consistent throughout the CFA. If the solicitor-client relationship is terminated by the Client, para. 20 of the CFA clearly states that the Client is responsible for Gluckstein’s “full account based on an hourly rate.” A “full account” implicitly means the fees, plus disbursements and taxes.
[35] Even if the solicitor-client relationship is terminated by Gluckstein, para. 22 of the CFA states that the Client will be responsible for Gluckstein’s “services based on an hourly rate.”
[36] The client argues that “services” means only the lawyer’s fees. I disagree. The terms “services” is not defined in the CFA, but it is defined in the Solicitors Act, which governs all retainer agreements, including contingency fee agreements.
[37] Section 15 of the Solicitors Act states:
In this section and in sections 16 to 33,
“services” includes fees, costs, charges and disbursements.
[38] Section 28.1 of the Solicitors Act deals with contingency fee agreements, which is covered by the definition in s. 15. It also stands to reason that the “services” provided by Gluckstein include the hiring of experts and incurring of charges to advance the Client’s case, as contemplated in para. 6 of the CFA.
[39] Accordingly, I find that Gluckstein is entitled to seek its disbursements in the forthcoming assessment.
b. Payment of Legal Fees
[40] Section 7 of Contingency Fee Agreements, O. Reg. 195/04 under the Solicitor Act states:
Despite any terms in a contingency fee agreement, a solicitor for a plaintiff shall not recover more in fees under the agreement than the plaintiff recovers as damages or receives by way of settlement. (emphasis added)
[41] The CFA at issue before me contains that very provision in para. 7. Despite that, in paras. 20 and 22 of the CFA, it also states that upon the termination of the solicitor-client relationship (by the client under s. 20 and by the firm under s. 22), Gluckstein can charge for their services based on an hourly rate. It does not specify any limitation as set forth in s. 7 of the Contingency Fee Agreements.
[42] In order to determine this issue, the principles of contract interpretation must be considered. In the Supreme Court of Canada case of Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, the court held at para. 47:
… the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding”… . To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning:
No contracts are made in a vacuum: there is always a setting in which they have to be placed. . . . In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating: (Reardon Smith Line, at p. 574, per Lord Wilberforce)
[43] While no direct evidence was provided to the court on this issue, it can be assumed that it was Gluckstein’s intention that its standard form CFA would be in conformity with the Solicitors Act and its regulations. Many of the exact terms from the legislation and regulation are repeated verbatim in the CFA.
[44] Viewing the CFA as a whole, I cannot interpret the CFA to mean that any fees charged under ss. 20 and 22 of the CFA would be in violation of s. 7 of the Contingency Fee Agreements. Gluckstein cannot carve out ss. 20 and 22 of the CFA and maintain that they are not governed by the legislation, thereby permitting them to advance a claim for legal fees before the Client has been awarded any damages or entered into a settlement. The entire CFA is governed by the regulations, not just those paragraphs dealing with payment if they remain on the record. Nothing prohibits Gluckstein from changing the method of calculating their fees when they cease acting, but they are not permitted to contract out of s. 7 of the Contingency Fee Agreements in the event they cease acting for the Client.
[45] The Client has not yet been awarded any damages or entered into a settlement agreement. Therefore, it is premature for Gluckstein to advance a claim for its fees, in violation of its own CFA and of s. 7 of the Contingency Fee Agreements. Accordingly, I find that Gluckstein is not entitled to seek its fees at the forthcoming assessment, as the issue is premature.
III. Issue 3: Is the Assessment Premature?
[46] Given my reasons, the assessment may proceed with respect of the disbursements, but is premature with respect to the fees to be charged. At this juncture, there has been no determination of what damages the Client will receive. Once that is determined, then the assessment of fees can proceed on the understanding that s. 7 of the Contingency Fee Agreements must be adhered to.
SEALING OF MOTION MATERIALS
[47] Given the nature of the privileged evidence set forth herein, it is appropriate that the motion materials be sealed. The Client should not be prejudiced in her ongoing action.
CONCLUSION
[48] For the reasons described herein, I make the following orders:
a) The termination of the solicitor-client relationship between Gluckstein Personal Injury Lawyers and Elizabeth Verlaan-Cole, as set forth in the Contingency Fee Retainer Agreement, dated January 8, 2014, was proper;
b) Gluckstein Personal Injury Lawyers is entitled to proceed with the assessment of the disbursements portion of their accounts immediately;
c) The assessment of the fees portion of the accounts of Gluckstein Personal Injury Lawyers is stayed until which time the action identified as Court File No. CV-10-40570 (Toronto) is settled or adjudicated;
d) In the event the fees portion of the accounts of Gluckstein Personal Injury Lawyers are assessed, no assessment value of the fees will exceed the amount recovered by Elizabeth Verlaan-Cole in damages at trial or by settlement;
e) The following court documents in this matter will be forthwith sealed: Motion Record of Respondent, dated July 11, 2019; Factum of the Moving Party, dated July 11, 2019; Supplementary Factum of the Moving Party, dated July 18, 2019; Amended Notice of Motion, amended July 11, 2019; Responding Affidavit of Jan Marin, sworn July 17, 2019; Responding Motion Record, dated July 17, 2019; and Responding Factum of the Applicant, July 12, 2019; and
f) The parties are encouraged to resolve the costs of this motion on their own. If they are unable to do so, both parties shall serve and file their written costs submissions, limited to two pages, double spaced and single sided, exclusive of a Costs Outline and case law, no later than 4:30 p.m. on December 5, 2019. Responding submissions, with the same size restrictions, are to be served and filed on or before 4:30 p.m. on December 19, 2019.
Fowler Byrne J.
Released: November 18, 2019
COURT FILE NO.: CV-19-1214-0000
DATE: 2019 11 18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GLUCKSTEIN PERSONAL INJURY LAWYERS
Applicant
- and -
ELIZABETH VERLAAN-COLE
Respondent
REASONS FOR JUDGMENT
Fowler Byrne J.
Released: November 18, 2019