OSHAWA COURT FILE NO.: CV-21-1004
DATE: 20221222
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
STEPHEN ROBERT DYMENT
Plaintiff
– and –
NEXT LIGHTING INC.
Defendant
Stephen Robert Dyment, Self-Represented
Adam Lefler, Counsel for the Defendant
HEARD: December 5, 2022
REASONS FOR DECISION
CHARNEY J.:
[1] The matter before me concerns two proceedings: a mortgage action and an assessment application under the Solicitors Act, R.S.O. 1990, c. S.15. Mr. Dyment is a lawyer. He is the plaintiff in the mortgage action, and he is the respondent in the assessment application.
[2] Mr. Dyment has brought a motion for summary judgment in the mortgage action. The defendant in that action, Next Lighting Inc. (“Next Lighting”) takes the position that the motion for summary judgment should be stayed or adjourned pending the resolution of the assessment application.
[3] The only issue before me is whether the motion for summary judgment should be stayed or adjourned, and the parties’ submissions were limited to that one issue.
[4] Both parties filed submissions relating to the adjournment request, but the full motion record in relation to Mr. Dyment’s motion for summary judgment had not yet been filed when I heard the adjournment request. The motion record was subsequently filed, and I did have access to it for the purpose of preparing these Reasons.
Facts
i) The Mortgage Action Against Next Lighting
[5] The mortgage action is an action commenced by Mr. Dyment against the defendant, Next Lighting, for $172,500 due on a mortgage given by Next Lighting to Mr. Dyment, securing a property municipally known as 107 Waterloo Ave., Toronto.
[6] The Statement of Claim is dated June 14, 2021, and was served on the Defendant on July 12, 2021.
[7] Mr. Dyment alleges in the Statement of Claim that the mortgage was delivered by the defendant to him “as security for the guarantee by the Defendant (Next Lighting) of the indebtedness of Adriana Hornstein (Adriana) to the Plaintiff.”
[8] The $172,500 mortgage was given as security for unpaid legal bills allegedly owed by Ms. Hornstein to Mr. Dyment. Mr Dyment was retained by Ms. Hornstein in 2008 to act on her behalf in a civil action relating to a partnership dispute concerning a real estate transaction. The action was commenced in 2009, the trial began in 2018, and continued intermittently for 16 days, with the final decisions being released in 2020. At trial, Ms. Hornstein’s case was dismissed: Hornstein v. Kats et al., 2020 ONSC 870. Mr. Dyment was also the counsel for Ms. Hornstein on the appeal, and the appeal was allowed in part: Hornstein v. Kats, 2021 ONCA 293. The details of those civil actions are not relevant to this proceeding.
[9] Mr. Dyment’s Statement of Claim makes the following allegations:
The Guarantee of the Defendant in writing was duly signed by the Defendant on November 9, 2020.
Pursuant to the Guarantee, the Defendant guaranteed unconditionally the indebtedness of Adriana [Hornstein] to the Plaintiff in the amount of $172,500.00, which indebtedness is now due and owing by Adriana to the Plaintiff.
Adriana is the mother of Daphne Desyatnik (Daphne). Daphne is the sole officer and director of the Defendant.
[10] To summarize the basis of Mr. Dyment’s claim against Next Lighting: Mr. Dyment was counsel for Adriana Hornstein. Adriana Hornstein’s daughter is Daphne Desyatnik. Daphne Desyatnik is the sole officer of Next Lighting. Next Lighting gave Mr. Dyment a mortgage for $172,500 as security for unpaid legal bills owed by Ms. Hornstein to Mr. Dyment.
[11] The Statement of Defence alleges, inter alia, that the Guarantee was provided solely for the indebtedness of Adriana Hornstein, but the Defendant alleges that the amount registered by the Plaintiff includes amounts ostensibly owed to the Plaintiff by Adriana’s husband and son. Whether that gives rise to a triable issue will have to be addressed when the merits of the summary judgment motion are heard.
[12] Subsequent to the issuance of the mortgage action, the 107 Waterloo Ave property was sold in December 2021, and $210,000 from the proceeds of that sale is currently held in trust pending the outcome of these proceedings.
ii) The Assessment of the Solicitor’s Bill
[13] Adriana Hornstein filed a Requisition for Assessment of the Plaintiff’s legal fees under s. 3 of the Solicitors Act on June 25, 2021 (which was after the Statement of Claim was filed, but before it was served on Next Lighting).
[14] Next Lighting is not a party to that assessment application, but requests that the Plaintiff’s claim against Next Lighting be “set aside until the cost assessment is completed and the claimed amount can be crystallized”.
[15] A hearing before an Assessment Officer was heard in Ms. Hornstein’s assessment on August 31, 2022. At the commencement of the hearing, an issue arose as to whether Ms. Hornstein had brought the assessment within 30 days of delivery of the solicitor’s bill, as required by s. 3(b) of the Solicitors Act.
[16] The Assessment Officer issued the following Endorsement:
I find that there is a dispute over the retainer agreement, the limitation period, and the amendment of an order to attach a bill delivered after the order had been brought. This assessment cannot therefore proceed at this time for reasons of no jurisdiction unless directed by an order from the court.
I hereby direct:
This preliminary appointment is adjourned sine die, pending directions from the court.
Either party may contact the assessment office and set a new date for a further preliminary appointment.
Either party is to bring a motion for direction as to the agreement in dispute, the limitation period, and the bills to be assessed before a Justice of the Superior Court to provide a determination as to these issues.
[17] Upon receiving that Order, Ms. Hornstein commenced an Application in the Superior Court on August 20, 2022, seeking, inter alia, “leave to proceed with an assessment under the Solicitors Act…of all accounts issued” to Ms. Hornstein by Mr. Dyment.
[18] Ms. Hornstein’s Notice of Application also seeks a declaration that the “Settlement of Accounts and Guarantee of Indebtedness” including any collateral or related documents or agreements relied upon by the Respondent are unenforceable as the product of compulsion, coercion, unconscionability and duress and do not preclude an assessment of the Respondent’s accounts.” Whether this latter declaration is available in an Application or should be joined with Mr. Dyment’s action against Next Lighting, is not an issue before me.
[19] The Notice of Application makes reference to the immediate proceeding. It states:
The Respondent sought to enforce a mortgage he registered against the property located at 107 Waterloo Ave., Toronto, Ontario which was owned by Next Lighting Inc., a corporation operated by the Applicant’s daughter Daphne Desyatnik, pursuant to an alleged guarantee in the sum of $172,500 in relation to the Respondent’s claim for legal fees against the Applicant;
The validity of the alleged guarantee is currently being challenged in a related court proceeding between Next Lighting Inc. and the Respondent under Court File No. CV-21 -1004 in Oshawa.
[20] I am advised by the parties that Ms. Hornstein’s Application is scheduled to be heard on October 6, 2023.
[21] Daphne Desyatnik also obtained an Order for Assessment on September 23, 2021. This Order of Assessment relates to bills delivered by Mr. Dyment to both Adriana Hornstein and Daphne Desyatnik on August 23, 2021 and August 24, 2021, regarding Ms. Hornstein’s action against Kats et al. The material filed before me indicates that a date of November 14, 2022 was scheduled for an Appointment of Preliminary Assessment against Mr. Dyment. The motion before me was heard on December 5, 2022, but I was provided with no information as to what happened at that Preliminary Assessment or whether it even proceeded.
Adjournment Request
[22] Counsel for Next Lighting relies on s. 6(4) of the Solicitors Act to argue that the action against Next Lighting (and therefore the motion for summary judgment) cannot proceed while either of the assessments remain outstanding. The relevant portions of s. 6 of the Act relate to references to assessment, and provide:
Delivery of bill and reference to assessment
6 (1) When a client or other person obtains an order for the delivery and assessment of a solicitor’s bill of fees, charges and disbursements, or a copy thereof, the bill shall be delivered within fourteen days from the service of the order.
Credits, debits, etc., on reference
(2) The bill delivered shall stand referred to an assessment officer for assessment, and on the reference the solicitor shall give credit for, and an account shall be taken of, all sums of money by him or her received from or on account of the client, and the solicitor shall refund what, if anything, he or she may on such assessment appear to have been overpaid.
Costs on reference
(3) The costs of the reference are, unless otherwise directed, in the discretion of the officer, subject to appeal, and shall be assessed by him or her when and as allowed.
No action
(4) The solicitor shall not commence or prosecute any action in respect of the matters referred pending the reference without leave of the court or a judge.
[23] Counsel for Next Lighting takes the position that the action against Next Lighting arises out of a guarantee that was signed as security by Ms. Desyatnik, the principal of Next Lighting, to guarantee Ms. Hornstein’s unpaid legal bills owed to Mr. Dyment. If Ms. Hornstein is successful in her assessment, then the indebtedness might be reduced. While Next Lighting is not a party to the assessment, both Ms. Hornstein and Ms. Desyatnik are parties to their respective assessments, and the mortgage was given for one purpose: as security for the unpaid legal fees. As such, s. 6(4) precludes the prosecution of the action against Next Lighting until the assessment is finally resolved.
[24] Mr. Dyment argues that while Ms. Hornstein and Ms. Desyatnik have brought assessments, neither of those individuals are parties to the immediate action that is the subject of his motion for summary judgment. He argues that the accounts that are the subject matter of the assessments are not the subject matter of his claim against Next Lighting or his motion for summary judgment in relation to his claim. His claim against Next Lighting relates solely to the enforcement of a guarantee and mortgage signed by Next Lighting. Next Lighting is not a party to any of the assessments. Ms. Hornstein and Ms. Desyatnik are free to pursue their assessments, unaffected by the determination of the motion for summary judgment. The final result of the assessment is not relevant to the issue to be determined on the motion for summary judgment.
[25] The issue on this motion is whether s. 6(4) applies to Mr. Dyment’s action against Next Lighting. If it does, then the action cannot proceed pending the assessment without leave of the court. Mr. Dyment takes the position that s. 6(4) does not apply to his action against Next Lighting, and has therefore not sought leave of the court to prosecute that action.
Analysis
[26] Any analysis of the Solicitors Act must start with the following observation made by Doherty J.A. in Guillemette v. Doucet, 2007 ONCA 743, at para. 11:
A client may challenge his or her solicitor’s accounts by way of an assessment. The provisions of the Solicitors Act governing applications for assessments are notoriously unclear.
[27] While the provisions are unclear, the public policy behind the assessment provisions in the Solicitors Act is well established. The right of a client to seek to have their lawyer’s account assessed is a matter of public interest because it relates to public confidence in the administration of justice. In Price v. Sonsini, 2002 CanLII 41996, the Court of Appeal held, at para. 19:
Public confidence in the administration of justice requires the court to intervene where necessary to protect the client’s right to a fair procedure for the assessment of a solicitor’s bill. As a general matter, if a client objects to a solicitor’s account, the solicitor should facilitate the assessment process, rather than frustrating the process [citation omitted]. In my view, the courts should interpret legislation and procedural rules relating to the assessment of solicitors’ accounts in a similar spirit. As Orkin argues, “if the courts permit lawyers to avoid the scrutiny of their accounts for fairness and reasonableness, the administration of justice will be brought into disrepute.” The court has an inherent jurisdiction to control the conduct of solicitors and its own procedures. This inherent jurisdiction may be applied to ensure that a client’s request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities.
[28] In Hathro Management Partnership v. Adler, 2018 ONSC 1560, Copeland J., as she then was, stated at para. 18:
It is important to note one other section of the Solicitor’s Act at this stage. Section 6(4) of the Act provides that: “The solicitor shall not commence or prosecute any action in respect of the matters referred pending the reference without leave of the court or a judge.” Section 6(4) clearly shows a legislative intent that if an application for an assessment is granted (also referred to in the Act as a “reference”), the assessment should generally proceed prior to any action to recover the money owed on the accounts.
[29] See also: Teplitsky, Colson LLP v. 2169252 Ontario Inc., 2019 ONSC 7026, at para. 79; Heydary Hamilton Professional Corp. v. Baweja, 2011 ONSC 2568, at para. 46.
[30] Mr. Dyment complains that Ms. Hornstein’s application will not be heard until October, 2023, and even then, if the assessment application is allowed to proceed, there will be further delay until it returns to the assessment officer.
[31] While such delays are unfortunate, they are not a reason to permit the lawyer to proceed with an action prior to the completion of the assessment. This was the law even when assessments were temporarily suspended during the pandemic. In Matthew R. Harris Professional Corporation v. Carey, 2020 ONSC 7808, Myers J. stated, at paras. 2-4 and 8-9:
It is the legislative policy of the Province that clients of lawyers be entitled to assess their lawyers’ accounts. Part of the obligation that goes with the privilege of being a licensed lawyer in Ontario is that clients are entitled to question and have an independent assessment officer review their lawyers’ accounts under the statutory process.
Proceedings in the Assessment Office remain suspended due to the pandemic despite the resumption of operations elsewhere in the court several months ago. Even prior to the pandemic, the lack of availability of timely hearing dates for assessments has been noticed.
The answer to issues surrounding the operation of the Assessment Office is not to bring assessments to court in the guise of an action on the lawyers’ fees. That just masks the issues and misallocates the burden of undertaking these proceedings to the court when the Legislature wishes these important matters to be dealt with by assessment.
The clients commenced an assessment proceeding. We are in a pandemic. Proceedings before the Assessment Office remain suspended. There is no indication of the likely duration of the suspension. In my view, that is not a basis to allow lawyers to just move the proceedings to the court without regard to the legislative policy supporting the assessment process.
If lawyers and/or clients have concerns with the operations of the Assessment Office and whether it is meeting the goal of providing “speedy and inexpensive” proceedings, a civil proceeding before the court is not the forum for those questions.
[32] While Next Lighting is not the client, and is not a party to the assessment application, there is no doubt that Mr. Dyment’s mortgage action against Next Lighting is an action to recover the amount owing on his solicitor’s bill to Ms. Hornstein and Ms. Desyatnik, which is the subject matter of the assessment applications. Whether the mortgage action falls within the four corners of the “notoriously unclear” language of the Solicitors Act, it clearly falls within the four corners of the public policy underlying the Act.
[33] I understand Mr. Dyment’s frustration with the delay entailed by this process, but $210,000 from the proceeds of the sale of the property is currently held in trust pending the outcome of these proceedings, so the security for the payment of his bill after assessment remains in place pending the final resolution of the assessment application.
Conclusion
[34] Based on the foregoing, the Plaintiff’s motion for summary judgment is adjourned pending the decision on the assessment applications brought by Adriana Hornstein and Daphne Desyatnik.
[35] If the parties are not able to agree on costs, the Defendant may serve and file costs submissions of no more than 3 pages plus costs outline and any offers to settle within 30 days of the release of this decision, and the Plaintiff may file responding submissions on the same terms within a further 15 days.
Justice R.E. Charney
Released: December 22, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
STEPHEN ROBERT DYMENT
Plaintiff
– and –
NEXT LIGHTING INC.
Defendant
REASONS FOR DECISION
Justice R.E. Charney
Released: December 22, 2022