Court File and Parties

COURT FILE NO.: CV-21-194-00 DATE: 2023-04-17

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

2801100 Ontario Inc. Mr. Singh for M. Singh Law Professional Corporation Plaintiff

- and -

River Green (Thunder Bay) Inc. J. Smith, R. Olson, R. MacLeod directors of River Green (Thunder Bay) Inc. Defendant

HEARD: March 28, 2023 at Thunder Bay, Ontario via Zoom BEFORE: Mr. Justice F. Bruce Fitzpatrick

Judgment on Motion for Charging Order

[1] M. Singh Law Professional Corporation (“MS”) seeks a charging order against certain property of the defendant River Green (Thunder Bay) Inc. currently in the possession of the plaintiff 2801100 Ontario Inc. (“280”).

Background

[2] This motion arises in the context of complex commercial litigation. River Green was incorporated in 2018. River Green formerly operated a commercial cannabis business. 28001100 Ontario Inc. was the landlord of the premises where River Green operated in Thunder Bay.

[3] River Green’s first cannabis crop failed. The cannabis crop (such as it was), was destroyed in December 2020. The crop failure set off a series of maneuvers in the Fall of 2020 which various factions involved with River Green took various steps related to the business. The lease for the company was purported to be terminated by 280. Growing equipment was seized by 280. People were fired. At least eight different court actions were commenced at Thunder Bay.

[4] Since April 2021, I have been case managing all the litigation matters commenced in the Northwest Region involving River Green. MS was retained by River Green on August 5, 2021.

[5] MS appeared before me on many occasions on behalf of River Green including attending as counsel on several contested motions involving 280. MS brought a successful motion to be removed as counsel for River Green in November 2022.

The Motion

[6] MS relies on the provisions of section 34 of the Solicitors Act R.S.O. 1990 c. S.15. The portions of Section 34 relevant to this motion are sub clauses (1) and (3) which state;

34 (1) Where a solicitor has been employed to prosecute or defend a proceeding in the Superior Court of Justice, the court may, on motion, declare the solicitor to be entitled to a charge on the property recovered or preserved through the instrumentality of the solicitor for the solicitor’s fees, costs, charges and disbursements in the proceeding...

(3) The court may order that the solicitor’s bill for services be assessed in accordance with this Act and that payment shall be made out of the charged property.

[7] In Weenen v. Biadi, 2018 ONCA 288, the Ontario Court of Appeal set out, at paras. 14 and 15, the following guidance with respect to a granting of a charging order under s. 34:

14 In order to obtain a charging order or a lien on the moneys in issue, the onus is on the solicitor to demonstrate that a charging order or lien is warranted. The decision is discretionary: Taylor v. Taylor (2002), 60 O.R. (3d) 138, [2002] O.J. No. 2313 (C.A.), at para. 34; Foley v. Davis, [1996] O.J. No. 3080, 49 C.P.C. (3d) 201 (C.A.), at p. 202 C.P.C. In deciding whether or not to exercise that discretion, courts must "balance the circumstances and equities of each case and client": Taylor, at para. 34.

15 The test for a charging order under s. 34 is clear. To obtain a s. 34 charging order a solicitor must demonstrate that:

i. the fund or property is in existence at the time the order is granted: Langston v. Landen, [2008] O. J. No 4936 (Ont. S.C.J.), at paras. 28-29;

ii. the property was “recovered or preserved” through the instrumentality of the solicitor; Kushnir v. Lowry, [2003] O.J. No. 4093 (C.A.), at para. 2;

iii. there must be some evidence that the client cannot or will not pay the lawyer’s fees; Kushnir, at para. 2; see also Guergis v. Hamilton, 2016 ONSC 4428, at para. 6; Thomas Gold Pettinghill LLP, at para. 88; Foley, at p. 202.

[8] The property at issue was described in a schedule to an amended pleading which was made on October 31, 2022. The Schedule is six and one half pages long. It shows an extensive list of industrial and office equipment, tools and other commercial goods.

Disposition

[9] On this motion there are no issues with respect to items (i) and (iii) of the test set out at paragraph 15 of Weenen. The property exists now and existed at the time MS was retained. A director for River Green attended on this motion. When asked if he intended to obtain counsel to respond to this motion, he suggested River Green had no money to retain counsel. Coincidentally immediately before this motion was heard, I was considering an application to place River Green into bankruptcy. In my view there is no question there is evidence before the Court that River Green cannot or will not pay MS.

[10] The issue on this motion is whether MS has satisfied part (ii) of the test set out in paragraph 15 of Weenen. In other words, was MS instrumental in preserving the property.

[11] In Foulidis v Foulidis [2022] O.J. No. 2135 D. Paciocco J.A. at paragraph 43 agreed with the proposition that for the purposes of section 34 charging order the solicitor’s contribution to recovering or preserving property has to be “substantial and integral”.

[12] On April 11, 2022, MS appeared on a motion to strike 280’s claim for failure to comply with a previous court order from September 2021 that 280 appoint counsel. No appeared for 280 on that day. 280 also had two outstanding costs awards against it totaling approximately $13,500.00. My endorsement on that attendance is 2801100 Ontario Inc. v. River Green (Thunder Bay) Inc. 2022 ONSC 2251. On that motion MS argued 280 was a shell corporation. I agreed. 280’s claim was dismissed.

[13] MS asserts the legal services directed at obtaining the dismissal were instrumental in preserving the property. This is because 280 can no longer make any lawful claim to the property. MS submits this evidence satisfies the second part of the three-part Weenen test.

[14] I disagree.

[15] MS’s position does not account for several key facts.

[16] One of the original proceedings that I am case managing under the River Green umbrella is the matter Olson v River Green CV-20-366. That matter first came before our court on a case conference in January 2021 where the plaintiff Mr. Olson, now a director of River Green, was asking to schedule a date for argument of his motion to have a receiver-manager for River Green. On April 1 2021, Fregeau J. made a temporary without prejudice order preserving the River Green assets in the Olson matter. The order also restrained River Green and/or any of its officers, directors or shareholders, and/or any other related party or parties who may be in temporary possession or control of any assets of River Green from assigning, transferring or disposing of said assets. That order has not been varied or lifted. MS played no part in obtaining that order as it had not yet been retained.

[17] To the extent that MS submits its efforts in April 2021 ended 280’s claim against the property, at that time MS had not yet made a specific claim in any pleading for preservation or return of the property at issue. That specific claim on the part of River Green did not come until 18 months later, in an amended claim issued October 31, 2022. The pleading was only amended after MS unsuccessfully moved for judgment without notice and in writing against 280. My endorsement on that motion is 2801100 Ontario Inc. v. River Green (Thunder Bay) Inc., 2022 ONSC 6119. It notes the competing claims to the assets made by other creditors of River Green. Asserting a preservation claim against property 18 months after it has already been preserved by court order does not strike me as an occasion of substantial or integral contribution to the preservation of that property.

[18] The remedy sought is discretionary. At its highest, MS put forward a preservation claim 18 months after the assets had already been preserved by court order for which it played no part. In my view MS has not demonstrated that it substantially or integrally did anything to preserve the property at issue. I find no basis to exercise my discretion pursuant to section 34 of the Solicitors Act. The motion is dismissed.

“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick

DATE: April 17, 2023