Court File and Parties
COURT FILE NO.: CV-18-00601544-0000
DATE: 20210517
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROOZ LAW PROFESSIONAL CORPORATION
Plaintiff
– and –
BRYAN HALLETT
Defendant
Alon Rooz, lawyer for the plaintiff
Aryan Kamyab, lawyer for the defendant
HEARD: May 12, 2021
ENDORSEMENT
DIAMOND J.:
Overview
[1] On August 18, 2018, Justice Koehnen granted an ex parte motion brought by the plaintiff seeking, inter alia, a charging order in the amount of $26,944.87 for fees and disbursements incurred by the plaintiff in its legal representation of the defendant.
[2] Justice Koehnen granted the charging order (“the Koehnen order”) on specific terms, and allowed the defendant 90 days after being served with the order to challenge it.
[3] Despite being served in early September 2018, the defendant did not move to challenge the Koehnen order until approximately late 2019. The defendant then adjourned his motion once, and the motion was not able to be fully argued for some time due to, inter alia, the suspension of regular court operations caused by the COVID-19 pandemic.
[4] The defendant’s motion seeking to set aside the Koehnen order (together with leave to proceed with an assessment of the plaintiff’s invoices) ultimately proceeded before me on May 12, 2021. At the conclusion of argument, I took my decision under reserve.
Summary of Relevant Facts
[5] On or about February 5, 2016, the defendant was involved in a motor vehicle accident. He signed a retainer agreement with the plaintiff law firm with respect to both his accident benefits and tort claims arising from the accident.
[6] The defendant was then involved in two subsequent motor vehicle accidents in June and August 2016. He signed two additional retainer agreements with the plaintiff to act on his behalf with respect to his additional accident benefits and tort claims arising from both subsequent accidents.
[7] All of the retainer agreements contained a contingency fee arrangement, but in the event of an early termination of the retainer agreement(s), the plaintiff’s fees were to be calculated at prescribed hourly rates or a percentage of the highest settlement amount offered to the date of the termination of the retainer agreement(s).
[8] In or around early July 2018, the solicitor/client relationship between the parties deteriorated and essentially broke down. On July 3, 2018, the defendant sent two separate emails to the plaintiff with the subject line “URGENT!” stating that he believed the plaintiff was trying to “take advantage of the circumstances with respect to the contingency agreement”. The defendant stated (mistakenly) that in his view, the plaintiff should only be paid if the plaintiff “settled the defendant’s case in full”. As such, the defendant gave instructions to only make an offer to settle for the full amount of his claims. The defendant then ended one of those emails with the cryptic words “I’m well aware of the term double-dipping.”
[9] On July 6, 2018, the defendant sent another email to the plaintiff. In that email, the defendant stated as follows:
“At the end of the day, we both know, I am the client, which your firm is retained to work for me and you are responsible to protect me people from trying to abuse me and take advantage of me in my medical conditions.
If having me as your client such a problem, you have the option to quit and walk away from both cases you are handling?
I have no problem to find another law firm to take over my cases. You are well aware of my knowledge of my rights within a client & lawyer relationship and I have proven that on many occasions in the past.
If you decide to continue representing me, you and your lawyers may advise me on what my best “options” are from here on in. But at the end of the day it is my instructions that count and I expect your lawyers to fallow (sic) them as to the Laws which governs.
The choice is up to you and the ball is in your court?”
[10] The defendant gave evidence on this motion that his first July 6, 2018 email was returned back to him as “undeliverable”, and this forced him to forward the contents of his email back to the defendant from a different email address. In the plaintiff’s responding materials, it appears that the plaintiff in fact received both July 6, 2018 emails delivered by the defendant from both email addresses. It is unclear how or why the defendant’s original July 6, 2018 email was returned as “undeliverable” as there had never been any technical problems with electronic communications between the parties up to that point.
[11] In any event, on July 11, 2018 the defendant forwarded the “undeliverable” response back to the plaintiff and stated as follows:
“I guess, I should assume, taken with your quick attempt to block my emails from getting through to you, your lack of response within the 72 hour window and your lack of seriousness within these matters you have quit representing me as to the the (sic) LSUC ACT & Consumer Protection Act.
So I would appreciate if you may have my files delivered to my home as soon as possible, so that I may begin either by representing myself or looking for another lawyer.
I thank you for your time and consideration. If you have any further questions or concerns, you may direct them to this email and/or the alternative email if you have still block (sic) my main email address.”
[12] Later that afternoon, the plaintiff responded to the defendant by return email and advised that at no time did the plaintiff block any of the defendant’s emails, but the plaintiff did receive the second July 6, 2018 email delivered from the defendant’s alternative email address. In that reply, the plaintiff advised the defendant as follows:
“I understand that your instructions are to prepare a copy of your file. I will have your file prepared and advise you of the costs to providing same to you (i.e. $0.25 per page plus any shipping fees). Alternatively, if you do find another lawyer, your lawyer may write to us and with the appropriateness I am taking we may prepare the file to be sent directly to them”
[13] On July 9, 2018, the plaintiff had received an offer to settle the defendant’s accident benefits claims. According to the retainer agreements, the plaintiff was entitled to charge legal fees on the basis of the prescribed hourly rates or 30% of the highest amount offered to the client to date. As the solicitor/client relationship had broken down, a final account was rendered on July 13, 2018.
[14] On July 16, 2018, the defendant sent another email accusing the plaintiff of various forms of misconduct and threatening a complaint to the Law Society of Ontario.
[15] On August 10, 2018, the plaintiff attended before Justice Koehnen and proceeded to argue the ex parte motion for a charging order. The Koehnen order directed that several identified parties (including certain insurance companies and law firms) hold in trust or pay into court the sum of $26,944.97 until further direction of the Court or agreement between the parties.
[16] The Koehnen order further directed the plaintiff to serve the order, the notice of action and the statement of claim on the defendant by September 10, 2018, and permitted the defendant 90 days from the date of being served with those materials to bring a motion to challenge the terms of the Koehnen order.
[17] The plaintiff arranged for personal service of the Koehnen order, the notice of action and the statement of claim upon the defendant, which service was effected on September 4, 2018. The defendant did not move within the 90 day period prescribed by Justice Koehnen to challenge, vary or set aside the Koehnen order.
[18] The impetus for the defendant bringing the within motion is the ultimate settlement of his claims, and the fact that the $26,944.97 has been paid in accordance with the Koehnen order.
Issue #1: Did the plaintiff breach its obligation to make full and frank disclosure?
[19] The defendant argues that the plaintiff was under a duty to make full and frank disclosure of all known material facts when it proceeded on an ex parte basis before Justice Koehnen. I agree with this submission. As held by the Court of Appeal for Ontario in A.M. v. J.M. 2016 ONCA 644:
“An ex parte order is intended to be used only in exigent situations where the delay required to serve the motion would probably have serious consequences, or where the giving of notice by the service itself would probably have serious consequences. A judge hearing an ex parte motion who is not satisfied of the probability of those consequences will decide that the motion cannot proceed ex parte and order that notice be given.
Where a motion is brought without notice, the person bringing the motion must make full and fair disclosure of all material facts (rule 39(6) of the Rules of Civil Procedure), including facts that may not be helpful to that party’s position. An ex parte order that is obtained without full and fair disclosure, even if the lack of full disclosure was unintended, is subject to being set aside. See for example, Rinaldi v. Rinaldi, 2013 ONSC 7368.
Notice and the opportunity to be heard are basic tenets of our justice system. Ex parte orders are therefore made only in very limited circumstances. The requirement for full and frank disclosure is essential to allow a court to fairly make a temporary order that will affect the rights of another person in an emergency situation where the court has not heard both sides of the story.”
[20] I cannot agree that the plaintiff failed to discharge its duty to make full and frank disclosure. As I understand the defendant’s argument, the plaintiff allegedly breached its duty of full and fair disclosure by not alerting Justice Koehnen to the fact that the defendant’s emails were returned as undeliverable; the defendant argues that the returned emails were true reason for the breakdown of the solicitor/client relationship.
[21] The defendant argues that the plaintiff did not include the complete email thread between the parties which included his July 6, 2018 email that set out “multiple failed delivery notices”. The defendant argues that the plaintiff presented a picture before Justice Koehnen that only the July 11, 2018 email was received by the plaintiff, i.e. the email asking for the delivery of the defendant’s file. By not mentioning the fact that the defendant was under the impression that the plaintiff had “blocked his emails”, the plaintiff allegedly misled Justice Koehnen from assessing all the material facts and circumstances prior to making his decision. In other words, the plaintiff did not advise Justice Koehnen that it was the defendant’s belief that the plaintiff withdrew from providing legal services and representation to the defendant.
[22] I do not agree. As stated above, the defendant’s emails were never “blocked” and there is no expert evidence in the record before me to come to any contrary conclusion (even though the defendant’s motion was adjourned previously to allow him the opportunity to tender such expert evidence). The record in fact discloses that the plaintiff did receive the defendant’s July 6, 2018 email, and even though the plaintiff did not include that email in the motion material before Justice Koehnen, it effectively made no difference as the solicitor/client relationship had already broken down.
[23] The plaintiff did not know that the defendant’s emails were returned as “undeliverable”, and even when the plaintiff advised the defendant on July 11, 2018 that it had never blocked his emails, the defendant carried on with the same course of action and reiterated his request to have his file delivered so that he could retain new counsel.
[24] I do not find the presence of a failure to make full and frank disclosure of material facts before Justice Koehnen. As such, the answer to Issue #1 is “No”.
Issue #2: Did the plaintiff withdraw from providing legal services thereby precluding its right to a charging order?
[25] This argument fails as it is premised upon a finding that the plaintiff blocked email correspondence from the defendant. I have not made any such finding on the record before the Court.
[26] While the defendant may have been under a mistaken belief that the plaintiff somehow “targeted” him by blocking his emails, this was not in fact the case.
[27] As such, the answer to Issue #2 is “No”.
Issue #3: Should the charging order be set aside due to its timing?
[28] The defendant submits that the plaintiff moved before Justice Koehnen on August 10, 2018, which was less than the 30 day period prescribed by section 2(1) of the Solicitors Act, R.S.O. 1990 c. S15. Section 2(1) provides as follows:
“No action shall be brought for the recovery of fees, charges or disbursements for business done by a solicitor as such until one month after a bill thereof, subscribed with the proper hand of the solicitor, his or her executor, administrator or assignee or, in the case of a partnership, by one of the partners, either with his or her own name, or with the name of the partnership, has been delivered to the person to be charged therewith, or sent by post to, or left for the person at the person’s office or place of abode, or has been enclosed in or accompanied by a letter subscribed in like manner, referring to such bill.”
[29] The defendant argues that as the plaintiff did not wait the mandatory 30 day period before commencing this proceeding this proceeding (and thus the Koehnen order) are in contravention of the Solicitors Act and therefore a nullity.
[30] Normally, section 2(1) is raised as a defence to a claim brought under the Solicitors Act. In Cheadles v. Zanewycz 2016 ONSC 7909, Justice Horkins dismissed an appeal of a decision made on a motion described as follows:
“The motion judge excluded the respondent’s claim for the account dated April 8, 2010, in the amount of $13,243.91. In respect of this account only, the motion judge found that the respondent’s Affidavit of Claim under the Creditors' Relief Act was contrary to s.2(1) of the Solicitors Act that states as follows:
- (1) No action shall be brought for the recovery of fees, charges or disbursements for business done by a solicitor as such until one month after a bill thereof, ... has been delivered to the person to be charged therewith.
The motion judge found that the respondent was barred from seeking relief for the April 8, 2010 account of $13,243.91, because the Affidavit of Claim was issued less than 30 days following delivery of the account to the appellant. As a result, the respondent’s claim was reduced to $49,715.”
[31] The plaintiff argues that it was “under the gun” to seek the charging order as a potential settlement was “imminent” given the offers to settle obtained from the defendant’s insurer in early July 2018. I do not agree with the plaintiff. There was no urgency at that time, and the defendant’s claims did not ultimately settle until later on, and for a far greater amount.
[32] As such, this proceeding is a technical nullity given that it was commenced before the mandatory 30 day period set out in section 2(1) of the Solicitors Act. Notwithstanding the terms of Justice Koehnen’s order, it appears that this Court lacked jurisdiction to entertain the charging order at a time when the mandatory 30 day period had yet to expire.
[33] Accordingly, I find the answer to Issue #3 is “Yes”. However, given the fact that the defendant did not move to challenge Justice Koehnen’s order for some time, in my view an equitable result is to suspend enforcement of my decision setting aside the Koehnen order for 60 days to allow the plaintiff the opportunity to regularize this technical nullity if legally possible.
[34] In other words, the plaintiff shall have up to 60 days to either (a) bring whatever motion (on notice) it deems fit in this proceeding, or (b) commence a new legal proceeding and presumably seek a new charging order (again, on notice) to try and correct the technical nullity described above. If the plaintiff does not take any such steps, or if any motion proves unsuccessful, then the charging order is set aside.
[35] Finally, for completeness of the exercise, I do not find the presence of any “special circumstances” that would the invoking of this Court’s discretion to grant the defendant leave to proceed with an assessment of the plaintiff’s account at this late stage. The Koehnen order already extended the time by which the plaintiff could have moved for such leave and he chose to wait over one year to bring his motion.
Costs
[36] If the parties are unable to resolve the cost of this motion, they may serve and file written costs submissions (totaling no more than five pages including a Costs Outline) in accordance with the following schedule:
a) the defendant may serve and file his written costs submissions within 10 business days of the release of this Endorsement; and
b) the plaintiff may serve and file its written responding costs submissions within 10 business days of the receipt of the defendant’s written costs submissions.
Diamond J.
Released: May 17, 2021
COURT FILE NO.: CV-18-00601544-0000
DATE: 20210517
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROOZ LAW PROFESSIONAL CORPORATION
Plaintiff
– and –
BRYAN HALLET
Defendant
ENDORSEMENT
Mr. Justice Diamond
Released: May 17, 2021