COURT FILE NO.: CV-20-82965

DATE: 2022-07-29

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Gibsons LLP, Solicitors

AND

Rui De Lima and 255 Richmond Road Holdings Inc., Applicants

AND

Gibsons LLP and D. Kenneth Gibson, Respondents

BEFORE: The Honourable Mr. Justice Marc Smith

COUNSEL: John Parr Telfer, Counsel for the Solicitors Patrick Simon, Counsel for the Applicants Jason Rabin, Counsel for the Respondents

HEARD: June 8, 2022, by video conferencing

REASONS FOR DECISION

M. Smith J

[1] This matter deals with the assessment of a solicitor’s accounts.

[2] Rui De Lima and 255 Richmond Road Holdings Inc. (“Applicants”) retains the services of Gibsons LLP and D. Kenneth Gibson (“Respondents”) to negotiate refinancing and to solicit potential buyers of the Applicants’ commercial property.

[3] To pay the Respondents’ legal costs, the Applicants obtain a loan from a company called Law Loans Ltd. (“Law Loans”). Mr. Gibson is the controlling mind of Law Loans. The Applicants agree that a charge be registered on their property.

[4] On January 19, 2021, McLean J. orders and directs that the Respondents’ accounts be assessed by an assessment officer. The purpose of the assessment is to determine the quantum of the legal fees, which are secured by a mortgage on the Applicants’ properties.

[5] The assessment is heard by Madam Lucie Bender (“Assessment Officer”) between June 7, 2021, and June 11, 2021.

[6] On August 10, 2021, the Assessment Officer delivers an oral decision and rules that the Respondents’ accounts be reduced from $221,336.66 to $35,000, and that it be further reduced by an additional $15,000 for the costs of the assessment.

[7] The Respondents bring a motion under r. 54.09(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”), opposing the confirmation of an assessment made by the Assessment Officer.

[8] In deciding if the assessment should be confirmed, there are two issues to be determined:

a. Are the Assessment Officer’s reasons sufficient?

b. Did the Assessment Officer exceed her jurisdiction?

[9] For reasons that follow, the Respondents’ motion is granted.

Position of the parties

Respondents

[10] The Respondents have two main arguments. The first argument is that the decision of the Assessment Officer cannot be confirmed because the reasons that were delivered are inadequate. While the Assessment Officer lists the factors to consider in the assessment of the Solicitors’ accounts, she makes no substantive findings of fact or application of the law. The Assessment Officer fails to explain how she arrived at the decision to reduce the legal account by 91%.

[11] The second argument flows from the first, in that the Assessment Officer made her decision on the basis of the Applicants’ theory of the case, namely that the retainer was motivated by revenge and greed. It is submitted that the Assessment Officer exceeded her jurisdiction by hearing arguments concerning the retainer agreement.

Applicants

[12] The Applicants say that the Assessment Officer is an expert in her field. The decision is well formulated. She reviewed and considered the appropriate factors and assessed the Solicitors’ accounts at $35,000 because that represented the fair and just value of the work that the Applicants should pay for the services rendered by the Respondents in this matter. The Applicants argue that the Assessment Officer made no mistake in principle.

[13] Regarding the jurisdiction, the Applicants submit that the Assessment Officer did not exceed her jurisdiction. She made no findings in regards to the theory of the Applicants’ case. The Assessment Officer only assessed the quantum, as directed by McLean J., and the finding of quantum should not be disturbed.

Legal principles

[14] An assessment officer’s decision is entitled to considerable deference. The hearing of an appeal is not an opportunity for the reviewing court to rehear the assessment and come to its own conclusion as to what is reasonable, absent an error in law, misapprehension of the evidence, palpable and overriding error on a factual matter, or an assessment amount that is so unreasonable as to constitute an error in principle: Rabbani v. Niagara (Regional Municipality), 2012 ONCA 280, [2012] O.J. No. 1868, at para. 6.

[15] An assessment officer must set out the reasons for the assessment, which includes an analysis of the factors and a proper review of the evidence. There must be a real analysis, not only a conclusory reasoning: Tebyanian v. Jagtoo, 2016 ONSC 2172, [2016] O.J. No. 1623, at paras. 14 and 15.

[16] It is an error in law if the trier of fact fails to provide an explanation for the decision that is “sufficiently intelligible so as to permit appellate review.” Also, the sufficiency of reasons is assessed using a functional and contextual approach: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at paras. 1, 24-26, and 55.

[17] An appeal court cannot intervene merely because it believes that the trier of fact poorly expressed themselves: F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at para. 99.

[18] An assessment officer has jurisdiction to address negligence and fraud. Such a jurisdiction is circumscribed by the assessment officer’s role of taking into account what the client has paid and evaluating the worth of the lawyer’s services. There is not, however, an untethered jurisdiction to make findings against a solicitor of negligence, fraud, embezzlement, misappropriation, or defalcation: Calin A. Lawrynowicz, Barristers & Solicitors v. Marino Estate, 2016 ONSC 2065, [2016] O.J. No. 1513, at para. 160.

Analysis

Issue #1 – Are the Assessment Officer’s reasons sufficient?

[19] The Assessment Officer’s decision of reducing the Respondents’ account from $221,336.66 to $35,000 is drastic. The parties are entitled to know why the Assessment Officer made this decision and how certain fees and/or disbursements have been awarded or denied. In my view, the Assessment Officer failed to do so in her decision.

[20] At page 3 of the Assessment Officer’s decision, she properly sets out the nine well-established criteria to be considered as articulated by the court in Cohen v. Kealy, (1985) 10 O.A.C. 344 (C.A). The Assessment Officer also adds a tenth criteria, which she notes is an added factor since the release of the Cohen decision. The criteria are as follows:

a. The time expended by the solicitor.

b. The legal complexity of the matter.

c. The degree of skill and competence demonstrated by the solicitor.

d. The responsibility assumed by the solicitor.

e. The monetary value.

f. The importance of the matter to the client.

g. The results achieved.

h. The expectation of the client as to the amount of fees.

i. The ability of the client to pay.

j. The credibility.

[21] Although the test is accurately laid out in the decision, the Assessment Officer does not engage in a meaningful analysis of each of the ten criteria. Rather, I find that the decision is mostly a summarization of the evidence and the position of the parties, without the making of substantive findings and conclusions.

[22] I am mindful that decisions do not need to be perfect. However, a decision must be adequate and provide for meaningful appellant review. While the Assessment Officer is undoubtedly very experienced and knowledgeable on the test that needs to be applied in assessing a solicitor’s account, I find, with the greatest respect, that her reasons are inadequate. I am unable to understand her path of legal reasoning. I am also unable to fully comprehend why she decided to markedly reduce the Respondents’ accounts or how she arrived at the sum of $35,000.

[23] The Assessment Officer’s conclusions are found at pages 17 and 18 of the decision:

The – now, difficulty here in determining an amount for the account was to look at what – what amount was fair and just for Mr. De Lima to pay for services rendered by Mr. Gibson. And those services rendered had to be legal services rendered to Mr. Gibson. I had difficulty at times sort of sorting through those issues. And while I find that some of the services were in fact required and performed for the client, I did reduce the account significantly. I did find that the environmental study in the amount of $7,500 was certainly to be expected. The $11,000 regarding the mortgage that Mr. De Lima spoke of was in fact required, and there are some services that were performed by the firm that I believe are fair and just for Mr. De Lima to pay; however, not in the amount that was charged to the client.

My decision, gentlemen, is that taking into account those two matters that I mentioned, the account in the amount of $221,336,66, I am reducing to $35,000.

[24] The Assessment Officer concludes that some of the services rendered by the Respondents were required, namely the environmental study and the mortgage work, totalling $18,500. Then, without providing any specifics, she says that there is some work that is fair and just, presumably over and above the work that was undertaken for the environmental study and mortgage. I assume that the Assessment Officer assesses this additional work at $16,500 because the grand total is $35,000.

[25] I have read the Assessment Officer’s decision several times. While her decision contains some findings on certain issues, I find that they are insufficient because there is no clear explanation as to how she reached her decision that such a drastic reduction in fees was warranted. My review of the Assessment Officer’s reasons is detailed in the text that follow.

[26] First, the Assessment Officer reviews and summarizes Mr. Gibson’s testimony, in conjunction with the Cohen factors:

a. The time charged was an accurate reflection of the work that he did.

b. The matter was complex.

c. He assumed responsibility for arranging the finance.

d. The monetary value (1.5 to 1.7 million) justified the work.

e. It was important to Mr. De Lima.

f. He had the skills and competency.

g. For the results achieved, there was no refinancing to the point that was wanted but the Canadian Revenue Agency was held off and he was able to preserve Mr. De Lima’s equity.

h. Mr. De Lima was paying a premium rate for premium service.

i. Mr. De Lima had the ability to pay.

[27] The Assessment Officer makes two findings while reviewing Mr. Gibson’s evidence. At page 6 of the decision, the Assessment Officer says that “overhead items” such as telephone messages from receptionists should be included in the solicitor’s hourly rate and not charged separately. In addition, a finder’s fee of $1,000 to Law Loans should not be permitted. But the Assessment Officer does not provide an explanation or analysis as to how many of these “overhead items” should not be charged or the dollar value that this represents. During argument, counsel for the Respondents noted that the majority of the fees were charged by Mr. Gibson.

[28] Second, the Assessment Officer reviews and summarizes Mr. De Lima’s evidence, but her review is not as clearly tied to the Cohen factors as she had done with Mr. Gibson’s evidence:

a. He had not been represented fully.

b. He did not receive the service that he was expecting.

c. He resented the service that he received.

d. It was difficult for him.

e. The financial aspect was troubling for him, and he blames Mr. Gibson for putting him in that situation.

[29] The review of Mr. De Lima’s evidence was succinct. At page 10 of the decision, the Assessment Officer makes these findings:

a. “And, at times, I did feel convinced that he did not understand the services that he received.”

b. “But it’s clear to me that he did go to you and he did retain you, sir.”

[30] Third, from pages 11 to 15, the Assessment Officer reviews and summarizes the parties’ arguments and submissions:

Respondents

a. Mr. De Lima’s evidence was contradictory and confusing, but there were no intentional misrepresentations.

b. Mr. Gibson accomplished the mandate to refinance and find a potential buyer.

c. The environmental studies cost more than initially expected.

d. Mr. Gibson’s evidence was credible. Mr. Gibson properly and accurately undertook the work and billed it to his client.

Applicants

e. Mr. De Lima was charged $80,000 for a refinancing exercise that was deemed to fail. His debt soared.

f. Mr. Gibson was in conflict by representing both the Applicants and the mortgagor.

g. Mr. Gibson’s actions were motivated by revenge.

h. Mr. Gibson’s accounts showed a lack of explanation and specificity. He was unable to explain what happened.

i. Mr. De Lima’s financial position was precarious.

j. The work done by Mr. Gibson had no value, not a single dollar of value.

k. The time spent by Mr. Gibson was excessive, taking too much time. Mr. De Lima could not have excepted all of this time.

[31] During this initial review of the parties’ position and argument, the Assessment Officer makes a couple more findings:

a. The work undertaken by Mr. Gibson was done.

b. Mr. De Lima wanted the environmental report at a cost of $7,500.

[32] Fourth, from pages 15 to 17, the Assessment Officer summarizes the Applicants’ position regarding the Cohen factors, as stated by the Applicants’ lawyer, Mr. Simon. The Assessment Officer starts her review by saying: “So, let’s get down to the factors as explained to me by mister – Monsieur Simon.”

a. Staff documents should be covered by the Solicitor’s fees. The times seem to be excessive, such as two hours of time for an uncomplicated letter.

b. It was not a complicated matter.

c. Mr. Gibson added debt and created a crisis. Mr. De Lima’s biggest income tenant left the premises.

d. Monetary value was significant.

e. It was very important to the client.

f. No results were achieved in favour of Mr. De Lima.

g. Mr. Gibson did not demonstrate any skills or competence. Mr. De Lima’s debt load increased.

h. Mr. De Lima does not have the ability to pay. He used his retirement and pension income to pay.

i. Regarding a lease account, Mr. De Lima did not authorize the transaction.

[33] Reading the last part of the Assessment Officer’s reasons generously, she agrees with the Applicants’ position that the time was excessive in drafting letters, the matter was important to Mr. De Lima, the monetary value was significant, and perhaps Mr. Gibson added debt and created a crisis. Regarding the debt and crisis, although I am adding it as a possible finding in my generous reading, I am not entirely persuaded because it is not clear to me if this is a finding of the Assessment Officer or simply a reiteration of the position being advanced by the Applicants. Regardless, even with these findings, I am of the view that they are insufficient conclusory assertions because they do not inform the parties why the Assessment Officer viewed the value of the Respondents’ services to be limited to $35,000.

[34] The Assessment Officer’s conclusion that the time is excessive appears to be restricted to some letters drafted by staff or telephone messages by the receptionist. Yet, there are no findings regarding which specific staff or receptionist time is excessive. There are no findings regarding Mr. Gibson’s docketed time, whether it was acceptable or objectionable.

[35] The Assessment Officer does not make a definitive finding on the complexity of the matter. However, she does conclude that the monetary value was significant and the matter was important to Mr. De Lima. In my opinion, this was not a simple matter. There were environmental issues at play with the property owned by the Applicants. There were financing and tax issues requiring some restructuring of the corporate entity. Experts were retained to assist in the corporate planning. Complex matters take more time to complete.

[36] The Assessment Officer does not make a clear finding regarding Mr. Gibson’s proper degree of responsibility. At page 16 of the decision, she says the following: “The solicitor in this case would have me believe that it was a complicated matter; however, it added debt [sic], it created a crisis, and Mr. De Lima’s biggest income tenant left the premises, therefore having Mr. De Lima use – lose that income.” Again, reading this generously, the Assessment Officer may have concluded that Mr. Gibson’s work not satisfactory. However, she does not offer a more detailed explanation as to how Mr. Gibson’s work added debt or created a crisis. Furthermore, there are no explanations as to what impact, if any, that this added debt or crisis may have had on the value of his work to Mr. De Lima.

[37] The Assessment Officer does not make a definitive finding regarding the results achieved. At pages 8 and 9 of the decision, she says: “So, in terms of the results achieved, there was no refinancing, not to the point that was wanted. You did what you could with respect to remediation. You were [indiscernible] a letter, sir, from the City of Ottawa that their liability, that they would pay your [indiscernible] only if they were responsible. And there was no sale.” She further says the following at page 16 of the decision: “The results achieved Monsieur Simon wants me to rule that there were no results achieved in favour of the client, that this was not of any benefit to the client.” The Assessment Officer does not review or weigh the evidence regarding the sale and/or the refinancing.

[38] The Assessment Officer does not make a finding on Mr. Gibson’s skills and competency. At pages 16 and 17 of the decision, she says: “Monsieur Simon would tell me that there was a lack of skill, no skill and competence demonstrated and the client had more debt load at the end of this than he had starting out.”

[39] The Assessment Officer does not make a finding regarding Mr. De Lima’s reasonable expectations concerning the legal fees. Rather, she finds that Mr. De Lima did not understand the services that he received from the Respondents. No further explanation was provided.

[40] The Assessment Officer does not make a finding regarding Mr. De Lima’s ability to pay. She simply acknowledges that there is a dispute on this issue.

[41] The Assessment Officer does not make any findings regarding either of the parties’ credibility.

[42] In sum, the Assessment Officer’s reasons fail to substantively address the Cohen factors, and they reveal no cogent basis for a sweeping reduction of the Respondents’ accounts. The Assessment Officer does not weigh the evidence analytically or make sufficient factual findings to reach the conclusion that the Respondents’ accounts be reduced from $221,336.66 to $35,000. Accordingly, I am of the opinion that the Assessment Officer’s reasons do not permit a meaningful appellant review. It is an error in law.

[43] The Respondents’ motion is granted on the basis of the insufficiency of reasons.

Issue #2 – Did the Assessment Officer exceed her jurisdiction?

[44] The Respondents say that during the hearing, the Applicants advanced a theory that Mr. Gibson took on the retainer with Mr. De Lima to strip him of his property for the express purpose of greed and revenge.

[45] The Respondents state that it was an error in principle for the Assessment Officer to even consider such a theory of the case.

[46] The Respondents argue that because the decision of the Assessment Officer contains few substantive findings of fact or application of the law, the court should infer that her decision was improperly influenced by the Applicants’ theory of the case.

[47] I disagree.

[48] The Assessment Officer was clear in her remarks that she was not going to consider the Applicants’ theory of the case.

[49] At page 14 of the Assessment Officer’s decision, she summarizes the Applicants’ position regarding greed and revenge: “You believe, sir, that Mr. Gibson’s actions were motivated by revenge for a case that happened years before. And whereas I’m unable to pronounce myself on that, I don’t know, I don’t know anything about the other case, but that clearly is your position, sir.”

[50] I do not find that the Assessment Officer exceeded her jurisdiction.

Conclusion

[51] I decline to confirm the Assessment Officer’s decision.

[52] I see no benefit that this matter be returned to the Assessment Officer, either for a new hearing or request that she provides further reasons for her findings and conclusions.

[53] The most just and fair approach to take is that this matter be returned to the judge hearing the application and that it be determined under the normal course of that proceeding.

[54] I encourage the parties to agree on the issue of costs. If the parties are unable to agree, the Respondents shall serve and file their costs submissions, limited to three pages excluding their Bill of Costs and Offers to Settle, within 30 days of this decision. The Applicants shall serve and file their responding submissions, within 15 days thereafter, with the same page restrictions.

M. Smith J

Released: July 29, 2022

COURT FILE NO.: CV-20-82965

DATE: 2022-07-29

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Gibsons LLP, Solicitors

– and –

Rui De Lima and 255 Richmond Road Holdings Inc.

Applicants

– and –

Gibsons LLP and D. Kenneth Gibson

Respondents

REASONS FOR DECISION

M. Smith J

Released: July 29, 2022