Court File and Parties

COURT FILE NO.: CV-21-00662399-0000 DATE: 20220225 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SERENITY VALLEY P. LAWN MANAGEMENT INC., Applicant AND: LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP, Respondent

BEFORE: Justice Glustein

COUNSEL: Karen Zvulony, for the applicant J. Thomas Curry and Aoife Quinn, for the applicant

HEARD: February 8, 2022 (by video hearing)

Reasons for Decision

Nature of application and overview

[1] The applicant, Serenity Valley P. Lawn Management Inc. (Serenity) brings this application to assess the accounts of the respondent, Lenczner Slaght Royce Smith Griffin LLP [1] under ss. 3 or 9 of the Solicitors Act, R.S.O. 1990, c. S.15.

[2] Lenczners was counsel to the lender, Park Lawn Corporation (Park Lawn), in a loan transaction pursuant to which Serenity [2] was required to pay reasonable legal fees incurred by Park Lawn. Serenity paid those fees and now seeks an order directing an assessment.

[3] For the reasons that follow, I dismiss the application. I find that:

(i) The application cannot be brought under s. 3 [3] since Serenity was not Lenczners’ client. Park Lawn was Lenczners’ client; and

(ii) Serenity has not established “special circumstances” to obtain an assessment under s. 9. Serenity paid the legal fees requested when it (a) was a sophisticated client represented by legal counsel, (b) agreed in all of the loan documentation and the subsequent forbearance agreement that it would pay Park Lawn’s reasonable legal fees, (c) signed a release of any claim, in any form, against Park Lawn’s agents for matters arising out of the loan, and (d) did not reserve any rights to assess or otherwise challenge the legal fees even after being provided with the amount of the fees and a redacted spreadsheet, in circumstances when it had negotiated other professional fees related to enforcement (for the proposed receiver). Serenity’s submission that it “had no choice but to pay” the legal fees without challenge is a bald assertion not supported by the evidence.

Further, there is no evidence to establish special circumstances that the legal fees paid by Serenity for Lenczners’ services were excessive.

Facts

The Loan

[4] Serenity entered into a loan agreement with Park Lawn on December 3, 2019 (the Loan), under which it borrowed the principal amount of $6.5 million, plus interest. The maturity date of the Loan was December 6, 2020. Prior to that date, the only payments required (assuming the Loan was in good standing) were monthly interest payments of approximately $48,750, beginning in December 2019.

[5] In its factum, Serenity takes the position (the Equity Submission) that it:

was induced by Park Lawn’s former CEO to enter the loan documentation on the promise and representation that the loan would never have to be repaid and would be converted into equity. When a new CEO took over, repayment was demanded.

[6] Serenity submits in its factum that it “understood that the language in the loan documentation required them to repay the loan and acknowledged this obligation during the litigation”. While much of Serenity’s efforts in relation to the Loan involved its attempts to obtain financing, it never abandoned the Equity Submission and still raised it as late as prior to the proposed motion to appoint a receiver, as set out in more detail below.

The Loan Documentation

[7] The Loan was evidenced by a Secured Promissory Note dated December 3, 2019 executed by Serenity in favour of Park Lawn (the Note).

[8] Pursuant to section 12.02 of the Note, Serenity agreed to pay all “reasonable fees” of Park Lawn’s counsel incurred in relation to (i) “the negotiation, documentation and execution of this Note” and (ii) “the enforcement of the Noteholder’s [Park Lawn’s] rights hereunder and thereunder (on a substantial indemnity/solicitor-and-client basis)”:

Expenses. The Borrower agrees to reimburse the Noteholder on demand for all reasonable and documented out-of-pocket costs, expenses and fees (including reasonable expenses and fees of its counsel) incurred by the Noteholder in connection with the transactions contemplated hereby including (a) the negotiation, documentation and execution of this Note and the Security Agreements; and (b) the enforcement of the Noteholder’s rights hereunder and thereunder (on a substantial indemnity/solicitor-and-client basis).

[9] Park Lawn obtained a guarantee as security of the Loan from George Marchi Holdings Ltd., [4] Evergreen (Canada) Developments Limited, 1094708 Ontario Limited, 1194469 Ontario Limited, Dina Giambattista and Alexandra Tam (the “Guarantors”).

[10] Serenity and the Guarantors provided security to Park Lawn against the Loan which included mortgages, share pledges, and a General Security Agreement (GSA) dated December 3, 2019.

[11] Pursuant to article 5.2 of the GSA, Serenity and the Guarantors agreed to:

pay to the Lender [Park Lawn] forthwith upon demand all costs, charges and expenses, including all legal fees, on a solicitor client basis, incurred by the Lender in collecting the Indebtedness and/or enforcing the security granted hereunder.

[12] Security for the Loan included a property appraised at $17,200,000, upon which Park Lawn had a first mortgage. The loan documentation also empowered Park Lawn to appoint a receiver over any of the security in the event of default.

Default under the Loan

[13] Serenity did not make the interest payments as required. Prior to Park Lawn retaining Lenczners to enforce the Loan, Serenity had only made one payment of interest on the Loan, in the amount of $86,666, on May 1, 2020.

[14] As of June 12, 2020, Serenity was $182,997 in arrears in interest on the Loan.

Initial efforts by Park Lawn to collect on the Loan

[15] In or around May 2020, Park Lawn retained Lenczners as litigation counsel in connection with Serenity’s default under the Loan. Park Lawn had attempted to recover on the Loan through direct negotiations with Marchi, without success.

[16] On June 12, 2020, Lenczners wrote to Marchi to demand payment of the amounts outstanding under the Loan, and to formally advise that Park Lawn was exercising its right to accelerate the Loan due to Serenity’s default. Marchi did not respond.

[17] On instructions from Park Lawn, Lenczners initiated an action to enforce on the Loan by Statement of Claim dated June 29, 2020.

[18] Serenity was represented by legal counsel, Joseph Sereda (Sereda). Between July and September 2020, Lenczners was in communication with Sereda regarding the claim and the repayment of the Loan. During this period of negotiation, Park Lawn deferred taking steps in the action.

[19] Sereda repeatedly assured Lenczners that Serenity was in the process of securing a lender to discharge the Loan.

[20] The emails between the parties establish that Lenczners made it clear to Sereda that its instructions from Park Lawn were to advance the litigation if there was no progress with the financing. Park Lawn required a written commitment from Serenity’s lenders to be certain of the financing in place, given that past assurances had not come to fruition. These written assurances were never provided.

[21] By way of example, a document provided by Sereda from Cameron Stephens Mortgage Capital (CSMC) dated August 26, 2020, stated only that CSMC “expect to have a formal commitment within 60-90 days” and that it was CSMC’s “intent to syndicate the loan to one or more public financial institutions”.

[22] Given the lack of certainty as to financing, Park Lawn (through Lenczners) took repeated steps to encourage Serenity to bring the Loan into good standing. Lenczners made clear that its instructions from Park Lawn were to pursue litigation. In an email dated September 3, 2020, Lenczners proposed options to Sereda to bring the Loan into good standing, including payments of interest amounts then owing.

[23] As of October 2020, Serenity had not provided any commitment to financing. Park Lawn, through Lenczners, had made an offer to waive default penalties until financing was in place, but would only delay enforcement if interest was brought current.

[24] After further correspondence from CSMC dated October 19, 2020 that offered no commitment to advance funds (and, at best, indicated that funding may be available by January 2021), Lenczners wrote to Sereda on October 23, 2020 setting out its instructions from Park Lawn that the offer to waive the penalty payment did not stand unless Serenity committed to repay the Loan and interest by the maturity date.

[25] Sereda did not respond.

[26] Park Lawn instructed Lenczners to make an offer to Serenity to extend the maturity date of the Note by one month and give Serenity until the end of January 2021 to repay the Loan (which would be within the target date of anticipated funding as set out by CSMC), but only if Serenity became current on outstanding interest payments by October 30, 2020. Lenczners communicated this offer to Sereda on October 26, 2020, and advised that if this proposal was not accepted by October 27, 2020, it was instructed to enforce the remedies available to Park Lawn to recover under the Note and GSA.

[27] Sereda responded that he would not recommend the proposal to Serenity but offered to speak with Serenity about a counterproposal. No proposal was received prior to service of receivership motion materials on Serenity. Marchi confirmed on cross-examination that Serenity could not afford to pay the outstanding interest amounts on the Loan at that time.

[28] Marchi’s evidence is that Park Lawn’s proposals “required payments to be made within a very tight and unrealistic time period that our new lenders simply could not meet” and that “[i]t was always about our new lender requiring a few more months’ time”. However, by October 2020, (i) there was no evidence of any actual commitment to lend; (ii) the loan was due in two months; and (iii) Serenity remained in default of its obligations to pay interest.

The steps taken for the initial hearing of the Receivership Motion

[29] Following Serenity’s rejection of Park Lawn’s extension offer, on instructions from Park Lawn, Lenczners began to take steps to collect on the Loan and enforce on Park Lawn’s security.

[30] Park Lawn’s two main options to enforce on the security were to exercise a power of sale over the charged lands or to appoint a receiver. Park Lawn chose the receivership option. The power of sale process was less preferable because it (i) was unlikely to be resolved by the maturity date of December 6, 2020, and (ii) may have disrupted the development of the project [5] and any financing premised on that project.

[31] Park Lawn considered a motion to appoint a receiver to be the step necessary to obtain further significant payments from Serenity and assurance of full repayment. Park Lawn instructed Lenczners to promptly proceed with its motion to appoint a receiver.

[32] In early November 2020, Lenczners prepared motion materials in support of a motion to appoint a receiver (the Receivership Motion), including an amended Statement of Claim and a factum. Lenczners identified A. Farber and Partners Inc. (Farber) as a proposed receiver, and worked with Farber to ensure the relief sought and terms of appointment were acceptable.

[33] On November 6, 2020, Lenczners obtained a date from the Commercial List office for a one-hour hearing of the Receivership Motion on November 10, 2020, at 2:00 p.m. This was the only available date from the court before February 2021. Lenczners notified Sereda of the listing by email.

[34] Serenity asserts that it was “blindsided” when it learned on November 6, 2020 that Park Lawn was bringing the Receivership Motion on November 10, 2020. However, Lenczners had informed Sereda repeatedly in discussions between June and November 2020 of its instructions to take steps to enforce the Loan if interest was not made current.

[35] Serenity submits that the Receivership Motion was “drastic”, since “[t[he Loan was secured”. However, as set out at para. 30 above, Park Lawn had a reasoned basis to prefer a receivership process over a power of sale, and there was no evidence that Serenity would provide a firm commitment to financing.

[36] On November 9, 2020, Lenczners reiterated to Sereda that Park Lawn would prefer to resolve the matter consensually. Lenczners had a call with Sereda later that afternoon to discuss possible terms for the adjournment of the Receivership Motion. These discussions continued during the morning of November 10, 2020, the return date of the Receivership Motion.

[37] At 12:03 p.m. on November 10, 2020, two hours before the return of the Receivership Motion, Serenity (through Sereda) served a Notice of Motion and supporting affidavit of Marchi seeking not only an adjournment of the Receivership Motion, but also a change of venue for the action. In his supporting affidavit, Marchi reiterated the Equity Submission, i.e. Serenity’s position that the Loan was unenforceable because there was an alleged collateral oral agreement between Serenity and Park Lawn that the Loan would not have to be repaid and would be converted into equity.

[38] Park Lawn’s instructions to Lenczners were to contest the adjournment unless the parties could agree to a satisfactory forbearance agreement. Given Park Lawn’s Equity Submission and the opposed adjournment and change of venue request, Lenczners was required to expend significant efforts to address these issues.

[39] At 12:33 p.m. on November 10, 2020, half an hour after serving the Notice of Motion, Sereda proposed possible terms to resolve the Receivership Motion, including a forbearance agreement. Counsel for the parties attended before Justice Conway, who was to hear the motion, and requested that the hearing be stood down for one hour in order to continue discussions. The parties later requested, and the court directed, that the Receivership Motion be adjourned for three days (to November 13, 2020), to enable the finalization of a forbearance agreement.

Negotiations leading to the Forbearance Agreement including negotiations as to the receiver’s fees

[40] Park Lawn’s instructions remained that unless a satisfactory forbearance agreement could be reached by November 13, 2020, Park Lawn would seek receivership against Serenity.

[41] The basic terms of the forbearance agreement were set out in an email exchange between counsel dated November 10, 2020, at 2:48 p.m. (minutes prior to the scheduled return before Justice Conway after the short adjournment she had ordered as set out at para. 39 above). Under those basic terms:

(i) Serenity would pay $425,000 for interest accumulated between November 10, 2020, and January 15, 2021;

(ii) Serenity would pay the principal amount owed under the Loan, by February 15, 2021;

(iii) Serenity would provide weekly updates on financing; and

(iv) Serenity would provide consents to (a) judgment, and (b) the exercise of other remedies, including the right to appoint a receiver.

[42] Lenczners completed a draft of the forbearance agreement on November 11, 2020. Sereda provided comments on the draft agreement on November 12, 2020, and the parties continued to negotiate the agreement into November 13, 2020.

[43] During the negotiations, Park Lawn (through Sereda) specifically raised a concern as to the fees of Farber, the proposed receiver. Sereda first proposed that those fees be paid by Park Lawn. By email dated November 12, 2020, at 7:59 p.m., Sereda wrote:

It’s very important for my clients. Add the following to the end of paragraph 4.01 (d). “ The fees and disbursement of A. Farber & Partners Inc. incurred to date in this matter and during the course of this agreement shall be paid by the Lender, and not added to the indebtedness.”

[44] Lenczners responded by email with its position that Serenity was responsible for the receiver’s fees pursuant to section 12.02 of the Note. Nevertheless, Park Lawn proposed a compromise clause.

[45] Sereda responded by email in which he acknowledged Serenity’s obligation under section 12.02 of the Note to pay reasonable enforcement costs (which would have included Lenczners’ legal fees) on a substantial indemnity basis, but proposed that receiver fees should not be set out in a forbearance agreement:

The Farber fees are a real sticking point, and it [ sic ] they are no [ sic ] significant at the moment, as they should not be, please let us leave them out. If there is a default, Farber will have their day.

Yes, I saw that part of the note which says “substantial indemnity”, not full indemnity. [Emphasis added.]

[46] After further negotiations, it was agreed that Serenity’s liability for the receiver’s fees would be capped at $5,000 plus HST, if Serenity did not default under the forbearance agreement, even though Park Lawn could have insisted on the application of section 12.02 of the Note.

[47] At no point during these negotiations did Sereda, on behalf of Serenity and the Guarantors, raise a concern as to the liability of Serenity or the Guarantors for any other fees, including legal fees, referenced in section 12.02.

[48] The forbearance agreement was dated November 12, 2020 and finalized into the early morning of November 13, 2020 (the Forbearance Agreement). Subject to the limitation on the receiver’s fees, Serenity and the Guarantors reaffirmed their obligation to pay all costs, fees and expenses of Park Lawn, including legal fees. Section 13.11 provides:

Reimbursement of Costs and Expenses. The Borrowers and Guarantors confirm their agreement to pay all costs, fees and expenses of the Lender (including legal fees), as provided for in the Loan Documents. [Emphasis in original text.]

[49] Pursuant to section 8.01 of the Forbearance Agreement, Serenity and the Guarantors released, inter alia, Park Lawn and its “agents” from any “proceeding, whether judicial, administrative or otherwise, with respect to any Claims”.

Failure of Serenity to make payment under the Forbearance Agreement

[50] Serenity was obligated under the Forbearance Agreement to provide financing updates to Park Lawn. Serenity was, at times, late with providing financing updates. Further, updates provided by Marchi [6] were often vague.

[51] On February 9, 2021, Lenczners requested additional funding details and the anticipated timing of funding. In response to follow-up emails sent by Lenczners on February 10 and 11, 2021, Marchi wrote on February 11, 2021 to advise that (i) Serenity was in conversation with CSMC and Roynat Inc. (Roynat); (ii) Serenity had not received confirmation of funding, but (iii) “I am expecting direct written confirmation from the lenders at the latest, tomorrow afternoon”.

[52] Serenity retained Lawrence Cohen (Cohen) to complete the transaction, and Park Lawn retained George Crossman (Crossman).

[53] By the due date of February 15, 2021, Serenity had not paid its debt under the Note. On that day, Sereda sent an email to Lenczners to advise that Serenity had received a final commitment from CSMC and Roynat in order to discharge the Loan, but that the payout date would be missed by several days. Sereda proposed that Serenity would deliver a further $50,000 to secure a short extension.

[54] On February 16, 2021, Sereda wrote to Lenczners by email attaching what he described as a confirmation letter of funding from Roynat and CSMC. However, while Roynat and CSMC confirmed that they had “an approved and accepted Commitment Letter to provide the above-captioned financing”, they advised that they only had a “target funding date” of February 26, 2021.

[55] Later that day, Lenczners responded that Park Lawn was willing to accept payment that day, because the original due date of February 15 had fallen on a holiday. However, Lenczners added: “Our client will not agree to any extension or further accommodation of any kind and reserves all of its rights, including to take whatever enforcement steps are necessary to secure payment of the outstanding amounts, the costs of which will be added to the outstanding amounts due ”.

[56] Park Lawn never agreed to a further extension.

[57] On February 17, 2021, Serenity delivered a cheque for $50,000.

Proposed return of the Receivership Motion

[58] On February 18, 2021, Lenczners wrote to the court asking for “the court’s availability for a 9:30 or a short <1 hour motion for the appointment of a Receiver”. By this date, Park Lawn had still not received a date by which the funds were to be paid.

[59] On February 22, 2021, Serenity had still not provided a date by which the funds were to be paid. Copying Sereda, Lenczners followed up on its request to the court for an urgent motion to appoint a receiver, pursuant to the consent judgment. A date was set for March 12, 2021, which in effect provided Serenity with almost a month after default under the Forbearance Agreement to discharge the loan obligation.

Requests by Serenity for details of legal fees

[60] On February 11, 2021, prior to expiry of the deadline for payment under the Forbearance Agreement, Sereda requested a “detailed payout statement and a direction re funds”.

[61] On February 15, 2021, Lenczners provided Sereda with a discharge statement setting out, as of February 16, 2021, all outstanding amounts for principal, interest, and a breakdown of all “legal and accounting fees” incurred from three law firms and the receiver (with the receiver fees limited to $5,000 as per the negotiated Forbearance Agreement).

[62] In the discharge statement, Lenczners set out its legal fees at $160,436.

[63] On February 18, 2021, Crossman provided the discharge statement directly to Cohen with a comment that “[l]egal fees continue to accrue to the time of final payout and will be added to an updated Statement that we will prepare two days before the payout date”.

[64] Crossman further noted that the $50,000 payment referred to at para. 57 above “would be subtracted from the final payment amount”.

[65] On February 19, 2021, Cohen wrote to Crossman and advised that “[f]urther to the discharge statement you provided, our lenders require full particulars and copies of the legal accounts referred to in the statements”.

[66] On February 23, 2021, Cohen reiterated his request to Crossman for “[f]ull particulars of the charges for Legal and Accounting Fees, including amounts charged by Lenczner Slaght …”

[67] On February 24, 2021, Crossman sent Cohen an updated discharge statement and a redacted spreadsheet which included each timekeeper, the date the work was performed, and the hours spent on the work, but redacted the docket entries. Lenczners’ total fees and disbursements up to the end of February were $185,190.70, of which Park Lawn only sought to recover $168,209.64 in fees, given that the loan document provided for payment of reasonable costs on a solicitor and client (substantial indemnity) basis.

[68] Serenity did not object to the sufficiency of information provided about the legal fees. Serenity did not ask any further questions with respect to the legal accounts payable under the terms of the Loan, nor did it request to negotiate the legal fees. Serenity did not ask for an unredacted copy of the information in the spreadsheet. Serenity never raised a concern about the quantum of the proposed legal fees.

[69] Instead, Serenity paid those legal fees without comment or question as set out at para. 72 below.

Final communications leading to payment of the Loan

[70] In his letter of February 23, 2021, as set out at para. 66 above, Cohen was unable to give a firm date for closing, but advised that “I expect to be in a position to close Thursday, if not Friday”.

[71] As of the discharge statement delivered by Crossman to Cohen on February 24, 2021, the total amount outstanding on the Loan, including all professional fees on a substantial indemnity basis, was $7,134,379.86.

[72] On March 5, 2021, Serenity repaid the Loan, including the legal fees of $168,209.64. Serenity did not indicate that the legal fees were paid under protest or without prejudice to dispute them at a later date.

Request for assessment

[73] On March 17, 2021, Serenity delivered a requisition under s. 3 in which it asserted that it was a “client” seeking to assess the account “delivered” to it by Lenczners. In the requisition, Serenity attested that there were no “special circumstances” required for the assessment.

[74] The order for assessment was granted “over-the-counter” by the registrar on March 19, 2021.

[75] By letter dated April 6, 2021, Lenczners objected to the assessment order on the basis that:

(i) Park Lawn was Lenczners’ client, and, as such, s. 3 did not apply to permit an assessment by Serenity; and

(ii) Under ss. 9 and 11, because the account had been paid, Serenity could only seek an assessment, upon special circumstances, as a “person, not being chargeable as the principal party, [who] is liable to pay or has paid a bill … to the principal party entitled thereto”.

[76] Serenity then brought this application for an order for the assessment of Lenczners’ accounts, both under ss. 3 and 9.

[77] Consequently, even though the order for assessment was only obtained under s. 3 (without special circumstances), the present application considers the availability of an assessment both under s. 3 and under the “special circumstances” requirement of s. 9 (since s. 11 requires special circumstances to be established upon payment of the account).

Marchi’s affidavit evidence as to quantum of fees charged by Lenczners

[78] In his affidavit, Marchi states that:

(i) “I was shocked when I saw $160,436.00 listed as the [Lenczners] legal fees. I could not understand how the legal fees were so high and the amount was well beyond my reasonable expectations”;

(ii) “Given the lack of particulars, I had no way of knowing what all the fees were for, if they were for fees owing under the loan agreement and if they were reasonable”; and

(iii) “In reviewing these accounts, I was shocked at the amount of time spent, the number of lawyers who billed on the file and duplication in work”.

[79] Marchi also raises examples of work he claims constitutes excessive billing, such as having “at least twelve (12) lawyers bill on the file, with five (5) billing at least $15,000 or more” and 28 hours billed to “review pleadings and documents, prepare chronology”.

[80] Serenity provided no evidence as to the fees it incurred in this matter.

The Lenczner Accounts

[81] The largely unredacted set of Lenczners accounts were produced as part of the Serenity motion record. Lenczners delivered those accounts on May 28, 2021, after it received a copy of the notice of application on May 19, 2021. The accounts contain only minor redactions for privilege.

Marchi’s affidavit evidence as to alleged “pressure” he felt required Serenity to accept the legal fees without challenge

[82] In his affidavits, Marchi makes numerous statements with respect to the alleged pressure he felt to accept the legal fees without challenge, including the following:

(i) “To avoid receivership, which was imminent, we had no choice but to pay the $168,209.64 demanded for legal fees by the Respondent”;

(ii) “Serenity did not pay the legal fees voluntarily nor did it agree with this amount. When I say that we did not pay these fees voluntarily one must appreciate the pressure that we were under at the time and why, for all practical purposes, we had no choice to pay the legal fees demanded and no time to waste. We needed to close the transaction immediately. The consequences if we failed to do so would have been devastating both financially and to our ongoing businesses. If we did not pay the legal fees, the transaction would not close and we would be forced into receivership on March 12, 2021 based on the consent orders we signed as part of the Forbearance Agreement. Given the aggressive way this matter was pursued and Park Lawn’s refusal for a short extension despite commitment letters from our new lender there is no doubt in my mind that the Respondent would have proceeded with its March 12, 2021 receivership motion. A dispute about the legal fees would not have stopped the receivership process”;

(iii) “We had no reason to believe that legal fees could be reduced by negotiation. After the Forbearance Agreement was signed, Park Lawn insisted on strict compliance and demanded payment in full. No discounts would be accepted on interest, principal or penalty interest”;

(iv) “We also frankly feared broaching the subject of the Respondent’s inordinately high fees which could have resulted in an even accelerated effort to appoint the receiver or the imposition of a further term that we agree not to challenge fees in exchange for a few more days forbearance”;

(v) “A receivership appointment would have likely killed our operating funeral establishments. Families of the recently deceased expect stability in the personal relationship we formed with them together with the operational integrity of our company. That would have been shattered with the changing of locks, notice posted on the doors and post receivership interaction with someone from an accounting firm with no experience in dealing with grieving families”; and

(vi) “At para 100 of his affidavit, Kolenda suggests that Serenity had a week before the receivership motion and could have ‘negotiated’ the legal fees during this time. Serenity had absolutely no reason to believe that the Law Firm would discount or negotiate their fees and had zero leverage. Rather, after repeated requests, the Law Firm were unwilling to even provide particulars necessary to understand how the fees became so inflated. It is clear even now that the Law Firm will not reduce their fees to a reasonable level, so why should we think that they would do so while they had our feet to the fire?”

Analysis

[83] In its factum, Serenity relies on both ss. 3 and 9 of the Solicitors Act, but acknowledged at the hearing that its “primary focus” was on s. 9.

[84] I address both submissions below.

Application for an assessment under section 3

[85] For the reasons that follow, I find that an assessment under s. 3 is not available to Serenity, since Serenity is not Lenczners’ client.

[86] I first consider the applicable law and then apply the law to the facts of the present case.

(i) The applicable law

[87] Section 3 provides:

Where the retainer of the solicitor is not disputed and there are no special circumstances, an order may be obtained on requisition from a local registrar of the Superior Court of Justice,

(a) by the client, for the delivery and assessment of the solicitor’s bill;

(b) by the client, for the assessment of a bill already delivered, within one month from its delivery;

(c) by the solicitor, for the assessment of a bill already delivered, at any time after the expiration of one month from its delivery, if no order for its assessment has been previously made. [Emphasis added.]

[88] Consequently, the right to an assessment under s. 3 is limited to either the client (under ss. 3(a) and (b)) or the solicitor (under s. 3(c)).

[89] While there is no definition of “client” under s. 3, s. 9(1) makes it clear that for non-clients who pay a legal bill, assessment can be sought “where a person, not being chargeable as the principal party” has paid a bill to “the principal party entitled thereto”. Section 9(1) provides:

Where a person, not being chargeable as the principal party, is liable to pay or has paid a bill either to the solicitor, his or her assignee, or personal representative, or to the principal party entitled thereto, the person so liable to pay or paying, the person’s assignee or personal representative, may apply to the court for an order referring to assessment as the party chargeable therewith might have done, and the same proceedings shall be had thereupon as if the application had been made by the party so chargeable. [Emphasis added.]

[90] Consequently, s. 9(1) distinguishes between (i) a third party to the solicitor-client relationship, who is not “chargeable as the principal party”, and (ii) the “principal party” who is the “party chargeable”, in order to enable a third party payor to seek an assessment “as the party chargeable therewith might have done”. The only other provision conferring such a right is s. 3. When read with s. 3, the “principal party” chargeable with the solicitor’s bill is synonymous with “the client”.

[91] The only definition of “client” under the Solicitors Act is found at s. 15, which is expressly restricted to the provisions in the Solicitors Act concerning “compensation agreements”. The fact that the s. 15 definition, which includes the extension of the term “client” to include “a person who is or may be liable to pay the bill of a solicitor for any services”, is only applicable to compensation agreements, further supports the clear language of s. 3 that the assessment process under that provision applies only to clients and solicitors.

[92] The above interpretation was adopted by the Court of Appeal in Cardillo v. Aird & Berlis LLP, 2018 ONCA 186, 81 B.L.R. (5th) 23, in which the court held that a debtor who paid a creditor’s legal fees pursuant to contractual requirements was not a client and could not rely on s. 3. The court held, at para. 7:

Because the accounts have already been paid by Sun Life and the appellant Medcap, who became liable for their payment and is not the client but a third party to the solicitor-client relationship, an order for assessment had to be obtained under s. 9(1) of the Solicitors Act, which required the appellant to demonstrate special circumstances justifying the assessment following payment pursuant to s. 11 … [Emphasis added.]

[93] Consequently, an assessment under s. 3 is only available for a client or solicitor.

(ii) Application of the law to the present case

[94] In the present case, there is no dispute that Park Lawn was Lenczners’ “client”, and the “principal party” responsible for payment of Lenczners’ legal fees.

[95] Serenity and the Guarantors were the parties who were “liable to pay” the Lenczners accounts as a result of the Note, guarantees, GSA, and Forbearance Agreement. Serenity paid the Lenczners accounts to Park Lawn, who was “the principal party entitled” to have its accounts paid by Serenity pursuant to the constituent loan agreements.

[96] For the above reasons, Serenity cannot seek an assessment under s. 3. Serenity reasonably acknowledged at the hearing that it was relying primarily on s. 9.

Application for an assessment under section 9

[97] For the reasons that follow, I find that Serenity has not established special circumstances to order an assessment after having paid the Lenczners’ accounts. I first review the applicable law and then apply the law to the facts of the present case.

(i) The applicable law

[98] I first consider the legislative framework and then consider the relevant case law on the doctrine of special circumstances.

(a) The legislative framework

[99] As set out at para. 89 above, s. 9(1) permits a person, “not being chargeable as a principal party” to “apply to the court for an order referring to assessment as the party chargeable therewith might have done”, when such third party “is liable to pay or has paid a bill … to the principal party”. The “same proceedings shall be had thereupon as if the application had been made by the party so chargeable”.

[100] Serenity seeks an assessment on this basis.

[101] Under s. 9(2), a third party who paid legal fees to the principal party can seek an assessment based both on any special circumstances which might have been available to the principal party, and on special circumstances that are applicable to the third party. Section 9(2) provides:

If such application is made where, under the provisions hereinbefore contained, a reference is not authorized to be made except under special circumstances, the court may take into consideration any additional special circumstances applicable to the person making it, although such circumstances might not be applicable to the party chargeable with the bill if he, she or it was the party making the application. [Emphasis added.]

[102] Serenity submits that special circumstances apply to its payment to Park Lawn for Lenczners’ legal fees. Serenity does not submit that any special circumstances apply to Park Lawn’s payment of its accounts to Lenczners.

[103] Section 11 enables the court to assess an account which is paid, provided that there are special circumstances which require the assessment. Section 11 provides:

The payment of a bill does not preclude the court from referring it for assessment if the special circumstances of the case, in the opinion of the court, appear to require the assessment.

[104] All parties agree that Serenity is required to establish special circumstances since it paid Lenczners’ legal accounts.

(b) The applicable case law

[105] I first consider the general principles applicable to the assessment of accounts paid by a third party, and then consider the case law relied upon by the parties which has applied those factors to a third party who seeks an assessment of legal fees paid to (or sought to be paid by) the person who is “chargeable as the principal party”.

1. General principles applicable to the assessment of accounts paid by a third party

[106] I set out the applicable general principles below.

i. Special circumstances must be established under s. 11 upon authorized payment of legal fees by the third party

[107] A payment of legal fees which is authorized by the third party payor is a payment for the purposes of s. 11, and as such requires the third party to establish special circumstances in order to obtain an assessment. The issue of whether the payment is “voluntary” or “involuntary” does not determine whether special circumstances are required: Plazavest Financial Corp. v. National Bank of Canada (2000), 47 O.R. (3d) 641 (C.A.), at paras. 30-32.

[108] Consequently, in Plazavest, even though the borrower did not voluntarily pay the legal fees (since those fees were unilaterally taken from the borrower’s account by the lender), the doctrine of special circumstances applied because the borrower had authorized such a step as part of the loan documentation.

ii. The court takes a generous approach to the determination of special circumstances when an account is paid by a third party

[109] “In deciding whether special circumstances exist, the court may take into consideration the fact that payment was made by a third party and not by the client”: Plazavest, at para. 34.

[110] Special circumstances are to be considered more generously for a third party who has paid legal fees pursuant to an agreement, since the same incentives for a client to ensure that the bill is reasonable may not be present. In Plazavest, the court held, at para. 35:

Section 9(2) of the Solicitors Act reflects the reality that a third party required to pay a legal bill will often not be in as good a position as the client to determine the propriety of that bill. In Tory, Tory, DesLauriers and Binnington v. Concert Productions International Inc. (1985), 7 C.P.C. (2d) 54 (Ont. H.C.J.), Steele J. considered a case in which a borrower committed to pay the lender's legal fees as part of the financing arrangements. The borrower subsequently sought to assess those fees. Steele J. said, at p. 57:

A third party under s. 8 [now s. 9] can be in no higher status than the party itself, and therefore, in my opinion, special circumstances are required to be shown by the applicant herein. However, s. 8(2) [s. 9(2)] allows the Court to consider any extra circumstances. A third party is not per se automatically entitled to be said to have special circumstances, although it should be given more favourable consideration than the party who paid the account. The facts in each case must be considered on their merits. [Emphasis added.]

[111] Similarly, in Temedio v. Niagara North Condominium Corporation No. 6, 2019 ONCA 762, 148 O.R. (3d) 171, the court held, at para. 28:

When a person other than the client is liable to pay a lawyer's bill, not all of the same incentives that may exist between the lawyer and the client to ensure the bill is reasonable may be present. Thus, in considering whether special circumstances have been shown, a more generous approach is to be taken when the person applying for the assessment is a person liable to pay the bill but is not the client. Section 9(2) of the Solicitors Act allows the court to consider extra circumstances applicable to such a person which would not pertain to the client itself. Although being a third party liable to pay the bill is not in and of itself a sufficient special circumstance, this court has endorsed the concept that a third party should be given more favorable consideration than the client who received and paid the account … [Emphasis added.]

iii. Special circumstances are to be considered from the perspective of the client or third party, and not from the perspective of the lawyer

[112] Special circumstances are to be considered from the perspective of the client: Echo Energy Canada Inc. v. Lenczner Slaght Royce Smith Griffin LLP, 2010 ONCA 709, 104 O.R. (3d) 93, at paras. 36-37, leave to appeal refused, [2010] S.C.C.A. No. 484. Based on this principle, when a third party pays an account, the court must also consider special circumstances under s. 11 from the perspective of the third party.

[113] “Under s. 9(2), the special circumstances to be considered include any additional special circumstances applicable to the third party who made the payment”: Cardillo, at para. 8.

iv. The presumption of acceptance upon payment of accounts

[114] Payment of an account by a third party is “generally seen as an implied acceptance by the payor of the propriety of the bill”, and, as such, “[a]bsent special circumstances, the payor should not be allowed to resile from its implied acceptance of the propriety of the bill”: Plazavest, at para. 30. Consequently, “ordering an assessment after payment will be the exception rather than the rule”: Clatney v. Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377, 131 O.R. (3d) 511, at para. 84.

[115] Consequently, the doctrine of “special circumstances” in s. 11 requires applicants to “rebut the presumption that they accepted the respondent's legal accounts as reasonable when they agreed to pay them”: Cardillo, at para. 12.

[116] However, a third party is not presumed to have accepted the reasonableness of accounts paid by a client when the third party does not pay those fees and is only presented with them for payment by the client: Temedio, at para. 29.

v. Special circumstances are those that undermine the presumption that the account was accepted as proper or show that the account was excessive or unwarranted, in order to protect the interests of the client or public confidence in the administration of justice

[117] Special circumstances under s. 11 “relate to the underlying principle that payment of the account implies that the client accepted that the account was proper and reasonable”. Consequently, “special circumstances will tend to either undermine the presumption that the account was accepted as proper or show that the account was excessive or unwarranted”: Echo Energy, at paras. 30-31 (see also Cardillo, at para. 8).

[118] As held by the court in Clatney, “‘[s]pecial circumstances’ are those in which the importance of protecting the interests of the client and/or public confidence in the administration of justice, demand an assessment”: at para. 86 (see also Price v. Sonsini (2002), 60 O.R. (3d) 257 (C.A.), at para. 19).

vi. An agreement to pay the legal fees of a creditor is not a waiver of a right to an assessment, but it is a relevant fact for the court to consider

[119] An agreement to pay the legal fees of a creditor is not a waiver of a right to an assessment. In Plazavest, the court held, at para. 20:

Apart entirely from the general question of whether those liable to pay legal fees can waive a right to assess a lawyer's bill, the actual terms of the agreement between Plazavest and National do not provide any evidence of a waiver. Plazavest agreed to pay National's actual fees and legal expenses relating to the transactions encompassed in the loan agreement. Certainly, there is no express agreement to waive any right to assess those costs. Nor can I accept that it was implicit in Plazavest's agreement to pay actual legal fees relating to the transactions that it would not challenge whether the fees were "actual" or whether the fees related to transactions encompassed by the loan agreement. An agreement to pay "actual" legal fees cannot be read as an agreement to pay all fees "actually charged". Actual fees refer to fees for work done within the scope of the retainer. [Emphasis added.]

[120] In Borden & Elliot v. Barclays Bank of Canada (1993), 15 O.R. (3d) 352 (Gen. Div.), at pp. 357-59, Adams J. held that an agreement by a third party to pay legal fees does not waive an assessment:

The Solicitors Act begins with s. 1 reflecting the legal profession's monopoly status. This beneficial status or privilege of the profession is coupled with corresponding obligations set out in the Act which make clear that the rendering of legal services is not simply a matter of contract. This is not to say a contract to pay a specific amount for legal fees cannot prevail. It may. But even that kind of agreement can be the subject of review for fairness.

I am further of the view that the provision (para. 6.6) to pay "reasonable legal fees" is not sufficiently express to permit me to conclude LDC compromised or forfeited its entitlement to bring this application. While the wording of the contract does not explicitly mention the assessment process under the Solicitors Act as the means to determine reasonableness, and it may be that reasonableness is not the sole criterion on a reference, the language employed fits comfortably within the policy of the Act and is best applied in that setting.

[121] However, “the terms of an agreement can figure prominently in the determination of whether special circumstances exist”: Cardillo, at para. 11. In Cardillo, the court held, at paras. 10-11:

They were indebted to Sun Life, and they negotiated and concluded a commercial agreement to satisfy their debt. The appellants confirmed their obligation to pay the total indebtedness to Sun Life, including the respondent's fees and disbursements, which were disclosed at Schedule A to the Assignment Agreement, to which they were parties …

Second, the terms of an agreement can figure prominently in the determination of whether special circumstances exist: Plazavest, at para. 17. Here, the appellants expressly acknowledged in the Assignment Agreement that they had had an adequate opportunity to read and consider it and to obtain independent legal advice before executing it. They knew that Sun Life was entitled to its "reasonable" expenses, including legal fees. They were fully informed of the legal fees and disbursements that were included in the amount paid to Sun Life. [Emphasis added.]

[122] Similarly, in Plazavest, the court held, at para. 17:

Although I would reject the contention that an agreement between a client and a lawyer may preclude the client from resorting to the Act or the inherent power of the court to seek an assessment of the lawyer's fees, I do not mean to suggest that the existence of such a contract and the terms of that contract are of no significance. As Adams J. said, the terms of the agreement may in the end prevail and dictate the fees to be paid. Furthermore, where the party seeking an assessment must show special circumstances, the terms of the agreement may figure prominently in the determination of whether those special circumstances exist: Borden & Elliot v. Barclays Bank of Canada, supra, at pp. 358-59. [Emphasis added.]

vii. A release of claims against a lawyer is not a waiver of a right to an assessment, but it is a relevant fact for the court to consider

[123] In Cardillo, the court expressed “serious concerns about the correctness of the motion judge’s decision” that a release of all claims against a party and its lawyers would be sufficient to “contract out of the Solicitors Act”: at paras. 5-6.

[124] However, as I discuss at para. 148(v) below, the court in Cardillo considered the release in that case as a factor militating against special circumstances, noting that the borrowers “signed three documents containing a comprehensive release that by its terms extended to Sun Life's legal counsel and their accounts”: at para. 11.

viii. The presence of legal counsel is a relevant factor

[125] In Cardillo, the court held that the fact that “the appellants were at all material times represented by legal counsel” was a factor militating against a finding of special circumstances: at para. 10.

ix. The third party’s failure to attempt to reserve its right to assess the accounts, or to request details of the legal expenses or copies of the account, is a relevant factor

[126] In Cardillo, the court found that there were no special circumstances justifying an assessment by the borrower who paid legal fees of the lender, relying in part on its finding that the borrower and guarantors “made no attempt to reserve their right to assess the accounts, nor did they request details of the legal expenses or copies of the accounts”: at para. 10.

x. The court must consider the totality of the circumstances in determining whether special circumstances exist.

[127] The court must consider the totality of the circumstances in determining whether special circumstances exist. In Plazavest, the court held, at para. 4:

I agree with [the applications judge] that s. 11 of the Act applies and that Plazavest was required to show "special circumstances". With respect, however, I do not agree that the language of the agreement between Plazavest and National was determinative of whether "special circumstances" existed. I think that the entirety of the circumstances, including but not limited to the terms of the agreement, should have been considered in deciding whether Plazavest had established "special circumstances". On the view I take of the entirety of the circumstances, Plazavest demonstrated "special circumstances" and was entitled to an order directing an assessment. [Emphasis added.]

[128] In Cardillo, the court held that “the court has a broad discretion to be exercised on a case-by-case basis and with an eye to all of the relevant circumstances”: at para. 8 (citing Plazavest, at para. 33).

xi. There must be evidence of an excessive account unless it is apparent on its face

[129] With respect to special circumstances arising from the quantum of the legal fees, the payor is required to lead evidence that the amount of the fees are excessive given the nature and complexity of the litigation, unless the court finds, on the basis of the size of the account, that there is some concern that the fees are excessive. In Echo Energy, the court held, at para. 31:

The appellant adduced no evidence that this amount was grossly excessive [7] given the nature and complexity of the litigation. That said, it seems to me that the size of the accounts can be a factor to consider under the first leg of special circumstances.

[130] Similarly, in Cardillo, the court held that the borrower “failed to demonstrate that the accounts were grossly [8] excessive”: at para. 12.

[131] It is not the role of the court on an application for an assessment based on excessive fees to conduct the actual assessment. Such a position would be contrary to the settled law that payment of the account results in a presumption of acceptance, requiring proof of special circumstances to obtain an assessment.

[132] Based on the approach in Echo Energy and Cardillo, the court must (i) consider the record before it to determine whether there is sufficient evidence, based on the size of the account and the nature and complexity of the litigation, to find some basis for concern that the fees paid were (at a minimum) excessive or (ii) determine, on the face of the fees charged, that there are special circumstances justifying an assessment.

2. Case law which has considered the factors relevant to determining whether special circumstances exist when a third party seeks an assessment of legal fees paid (or sought to be paid)

[133] There are three Court of Appeal decisions relied upon by the parties, in which the court considered the factors relevant to determining whether special circumstances exist when a third party seeks an assessment of legal fees paid (or sought to be paid): Plazavest, Cardillo, and Temedio.

[134] I have referred to all of those cases above with respect to the general principles to be considered by the court on an application for an assessment under s. 9(2). I now review those cases in more detail, as each party seeks to rely on, or distinguish, the above decisions with respect to the facts in the present case.

i. Plazavest

[135] Chronologically, Plazavest was the first Court of Appeal decision before the court on this application (decided in 2000), and was relied upon primarily by Serenity. In Plazavest, the court summarized the relevant facts, at para. 1:

The appellant ("Plazavest") borrowed money from the respondent, the National Bank of Canada ("National"). As a term of that loan agreement, Plazavest agreed to pay National's legal fees relating to the loan transaction. National retained the respondent, Kelly Affleck Greene ("Kelly Affleck") who provided legal services and eventually submitted their bill to National. National requested that Plazavest pay the bill, and when Plazavest declined, National, pursuant to a term of the loan agreement with Plazavest, paid the bill from funds held in Plazavest's account. Plazavest then brought an application seeking an order directing that National deliver copies of Kelly Affleck's legal bills to Plazavest and an order directing that the bills be referred for assessment pursuant to the Solicitors Act, R.S.O. 1990, c. S.15 (the "Act").

[136] Under the loan agreement, Plazavest was required to pay “all legal expenses actually charged”. The applications judge relied on that provision to find that Plazavest “could not demonstrate ‘special circumstances’ justifying an order directing an assessment”: at para. 2.

[137] The Court of Appeal reversed the decision of the applications judge and ordered the assessment of the legal fees. The Court of Appeal held that “three factors are particularly significant in determining whether special circumstances exist here”: at para. 36.

[138] The first factor was that Plazavest had never agreed to pay the fees requested by National, resulting in National unilaterally withdrawing the funds from Plazavest’s account, as it was entitled to do under the agreement. The court held, at para. 36:

First, the payment to Kelly Affleck was made on Plazavest's behalf by National over the express objection of Plazavest. Plazavest had made it clear that it did not agree with the amounts claimed in the bills provided to National by Kelly Affleck. In this circumstance, the normal inference concerning the propriety of the bills flowing from the payment of the bills cannot be made. It cannot be said that Plazavest is seeking to challenge legal bills which, by its earlier conduct, it had accepted as appropriate. To the contrary, in bringing this application, Plazavest was maintaining the same position it had taken from the time it was first advised of the amount of the bill. Denying an assessment in these circumstances does not further the purpose underlying s. 11 of the Act: see Enterprise Rent-a-Car v. Shapiro, Cohen, Andrews, Finlayson (1999), 46 O.R. (3d) 257 (C.A.), supra, at p. 265. [Emphasis added.]

[139] The second factor was that National refused to provide information about the majority of bills. The court held, at paras. 37-40:

Second, when Plazavest initiated this application, it had virtually no information concerning the work done by Kelly Affleck for which the law firm was claiming fees in excess of $32,000. Plazavest was not the client and could not have first hand knowledge of what work Kelly Affleck had done on the relevant transactions. Plazavest requested the bills when National demanded payment. National provided one bill referable to a very small part of the overall amount claimed by Kelly Affleck but refused to provide the remaining bills. In effect, National took the position that Plazavest was obligated to pay the legal fees but was not entitled to any information concerning the work done to earn those fees. National eventually modified its position somewhat and did provide Plazavest with the bills given to it by Kelly Affleck. The bills given to Plazavest were, however, edited on the basis of solicitor-client privilege and gave Plazavest only partial information as to the work done by Kelly Affleck. The edited bills were provided long after National had paid the bill from Plazavest's account.

National's refusal to give the bills to Plazavest before paying the legal fees from Plazavest's account, and its subsequent providing of only edited bills to Plazavest are important factors which tells in favour of directing an assessment. A third party who has agreed to pay a client's legal bills is entitled, subject to any sustainable solicitor-client privilege claim, to information in the client's possession which is relevant to the determination of whether the legal bills are properly payable by the third party.

I would think that in the normal course, a client in the position of National should provide copies of the legal bills to the third party who was responsible for paying those bills. If the client has legitimate concerns that the bills will reveal information protected by the solicitor-client privilege, the client should provide the third party with a description of the legal work done and the fees charged for that work which will protect the privilege but still allow the third party to make an informed decision as to its obligation to pay that bill.

Had National been more forthcoming in providing details as to the services rendered by Kelly Affleck, it may well have avoided this application altogether. At a minimum, it would have been in a much better position to argue that Plazavest could not demonstrate "special circumstances". [Emphasis added.]

[140] Third, the court held that National’s refusal to provide information resulted in the necessity of an assessment to determine whether the fees charged were “incurred in relation to the transactions arising out of the loan agreement”, as required under the loan documentation. The court held, at paras. 43 and 44:

I do not, however, accept National's submission that the language of the agreement tells against an assessment. Plazavest agreed to pay actual legal fees and expenses incurred in relation to the transactions arising out of the loan agreement. Given National's position, Plazavest had no way, other than through the assessment process, of determining whether the amounts claimed in the bills met these two criteria. I see nothing in the language of the 1997 agreement which should foreclose Plazavest's resort to an independent arbiter to determine whether the fees claimed in fact came within the description of the fees which Plazavest had agreed to pay. The analysis of Adams J. in Re Borden & Elliot v. Barclays Bank of Canada, supra, at pp. 358-59, although directed to an agreement requiring that the third party pay "reasonable" fees, seems to me to have equal application to the 1997 agreement. Plazavest agreed to pay actual legal fees and expenses incurred in relation to the loan transaction. It did not agree to pay any and all fees claimed by Kelly Affleck. The terms of the 1997 loan agreement may well limit the arguments available to Plazavest on an assessment, but in my view they should not preclude that assessment.

Plazavest was entitled to satisfy itself that the legal fees and expenses which were claimed met the criteria set out in the 1997 agreement. National chose to deny Plazavest the relevant information and to pay Kelly Affleck's fees from Plazavest's account over Plazavest's express objection. Absent an assessment by Plazavest, there will be no independent review of the fees and no way of knowing whether they are truly covered by the 1997 agreement. In my view, these factors combine to constitute special circumstances within the meaning of s. 11 of the Act. This is a case where an assessment should be ordered. [Emphasis added.]

ii. Cardillo

[141] Chronologically, Cardillo was the second Court of Appeal decision before the court on this application (decided in 2018), and was relied upon primarily by Lenczners. In Cardillo, the appellant borrower (Medcap) sought an assessment after paying the legal fees claimed by the lender (Sun Life): at para. 7.

[142] The legal fees were set out in a schedule to an Assignment Agreement pursuant to which Medcap (i) repaid Sun Life and (ii) released Sun Life’s lawyers from any claims. The court summarized the relevant facts at paras. 1-3:

Sun Life Assurance Company of Canada ("Sun Life") entered into a loan agreement with Medcap Real Estate Holdings Inc. ("Medcap"), one of the appellants. The loan was secured by: (i) a mortgage over real property, (ii) a general security agreement; and (iii) a personal guarantee signed by John Cardillo, the other appellant.

Ten years later Sun Life retained the respondent law firm to take the necessary steps to enforce the security and to collect the amounts due. Ultimately Sun Life and the appellants entered into a Forbearance Agreement in connection with Medcap's debt, which was then in excess of $1.5 million. The appellants, among other things, agreed that Medcap would reimburse Sun Life for all reasonable expenses, including legal fees, and that they were estopped from disputing the amount owing. Further, the appellants released Sun Life and its "attorneys, advisors and other representatives" from claims in connection with the Forbearance Agreement or the original loan agreement.

A Forbearance Extension Agreement which extended the time for payment contained an identical release. Contemporaneous with the payment of the amounts due the parties entered into an Assignment Agreement, assigning the debt, loan agreement and underlying security to 2503866 Ontario Ltd. Schedule "A" to this agreement set out a summary of Medcap's indebtedness to Sun Life, which included specific amounts for legal fees and disbursements: $89,065.68, which was capitalized and included in Medcap's debt to Sun Life, and $14,671.12 for further legal fees. The Assignment Agreement also contained a comprehensive release in essentially the same terms as the first two releases. Sun Life paid each of the four accounts that were rendered by the respondent. [Emphasis added.]

[143] The court reviewed the decision of the motion judge, who had held that the release precluded an assessment. The court held, at paras. 4 and 5:

Subsequently, the appellants obtained a registrar's order for the delivery and assessment of the respondent's accounts. Eventually the respondent moved for an order declaring that the three releases precluded the assessment of the various legal accounts rendered to Sun Life. The motion judge granted the motion and declared "that the Releases forever preclude the assessment of, or any other mater pertaining to, the [four accounts of Aird & Berlis LLP]". This order is the subject of this appeal.

The primary issue before the motion judge was whether the releases were effective to preclude the assessment of the respondent's accounts on the basis that they attempted to contract out of the Solicitors Act, R.S.O. 1990 c. S.15. The motion judge noted that in Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, 96 O.R. (3d) 171 this court held that parties cannot contract out of the Act for public policy reasons. However, he held that the rationale in Jean Estate did not apply to the case at bar where the parties were sophisticated commercial parties acting with the benefit of legal advice. He concluded that the parties were not seeking to contract out of the Solicitors Act, but that they had agreed that the appellants would be precluded from challenging its payment to Sun Life, which included the legal fees. [Emphasis added.]

[144] As I discuss at para. 123 above, the court expressed “serious concerns about the correctness of the motion judge’s decision” that a release of all claims against a party and its lawyers would be sufficient to “contract out of the Solicitors Act”: at paras. 5-6.

[145] However, the court dismissed the appeal because the appellant Medcap had not established special circumstances justifying an assessment. The court relied on the principles in Plazavest, which (i) “required the appellant to demonstrate special circumstances justifying the assessment following payment pursuant to s. 11”; and (ii) gave the court “a broad discretion to be exercised on a case-by-case basis and with an eye to all of the relevant circumstances”: at paras. 7-8.

[146] The court further held that (i) “[s]pecial circumstances will tend to either undermine the presumption that the account was accepted as proper or show that the account was excessive or unwarranted”; and (ii) “[u]nder s. 9(2), the special circumstances to be considered include any additional special circumstances applicable to the third party who made the payment”: at para. 8.

[147] Applying the above “analytical approach” which the court held should have been followed by the motion judge, the court held that it was “not satisfied that there are special circumstances that would warrant an order directing an assessment of the respondent's legal accounts”: at para. 9.

[148] The court relied on the following factors (quoted verbatim):

(i) [T]he appellants were at all material times represented by legal counsel. They were indebted to Sun Life, and they negotiated and concluded a commercial agreement to satisfy their debt. The appellants confirmed their obligation to pay the total indebtedness to Sun Life, including the respondent's fees and disbursements, which were disclosed at Schedule A to the Assignment Agreement, to which they were parties: at para. 10;

(ii) [The appellants] made no attempt to reserve their right to assess the accounts, nor did they request details of the legal expenses or copies of the accounts: at para. 10;

(iii) [T]he appellants expressly acknowledged in the Assignment Agreement that they had had an adequate opportunity to read and consider it and to obtain independent legal advice before executing it. They knew that Sun Life was entitled to its "reasonable" expenses, including legal fees: at para. 11;

(iv) [The appellants] were fully informed of the legal fees and disbursements that were included in the amount paid to Sun Life: at para. 11; and

(v) [The appellants] signed three documents containing a comprehensive release that by its terms extended to Sun Life's legal counsel and their accounts: at para. 11.

[149] The court further held that the appellants “also failed to demonstrate that the accounts were grossly excessive”: at para. 12. Those accounts totalled $103,736.80, for enforcement of a debt which was “in excess of $1.5 million”: at paras. 2 and 3.

iii. Temedio

[150] Chronologically, Temedio was the third Court of Appeal decision before the court on this application (decided in 2019), and was relied upon primarily by Serenity.

[151] In Temedio, the appellant (Temedio) owned a residential unit in the respondent condominium corporation. Complaints were made against Temedio relating to noise and profanity, which resulted in the respondent retaining counsel for (i) pre-litigation matters, (ii) a compliance proceeding in which the respondent sought eviction or compliance with the rules of the condominium, and (iii) an appeal by Temedio.

[152] The condominium corporation sought payment of all legal fees incurred pursuant to s. 134(5) of the Condominium Act, 1998, S.O. 1998, c. 19, which provides that costs of obtaining the order “shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit”.

[153] Temedio did not pay the fees requested. Instead, Temedio brought an application for an assessment.

[154] The Court of Appeal held that it was not necessary to determine the issue raised before the application judge as to whether it was necessary (because Temedio had not paid the legal fees) for Temedio to establish special circumstances in order to seek an assessment. Instead, the court held that “even if the application judge was right in requiring Ms. Temedio to show special circumstances, she erred in failing to find that special circumstances were present, sufficient to warrant assessment of all of the bills”: at para. 25.

[155] The court held that special circumstances arose based on the concerns raised by Taylor J., the judge who heard the compliance proceedings and held that the eviction proceedings were “draconian”, “not an appropriate remedy”, “heavy-handed”, and may well have resulted in unnecessary costs: at paras. 7 and 9.

[156] The court held that the decision of Taylor J. justified a finding of special circumstances to warrant an assessment. Zarnett J.A. held, at paras. 31-32:

Taylor J. voiced his disapproval of the conduct of the Corporation in seeking the extreme remedy of eviction (which the Corporation did not obtain) and observed that a less heavy-handed approach on its part might have avoided litigation altogether. Ms. Temedio was on the receiving end of that unsuccessful strategy and approach, yet to the extent the legal bills to the Corporation included time spent on it, Ms. Temedio is being asked to pay for it. The extent to which the fees charged may include amounts for pursuing the failed eviction strategy and the heavy-handed approach raise questions about the amount of the legal bills. So too does the fact that Taylor J. limited the Corporation to an award of $2,500 in costs for the compliance proceeding; this also raises a question about the total fees of $52,000 charged for that proceeding.

Taken together and viewed in light of the correct principle, there were sufficient special circumstances to warrant a review of the compliance proceeding bills at an assessment at the request of a third party like Ms. Temedio given that her request is entitled in law to favourable consideration. [Emphasis added.]

[157] I now apply the general principles discussed above, as well as the trilogy of cases from the Court of Appeal which has considered the factors relevant to determining whether special circumstances exist when a third party seeks an assessment of legal fees.

(ii) Application of the law to the present case

[158] Serenity submits that there are two bases to establish special circumstances justifying an assessment: (i) the evidence rebuts the presumption that payment of the account constitutes acceptance of the account and (ii) the Lenczners account was excessive. I address each of these submissions below.

(a) Factors related to the payment of the account

1. The positions of the parties

[159] Serenity relies primarily on Plazavest, and submits that as in Plazavest, special circumstances exist despite payment of the account.

[160] Serenity relies on the following factors to submit that special circumstances exist (quoted from Serenity’s factum):

(i) “Park Lawn’s failure to provide copies of the accounts and meaningful details about the fees”, and

(ii) “[T]he extreme pressure that Serenity was under” because of “the imminent receivership, both at the time the Forbearance Agreement was signed and upon the expiry of the forbearance period”.

[161] Lenczners relies primarily on Cardillo, and submits that special circumstances do not exist.

[162] Lenczners relies on the following factors to submit that special circumstances do not exist (quoted verbatim from Lenczners’ factum):

(i) “[T]he various agreements signed by [Serenity] are determinative”;

(ii) “[Serenity] could have, but chose not to, raised issues with respect to the quantum of legal fees during the negotiation of the Forbearance Agreement (as it did with the receiver’s fees)”, but “made no attempt to reserve their right to assess the accounts” (citing Cardillo);

(iii) “Mr. Marchi’s suggestions that further inquiries about the legal fees were frustrated by the time pressure of the [Receivership] Motion is without credibility”; and

(iv) “[Serenity] had ample time to request information”.

[163] For the reasons that follow, I agree with Lenczners and find that special circumstances do not exist to justify an assessment.

[164] I now address the relevant factors.

2. Factor 1: The agreements between the parties

[165] In the present case, as did Medcap in Cardillo, Serenity paid the legal fees with full knowledge of the legal fees sought, and pursuant to an agreement between sophisticated commercial parties, represented by counsel.

[166] In Cardillo, the court relied on the evidence that in all documents related to the loan and the forbearance agreement, the borrowers “confirmed their obligation to pay the total indebtedness to Sun Life, including the respondent’s fees and disbursements”, while “at all material times represented by legal counsel”: at para. 10.

[167] These same factors arise in the present case. Serenity agreed to pay all reasonable fees related to enforcement of the Note. That agreement was reiterated in the Note, the GSA, and again in the Forbearance Agreement negotiated by the parties.

[168] As in Cardillo, in the present case Serenity “had an adequate opportunity to read and consider” its contractual obligations and “to obtain independent legal advice before executing” the documents: at para. 11.

[169] Further, Serenity, as did Medcap in Cardillo, provided a release of all claims arising from the dealings between the parties.

[170] Serenity seeks to distinguish the release in Cardillo since it specifically included claims against “lawyers” and claims for “accounts”. However, I find that the broad release in s. 8.01 of the Forbearance Agreement in the present case against any “agent” of Park Lawn from any “proceeding, whether judicial, administrative or otherwise, with respect to any Claims” is broad enough to include a claim against a lawyer, who acts as an agent of its client, for any “administrative or otherwise” claim, including an assessment.

[171] It is settled law from Plazavest that neither an agreement to pay legal fees, nor a release, necessarily precludes an assessment.

[172] However, it is settled law that an agreement to pay legal fees and a release (i) “may figure prominently in the determination of whether those special circumstances exist”; and (ii) may “in the end prevail and dictate the fees to be paid”: Plazavest, at para. 17. Both were important factors considered by the court in Cardillo.

[173] In the present case, while neither the release nor the agreements to pay are determinative factors to reject a request for an assessment, these factors are important since Serenity, as a sophisticated commercial party represented by counsel, agreed to pay reasonable legal fees and signed a release. Serenity now comes to the court to submit that special circumstances exist which “demand an assessment” because of “the importance of protecting the interests of the client and/or public confidence in the administration of justice”: Clatney, at para. 86.

[174] The approach taken by Serenity is, in effect, an attempt to circumvent an agreement with Park Lawn, by seeking an assessment. In circumstances where Serenity raised no challenge to legal fees, Serenity would ask the assessment officer to reduce the amount of legal fees. If successful on the assessment, Lenczners would be required to reimburse some of the legal fees paid by Serenity, which would then leave an additional balance to presumably be paid by Park Lawn, who had already paid its legal fees to Lenczners and negotiated an agreement which contemplated Serenity’s payment of the known amount of $168,209.64 for Park Lawn’s legal fees. Such a result neither advances “public confidence in the administration of justice”, nor is required for “protecting the interests of the client”.

3. Factor 2: Evidence related to Serenity’s requests for accounts

[175] Serenity seeks to rely on Plazavest to distinguish the importance of the agreements and release. Serenity submits that as in Plazavest, “Park Lawn’s refusal to provide copies of the accounts or meaningful particulars prior to payment, when asked, are key factors in favour of the assessment”. I do not agree.

[176] There is a significant distinction between the facts in Plazavest and those in the present case. In Plazavest, National “took the position that Plazavest was obligated to pay the legal fees but was not entitled to any information concerning the work done to earn those fees”: at para. 37. National’s “refusal to give the bills to Plazavest before paying the legal fees from Plazavest’s account” was an “important” factor “which tells in favour of directing an assessment”: at para. 38.

[177] In the present case, Park Lawn never took such a position.

[178] To the contrary, Park Lawn responded to all of Serenity’s requests for information about legal fees. While Park Lawn and National both provided “edited bills” to their borrowers, the important distinction from Plazavest is that National only provided the edited information “long after National had paid the bill from Plazavest’s account”: at para. 37, in circumstances where Plazavest had refused to pay the account and advised National that Plazavest “would assess the accounts if no agreement could be reached”: at paras. 8 and 37.

[179] In the present case, when Serenity requested a “detailed payout statement and a direction re funds”, Park Lawn provided it through counsel. When Serenity requested “full particulars and copies of the legal accounts referred to in the statements”, Park Lawn provided a redacted spreadsheet which provided a summary of each timekeeper, the number of hours worked, and the hourly rate, as well as every daily entry for every timekeeper on the file, albeit with the description of the work redacted.

[180] As in Cardillo, Serenity received a discharge statement, akin to the “summary of Medcap’s indebtedness to Sun Life, which included specific amounts for legal fees and disbursements”: at para. 3.

[181] The fee information in Cardillo was provided “contemporaneous with the payment of the amounts due”, as set out as a schedule to the assignment agreement: at para. 3. Consequently, Medcap was “fully informed of the legal fees and disbursements that were included in the amount paid”: at para. 11. In the present case, the discharge statements and redacted spreadsheet set out the legal fees claimed by Park Lawn, and, as in Cardillo, Serenity paid those fees with full knowledge of the quantum sought.

[182] Serenity now submits that the redacted spreadsheet fails to disclose sufficient information to determine the work that was done. However, as in Cardillo, Serenity never raised any concern as to the sufficiency of the information or the quantum of legal fees upon being initially advised of the amount in the discharge statement and later given daily docket entries in the redacted spreadsheet.

[183] As in Cardillo, at para. 10, Serenity led Park Lawn to believe that the fee information provided by Park Lawn was satisfactory. Serenity paid the legal fees without any protest or challenge, and “made no attempt to reserve their right to assess the accounts”, nor did they request further “details of the legal expenses or copies of the accounts” after receipt of the redacted spreadsheet.

[184] In contrast, at all times in Plazavest, National refused to provide the information requested about the legal fees. Further, Plazavest reserved its right to assess National’s accounts. Plazavest “advised National that Plazavest could not agree with the quantum of the bills and would assess the accounts if no agreement could be reached”: at para. 8.

[185] Also in contrast to the present case, the appellant condominium owner in Temedio only learned of the legal fees when the respondent claimed them under the Condominium Act. There could be no suggestion that the appellant knew of the fees sought and agreed without reservation.

[186] In the present case, the parties were sophisticated clients represented by counsel. Marchi claims that he (i) was “shocked when [he] saw $160,436.00 listed as the [Lenczners] legal fees” in the discharge statement and (ii) “had no way of knowing what all the fees were for” when he received the redacted spreadsheet. However, as in Cardillo, and unlike in Plazavest, Serenity never raised any concern about the accounts, nor requested any further unredacted information.

[187] If Serenity had raised its purported concerns as to the proposed legal fees, and Park Lawn had refused to provide further information and/or Serenity had then refused to pay the legal fees without an assessment, the situation would have been more akin to that in Plazavest. Serenity did not do so.

[188] If Serenity had raised any concern as to the quantum of legal fees or sufficiency of information provided, there is no evidence that Park Lawn would not have considered those concerns and provided more information or attempted to negotiate a resolution. To the contrary, Serenity had successfully raised and negotiated the issue of capping the receiver’s fees as a term of the Forbearance Agreement.

[189] Instead, Serenity raised no issue about the amount of legal fees upon receipt of the redacted spreadsheet, and paid the legal fees. Consequently, in the context of sophisticated commercial negotiations between the parties, Park Lawn had no reason to conclude that the quantum of legal fees was being challenged.

[190] Such an approach is not consistent with Plazavest. When a party objects to payment of fees from the outset, or makes a payment by reserving a right to challenge the fees through an assessment, then sophisticated commercial parties all operate from the same playbook, understanding what has been agreed to by the parties and what is outstanding. Serenity did not take that approach in the present case.

[191] Consequently, I find that the facts of the present case are similar to those in Cardillo, and do not support a finding of special circumstances.

4. Factor 3: The effect of the Receivership Motion

[192] Serenity seeks to distinguish Cardillo on the basis that there was no “imminent receivership” in that case.

[193] Throughout his evidence (summarized at para. 82 above), Marchi asserts that Serenity “had no choice but to pay” the legal fees requested. Marchi asserts that if Serenity had not done so, “the transaction would not close, with consequences that would have been “devastating both financially and to our ongoing businesses”.

[194] Marchi states that Serenity “had no reason to believe that legal fees could be reduced by negotiation” and that Serenity “frankly feared broaching the subject of [Park Lawn’s] inordinately high fees which could have resulted in an even accelerated effort to appoint the receiver or the imposition of a further term that we agree not to challenge fees in exchange for a few more days forbearance”. In essence, Serenity’s position is that it was too risky to question legal fees, since “[a] receivership appointment would have likely killed our operating funeral establishments”.

[195] However, the above statements are bald assertions, raising hypothetical and speculative possibilities that are not supported by the evidence.

[196] Serenity sought to challenge uncapped receiver fees as a term of the Forbearance Agreement, in the context of the initial return of the Receivership Motion. Park Lawn did not take the hard line posited by Serenity. Instead, Park Lawn negotiated with Serenity and capped the Farber fees.

[197] When Serenity asked for details of the legal fees, Serenity did not take the position (as in Plazavest) that Serenity was not entitled to any information and was required to pay any amount proposed by Park Lawn. Instead, Park Lawn provided a redacted spreadsheet which set out every docket entry as well as a complete summary of every timekeeper, hours worked, and actual fees charged. While the work done by each timekeeper was redacted, Park Lawn never refused to provide additional information which could have summarized the work done. Serenity chose not to ask for such information and paid the legal fees without challenge or any reservation of an assessment.

[198] If Serenity had been concerned about the effect of challenging the quantum of legal fees (as Marchi suggests), it would not have asked for any details when it received the discharge statement. However, it made such a request and Park Lawn responded by providing the redacted spreadsheet which Serenity never challenged.

[199] Further, there is no evidence that Serenity could not have offered to (i) pay all outstanding amounts under the Loan except for the Lenczners account, and (ii) reserve those legal fees to be assessed. If Serenity had done so, it would have complied with its obligations to pay all amounts for principal, interest, and enforcement of the Loan, while challenging whether the Lenczners fees were “reasonable”, which was consistent with Serenity’s obligations under the Note.

[200] If Serenity had taken such an approach, it is difficult to contemplate how Serenity could have been placed into receivership. Serenity could have advised the court that it had a cheque available for the full amount of the principal, interest, and enforcement of the Loan, but was only contesting whether the Lenczners legal fees were reasonable, as was its contractual right. In such circumstances, a receivership order would have been highly unlikely.

[201] However, Serenity chose not to take any of the above steps. Instead, (i) as a sophisticated party represented by counsel, (ii) who had agreed to (a) pay all reasonable legal fees as a contractual term in the Note, GSA, and Forbearance Agreement and (b) release all of Park Lawn’s agents from any claims in any form, and (iii) knew the amount of legal fees sought, Serenity paid the legal fees and less than two weeks later sought to challenge those fees through an assessment.

[202] Marchi acknowledged on his cross-examination that Serenity’s priority was obtaining the “funding”. Any dispute over the quantum of the $168,209.64 in legal fees was de minimis in the context of Marchi seeking financing to pay off Serenity’s principal and interest obligations under the $7 million loan.

[203] For the above reasons, the Receivership Motion does not constitute a special circumstance justifying an assessment.

5. Factor 4: Serenity had ample time to challenge the quantum of legal fees

[204] Serenity had the opportunity to raise the quantum of legal fees.

[205] Upon receiving the updated discharge statement and the redacted spreadsheet on February 25, 2021, Serenity asked no further questions with respect to the fees prior to payment. Serenity paid the Loan approximately two weeks after it was due, and over a week before the return of the motion to appoint the receiver. There was ample time for Serenity to obtain such further information about the legal fees, in order to satisfy itself as to their reasonableness.

[206] Similarly, Serenity chose to not ask for unredacted entries or complete accounts prior to payment. Instead, even though there is no evidence that Serenity could not have (i) negotiated the quantum of the legal fees or (ii) proposed to pay its loan obligations while reserving the right to challenge the legal fees, Serenity took no such steps. Instead, it engaged in commercial negotiations between sophisticated parties, reached a resolution which included payment of a known amount of legal fees, and then sought to set aside that payment through an assessment.

6. Conclusion on factors related to payment of the account

[207] It is settled law that the court must take a generous approach when considering if there are special circumstances justifying an assessment sought by a third party required to pay legal fees. However, there must be sufficient evidence before the court to rebut the presumption that payment of the legal fees does not constitute acceptance of those fees. Bald assertions of pressure or fear of negotiations do not suffice.

[208] For the above reasons, I rely on the totality of the evidence and find that Serenity has not established special circumstances related to “the importance of protecting the interests of the client and/or public confidence in the administration of justice”: Clatney, at para. 86. Consequently, I find no special circumstances justifying an assessment based on the payment of the account.

(b) Whether Serenity has satisfied the court that the quantum of the fees charged by Lenczners was excessive

[209] As noted at para. 129 above, the court in Echo Energy set out the principle that a person who pays an account and then seeks an assessment based on the special circumstance of excessive fees, must adduce “evidence that this amount was grossly excessive given the nature and complexity of the litigation”, unless the court can determine, based on the fee sought, that “the size of the accounts” raises concern: at para. 31.

[210] Similarly, the court in Cardillo refused to find that the legal fees paid by Medcap “were grossly excessive”, since Medcap “failed to demonstrate” such a submission: at para. 12.

[211] In the present case, Serenity led no evidence which established that the Lenczners fees were excessive. [9]

[212] Marchi makes the bald assertion that he was “shocked” when he received the discharge statement which set out Lenczners’ substantial indemnity fees. However, Serenity chose not to file any evidence as to the accounts charged by its solicitor, Sereda, for legal services during the litigation arising from Serenity’s default under the Loan.

[213] Further, it is reasonable to conclude that whatever Sereda’s fees might have been, Lenczners’ fees would justifiably have been greater, as it was Lenczners who prepared a statement of claim, the Forbearance Agreement, and the materials for the Receivership Motion.

[214] Unlike in Temedio, there is no evidence that any of the enforcement steps taken by Serenity were “draconian”, “not an appropriate remedy”, “heavy-handed” or resulted in unnecessary costs. While Serenity submits that no enforcement was required to obtain payment because the Loan was secured, Serenity was neither able to obtain financing by the due date under the Loan, nor by the extended date under the Forbearance Agreement. For the reasons set out at para. 30 above, receivership proceedings were the best option for Park Lawn to obtain prompt payment of the Loan. Park Lawn was not required to adopt an option (such as power of sale or continued waiting for financing) that was not in its interests.

[215] In his affidavit, Marchi takes issue with certain aspects of the accounts, such as the number of timekeepers, and the number of hours spent for certain tasks such as reviewing pleadings or preparing the receivership motion materials. However, it is not the role of the court to, in effect, conduct an assessment as part of the request for an assessment.

[216] On an application for an assessment based on excessive fees paid by the client or third party, the court must either (i) have some evidence that raises a concern that the fees were excessive or (ii) find that there is such a concern based on the fees charged: Cardillo, at para. 12. A review of accounts at a detailed level (which would be done at an assessment) is neither appropriate nor consistent with the need for special circumstances to protect public confidence in the administration of justice.

[217] In the present case, there is no basis for the court to conclude that a decision to involve several lawyers with important roles in the case (at various years of call and hourly rates) was a grossly excessive (or in any way excessive) manner of staffing a file. There is no basis for the court to conclude that, on its face, the hours billed to preparing complex chronologies or commercial receivership materials were grossly excessive (or in any way excessive).

[218] To the contrary, the totality of the fees sought, $168,209.64, is consistent with the Court of Appeal’s approach in Cardillo, in which it held that the legal fees and disbursements claimed of $103,736.80, for enforcement of a debt which was “in excess of $1.5 million”, was not “grossly excessive” (at paras. 2, 3 and 12).

[219] In the present case, the amount outstanding on the loan was over $7 million, and Lenczners was required to not only prepare a statement of claim, but also to engage in lengthy negotiations, draft a forbearance agreement (as in Cardillo), and also to prepare materials and submissions for a receivership motion for which Serenity sought a change of venue and an adjournment based on its Equity Submission that the Loan was not intended to be repaid.

[220] In such circumstances, legal fees of $168,209.64 are within the range of reasonableness accepted by the court in Cardillo, and raise no issue of excessive fees on the face of the amount sought.

[221] By way of contrast, in Temedio, relied upon by Serenity, the court had evidence before it which established a concern that the fees claimed by the condominium corporation were excessive. In particular, as I discuss at paras. 155 and 156 above, during the compliance requirement hearing Taylor J. (i) strongly questioned the strategy of bringing unsuccessful eviction proceedings, (ii) suggested that costs were wasted as a result, and (iii) awarded a very low amount of costs to reflect those factors. There is no such evidence before the court in the present case.

[222] For the above reasons, I find that Serenity has failed to establish special circumstances justifying an assessment based on excessive fees.

Order and costs

[223] For the above reasons, I dismiss the application and quash the order for an assessment. I order that Serenity pay costs of $15,000 (inclusive of taxes and disbursements) to Lenczners within 30 days of this order, an amount agreed to by the parties for the costs of this application.

GLUSTEIN J. Date: 20220225

COURT FILE NO.: CV-21-00662399-0000 DATE: 20220225 ONTARIO SUPERIOR COURT OF JUSTICE SERENITY VALLEY P. LAWN MANAGEMENT INC. Applicant AND: LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP Respondent

reasons for decision Glustein J. Released: February 25, 2022

[1] (now Lenczner Slaght LLP and referred to in these reasons as Lenczners) [2] Serenity and a company named Serenity Valley Mausoleum Inc. entered into the loan agreement as parties under the Note and GSA described at paras. 7 and 10 below, but as Serenity is the only applicant, I refer only to it throughout these reasons. [3] (unless otherwise stated, all statutory references are to the Solicitors Act) [4] George Marchi (Marchi) is the principal of Serenity and provided the affidavit evidence on behalf of Serenity in this application. [5] The Loan was made in connection with a project for a proposed cemetery and mausoleum development known as Pine Valley in Vaughan, Ontario. [6] Marchi was authorized to communicate directly with Lenczners on these issues, even though still represented by Sereda. [7] I do not address whether the standard to establish special circumstances requires a third party to lead evidence that the fees were “grossly” excessive (as referred to in both Echo Energy and in Cardillo), or only to lead evidence that the fees were excessive. That issue was not before the court in either of those decisions, and does not arise in the present case as, for the reasons I discuss below, Serenity has not met the lower standard of establishing that the Lenczners fees were “excessive”. [8] Ibid. [9] See footnote 7 above.