Court File and Parties

COURT FILE NO.: CV-16-565264

DATE: 20190417

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Michael Collinson, Applicant

AND:

Chitiz Pathak LLP, Respondent

BEFORE: Pollak J.

COUNSEL: Michael Collinson, self-represented Applicant/Respondent Alastair McNish, for the Respondent/Appellant

HEARD: January 29, 2019

ENDORSEMENT

[1] This is an appeal from a Master’s Order allowing an assessment of 13 of 23 accounts for legal services which the Appellant Chitiz Pathak LLP provided to the Respondent Michael Collinson between 2011 and 2014. The Respondent’s position before the Master was that the Appellant unilaterally took monies from his settlement funds, which were held in trust, to pay legal accounts which the Appellant had issued but not yet given to him. The Respondent submitted that he did not accept or approve these account payments. He therefore asked the Master to order an assessment of these accounts.

[2] The Master held that Mr. Collinson rebutted the presumption that paid accounts are excluded from assessment because he objected to payment of invoices from the settlement proceeds. The Master found that there were “special circumstances” permitting an assessment of the accounts because it was reasonable for Mr. Collinson to believe his litigation matters were one ongoing retainer, and because it was difficult for him to challenge an account as he did not want to alienate his lawyers.

[3] The Appellant’s position is that the Master’s findings on the payment of the accounts were factually and legally incorrect. It is submitted that the 13 accounts were paid more than 2 years earlier.

[4] The standard of review of the Master’s decision is set out in Housen v. Nicolaisen, 2002 SCC 33, [2002] 2. S.C.R. 235, and Guillemette v. Doucet, 2007 ONCA 743, 88 O.R. (3d) 90, as:

• On a pure question of law, the basic rule with respect to the review of a trial judge's findings is that an appellate court is free to replace the opinion of the trial judge with its own. Thus the standard of review on a question of law is that of correctness (para. 8).

• On questions of fact the Court should not reverse findings of fact and inferences of fact unless there is “palpable and overriding error” (paras. 10 and 25).

• For questions of mixed fact and law the appellate court should defer to the judge of first instance’s findings on the standard of palpable and overriding error unless it is clear that the trial judge made some extricable error in principle with respect to the characterization of the standard or its application, in which case the error may amount to an error of law (para. 37).

[5] The Appellant submits that the Master relied on a factual finding that “most of the accounts were paid out of settlement funds”. The Appellant submits that this factual finding and its consideration by the Master was an error as it was an irrelevant consideration.

[6] The Respondent submits that there was no error in the factual finding that “most” accounts were involuntarily paid out of settlement funds. Of the monies paid from the 23 accounts, 58% of the monies were paid from settlement funds. Of the $301,363.64 paid to the Appellant, the Respondent alleges that a total of $173,983.90 was “misappropriated” from settlement funds. There were two settlements, one in July or August of 2012 and a second in November 2016. The Respondent submits that monies were unilaterally taken from his settlement funds to pay legal accounts that had been issued but not yet given to him by the law firm. He did not accept or approve these accounts.

[7] The Master concluded that on the basis of the record, there was a “matrix of facts” that led to the finding of special circumstances.

[8] Specifically, the Master found "… that the manner in which the accounts are rendered up until May 22, 2014 adds to the matrix of facts that gives rise to special circumstances warranting assessment at this late date".

[9] The Master held:

(a) "In this case, it is entirely reasonable that Collinson would have not considered seeking assessment of his bills after the conclusion of each matter. Enterprise Rent-a-Car Co. v. Shapiro, Cohen, Andrews, Finlayson (1998), 38 O.R. (3d) 5 (C.A.)”.

(b) “On balance I accept Collinson's explanation as to why he delayed in challenging the accounts. I also accept that in his mind, all of the legal work was one continuous retainer that he was only able to scrutinize at the end. In my view, BVT has a bona fide concern and would not go to such great lengths (now, two contested motions) to merely pursue a grudge." … "As such, I reject Chitiz Pathak's argument that Collinson was happy with its services until the very end and is motivated solely by animus towards the firm."

“[12] I find that Collinson has rebutted the presumption that he accepted the accounts when he paid them in full because most of the accounts were paid from a settlement of the breach of settlement matter (as accepted by the Court in Echo Energy Canada Inc. v. Lenczner Slaght Royce Griffin Smith LLP, 2010 ONSC 187 at para. 34). He objects to the application of his funds in this way. Chitiz Pathak LLP argues that he agreed to that manner of payment in his general retainer. However, Collinson’s evidence that he objects to it still speaks to the presumption. It contradicts the presumption that payment equals acceptance. In this case, it does not.

[13] I also am guided by the principle that motions for assessment are to be considered from a client’s point of view. In this case, it is entirely reasonable that Collinson would have not considered seeking assessment of his bills after the conclusion of each matter. The technical legal differences between an interim bill and final bill as described by Perell, J. in Fiset v. Falconer, [2005] OJ No 4023 at para. 26 is not one that Collinson would have appreciated at the time the bills were rendered.

[14] I accept his evidence that for all intents and purposes, he believed that he had a singular retainer with the final bill coming after the breach of settlement matter was completed notwithstanding that the retainer agreement stated that each new matter would be a new retainer. It is in my view incumbent on the solicitor to either have a new retainer agreement signed for each matter, or for him or her to flag this issue for the client if the client is to be held to such a standard of knowledge of his rights under the Solicitors’ Act. In any event, where there are a series of transactions and services as there were in this case, it is difficult for a client to challenge a bill mid-stream for fear of alienating the lawyer. Indeed in this case and that of BVT, the moment Collinson raised the issue of fees, Chitiz Pathak LLP withdrew their service. Collinson has provided sufficient evidence on the record that he raised concerns about the legal services and only stayed with the firm after assurances of improved service. As such, I reject Chitiz Pathak’s argument that Collinson was happy with its services until the very end and is motivated solely by animus towards the firm.

[15] Finally, I find that the manner in which the accounts are rendered up until May 22, 2014 adds to the matrix of facts that gives rise to special circumstances warranting assessment at this late date. All bills prior to this are done by assigning a final sum to a long narrative of the work that was done. There is no breakdown of hours, spent by which lawyers, on what task. While the narrative format that Chitiz Pathak LLP used is acceptable to the Law Society of Ontario and complies with the Solicitors’ Act, it is difficult for Collinson to understand the basis of the bill or to knowledgeably assess its reasonableness. For example, the invoice rendered on August 1, 2012 has a two-page narrative leading to a $79,858.86 bill. This format makes it difficult for Collinson to understand what he paid for. For simple matters, the narrative format may be fine. Not, however, for the bulk of the invoices in the present case. There are a few invoices prior to May 22, 2014 that do not use the narrative. However, it makes sense that if the each of the four matters as a whole are going for assessment, there is no utility in parsing out one or two invoices. The invoices post May 22, 2014 relate to the breach of settlement matter that Chitiz Pathak LLP has already agreed to have assessed.”

[10] Applying the standard of review analysis set out in Housen, I find that there are no palpable and overriding errors in the Master’s findings of fact as the Appellant alleges. I also find that the Master’s reasons are clear and persuasive. Lastly, I find no errors in the Master’s application of the applicable law to the factual findings made. The Master considered the proper factors to determine whether “special circumstances” existed to justify the orders for assessment that were made. The Master set out the factors she took into consideration and further set out the manner in which she applied the law to those factors in her reasoning, which I have referred to above. I agree with the Master’s decision.

[11] To conclude, when applying the appropriate standard of review, I can find no errors alleged by the Appellant.

Costs

[12] The parties have reached an agreement on costs to be awarded to the successful party on a partial indemnity basis in court at the hearing of this matter in the amount of $2,500. If the successful Respondent wishes to make submissions that costs on a higher scale should be awarded and the parties are unable to agree on such higher scale costs, they may make brief written submissions to me no longer than three pages in length. The Respondent’s submissions are to be delivered by 12:00 p.m. on April 24, 2019, and the Applicant’s submissions are to be delivered by 12:00 p.m. on April 30, 2019. Any reply submissions are to be delivered by 12:00 p.m. on May 3, 2019.

[13] Submissions are to be delivered to Room 170, 361 University Avenue or via email to my assistant. After May 3, 2019, if no submissions are submitted for costs by these deadlines, the matter will be considered at an end and the file returned to the motions office.

Pollak J.

Date: April 17, 2019