Court File and Parties
COURT FILE NO.: CV-22-0069121 DATE: 20230313
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: RYAN NAIMARK PROFESSIONAL CORPORATION O/A NAIMARK LAW, Plaintiff AND: DAVID LILLY, Defendants
BEFORE: Justice Papageorgiou
COUNSEL: N., SINJARI, for the Plaintiff
HEARD: March 13, 2023
Endorsement
Nature of the Application
1The Applicant, Naimark Law Firm (“Naimark”) brought an application for a charging order upon the property or proceeds recovered by the Respondent, David Lilly (“Mr. Lilly”) in relation to claims arising from a December 30, 2015 motor vehicle accident (the “Motor Vehicle Accident”).
2The Application proceeded before me on March 13, 2023.
3The materials filed before me included the affidavit of Anastasia Sukalsky sworn January 9, 2023 as well as the affidavit of Anastasia Sukalsky sworn December 12, 2022 which was not filed in the public record but which was provided to me at the hearing of the Application. It set out additional detailed reasons for the charging order, and the circumstances of the solicitor and client breakdown and termination. These cannot be divulged publicly because of solicitor and client privilege.
4Mr. Lilly was duly served with the Application materials but did not file any responding material and did not appear.
The Law
5A charging order (or lien) gives the holder a proprietary interest of a secured creditor over property: Dalcor Inc. v. Unimac Group Ltd., 2017 ONSC 945 at para 18.
6Section 34 of the Solicitors Act, R.S.O., c. S 5 sets out the statutory authority for a court to make a charging order where the solicitor has been employed to prosecute or defend an action in the Superior Court. In this case, the retainer was in respect of matters which would proceed before an administrative tribunal; there is no proceeding commenced in the Superior Court and as such the application for a charging order cannot be made pursuant to the Solicitors Act.
7However, the court has always had the inherent jurisdiction to make a charging order in favour of a solicitor in respect of their claim for costs: Re Tots and Teens Sault Ste. Marie, 2012 ONSC 2182 at paras 15-17.
8The criteria necessary for a court to make a charging order pursuant to section 34 of the Solicitors Act, or pursuant to its inherent jurisdiction, is the same. These criteria are set out in Thomas Gold Pettinghill LPP v. Ani-Wall Concrete Forming Inc., 2012 ONSC 2182 at paras 84 & 88:
84 A charging order is a statutorily-based proprietary right of a lawyer to claim property owned by a client or former client when the lawyer's acts were instrumental in recovering the property. A charging order is similar to a charging lien, which is a manifestation of the common law court's and the court of equity's inherent jurisdiction.
88 The charging order or charging lien is for the lawyer's fees, costs and disbursements in the proceeding. To obtain a charging order or charging lien, a lawyer must demonstrate that: (a) the fund, or property, is in existence at the time the order is granted; (b) the property was recovered or preserved through the instrumentality of the lawyer; and (c) there must be some evidence that the client cannot or will not pay the lawyer's fees:" Bilek v. Salter Estate, [2009] O.J. No. 4454 (S.C.J.); Langston v. Landen, [2008] O.J. No. 4936 (S.C.J.); Kushnir v. Lowry, [2003] O.J. No. 4093 (C.A.); Higgott v. Higgott, [1989] O.J. No. 1290 (Gen. Div.); Blue Resources Ltd. v. Sheriff, [1996] O.J. No. 1175 (Gen. Div.); Budinsky v. The Breakers East Inc., [1993] O.J. No. 1984 (Gen. Div.).
9See also, and Foulidis v. Foulidis, 2022 ONCA 362 at para 21.
Criteria 1: The fund is in existence at the time the order is granted
10On or about September 13, 2021, Mr. Lilly retained Naimark to act as his lawyers in respect of his claim for Accident Benefits as well as his Application for Catastrophic Impairment (the “Claims”) pursuant to a Contingency Fee Retainer Agreement of same date (the “Contingency Fee Agreement”).
11“Property” upon which a charging order or lien can be made include choses in action and proceeds that will become available in the future: Thomas Gold Pettinghill LPP at para 87; Fancy v Morse, 2017 ONCA 82 at para 9.
12Upon being retained to prosecute the litigation, “the funds—in the form of a chose in action” existed: Fancy at para 9. As well, as will further be discussed below, the insurer made an offer to settle as a result of Naimark’s efforts; therefore there is a specific fund in existence in that respect as well: Thomas Gold Pettinghill LPP at paras 84-88.
13Therefore, the first criteria is satisfied.
Criteria 2: property was recovered or preserved through the instrumentality of the lawyer
14The caselaw establishes that a solicitor’s contribution to recovering or preserving property has to be “substantial and integral” before it can be found to have been instrumental to that recovery or preservation: Foulidis v. Foulidis, 2022 ONCA 362 at paras 42-43.
15Prior to retaining Naimark, Mr. Lilly was self-represented.
16Mr. Lilly had a hearing scheduled to take place before the License Appeal Tribunal from December 12-15, 2022 in respect of the insurer’s denial of Mr. Lilly’s Application for determination of Catastrophic Impairment.
17After it was retained, Naimark spent significant time and resources obtaining expert reports, investigating the matter, setting up multi-disciplinary assessments, arranging for treatment, negotiating and preparing for hearing before the License Appeal Tribunal above.
18Prior to retaining Naimark, Mr. Lilly was presented with an offer to settle his claim from his insurer. Naimark was able to obtain an offer that was four times higher.
19Naimark’s present account for fees and disbursements is $78,948.46.
20There are significant additional details as to how Naimark’s contribution was “substantial and integral” set out in the affidavit of Anastasia D. Sukalsky sworn December 12, 2022. These details are not included in this decision and this affidavit has not been filed because it consists of solicitor and client protected material. Mr. Lilly’s matter is still ongoing and disclosure of such information could prejudice his case.
21Based upon all the evidence before me, I am satisfied that Naimark’s contribution to recovering or preserving Mr. Lilly’s claim was substantial and integral and therefore instrumental.
Criteria 3: evidence that the client cannot or will not pay the lawyer's fees
22After Naimark secured the higher offer for Mr. Lilly, Mr. Lilly advised on multiple occasions that if he were to settle his claim, he would not pay Naimark’s legal fees and disbursements.
23He then stopped returning emails or telephone calls from Naimark requesting instructions on the settlement offer/ hearing. He began contacting the insurer’s claims adjuster directly via telephone.
24On December 5, 2022, Mr. Lilly terminated the solicitor-client relationship with Naimark.
25The hearing scheduled for December 12-15 was adjourned.
26Naimark delivered an account on December 12, 2022 and it has not been paid.
27For the above reasons, as well as evidence contained in the affidavit of Anastasia D. Sukalsky sworn December 12, 2022, but not filed, I am satisfied that there is sufficient evidence that Mr. Lilly will not pay Naimark’s fees in accordance with the Contingency Fee Agreement if a charging lien is not declared.
The principles of equity
28A charging order is discretionary and as such will not be granted if it would offend the principles of equity: Foulidis at para 50. I find that there is no evidence before me that granting the charging order offends the principles of equity. There is no evidence of any improper conduct by Naimark and no evidence that any third party will be affected by this Order.
Conclusion
29Therefore, I am granting the Order sought pursuant to the court’s inherent jurisdiction. The charge only impacts $78,948.46 of any settlement or other amounts paid pursuant to Mr. Lilly’s Accident Claim.
30It further provides that any proceeds subject to Naimark’s charge shall be paid into court and shall not be paid out without further motion on notice to Mr. Lilly. Therefore, this charging order does not impact any issues which Mr. Lilly may raise related to Naimark.
31Naimark seeks costs in the amount of $4,591.94 on a partial indemnity basis. Mr. Lilly was advised that if this matter proceeded, Naimark would be seeking costs.
32I have reviewed the Bill of Costs filed. I find that the amount expended is fair and reasonable and within the reasonable contemplation of Mr. Lilly and that the rates charged and time spent is reasonable.
33Having not appeared he is in no position to challenge the quantum or its reasonableness in any event.
34Therefore, Order to go in the form provided to me and signed by me today with costs in the amount of $4,591.94 payable within 90 days.
Papageorgiou J.
Date: March 13, 2023