ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
799969 ONTARIO LIMITED, LEO EREZ and TZVI EREZ
Applicants
- and –
GREENSPAN PARTNERS, LLP
Respondent
APPLICATION UNDER ss. 4, 11, 23, 24 and 25 of the Solicitors Act R.S.O. 1990 c. S 15.
Peter I. Waldmann for the Plaintiff
Nancy J. Tourgis and Melvyn L. Solmon for the Respondent
HEARD: August 9, 2023
PERELL, J.
REASONS FOR DECISION
Contents
A. Introduction. 2
B. Methodology. 3
C. Temporal Benchmarks. 4
D. Dramatis Personae. 6
E. Procedural and Evidentiary History of the Civil Application. 7
F. The Erezs’s Theory of their Case. 10
G. Legal Background. 11
Retainers and Contracting for Legal Services. 11
Assessments of Accounts pursuant to the Solicitors Act 14
H. The Alleged Fixed-Price Retainer for the Preliminary Inquiry. 19
I. The Maximum Price Contract for the Trial – Quantity of Legal Services. 24
J. The Maximum Price Contract for the Trial – Quality of Legal Services. 28
K. Circumstances and Special Circumstances for an Assessment of Accounts. 30
L. Conclusion. 30
A. Introduction
1Tzvi Erez (“Mr. Erez”), Leo Erez, and 799969 Ontario Limited (the “Erezs”) dispute the legal fees charged by Greenspan Partners LLP, which firm acted as Mr. Erez’s criminal defence counsel between September 2009 to January 2015.
2Lawyer and client disputes about fees are nasty, and this one is as nasty as it gets. The Erezs besmirch the quantity, quality, and the integrity of the legal services provided by the late Edward Greenspan and by his associate, Vanessa Christie, now a judge of this court. The Erezs submit that Mr. Erez did not receive the level of competent and vigorous advocacy that would justify the fees charged. Amongst other things, in a long list of alleged professional malfeasance, Mr. Erez says that Mr. Greenspan did not follow instructions and his colleagues unprofessionally and unethically forced Mr. Erez to plead guilty to a crime he did not commit.
3The legal fees were paid by Mr. Erez, his father Leo Erez, and by 799969 Ontario Limited, a family business. On June 15, 2015, pursuant to the Solicitors Act,1 the Erezs commenced this application for leave for an assessment of the accounts of Greenspan Partners LLP. In the euphemisms of the administration of justice, the Erezs’s application, which began in 2015, has had a “time out” of 2,974 days (98 months), and the application was not heard on its merits until August 9, 2023.
4For the reasons that follow, I dismiss Erezs’s application for an assessment of Greenspan Partners accounts. Applications for leave to have an assessment by an Assessment Officer under the Solicitors Act are fact specific. I do not believe the Erezs’s versions of the history of the legal services provided by Greenspan Partners. There was no “fixed price” contract with respect to the preliminary inquiry phase of the charges against Mr. Erez. Greenspan Partners did not charge more than it was entitled to charge for the preliminary inquiry phase. Although there was a “maximum price” contract with respect to the trial phase of the charges against Mr. Erez; however, Greenspan Partners did not breach the contract as to the quantity or the quality of legal services provided. Pursuant to the maximum price contract, Greenspan Partners did not charge more than it was entitled to charge. Greenspan Partners did not charge for legal services that it did not provide. The recently abandoned allegations of Greenspan Partner’s services being unprofessional or incompetent are unfounded and, in any event, the issue is res judicata pursuant to the doctrine of issue estoppel. There are no circumstances, and, in particular, there are no “special circumstances” that would justify a referral for assessment of the fees charged by Greenspan Partners. On the merits, there is no basis for referring the accounts to an Assessment Officer.
5It is not in the interests of justice to have the accounts assessed by an Assessment Officer. Although the law firm has been aggrieved, it has not been prejudiced by the delay in the prosecution of the assessment application. The firm’s ability to defend itself was not compromised by the death of Mr. Greenspan. In dismissing the Erezs’s application for an assessment of accounts, I have had to undertake the very assessment that the Erezs are seeking from an Assessment Officer.
6Assembled over 2,974 days, this application has a documentary record of affidavits, transcripts, contracts, email messages, letters, dockets, invoices, endorsement, judgments, etc. that comprises over 7,000 pages. An Assessment Officer would be in no better position than I am to undertake an assessment of the accounts of Greenspan Partners. I undertook an assessment, and my own evaluation of the legal services provided by Greenspan Partners is that there is no basis for a refund of fees paid by the Erezs. No purpose would be served by referring the matter to an Assessment Officer. The Erezs’s persistence in making scurrilous allegations against the integrity of the late Mr. Greenspan and of Greenspan Partners is long overdue to be over.
B. Methodology
7The factual, evidentiary, and procedural background to the Erezs’s application for an assessment of the accounts of Greenspan Partners is complicated and has been protracted. This application has been fiercely contested for almost a decade. While the applicable law is not disputed, its application to the complex evidentiary record was vigorously and passionately submitted on behalf of the Erezs and on behalf of Greenspan Partners.
8My response to the parties’ arguments requires a detailed analysis. To explain my reasons for dismissing the Erezs’s application, I shall adopt the following methodology.
9Part A is the introduction.
10Part B is the description of the methodology.
11In Part C, I shall set out temporal benchmarks to frame the analysis of the four major issues that underlie the Erez’s application; namely: (a) Did Greenspan Partners breach a “fixed price” contract to charge $160,000, all inclusive, for the legal services for the preliminary inquiry phase of Mr. Erez’s criminal proceedings? (b) Did Greenspan Partners breach a “maximum price” contract of $565,000, all inclusive, for the legal services for the trial phase of Mr. Erez’s criminal proceedings by charging for services that were not provided? (c) Did Greenspan Partners breach a “maximum price” contract of $565,000, all inclusive, for the legal services for the trial phase of Mr. Erez’s criminal proceedings by professional malfeasance, including unprofessionally and unethically forcing Mr. Erez to plead guilty to a crime he did not commit? And (d) Do the circumstances or the “special circumstances” of the lawyer and client relationship between Mr. Erez and Greenspan Partners justify ordering that the accounts of Greenspan Partners be assessed by an Assessment Officer?
12In Part D, I shall describe the principal actors in the matter of Mr. Erez’s criminal proceedings and also the actors in these civil proceedings about the accounts rendered by Greenspan Partners for the criminal proceedings.
13In Part E, I shall describe the procedural and evidentiary background to the civil proceedings for a referral to an Assessment Officer.
14In Part F, I will explain the Erezs’s theory of their case, a theory that changed during the almost decade of the civil proceedings.
15In Part G, I shall set out the legal background for an assessment of a lawyer’s accounts pursuant to the Solicitors Act. I shall also address matters of the general law about lawyer and client relationships, and, in particular, I shall briefly address contract law associated with lawyer and client contracts about legal fees. I shall discuss the nature of a “retainer” for legal services.
16In Part H, I shall discuss the question of the alleged fixed-price contract for the preliminary inquiry.
17In Part I, I shall discuss the question of the “quantity” of the legal services provided by Greenspan Partners for the maximum-price contract for the trial phase of the criminal proceedings.
18In Part J, I shall discuss the question of the “quality” of the legal services provided by Greenspan Partners for the trial phase of the criminal proceedings.
19In Part K, I shall discuss whether there are circumstances or special circumstances that would justify an assessment by an Assessment Officer of the accounts of Greenspan Partners.
20Part L is my conclusion.
C. Temporal Benchmarks
21The following temporal and factual benchmarks frame the analysis and are helpful in understanding the factual background and legal background and my decision to dismiss this application.
22June 2009 – September 2009 (approx. 3 months) - Mr. Erez is charged with one count of fraud, seven counts of forgery, and one count of breach of probation. It will take several months for Mr. Erez to hire a criminal defence lawyer.
23September 2009 – October 2010 (approx. 13 months) – In September 2009, Mr. Erez hires Greenspan Partners with respect to the criminal charges laid in June 2009. By October 2010, Mr. Greenspan succeeds in having the charges withdrawn. Greenspan Partners charges $153,509.81 and closes its file.
24October 2010 – October 14, 2011 (approx. 12 months) – It is anticipated that new fraud charges will be laid against Mr. Erez. Greenspan Partners has an unofficial watching brief. In October 2011, the Crown does issue an information against Mr. Erez. The information accuses him of ten counts of fraud, and on October 14, 2011, Greenspan Partners opens a new file for Mr. Erez.
25October 14 2011 – April 19, 2013 (approx. 19 months) – The Crown replaces the ten count information with a twenty six count information. The Crown proceeds with the charges to a preliminary inquiry in the Ontario Court of Justice. For this period, Mr. Erez alleges that he has a “fixed price” contract with Greenspan Partners that the firm will charge $160,000 for the preliminary inquiry. The law firm charges $180,235.50 for the preliminary inquiry.
26April 19, 2013 – May 5, 2014 (approx. thirteen months) – Twenty-six counts of fraud are committed to trial. Mr. Erez pleads not guilty. Greenspan Partners prepares for the trial to proceed as a judge and jury trial and then with Mr. Erez’s re-election, the firm prepares for a judge-alone trial. It is not disputed that Greenspan Partners has agreed to a “maximum price” contract of $565,000, all inclusive of fees, disbursements, and taxes for the completion of the trial phase including a Garner Hearing and sentencing.
27May 5, 2014 – May 28, 2014 (approx. one month) – The fraud trial commences before Justice Forstall, but the trial ends with a mistrial order when Mr. Erez decides to plead guilty to twelve counts of fraud based on a revised information. Justice McMahon assumes carriage of the criminal proceedings for the guilty plea, the Garner Hearing, and the sentencing. Greenspan Partners continues to act pursuant to the maximum price contract for the reconstituted criminal proceedings.
28May 28, 2014 – January 5, 2015 ( approx. seven months) – Greenspan Partners is engaged in preparing the Garner Hearing and for sentencing. It delivers what will be its final account on June 24, 2014. Mr. Greenspan dies on December 24, 2014, and on January 5, 2015, the Erezs terminate the law firm’s retainer. Mr. Erez hires Gregory Lafontaine to complete the Garner Hearing and the sentencing phase of the criminal proceedings.
29January 5, 2015 – January 13, 2016 (approx. twelve months) – In January 2015, the criminal file is transferred to Mr. Lafontaine, who carries on with the Garner Hearing and the sentencing phase of the criminal charges. On June 18, 2015, the Erezs commence this application requested an order directing a reference for assessment of the accounts of Greenspan Partners. Around this time, Mr. Erez gives Mr. Lafontaine instructions to bring an application to set aside the guilty plea, which application is brought on December 17, 2015. On January 13, 2016, in the civil proceedings, the parties agree to adjourn the Erezs’s civil application pending the outcome of Mr. Erez’s application to strike the guilty plea in the criminal proceedings.
30January 13, 2016 – September 9, 2016 (approx. eight months) - Between January 2016 and September 9, 2016, Mr. Erez’s application to strike his guilty plea proceeds unsuccessfully. Mr. Erez, Leo Erez, and Ms. Christie testify and are cross-examined in the application to set aside the guilty plea. Justice McMahon dismisses the application on March 22, 2016 with oral reasons.2 Then, Justice McMahon presides over the Garner Hearing and the sentencing phase. On September 9, 2016, Greenspan Partners brings a motion for directions with respect to the resumption of the civil application for an assessment.
31September 9, 2016 – December 2020 (52 months) - On September 9, 2016, in the civil application a motion for directions is scheduled for October 26, 2016. Subsequently, the motion is adjourned to January 30, 2017, then to April 2017 and then adjourned sine die. The civil application languishes during the pendency of Mr. Erez’s criminal proceedings including his appeal. On July 24, 2017, Justice McMahon releases his Reasons for Sentence in the criminal proceedings. Justice McMahon sentences Mr. Erez to eight years of imprisonment, less credit for some time served. Justice McMahon makes a Restitution Order in excess of $6.0 million. Mr. Erez appeals against the dismissal of the set aside guilty plea application and fraud charge sentence. On July 27, 2017, Mr. Erez is denied bail pending his appeal.3 On January 31, 2019, Mr. Erez’s appeal is argued, and the Court of Appeal dismisses the appeal from the bench. The Court of Appeal releases its Reasons for Decision dismissing the appeals in March 2019.4 Mr. Erez applies for leave to appeal to the Supreme Court on July 22, 2019, but does not pursue the leave application.5 In November 2019, Greenspan Partners brings a motion for security for costs, which after several adjournments related to the Covid 19 pandemic, is withdrawn and settled in December 2020.
32December 2020 – August 9, 2023 (32 months) - The hearing of the application for an assessment is scheduled for April 13, 2021, but is interrupted by an interlocutory motion about the evidentiary record and about the application of the doctrine of issue estoppel, which motion which is eventually resolved by Justice Black on June 17, 2022. On September 29, 2022, Justice Dow schedules the application to be heard on July 20, 2023. After a short adjournment, the application is argued on August 9, 2023.
D. Dramatis Personae
33Tzvi Erez (“Mr. Erez’) was born in October 1967. He is highly intelligent. He is well educated with two post-graduate university degrees including an MBA. He operated a printing business. Mr. Erez was extensively involved in the preparations for the preliminary inquiry, the trial, the pleas and change of pleas, the Garner Hearing, and the sentencing phase of his criminal proceedings. Mr. Erez swore numerous affidavits in support of this application for an assessment of the accounts of Greenspan Partners. He was cross-examined in this application and in the criminal proceedings.
34Leo Erez is Mr. Erez’s father. He is a successful land developer. He was involved in assisting Mr. Erez in responding to the criminal charges. He testified in the criminal proceedings. Leo Erez swore an affidavit in this application for an assessment of Greenspan Partners accounts. Leo Erez was cross-examined. Hannah Erez is Tzvi’s mother.
35Hila Meisels is Mr. Erez’s sister, Dr. David Meisels is his brother-in-law. Mrs. Meisels swore an affidavit in this application. The Meisels were present at some of the meetings between the Erezs and the lawyers of Greenspan Partners.
36799969 Ontario Limited is the corporation owned by Leo and Hannah Erez. Mr. Erez’s parents paid a substantial portion of the legal fees that are the subject matter of this application.
37Greenspan Partners LLC is a law firm specializing in criminal law. It is the successor of the registered partnership known as Greenspan Partners. For present purposes, one or the other of the partnerships known as Greenspan Partners acted for Mr. Erez from June 2009 to January 5, 2015 with respect to fraud charges levied against Mr. Erez.
38Greenspan Partner’s senior and founding partner was the late Edward Greenspan. Q.C., LL.D., D.C.L. Mr. Greenspan was regarded as one of Canada’s preeminent criminal law lawyers with an excellent reputation. Mr. Greenspan died unexpectedly on December 24, 2014.
39One of the associate lawyers at Greenspan Partners and later a partner of the firm was Vanessa Christie, now Madam Justice Christie of the Superior Court of Justice. Ms. Christie joined the law firm as an articling student in 2000. She became involved in Mr. Erez’s defence around the time of his preliminary inquiry in 2013. She remained involved after Mr. Greenspan’s death until Mr. Erez terminated the law firm’s retainer in January 2015. In September 2017, Ms. Christie was appointed a judge of the Ontario Court of Justice. In June 2019, she was appointed to be a judge of the Ontario Superior Court of Justice. Before her appointment to the bench, Ms. Christie swore an affidavit in this application. She was not cross-examined on this affidavit, but she was extensively cross-examined about its contents in the criminal proceedings in Mr. Erez’s application to strike his guilty plea.
40Brad Greenshields was an associate lawyer with Greenspan Partners. He joined the firm in January 2013 and his involvement with the Erez file paralleled Ms. Christie’s involvement. Mr. Greenshields had been called to the bar in 2008 and before joining Greenspan Partners had been an assistant Crown prosecutor and had also been in private practice.
41Julianna Greenspan is the daughter of the late Edward Greenspan. She is a criminal lawyer, who worked at the firm founded by her father and who continued the firm after his death. She was only peripherally involved in the Erez file at the law firm, but she became involved in the Erezs’s application for an assessment of the law firm’s accounts. Ms. Greenspan swore several affidavits during the protracted and contentious course of the assessment application.
42John Scutt was the Crown Prosecutor in the criminal proceedings against Mr. Erez.
43In April 2013, Justice Ray of the Ontario Court of Justice presided at Mr. Erez’s preliminary inquiry in the prosecution of twenty-six counts of fraud over $5,000. The matter was committed over to a trial in the Superior Court of Justice.
44In 2014, Mr. Erez initially pleaded not-guilty. Justice Forestall was the judge for the trial after Mr. Erez re-elected for a judge alone trial. The trial before Justice Forestall ended after Mr. Erez decided to enter a guilty plea for reduced charges.
45In March 2014, Justice McMahon was the judge who presided over Mr. Erez guilty plea for twelve counts of fraud. Justice McMahon became seized of the sentencing phase of the trial and of a Garner Hearing to determine the losses caused by Mr. Erez’s admitted frauds. Beginning in late 2015, Justice McMahon also presided over Mr. Erez’s application to withdraw his guilty plea.
46On January 5, 2015, Mr. Erez hired Gregory Lafontaine to replace Greenspan Partners as his defence counsel in the ongoing criminal proceedings against Mr. Erez.
47In June 2015, the Erezs brought this application for an assessment of Greenspan Partners accounts. Justices Black, Dow, Glustein, Hood, McEwan, Myers, Lederman, and Perell, all made procedural, evidentiary, or interlocutory orders between the commencement of the application on June 15, 2015 and the argument of the application on August 9, 2023.
48Peter I Waldman is the lawyer of record for the Erezs on this application to have the accounts of Greenspan Partners assessed pursuant to the Solicitors Act.
49Areta Lloyd was an articled student-at-law with Mr. Waldman. She swore an affidavit dated June 18, 2015 in support of the Erezs’s application for an assessment of the Greenspan Partner’s accounts.
50Lauren Gabriel was an articled student-at-law with Mr. Waldman. She swore an affidavit dated September 15, 2015 in support of the Erezs’ application.
51Greenspan Partners LLP retained the law firm of Solmon Rothbart Tourgis Slodovnick LLP to resist the application for an assessment of accounts. Nancy Tourgis and Mel Solomon have had carriage of the file.
52Jenifer Savoie is a legal assistant with the Solomon Rothbart Tourgis Solodovnik firm. Ms. Savoie swore affidavits dated April 30, 2021 and July 19, 2021 in the civil proceedings for an assessment of accounts.
E. Procedural and Evidentiary History of the Civil Application
53On June 18, 2015, Leo Erez, Tzvi Erez, and 799969 Ontario Limited commence this application for an order directing a reference for assessment of the accounts of Greenspan Partners LLP. The application is supported by the affidavit dated June 18, 2015 of Ms. Lloyd (400 pages).
54On August 21, 2015, Mr. Erez swears an affidavit (277 pages) in support of the Erezs’s application.
55On September 15, 2015, the Erezs’s amend their Notice of Application, and Ms. Gabriel swears an affidavit (113 pages) in support of Erezs’s application.
56On September 18, 2015, Greenspan Partners delivers a Demand for Particulars.
57On October 8, 2015, there is an attendance before Justice Glustein, who schedules October 30, 2015 for the Erezs’s motion for a sealing order. Justice Glustein makes an interim order sealing the file, and he adjourns the application for an assessment to a date in January 2016 to be confirmed with the motions scheduling office.
58On October 12, 2015, the Erezs deliver a Response (24 pages) to the Demand for Particulars.
59On October 30, 2015, on consent, I make an interim sealing order and adjourn the motion for a sealing order to December 14, 2015.
60On December 14, 2015, Ms. Christie swears an affidavit (2,036 pages) in response to the Erezs’s application for an assessment. Also on this date, Justice Hood refuses to extend the temporary sealing order.
61On January 13, 2016, the parties agree to adjourn the application for an assessment of the law firm’s accounts. The adjournment is sine die pending the completion of the criminal proceedings against Mr. Erez and in light of his motion to set aside his guilty plea.
62On July 15, 2016, there is a case management conference before Justice McEwan. Greenspan Partners wishes to bring a motion for directions to limit cross-examinations on the basis of issue estoppel. Justice McEwan schedules the motion for October 26, 2016.
63On September 9, 2016, Greenspan Partners brings a motion scheduled for October 26, 2016. The motion is for directions with respect to, among others thing, the cross-examination of Ms. Christie in light of her having been cross-examined in Mr. Erez’s by then unsuccessful proceedings to strike his guilty plea.
64On September 28, 2016, Mr. Erez swears an affidavit in response to the motion for directions.
65Around October 26, 2016, on consent. the motion for cross-examination directions is adjourned to January 30, 2017.
66Around January 30, 2017, the motion for directions is adjourned to April 18, 2017 and then further adjourned sine die.
67On December 19, 2018, Ms. Meisels swears an affidavit for the Erezs.
68In June 2019, Justice Christie is appointed to be a judge of the Superior Court of Justice, and in August 2019, Mr. Waldman writes counsel for Greenspan Partners to advise that Justice Christie will not be cross-examined.
69On November 19, 2019, Master McAfee schedules Greenspan Partners’ motion for security for costs to be heard by Master Josefo.
70On January 23, 2020, Associate Justice Josefo schedules the security for costs motion for May 13, 2020.
71On January 23, 2020, Ms. Greenspan swears an affidavit (263 pages) in support of Greenspan Partners’ motion for security for costs.
72On May 31 2020, Adil Esmail, a real estate agent swears an affidavit in support of Greenspan Partners’ motion for security for costs.
73On May 13, 2020, the motion for security for costs is not reached and the motion is adjourned to June 1, 2020.
74On May 31, 2020, Leo Erez swears an affidavit (244 pages) in response to Greenspan Partners’ motion for security for costs.
75On June 1, 2020, the motion for security for costs is not argued, and it is adjourned to December 21, 2020.
76On September 11, 2020, Ms. Greenspan swears an affidavit (74 pages) in support of Greenspan Partners’ motion for security for costs.
77On December 21, 2020, the motion for security for costs is withdrawn. The Erezs agree to deposit $130,000 in trust with Mr. Waldman as security for costs.
78On December 16, 2020, the parties attend a case management conference to set a date for the hearing of the application. Justice Dow schedules April 13, 2021 for the hearing of the Application.
79On February 25, 2021, Leo Erez is cross-examined.
80On March 16, 2021, Mr. Erez is cross-examined.
81Without an appointment being served, the parties reserved March 17, 2021 for the cross-examination of Ms. Greenspan, but through no fault of hers, the cross-examination does not proceed on that day.
82On April 5, 2021, Mr. Erez delivers a supplementary affidavit (1,219 pages) and the affidavit dated April 5, 2021 (8 pages) of his sister Hila Meisels. The April 5, 2021 affidavit of Mr. Erez discloses for the first time transcripts (transcribed in October and December 2014) of surreptitiously recorded conversations between Mr. Erez, Mr. Greenspan, Ms. Christie, and Brad Greenshield that had taken place in the fall of 2014 in the law firm’s offices.
83On April 8, 2021, there is a case management conference and Justice Dow adjourns the application scheduled for April 13, 2021. Greenspan Partners brings a motion for orders: (a) striking Mr. Erez’s supplementary affidavit and the affidavit of Hila Meisels and (b) directing that the Erezs are not entitled to cross-examine Julianna Greenspan. The motion is scheduled for August 12, 2021. Justice Down does not set a date for the application for an assessment.
84Greenspan Partners’ motion to strike is supported by the affidavit dated April 30, 2021 (120 pages) of Jennifer Savoie.
85On June 16, 2021, Mr. Erez swears an affidavit (2 pages) in response to Greenspan Partners’ motion to strike.
86On July 19, 2021, Ms. Savoie swears a further affidavit (43 pages) in the motion to strike.
87On August 16, 2021, the motion to strike Mr. Erez’s affidavit and to bar the cross-examination of Ms. Greenspan is adjourned on consent to be heard on March 23, 2022.
88On December 15, 2021, Mr. Erez swears an affidavit (121 pages) in the motion to strike.
89On March 23, 2022, Mr. Erez swears another affidavit (33 pages) on the motion to strike, which motion is returnable that day. Justice Myers adjourns the motion to strike and reschedules it to be heard on May 13, 2022. He orders the Erezs to pay $1,500 in costs for the adjournment.
90On May 13, 2022, Justice Black hears the motion to strike.
91On June 17, 2022, Justice Black releases his decision on the motion to strike.6 He grants the motion. He orders that the supplementary motion record and the second supplementary affidavit of Mr. Erez be struck. In addition, he strikes the paragraphs in Mr. Erez’s affidavits of December 15, 2021 and March 23, 2022 that had been identified in Greenspan Partner’s further Amended Notice of Motion. Justice Black concludes that the Erezs had forfeited the right to cross-examine Ms. Greenspan. Justice Black states that it is time that the application, outstanding since 2015, should be determined on its merits. He awards the law firm $10,320 in costs, all inclusive, for the motion.
92On September 29, 2022, Justice Dow schedules the Erezs’s application for an assessment of the Greenspan Partners’ accounts to be heard on July 20, 2023.
93On July 20, 2023, the parties agreed that the application should be adjourned to August 9, 2023.
94On August 9, 2023, the application is argued. I reserved judgment.
F. The Erezs’s Theory of their Case
95Mr. Erez alleges that he had a “fixed price” retainer contract with Greenspan Partners for the preliminary inquiry of twenty-six counts of fraud. Mr. Erez says that the fixed price was pursuant to an oral contract that he had with Mr. Greenspan. Then, Mr. Erez says that there was a written retainer contract for an all-inclusive up-to $565,000 “maximum price” contract for the trial phase of the criminal proceedings.
96The original theory of the Erezs’s case had two parts to it. For the first part, the Erezs submitted that they paid $872,539.60, instead of the $160,000 fixed price retainer for the preliminary inquiry and the $565,000 maximum-price retainer for the trial phase of the criminal proceedings. The Erez claimed an overpayment of $147,539.60. For the second part of the original theory, the Erezs submitted that the value (the quality) of the legal services for the trial and sentencing phase was not $565,000 but only $188,333; i.e., they complained that they overpaid $367,667 (two-thirds) for the trial phase of the criminal charges. Thus, under their original two-part theory, the Erezs sought an assessment to recover $515,206.60 ($147,539.60 plus $367,667) plus approximately nine years of interest pursuant to s. 33 of the Solicitors Act.
97Under this first theory of the case, the Erezs submitted that all of Greenspan Partners’ accounts save for the final account, which was dated June 25, 2014, were interim accounts. Because their request for an assessment came on June 15, 2014, within one year of the final account, the Erezs need not rely on “special circumstances” to have the law firm’s fees assessed, although there are, if the Erezs’s theory is true, also special circumstances that would justify having Greenspan Partners’ accounts being assessed.
98Recently, the Erezs changed their theory of the case. The Erezs’s allegations about the overcharging for the preliminary inquiry persisted; however, the calculation of the overcharge had changed from a claim for a refund of $70,000 ($230,000 (the amount paid for the preliminary inquiry) - $160,000, (the alleged fixed price for the preliminary.
99In the 2023 revised theory of the case, with respect to the accounts associated with the trial phase of the criminal proceedings, the Erezs have abandoned the incompetence and unprofessionalism allegations altogether to be replaced by an allegation that Greenspan Partners had charged around $565,000 for $272,000 of hourly rate billings, and accordingly, the law firm should refund $293,000 for services charged for but not received. Thus, under the second theory of the Erezs’s case, they now seek an assessment to recover $363,000 ($70,000 plus $293,000) plus approximately nine years of interest pursuant to s. 33 of the Solicitors Act.
G. Legal Background
1. Retainers and Contracting for Legal Services
100The critical subject matter of this application for an assessment of Greenspan Partners accounts is the nature of the contracting between lawyer and client. At least seven major branches of the law regulate the relationship between a lawyer and his or her client and all of this law is applicable with respect to contracts for legal services, commonly referred to as “retainers”.
101First, the legal profession is a self-regulated profession under the authority of the Law Society of Ontario; thus, the lawyer-client relationship is regulated by administrative law. Second, lawyers are officers of the court, and thus the lawyer-client relationship is regulated by the court’s inherent, common law, and statutory jurisdiction. Third, the provision of legal services is a matter of the law of contract including contracts of agency. As a matter of contract law, a lawyer will provide legal services and may act as the agent or representative of the client. The terms of the contract may be a combination of oral, written, implied, or statutorily imposed terms. Fourth, the contractual relationship and the common law relationship between a lawyer and his or her client entails a duty of care both in contract and in tort; thus, there is concurrent liability in contract and in tort with respect to a lawyer’s services. Fifth, the relationship between a lawyer and his or her client is a fiduciary relationship regulated by the law of equity that governs relationships of trust and confidentiality. Sixth, the contract, tort, and fiduciary relationship between a lawyer and his or her client is governed by general statutes and by special statutory provisions, including the Solicitors Act. Seventh, pursuant to the law of evidence, there are privileges associated with the communications between a lawyer and his or her client including solicitor and client privilege, litigation privilege, and settlement communications privilege.
102Contracts for remuneration for legal services are long standing phenomenon of the practice of law. Mark M. Orkin in Legal Ethics (2nd ed.)7 states at pp. 148-9:
From early times in Canada a lawyer could agree with a client to perform certain work for a stipulated fee,8 but the court was not precluded from exercising the ordinary jurisdiction of a court of equity to determine the validity of the agreement.9 If the court deemed that the charges were unreasonable or unfair it could rectify them.10 Today the matter is regulated by provincial statutes which recognize that clients and lawyers may enter into written agreements concerning payment for legal services, and which provide for the assessment of legal fees rendered pursuant to such agreements. As well, all jurisdictions regulate contingency fee agreements.
103Contracts for legal services are often called a “retainer.” P.G. Osborn, A Concise Law Dictionary (5th ed.)11 defines retainer as follows:
Retainer. (1) […] (2) The engagement of a barrister or solicitor to take or defend proceedings, or to advise or otherwise act for a client.
104A retainer agreement, which may oral and or in writing or inferred by conduct is essentially an agency agreement in which the client purchases the lawyer’s undertaking to provide services for the client.12 In what is a described as a “general retainer,” the money belongs to the lawyer and he or she does not have to account for it or provide services.13 In a specific retainer, the retainer agreement is tied to specific services and the lawyer must hold the money in its trust account pending providing legal services.14 In the W.B. Williston and R.J. Rolls, The Law of Civil Procedure,15 the nature of a retainer is described as follows:
The term “retainer” has a number of meanings. It may mean: (a) the act or authorizing or employing a solicitor or counsel; (b) the document by which such employment is evidenced; (c) a stipulated fee given to secure the services of a solicitor or counsel; or (d) a deposit to be held on account of future fees and disbursements.
A fee by way of retainer is regarded as a gift given without consideration. It is something outside and apart from the solicitor’s remuneration and need not be brought into the solicitor’s remuneration and need not be brought into the solicitor’s account. Before a solicitor can regard money paid in advance as a retainer and not as security for remuneration or as a payment or deposit on account, the solicitor must fully explain the meaning and effect of the retainer; that it is a gift made without consideration, that the solicitor does not take it into his account, and that even if the client is successful he cannot recover it in costs from the other side.
105Black’s Law Dictionary16 defines “retainer” as follows:
RETAINER. The act of withholding what one has in one’s own hands by virtue of some right.
Act of client in employing his attorney of counsel, and also denotes the fee which the client pays when he retains the attorney to act for him, and thereby prevents him from acting for his adversary. Bright and Turner, 205 Ky. 188, 265 W. 627, 628; Devany v. City of South Norfolk, 143 Va. 768, 129 S.E. 672, 674.
General Retainer – Of an attorney or solicitor merely gives a right to expect professional service when requested. It binds the person retained not to take a fee from another against his retainer, but to don nothing except what he is asked to do, and for this he is to be distinctly paid. Rhode Island Exch. Bank v. Hawkins, 6 R.I. 296.
Special Retainer – An engagement or retainer of an attorney or solicitor for a special and designated purpose; as to prepare and try a particular case. Agnew v. Walden, 84 Alt. 502, 4 So. 672.
106David A.A. Stager, who was an economist, with H.W. Arthurs, a former law dean, in Lawyers in Canada,17 a study published in association with Statistics Canada, described a “retainer fee” as follows:
Retainer Fee. A retainer fee is actually a method for prepayment of the expected fee. This is an initial lump sum, or monthly amount paid by a client for expected use of a lawyer’s services, especially telephone consultations for minor advice, or for documentation work. Through time, this fee will be adjusted to represent the actual cost for providing services required. This method or means of spreading legal costs uniformly over the year and a means whereby a small law firm can establish an assured regular income and a continuing clientele.
107From these definitions and descriptions, it becomes apparent that the nature and notion of a “retainer” is an amorphous and question-begging concept. Typically, retainers are written contracts, but conceptually in some cases, they may be regarded as a gift.
108As contracts, retainers exchange a client’s payment of money, for securing and perhaps paying for legal services. For a retainer, the lawyer may do no more than promise to provide future services for which the sum of money may or may not be used as a pre-payment. The amount of the retainer payment may or may not be connected to the amount charged for the legal services. In other words, the payment of the retainer may be in consideration of the lawyer standing ready to provide future services; however, the retained lawyer may never be asked to provide those services but, the lawyer nevertheless will have precluded himself or herself from acting against the client. For the price of the retainer, the client will have purchased nothing more than loyalty. However, in other cases, the client will have pre-purchased general or specific legal services. A retainer may or may not define the price or the pricing for legal services.
109In practice, in most cases, a retainer is used as payment for legal services and is not just a standby fee. Where the retainer is used as payment for legal services, the payment may or may not set the price or pricing of those legal services.
110A retainer payment, however, may just be security for the payment of the fee for the lawyer’s services. Or a retainer payment may be a client’s deposit for payment for legal services. Or, a retainer payment might be the predetermined price for the lawyer’s services. Or a retainer payment may be used as part payment for the lawyer’s services.
111Retainers are contracts, and the parties have the freedom of contract to define the terms and the operation of the retainer. Thus, a client may retain a lawyer pursuant to a retainer, but the nature of that retainer to any contract for legal services and the relation of the retainer to the price and manner of payment for legal services is question-begging concept. The questions that beg to be answered are: (a) Did the lawyer and the client enter into a contract for present or future legal services? (b) What are the oral, written, and or implied terms of the contract for present or future legal services? (c) Do the terms of the contract of legal services include the payment of a sum just to engage the lawyer’s services? (d) Is the retainer, a standby fee, a deposit, security, or prepayment for legal services? (e) What are the terms of payment of the retainer and how are they related to the payment for legal services? (f) What was the conduct of the parties and how was the retainer payment actually used by the lawyer?
112There are no standard answers to these questions because as noted by Willison and Rolls, the term “retainer” may mean: (a) the act or authorizing or employing a solicitor or counsel; (b) the document by which such employment is evidenced; (c) a stipulated fee given to secure the services of a solicitor or counsel; or (d) a deposit to be held on account of future fees and disbursements. And there is the further complexity that like any contract, it may be open to differing interpretations in accordance with the normative legal principles that govern the interpretation of contracts.
113Somewhat special law applies in interpretating a retainer agreement. Where there is an issue about the terms of an oral retainer, ambiguities are resolved in favour of the client, and where the retainer is oral, the onus is on the lawyer to disprove the client’s version of the client’s interpretation of the agreement.18
2. Assessments of Accounts pursuant to the Solicitors Act
114Pursuant to the court’s inherent jurisdiction to control the conduct of its officers and pursuant to the provisions of the Solicitors Act, the Superior Court has the jurisdiction to order a lawyer to submit his or her account for assessment.
115For present purposes, the relevant provisions of the Solicitors Act, are sections 3, 4, 9, 11, 15-21, 23, 24, 25, and 33 which state:
Order for assessment on requisition
3 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) […]
No reference on application of party chargeable after verdict or after 12 months from delivery
4 (1) No such reference shall be directed upon an application made by the party chargeable with such bill after a verdict or judgment has been obtained, or after twelve months from the time such bill was delivered, sent or left as aforesaid, except under special circumstances to be proved to the satisfaction of the court or judge to whom the application for the reference is made.
Assessment where a party not being the principal, pays a bill of costs
9 (1) 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.
What special circumstances may be considered in such case
(2) 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.
Payment not to preclude assessment.
11 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.
Compensation Agreements
Definitions
15 In this section and in sections 16 to 33,
“client” includes a person who, as a principal or on behalf of another person, retains or employs or is about to retain or employ a solicitor, and a person who is or may be liable to pay the bill of a solicitor for any services;
“contingency fee agreement” means an agreement referred to in section 28.1;
“services” includes fees, costs, charges and disbursements.
Agreements between solicitors and clients as to compensation
16 (1) Subject to sections 17 to 33, a solicitor may make an agreement in writing with his or her client respecting the amount and manner of payment for the whole or a part of any past or future services in respect of business done or to be done by the solicitor, either by a gross sum or by commission or percentage, or by salary or otherwise, and either at the same rate or at a greater or less rate than that at which he or she would otherwise be entitled to be remunerated.
Definition
(2) For purposes of this section and sections 20 to 32,
“agreement” includes a contingency fee agreement.
Approval of agreement by assessment officer
17 Where the agreement is made in respect of business done or to be done in any court, except the Small Claims Court, the amount payable under the agreement shall not be received by the solicitor until the agreement has been examined and allowed by an assessment officer.
Opinion of court on agreement
18 Where it appears to the assessment officer that the agreement is not fair and reasonable, he or she may require the opinion of a court to be taken thereon.
Rejection of agreement by court
19 The court may either reduce the amount payable under the agreement or order it to be cancelled and the costs, fees, charges and disbursements in respect of the business done to be assessed in the same manner as if the agreement had not been made.
Agreement not to affect costs as between party and party
20 (1) Such an agreement does not affect the amount, or any right or remedy for the recovery, of any costs recoverable from the client by any other person, or payable to the client by any other person, and any such other person may require any costs payable or recoverable by the person to or from the client to be assessed in the ordinary manner, unless such person has otherwise agreed.
Idem
(2) However, the client who has entered into the agreement is not entitled to recover from any other person under any order for the payment of any costs that are the subject of the agreement more than the amount payable by the client to the client’s own solicitor under the agreement.
Claims for additional remuneration excluded
21 Such an agreement excludes any further claim of the solicitor beyond the terms of the agreement in respect of services in relation to the conduct and completion of the business in respect of which it is made, except such as are expressly excepted by the agreement.
Determination of disputes under the agreement
23 No action shall be brought upon any such agreement, but every question respecting the validity or effect of it may be examined and determined, and it may be enforced or set aside without action on the application of any person who is a party to the agreement or who is or is alleged to be liable to pay or who is or claims to be entitled to be paid the costs, fees, charges or disbursements, in respect of which the agreement is made, by the court, not being the Small Claims Court, in which the business or any part of it was done or a judge thereof, or, if the business was not done in any court, by the Superior Court of Justice.
Enforcement of agreement
24 Upon any such application, if it appears to the court that the agreement is in all respects fair and reasonable between the parties, it may be enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit, but, if the terms of the agreement are deemed by the court not to be fair and reasonable, the agreement may be declared void, and the court may order it to be cancelled and may direct the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein to be assessed in the ordinary manner.
Reopening of agreement
25 Where the amount agreed under any such agreement has been paid by or on behalf of the client or by any person chargeable with or entitled to pay it, the Superior Court of Justice may, upon the application of the person who has paid it if it appears to the court that the special circumstances of the case require the agreement to be reopened, reopen it and order the costs, fees, charges and disbursements to be assessed, and may also order the whole or any part of the amount received by the solicitor to be repaid by him or her on such terms and conditions as to the court seems just.
Interest on unpaid accounts
33 (1) A solicitor may charge interest on unpaid fees, charges or disbursements, calculated from a date that is one month after the bill is delivered under section 2.
Interest on overpayment of accounts
(2) Where, on an assessment of a solicitor’s bill of fees, charges and disbursements, it appears that the client has overpaid the solicitor, the client is entitled to interest on the overpayment calculated from the date when the overpayment was made.
Disallowance, variation on assessment
(4) On the assessment of a solicitor’s bill, if the assessment officer considers it just in the circumstances, the assessment officer may, in respect of the whole or any part of the amount allowed on the assessment,
(a) disallow interest; or
(b) vary the applicable rate of interest.
116In the immediate case, there is no dispute that Mr. Erez, who was the client, and that Leo Erez and 799969 Ontario Limited, who paid Greenspan Partners’ accounts, have standing to seek an assessment of the law firm’s accounts pursuant to the Solicitors Act.
117Pursuant to s. 3 of the Solicitors Act, the Erezs could have obtained an order for assessment on requisition from a local registrar of the Superior Court of Justice had they applied within one month of the delivery of the law firm’s final account. However, the Erezs did not requisition an assessment within one month.
118In the immediate case, although the Erezs had missed the opportunity of obtaining an assessment as of right, pursuant to the court’s inherent jurisdiction and the relevant provisions of the Solicitors Act, a court may order an assessment of a lawyer’s accounts within one year of the final account if (a) there are “special circumstances” or (b) if there is a sufficient reason in order to do justice to the parties, which is a lesser threshold than a requirement for special circumstances.19 Thus, justification in the interests of justice or special circumstances is a prerequisite for a court ordered assessment within the twelve-month limitation period that applies to all accounts.
119Special circumstances include any circumstances of an exceptional nature affecting the matter of costs or the liability of a client that a judge, in the exercise of his or her judicial discretion in each particular case, may consider relevant to justify ordering an assessment of the account.20
120In determining whether there are special circumstances, the court exercises a broad discretion to be exercised on a case-by-case basis and with an eye to all of the relevant circumstances.21
121The payment of the account is a factor to consider in determining whether there are special circumstances.22 The special circumstances requirement reflects the inference that payment of an account implies that the client accepted the account as reasonable, and when the account has been paid, the special circumstances will tend to undermine the presumption that the account was accepted as proper or show that the account was excessive or unwarranted.23 But the starting point is the perspective of the client, and 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 assessment of a solicitor’s bill.24
122The factors relevant to whether there are special circumstances include but are not limited to: (a) the sophistication of the client; (b) the adequacy of communications between the client and the lawyer; (c) whether there is evidence of increasing lack of satisfaction by the client regarding the lawyer’s services; (d) whether there is evidence of overcharging; (e) the extent of the details of the bills; (f) whether the lawyer and client relationship has terminated or is ongoing; and (g) whether the payments could be characterized as involuntary.25
123While it is in the interests of the administration that lawyers should facilitate and be willing to expose their accounts to assessment, where the client requires leave of the court for a referral to an assessment officer, the court will not order an assessment unless it is satisfied that it is an appropriate case because there are special circumstances or because pursuant to the court’s inherent circumstances there is justification for the court to make the referral.26
H. The Alleged Fixed-Price Retainer for the Preliminary Inquiry.
124In this part of my Reasons for Decision, I analyze whether Greenspan Partners breached a “fixed price” retainer to charge $160,000, all inclusive, for the legal services for the preliminary inquiry phase of Mr. Erez’s criminal proceedings.
125The factual background to determine this issue begins long before the alleged oral agreement. In the 2000s, Mr. Erez was operating a printing business. In February 2009, the business went bankrupt, and individuals and corporations that had lent money to Mr. Erez’s business began lodging complaints with the Toronto police. It was alleged that Mr. Erez had defrauded lenders of millions of dollars to his business. It was alleged that Mr. Erez induced the loans by falsely misrepresenting that he had printing contracts with an elite clientele including Loblaws, Colgate-Palmolive, Movado Group, and Tommy Hilfinger and others. The contracts were, however, fictitious. On February 17, 2009, one of Mr. Erez’s alleged defrauded lenders succeeded in having a receiver appointed over the assets of Mr. Erez and his businesses, and shortly thereafter, the Toronto Police Fraud Squad commenced an investigation.
126In June of 2009, Mr. Erez was charged with one count of fraud, seven counts of forgery and one count of breach of probation. In the last regard, Mr. Erez had a previous conviction for uttering a forged document.
127It seems that it took several months for Mr. Erez to hire a lawyer to respond to the fraud charges and on September 24, 2009, Mr. Erez hired Mr. Greenspan and Greenspan Partners. The firm had not previously acted for Mr. Erez. Mr. Erez signed a general retainer agreement involving a retainer of $25,000 and also a specific retainer of $125,000 with respect to the fraud charges.
128In the following year, there are bail hearings and at least nineteen court appearances. Ultimately, Mr. Greenspan achieves a withdrawal of the June 2009 charges against Mr. Erez. The withdrawal of the charges was formalized in the autumn of 2010. Around the time of the withdrawal of the 2009 charges, Greenspan Partners issued an account dated September 24, 2010.
129Greenspan Partners charged $153,509.81 for its services leading to the withdrawal of the 2009 charges. This was a final account. Mr. Erez paid this account, and he had no complaints about the fees charged. Mr. Erez paid in installments, and the installments were used to pay interim accounts and then to pay the final account issued in October 2010.
130It is significant to note that the ultimate fee of Greenspan Partners for its services in 2009 and 2010 was in excess of the retainer amounts for the services leading to the withdrawal of the charges laid in 2009 and at no time did Mr. Erez suggest that there was a fixed or maximum fee based on the retainers demanded by the law firm for its services leading to the withdrawal of the 2009 charges. The specific retainer of $125,000 did not preclude the law firm charging $153,509.81 for its services. I infer from the history of the accounts for the legal services that led to the withdrawal of the 2009 charges, that Mr. Erez understood that an agreed retainer amount does not foreclose charging more or possibly less than the stipulated sum of the retainer. Mr. Erez was a sophisticated man and a sophisticated client who understood that a quantified retainer was not per se a fixing of the amount of the lawyer’s fees for which the retainer was deposits for future services.
131Returning to the narrative, despite Mr. Greenspan’s initial success, the Crown was not finished prosecuting Mr. Erez about the affairs of his printing business, which had gone bankrupt leaving a horde of very angry creditors. After the 2010 withdrawal of the 2009 charges, Mr. Erez and Greenspan Partners anticipated that there would be a new round of charges. The firm monitored the situation. It had a watching brief, but the law firm did not open a file until another year had passed. A year after the withdrawal of 2009 charges, new charges against Mr. Erez were laid in October 2011. At that time, Greenspan Partners opened a new file for ten counts of fraud, with more counts anticipated. The first docket entry (October 14, 2011) reads: “To attending at 51 Division with Tzvi Erez re: his upcoming fraud x 10 charges.”
132On October 18, 2011, Mr. Erez is charged with ten counts of fraud. In the autumn of 2011, Mr. Erez formally hires Mr. Greenspan and his firm to defend the new round of fraud charges. In his initial affidavit in this application, Mr. Erez deposed that there was an oral contract between him and Mr. Greenspan and that the legal fees for the preliminary inquiry portion of the legal engagement would be fixed at $160,000. Mr. Erez deposed:
Greenspan also told me that if the preliminary inquiry went well, it could lead to the=charges being dropped. I had wished to not incur the cost of the preliminary inquiry if a trial would be inevitable but he convinced me that given this chance, it was worth pursuing.
Greenspan requested $160,000.00, which he told me was an all-inclusive price to cover the preliminary inquiry, including tax and disbursements. He required that this$160,000.00 be provided on a schedule before the start of the preliminary inquiry. This amount was paid to Greenspan Partners. Attached is an email I sent to Greenspan on January 28, 2013, where I confirm the payment schedule for the retainer for the preliminary inquiry […].
133I do not find Mr. Erez’s evidence of an oral agreement for all-inclusive price for the preliminary inquiry credible. Apart from the circumstance that it is self-serving evidence from a fraudster, it is not believable in the factual circumstances. Mr. Erez was a sophisticated litigant who knew that a retainer per se does determine the price of legal services. He would have understood that the purposes and terms of a retainer are not standard and are to be negotiated. I believe that Mr. Greenspan did specify $160,000 as a retainer. I believe that both Mr. Greenspan and Mr. Erez understood that the retainer was to be used for payment of the accounts for the preliminary hearing, but the retainer did not predetermine the price for the legal services to be provided by the law firm. The retainer was an estimate of what Mr. Erez certainly knew was to be a costly legal battle.
134It is the position of Greenspan Partners that there was no fixed price for the preliminary inquiry. Mr. Greenspan having passed away, the firm has no direct evidence to contradict Mr. Erez that he had an oral contract with Mr. Greenspan to fix the price for the preliminary inquiry. Nevertheless, Greenspan Partners argues that there is no written evidence of a fixed price contract. The firm submits that the written evidence and the conduct of the parties demonstrates that Mr. Greenspan had demanded a retainer of $160,000 to be applied against legal services rendered but he did not fix the price of those legal services.
135Ms. Christie, as she then was, deposed that Mr. Greenspan’s practice was to confirm fixed price contracts in writing and although there is a reference to $160,000 retainer in the immediate case, there is no such evidence in the immediate case that it was a fixed price contract for legal services.
136Greenspan Partners argues that Mr. Erez’s self-serving oral evidence is not credible and that he has not met the onus of proving the existence of an oral contract to fix the price for the preliminary inquiry. The law firm interprets the conduct of the parties and the email messages as showing that while there was a contract that Mr. Erez pay $160,000 to the firm for the preliminary inquiry, the payment was a retainer to be applied against the firm’s legal fees and not predetermining the amount of those fees.
137I agree with the arguments of Greenspan Partners and my conclusion is that there was no oral contract between Mr. Erez and Mr. Greenspan to set a fixed price for the preliminary inquiry. In addition to the arguments of Greenspan Partners, which are supported by the evidentiary record, in reaching my conclusion, I rely on the circumstance that Mr. Erez knew from the outset or not long after the outset of the 2011 information alleging multiple counts of fraud that the preliminary inquiry would be an expensive necessity for him to avoid a trial conviction or to minimize the criminal penalties following a conviction after a trial.
138It was obvious from the outset of this new or reopened retainer or it would have become obvious not long after the outset that the Crown would not consider withdrawing the new charges, and the Crown prosecutor’s plan was to proceed to a preliminary inquiry. It was obvious from the outset or not long after the outset of the opening of the new file that Mr. Erez’s defence would be difficult, precarious, and expensive to mount.
139The defence strategy was to use the preliminary inquiry to prepare for a very-very difficult defence. Mr. Erez had no affirmative defence, and it was inconceivable that he could testify in his own defence given the forgeries and his own criminal record or previous frauds and forgeries. His own financial records were dubious. His business and personal accountant would not take responsibility for the financial records honesty or accuracy. Correspondence, financial records and transaction documents had been seized by Mr. Erez’s receiver. There was a serious risk that mounting an affirmative or deflecting defence would make matters worse and prompt more charges.
140I find as a fact that Mr. Erez was advised by Greenspan Partners that it was inevitable that there would be a committal on at least some of the counts of fraud. I find as a fact that Mr. Erez knew that there was an overwhelming prosecution case that he had perpetrated fraud by his misrepresentation of the existence of lucrative printing contracts. Mr. Erez denied ever meeting some of the complainants, but that was disputed and disputable.
141I find as a fact that in consultation with Mr. Greenspan, Mr. Erez understood that his best defence was a Charter argument that there had been undue delay in prosecuting the criminal charges. Mr. Erez was closely involved in constructing that delay defence providing evidence about the public notoriety of the charges and how the laying of the charges had harmed Mr. Erez, his businesses, and his family.
142The other defence available to him was that although he had had lied about the printing contracts, what actually induced the lenders to make their loans to Mr. Erez’s printing business was the interest rate and the quick timing of the repayments that Mr. Erez was prepared to pay the lenders. In other words, the investors did not rely on Mr. Erez’s misrepresentations, but they were loan sharks seizing on an opportunity to recover criminal interest rates. The prospects of this non-reliance defence succeeding were miserably poor given that Mr. Erez had forged purchase orders and other documents and provided them to lenders and his financial records were in disarray. The success of the defence would depend upon Mr. Greenspan establishing through cross-examination that each of the lenders was a loan shark. Although that defence might succeed in reducing the counts of fraud and the corresponding penalties and punishments, total success was unlikely and there was the risk of making matters worse.
143In these difficult forensic circumstances, I believe that Mr. Greenspan did ask for and Mr. Erez did agreed to provide a retainer of $160,000 for the preliminary inquiry. I, however, do not believe that this retainer fixed the price of his firm’s legal services for the preliminary inquiry at $160,000.
144In addition to the arguments of Greenspan Partners about Mr. Erez’s unreliable evidence and in addition to the above observations about the necessary expense of an expensive preliminary hearing, in reaching my conclusion that there was no fixed-price for the preliminary inquiry, I also rely on the history of the firm’s billings and the correspondence between Mr. Erez and Mr. Greenspan. I have analyzed the firm’s dockets, which are in printouts in Ms. Christie’s affidavit dated December 14, 2015.
145The printout of the firm’s dockets indicates that on February 23, 2012, Greenspan Partners issued an account for $4,816.63 (Invoice 10392). Mr. Greenspan docketed 1.0 hours x $850/hr, and Students (noted as “Lawyer 7” in the printouts) docket 22.75 hours x $150/hr.
146The printout of the firm’s dockets indicates that on April 18, 2012, Greenspan Partners issued an account for $11,648.85 (Invoice 10436). Mr. Greenspan docketed 5.0 hours x $850/hr. Students docket 39.0 hours x $150. Lawyer 17 docketed 3.1 hours x $175/hr.
147On April 18, 2012, Mr. Greenspan writes Mr. Erez enclosing the account. The two sentence letter states: “I enclose our account to date. I would be grateful if you forward to us a refresher retainer to be placed in our trust account.” The reference to a “refresher retainer” connotes and denotes that the parties had the common understanding that retainer payments were not a fixing of the price for the legal services for the preliminary inquiry.
148On October 17, 2012 Greenspan Partners issues an account for $4,133.51 (Invoice 10577). The dockets indicate that Mr. Greenspan docketed 2.69 hours x $850. Students docket 6.75 hours x $150.
149On January 28, 2013, Mr. Erez sent Mr. Greenspan the following message (with my emphasis added). The message set out a schedule for the payment of $160,000 for a retainer:
Hello Eddie, I finally have a confirmed schedule on the retainer requirement. I assume you already received the additional $25,000 last week, and I took it into account. I did not want to give you this before absolutely confirming with my parents:
$34,000 paid
$25,000 paid
$5,000 February 5 (cheque #5382 - already in my possession please see attached)
$5,000 February 5 (cheque #5394- already in my possession please see attached)
$45,000 week of February 25
$46,000 week of March 25 and;
Possibility of $10,000 week of March 4th - will notify in advance and reduce later payments accordingly.
Eddie, this is a solid schedule, and it is the best I can confirm and achieve.
[…] Regards and thank you. Tzvi
150While this message confirms that there was a $160,000 retainer requirement, it does not confirm that the price for the preliminary inquiry is fixed at $160,000.
151On March 20, 2013, Mr. Erez sent Mr. Greenspan the following email message: “Eddie, I dropped off a certified draft at your office for $9,000 today. You will receive as promised the remainder in draft form as well ($16,000) for a total of $25,000 as planned. […].” Eight minutes after receiving Mr. Erez’s email message. Mr. Greenspan sent the following email message to Mr. Erez, with my emphasis added:
Tzvi, our agreement was that you were to provide me with $160,000 for the preliminary inquiry. The agreement was that you would deposit in our trust account in the month of September 2012, $35,000 to $40,000. In addition, you would deposit $40,000 in November 2012, an additional $40,000 in January 2013, and a further $40,000 in March 2013 for a total of $160,000. In October 2012, you gave us $29,000 […] In February […] you provided us with $35,000 reducing the total amount outstanding to the end of February to $31,000. On the $31,000 outstanding plus the $40,000 [due] in March 2013 totals $71,000. To date you have provided me with $9,000 in March leaving an outstanding balance owing to our firm of $62,000. We received today $16,000 which brings the amount owing to $46,000.00. I would be grateful if you could attend to this at your earliest convenience.”
152The emphasized words are the best that Mr. Erez can come up with as corroboration of a fixed price for the preliminary inquiry. However, given the history of the relationship between Mr. Erez and Mr. Greenspan and the history of the billings and payments, all the emphasized words mean is that Mr. Erez had agreed to provide a $160,000 retainer for the preliminary hearing, which does not per se mean and would not be understood by Mr. Erez to mean that Mr. Greenspan was precluded from charging more than $160,000, which is precisely what happened.
153In February 2013, Ms. Christie becomes involved in the preparations for the preliminary inquiry. Before that time, she had only had some periphery involvement in the file.
154The preliminary inquiry begins on April 5, 2013 before Justice Ray. The charges are increased from ten to twenty-six counts of fraud. Mr. Erez is in court and hears Mr. Greenspan’s concession that there would be a committal for a trial in the Superior Court.
155On April 17, 2013, Greenspan Partners delivers an account (Invoice 2013) for $180,235. The firm’s printout of dockets indicates that Mr. Greenspan docketed 108.5 hours x. $850/hr., Ms. Christie docketed 172.6 hours x. $350/hr. Students docket 2.2 hours x $150/hr., and Lawyer 18 docketed 68.5 hours x 175/hr.
156The account comes with a letter and trust statement. In the letter, Mr. Greenspan writes: “I enclose our account to date. You will see that there is an outstanding balance of $72,942.72 and I would be grateful if you could attend to it at your earliest convenience.” The amount of the account was $180,235.50. Mr. Erez raises no complaint that the April 17, 2013 account exceeds a fixed price for the preliminary inquiry.
157The preliminary inquiry is completed on April 19, 2013, and Mr. Erez is committed to trial.
158On April 22, 2013, Greenspan Partners issues another account (Invoice 10775) for the preliminary inquiry. The account was for $28,800.88. The dockets indicate that Mr. Greenspan docketed 20.0 hours x. $850/hr. and Ms. Christie docketed 24.25 hours x $350/hr.
159The account invoices for the preliminary hearing total $273,477.15. By the conclusion of the preliminary inquiry Mr. Greenspan had docketed time of 141.44 hours and Ms. Christie had docketed time of 300.95 hours
160On April 30, 2013, Greenspan Partners wrote off docketed time of $51,643.60.
161I conclude that while there was an oral agreement that Mr. Erez provide a $160,000 retainer for the preliminary inquiry, there was no oral agreement that the $160,000 retainer fixed the price of the legal services to be provided at the preliminary inquiry.
162In coming to this factual conclusion, I have not ignored the evidence of Leo Erez, who deposed that he unsuccessfully attempted to discuss the fees for the preliminary inquiry with Mr. Greenspan. This attempt, however, was preempted by Mr. Greenspan’s secretary, who passed a vague message to Leo Erez that the fee for the preliminary inquiry would be discounted by $50,000.27 While, I have not ignored this evidence, it is at best neutral and at worst meaningless. Leo Erez was not a witness to the oral contracting between his son and Mr. Greenspan and the evidence about Leo Erez’s conversation with Mr. Greenspan’s secretary provide no basis for making any findings of fact about the use to be made of a $160,000 retainer.
I. The Maximum Price Contract for the Trial – Quantity of Legal Services
163The above analysis disposes of the first branch of the Erez’s theory of the case to justify an assessment of Greenspan Partner’s accounts. I turn now to the Erez’s complaints about the “quantity” of the legal services provided by the law firm for the trial phase of the firm’s retainer.
164The Erez’s quantity complaint is that the law firm charged for work it did not do. To analyze this complaint, I undertook an assessment of the legal services provided by the law firm and I reviewed the allocation of docketed hours. This analysis shows that there is no merit to the Erez’s complaint and no cause to order a referral to an Assessment Officer.
165After the committal to trial in the Superior Court, there are judicial pretrials on July 2, 2013, and July 30, 2013.
166On July 31, 2013, Greenspan Partners issues an account (Invoice 10901) for $28,316.34. For this account: Mr. Greenspan docketed 11.85 hours x. $850/hr.; Ms. Christie docketed 37.85 hours x $350/hr.; and Students docket 1.3 hours x. $60.
167After the preliminary inquiry, Leo Erez and Mr. Greenspan agreed that Greenspan Partners would act on Mr. Erez’s behalf at the trial for a fixed price. The written retainer contract dated August 2, 2013 stated:
SPECIFIC RETAINER
RE: TZVI EREZ
I, LEO EREZ, hereby confirm that I commit to pay my son’s fees and disbursements plus HST for his trial on 26 counts of Fraud Over $5,000.00 and whatever additional charges occur.
I agree that as of July 29, 2013 until the completion of the trial and sentence (if he is convicted) and including a motion to strike down the provision of a fine in lieu of forfeiture but not including any appeal to the Court of Appeal, that the fee will be $565,000.00 which includes disbursements and HST.
I further agree that I will pay that amount in the following manner: […]
I further agree that you may render accounts on a regular basis for work done in connection with the preparation for the trial but that the total fee will not exceed $565,000.00, including disbursements and HST irrespective of what amount of time is spent by your firm in connection with my son’s matter until the trial case is concluded.
You agree to act on behalf of my son with Vanessa Christie and to represent him on all of his outstanding charges.
I hereby acknowledge having read this agreement and receiving a copy of this specific retainer.”
14On September 13, 2013, there is a pretrial conference, and Mr. Erez’s matter is set for trial by jury for eight weeks to commence on May 5, 2014. Mr. Erez instructs Mr. Greenspan to bring an application under s. 11(b) of the Charter of Rights and Freedoms to have the charges dismissed for delay. As noted above, this is recognized as Mr. Erez’s best available defence.
15On October 28, 2013, Greenspan Partners issues an account (Invoice 10983) for $6,512.75. For this invoice: Mr. Greenspan dockets 20.0 hrs x $850/hr.; Ms. Christie dockets 3.5 hours x. $350/hr.; and Students docket 2.75 hrs x. $150/hr.
16On November 28, 2013, Greenspan Partners issues an account (Invoice 11004) for $12,538.20. For this invoice, Mr. Greenspan dockets 12.4 hours x $850/hr.; Ms. Christie dockets 1.25 hours x $350/hr.; and Students docket 0.65 hours x. $150.
17On December 13, 2013, Mr. Erez signs a direction that accounts be made out to 799969 Ontario Limited. The direction stated: “As of October 31, 2013, I instruct Greenspan Partners LLP to send generic accounts to 799969 Ontario Limited. Do not include any details with respect to work done, Please prepare the accounts to state: “to legal fees in connection with outstanding matters. Dated at Toronto, this 13th day of December, 2013, Tvzi Erez.”
168On January 16, 2014, Greenspan Partners issues an account (Invoice 11048) for $48,805.83. For this account, Mr. Greenspan dockets 36.83 hours x $850/hr.; Ms. Christie dockets 26.23 hours x $350/hr.; and Mr. Greenshields dockets 27.6 hours x. $200/hr.
169On January 30, 2014, Greenspan Partners issues an account (Invoice 11081) for $19,297.58. For this account: Mr. Greenspan dockets 3.00 hours x $850/hr.; Ms. Christie dockets 10.4 hours x. $350/hr.; Mr. Greenshields dockets 39.5 hours x. $200/hr.; and Lawyer 23 dockets 0.5 hours x $175.
170On February 25, 2014, Greenspan Partners issues an account (Invoice 11094) for $33,943. Mr. Greenspan dockets 5.2 hours x $850/hr. Ms. Christie dockets 16.85 hours x. $350/hr. Mr. Greenshields dockets 69.65 hours x. $200/hr. Lawyer 23 dockets 0.5 hours x. $175/hr. Lawyer 21 dockets 0.5 hours x $500; Students docket 3.25 hours x $50/60/150/hr.
171On March 27, 2014, Greenspan Partners issues an account (Invoice 11127) for $50,225.43. Mr. Greenspan dockets 1.65 hours x $850/hr. Ms. Christie dockets 57.4 hours x. $350/hr. Mr. Greenshields dockets 107.5 hours x. $200/hr. Lawyer 23 dockets 0.15 hours x $175/hr. Students docket 0.75 hours x $150/hr.
172On April 17, 2014, Greenspan Partners issues an account (Invoice 11148) for $52,396.56. Mr. Greenspan dockets 18.03 hours x $850/hr. Ms. Christie dockets 71.0 hours x. $350/hr. Mr. Greenshields dockets 42.75 hours x $200/hr. Lawyer 21 dockets 6.0 hours x. $500/hr. Lawyer 22 dockets 1.9 hours x $150/hr. Students docket 1.44 hours x $150/hr.
173On April 29, 2014, Greenspan Partners issues an account (Invoice 11158) for $43,011.87. Mr. Greenspan dockets 14.4 hours x $850/hr. Ms. Christie dockets 27.7 hours x. $350/hr. Mr. Greenshields dockets 48.15 hours x $200/hr. Students docket 3.0 hours x $150/hr.
18The trial commences with the s. 11(b) application and on May 20, 2014, Justice Forestall dismisses the s. 11(b) application. Mr. Erez’s best defence is gone.
19On May 21, 2014, the evidentiary part of Mr. Erez’s trial of twenty-six fraud charges commences. At the conclusion of the first day Crown Counsel, John Scutt, provides further disclosure, including email messages that had been received by the Crown’s witnesses. The information in these messages is relevant to Mr. Erez involvement in recruiting investors and his non-reliance defence. The disclosure is highly detrimental to the already very low prospects of Mr. Erez’s no-reliance defence. Mr. Greenspan asks for and Justice Forestell grants a request for an adjournment so that the defence can consider the new disclosure.
174On the evening of May 26, 2014, there was a meeting at Greenspan Partners office. The damaging nature of the emails is discussed in detail and eventually Mr. Erez decides that he will plead guilty, and he instructs the lawyers to focus on sentencing submissions to attempt to obtain a favourable sentence.
175Pausing here to foreshadow, ten months later on an application to strike his guilty plea, and also in his civil proceeding for an assessment of Greenspan Partners’ accounts, Mr. Erez testified and deposed that he was treated in a brutal fashion by Mr. Greenspan, who swore at him, yelled at him, berated him, and threatened him. Mr. Erez says he was coerced into pleading guilty. Justice McMahon, however, will conclude that contrary to this testimony, Mr. Greenspan and Ms. Christie professionally and properly advised Mr. Erez of his legal predicament and that Mr. Erez was not coerced into pleading guilty to crimes he did not commit.
176Mr. Erez, having decided to change his plea to a guilty plea, a pre-trial is arranged and held before Justice McMahon. Sentencing parameters are discussed. After being provided with more legal advice, Mr. Erez signs an acknowledgement that states that he is pleading guilty.
177On May 27, 2014, for the purposes of a guilty plea, the Crown issues a new information. The number of charges is reduced to twelve. There is correspondence that indicates that Mr. Erez requested that efforts be made to reduce the number of charges and that he is grateful to Greenspan Partners for its success in reducing the charges.
178Mr. Erez appears before Justice McMahon on May 28, 2014. Justice McMahon scrupulously explains the requirements of a guilty plea. Mr. Erez pleads guilty. In an admitted statement of facts, Mr. Erez admits that he had forged purchase orders for printing services. He admits that there were twelve instances of losses exceeding $5,000. The precise amount of the losses remained to be determined but range in the millions of dollars.
179Left unresolved at the time of Mr. Erez’s guilty plea is the matter of settling with the Crown the amount of damages caused by Mr. Erez’s fraud, a matter that was relevant to the sentencing phase of the criminal proceedings. The actual amount of the loss was in dispute and had to be resolved by counsel or pursuant to what is known as a Garner Hearing.
180On May 29, 2014, Greenspan Partners issues an account (Invoice 11181) for $247,819.51. For this invoice: Mr. Greenspan dockets 133.8 hours x $850/hr.; Ms. Christie dockets 193.25 hours x. $350; Mr. Greenshields dockets 133.35 hours x. $200/hr.; Lawyer 21 dockets 1.5 hours x $500/hr.; and Lawyer 6 dockets 25.0 hrs x. 0.0/hr.
181On June 25, 2014, Greenspan Partners issues an account (Invoice 11211) for $18,610.39. Mr. Greenspan dockets 0.40 hours x $850 plus $13,427 (fees). Ms. Christie dockets 7.2 hours x. $350/hr. Mr. Greenshields dockets 0.75 hours x. $200/hrs. This is the last account issued by Greenspan Partners.
182The invoices for the trial phase total $512,671.63.
183Mr. Erez does not protest the accounts and on November 30, 2014, Mr. Erez writes to Ms. Christie stating “As always, I very much appreciate your efforts on my behalf. …” The work of the law firm continues into the fall of 2014. It is during this time that Mr. Erez surreptitiously records a meeting with the lawyers of the law firm, one meeting in October 2014 and the other in December 2014. (The transcripts are eventually struck as a part of Justice Black’s order, mentioned earlier in these Reasons for Decision.)
20On December 1, 2014, Mr. Erez requests that Greenspan Partners obtain a seven week extension of the sentencing hearing. The hearing is moved from December 11, 2014 to February 6, 2015.
184On December 24, 2014, Mr Greenspan dies. Before his death, Mr. Greenspan had only received thanks from Mr. Erez for the firm’s work. There were no complaints about the accounts.
185After June 26, 2014, the unbilled time of Greenspan Partners is: 0.2 hours x $850/hr. for Mr. Greenspan; 70.1 hours x. $350/hrs. for Ms. Christie; 36.9 hours x. $200/hrs for Mr. Greenshields, 1.4 hours x $150/hr. for Students. The total unbilled time is $32,295.
186On January 5, 2015, Mr. Erez terminates the retainer of Greenspan Partners LLP. Mr. Erez hires Mr. LaFontaine to complete the criminal proceedings.
187Mr. Erez decision to terminate the engagement of Greenspan Partners was a decision that he was entitled to make, but it was his decision that meant the completion of the trial was not covered by the maximum price contract. There is no suggestion that Greenspan Partners would not have completed its services for Mr. Erez, obviating the need for his incurring additional legal fees. In this regard, on January 26, 2015, Ms. Christie writes Mr. Lafontaine. She encloses copies of the accounts sent to Mr. Erez and a copy of the specific retainer contract signed by Leo Erez. In her letter, she states:
I can indicate to you that our legal services rendered depleted the monies agreed to pursuant to the agreement as reflected in the documentation provided. Further, as of the date of Mr. Erez’s direction to cease work on his matter (January 5, 2015), we incurred a significant amount (approximately $30,000) in unbilled legal fees and have not been billed to the client nor had we intended to do so as per the agreement.
188The above analysis leads to the following findings of fact. Although there was a “maximum price” contract with respect to the trial phase of the charges against Mr. Erez; Greenspan Partners did not breach the contract as to the quantity of legal services provided.
189Pursuant to the maximum price contract, Greenspan Partners did not charge more than it was entitled to charge. Greenspan Partners did not charge for legal services that it did not provide. There is no basis to refer these accounts to an Assessment Officer.
J. The Maximum Price Contract for the Trial – Quality of Legal Services
190As noted above, when the Erez’s originally brought this application, it was a part of their case to challenge the quality of the legal services provided by Greenspan Partners. They made this challenge in support of their argument that there should be an assessment of the accounts by an Assessment Officer. At the hearing of the application, the Erez’s abandoned this allegation. This abandonment took Greenspan Partners by surprise because for almost a decade the firm has defended its and the late Mr. Greenspan’s honour.
191Greenspan Partner’s defence has been on the merits and also the law firm raised the technical defence that the issue of the competence and integrity of the firm’s legal services is res judicata, i.e., already decided.
192I agree with Greenspan Partners’ arguments about issue estoppel and these arguments provide another reason for dismissing the Erez’s application for a referral to an Assessment Officer.
193Issue estoppel precludes a litigant from re-litigating an issue that has been clearly decided by a court of competent jurisdiction in a previous proceeding between the same parties or their privies even if the new litigation involves a different cause of action. The requirements for an issue estoppel are: (1) the parties or their privies are opponents in consecutive law suits; (2) the same issue is involved in the initial and subsequent litigation; (3) the issue is litigated and determined in the first suit and its determination was necessary to the result in the litigation; and (4) the decision on the issue is a final decision.28 Danyluk v. Ainsworth Technologies Inc.29 is a leading case on issue estoppel. It adds an element of discretion to the determination of whether there is an issue estoppel. In this case, the Supreme Court of Canada held that where a party establishes the pre-conditions for an issue estoppel, a court must still determine whether, as a matter of discretion, issue estoppel ought to be applied. The court should stand back and, take into account the entirety of the circumstances, consider whether application of issue estoppel in the particular case would work an injustice.30
194All of the elements for an issue estoppel are present in the immediate case, including the discretionary element.
195As noted above in the discussion of the temporal and factual benchmarks, in late May 2014 in the criminal proceedings, Mr. Erez attended before Justice McMahon and pleaded guilty to twelve counts of fraud over $5,000. Greenspan Partners’ legal work for Mr. Erez then continued for the next six months as Justice McMahon presided over a Gardner Hearing and the sentencing phase of the criminal proceeding. Mr. Greenspan died in December 2014 and in January 2015, Mr. Lafontaine became Mr. Erez’s defence counsel. In June 2015, just shy of one year after Greenspan Partners’ final account, the Erez’s brought this application for an assessment of the law firm’s accounts and around the same time, Mr. Erez brought an application in the criminal proceeding to strike his guilty plea. There was a hearing before Justice McMahon on Mr. Erez’s application to set aside his guilty plea. The quality of Greenspan Partners’ legal services was the critical issue for the application to strike the guilty plea.
196Mr. Erez and Ms. Christie testified, and both were cross-examined. Mr. Erez testified that he was pressured by Mr. Greenspan to plead guilty and that Mr. Greenspan had threatened him. Mr. Erez said that his guilty plea was involuntary, not informed, and was a result of the pressure exerted by Mr. Greenspan and to a lesser extent by Mr. Greenspan’s colleagues. He said Mr. Greenspan misinformed him about his defence and that Ms. Christie had misled him. Mr. Erez said he was innocent, and that his guilty plea was a miscarriage of justice.
197On March 22, 2016, Justice McMahon dismissed the set aside guilty plea application. Justice McMahon found that Mr. Erez is not a credible witness. Justice McMahon did not accept Mr. Erez’ evidence as to what transpired at the meetings with Mr. Greenspan, Ms. Christie, and Mr. Greenshields. In relation to the outstanding civil application for an assessment of Greenspan Partners’ accounts, Justice McMahon stated:
I have examined Mr. Erez’ affidavit in the civil proceedings against Mr. Greenspan. I find, in parts, it is completely misleading on how the plea discussions happened. In the affidavit, he condenses the several days of plea discussions down to two days. Mr. Erez, in that affidavit, leaves a false impression in the affidavit that he signed the plea Direction just five minutes before going into court and pleading guilty before me. In reality, the plea Direction was signed 24 hours in advance. He had another day to consider his position. The fact that his prior sworn affidavit was misleading on a material fact, I find negatively impacts my assessment of his credibility.
198Although Justice McMahon had concerns about the accuracy of Ms. Christie’s account of one meeting, he found her to be a credible witness and he accepted her evidence as true. Justice McMahon found as a fact that Greenspan Partners acted competently and did not act unprofessionally or unethically. Justice McMahon did not strike Mr. Erez’s guilty plea precisely because there was no professional malfeasance by Greenspan Partners.
199The issue of the quality of Greenspan Partners’ services is res judicata and cannot establish a justification for a referral of the law firm’s accounts to an Assessment Officer.
K. Circumstances and Special Circumstances for an Assessment of Accounts
200As noted above, the final account rendered by Greenspan Partners came in June 2014. The Erez’s did not apply for an assessment within one month of that final account. The Erezs terminated the retainer of Greenspan Partners in January 2015, and they did not apply within one month of the termination of the retainer. Because of their delay in obtaining a requisition for an assessment, the Erezs needed leave of the court, which they sought by this application, which was commenced just weeks before the anniversary of Greenspan Partners’ final account.
201My findings of fact above establish that there are no circumstances and no special circumstances that would justify an assessment by an Assessment Officer. Mr. Erez was a sophisticated client who was hand and glove with Greenspan Partners in preparing for the preliminary inquiry, in preparing for the trial, in making the decision to change his plea, in giving instruction for the sentencing phase and the Garner Hearing. He knew from the outset that the legal costs of his defence would be huge, and he paid that expense without complaint. He knew that there was no fixed price for the preliminary inquiry, and he knew that there was a maximum price for the trial. Those were the deals that he knowingly made and he was content to abide by until with new legal counsel he changed course and decided to recant his guilty plea. It was only then that it became in his self-interest to impugn the legal services for which he formerly was gratified to receive. That change of mind is not a special circumstance or a circumstance that would stir the court’s inherent jurisdiction. Copious amounts of legal work was done by Greenspan Partners and the law firm was willing and able to carry on notwithstanding Mr. Greenspan’s passing.
202Ironically, I have had to undertake an assessment of the law firm’s accounts in order to respond to the submissions of the parties, and this assessment confirms that the Erez’s application should be dismissed.
203Moreover, it is not in the interests of justice to refer the matter to an Assessment Officer. Greenspan Partners submits that the delay in the Erez’s launching this application after Mr. Greenspan had passed away and was not in a position to defend his own and his firm’s reputation was prejudicial.
204In another irony of this case, while I agree that it is not in the interests of justice to have an assessment of Greenspan Partners’ accounts, I disagree with the submission that the firm has been prejudiced by the timing and the duration of this application.
205There has always been an adequate evidentiary record and once Justice McMahon made his determination about the professionalism of the firm’s services, both parties had their day in court and the reputation of Mr. Greenspan and his firm was intact and would become invulnerable to attack once the Court of Appeal dismissed Mr. Erez’s appeal.
206It is indeed unfortunate that the Erezs persisted until recently to litigate what was a dead horse of an application, but that prejudice is a matter of costs.
L. Conclusion
207For the above reasons, the application is dismissed with costs payable to Greenspan Partners.
208If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Greenspan Partners’ submissions within twenty days of the release of these Reasons for Decision followed by the Erezs’s submissions within a further twenty days.
Perell, J.
Released: September 1, 2023
COURT FILE NO.: CV-15-530713
DATE: 2023/09/01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
799969 ONTARIO LIMITED, LEO EREZ and TZVI EREZ
Applicants.
- and –
GREENSPAN PARTNERS, LLP
Respondent
REASONS FOR DECISION
PERELL J.
Released: September 1, 2023
A licensee shall not pay into a trust account the following money:
- Money that belongs entirely to the licensee or to another licensee of the firm of licensees of which the licensee is a partner or by which the licensee is employed, including an amount received as a general. retainer for which the licensee is not required either to account or to provide services.
- (1) Subject to section 8, every licensee who receives money in trust for a client shall immediately pay the money into an account at a chartered bank, provincial savings office, credit union or a central to which the Credit Unions and Caisses Populaires Act, 2020 applies or registered trust corporation, to be kept in the name of the licensee, or in the name of the firm of licensees of which the licensee is a partner, through which the licensee practises law or provides legal services or by which the licensee is employed, and designated as a trust account.
Footnotes
- R.S.O. 1990 c. S 15.
- R. v. Erez, [2016] O.J. No. 723 (S.C.J.),
- R. v. Erez, [2017] O.J. No. 3942 (C.A.).
- R. v. Erez, 2019 ONCA 204.
- R. v. Erez, [2019] S.C.C.A. No. 161.
- 799969 Ontario Limited and Erez v. Greenspan Partners LLP, 2022 ONSC 3653
- Toronto: Thomson Reuters, Canada Law Book, 2011.
- McPeasley and Eccles (Re) (1859), 5 U.C.L.J. 279.
- Preston v. Nugent (1900), 1900 130 (MB QB), 13 Man. R. 511 (K.B.).
- Gola v. Philion, 1919 100 (SK KB), [1920] 3 W.W.R. 348 (Sask. K.B.).
- London, Sweet & Maxwell, 1964.
- Strother v. 3464920 Canada Inc., 2007 SCC 24, [2007] 2 S.C.R. 177 at para. 133; Groom v. Crocker, [1939] 1 K.B. 194 at p. 222 (C.A.).
- By-Law 9, Section 8, para. 1 made under the Law Society Act, R.S.O. 1990, c. L.8 states:
- By-Law, Section 7 (1) of the Law Society Act states:
- Toronto: Butterworths, 1970, p. 63.
- (rev’d Fourth ed) (St. Paul, Minn., West Publishing Company Co., 1968).
- Toronto: University of Toronto Press, 1990, p. 226.
- Trillium Motor World Ltd. v. General Motors of Canada Ltd., 2015 ONSC 3824 at para. 470, var’d on quantification of damages, 2017 ONCA 54; Broesky v. Lüst, 2011 ONSC 167 at para. 48, aff’d 2012 ONCA 701; Rye and Partners v. 1041977 Ontario Inc., [2002] O.J. No. 4518 (S.C.J.), aff’d [2004] O.J. No. 2480 (C.A.); Coughlin v. Comery, [1996] O.J. No. 822 at para. 34 (Gen. Div.), aff'd [1998] O.J. No. 4066 (C.A.), leave to appeal to S.C.C. refused [1998] S.C.C.A. No. 597.
- Adler v. Thompson Rogers, 2019 ONCA 810; McCarthy Tétrault LLP v. Guberman, 2012 ONCA 679; Guillemette v. Doucet(2007), 2007 ONCA 743, 88 O.R. (3d) 90 (C.A.); Almond v. McDonnell, [2004] O.J. No. 691 (S.C.J.); Re Robbins and Partners and Randall, (1977) 1977 1033 (ON SC), 17 OR (2d) 242 (Master); Burt v. Johnstone, [1996] O.J. No. 2473 (Gen. Div.).
- Calles v. Yorkmak, 2023 ONSC 1248; Novosel v. Campisi, 2022 ONSC 3300; Hodge v. Neinstein, 2017 ONCA 494 Clatney v. Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377; Glanc v. O’Donohue & O’Donohue (2008), 2008 ONCA 395, 90 O.R. (3d) 309 (C.A.); Plazavest Financial Corp. v. National Bank of Canada (2000), 2000 5704 (ON CA), 47 O.R. (3d) 641 (C.A.); Ling v. Naylor, [1998] O.J. No. 5263 (Gen. Div.); Minkarious v. Abraham, Duggan (1995), 1995 7253 (ON SC), 27 O.R. (3d) 26 (Gen. Div.); Rooney v. Jasinski, 1952 115 (ON CA), [1952] O.R. 869 (C.A.).
- Guillemette v. Doucet (2007), 2007 ONCA 743, 88 O.R. (3d) 90 (C.A.); Plazavest Financial Corp. v. National Bank of Canada (2000), 2000 5704 (ON CA), 47 O.R. (3d) 641 (C.A.); Minkarious v. Abraham, Duggan (1995), 1995 7253 (ON SC), 27 O.R. (3d) 26 (Gen. Div.). 465 TJ Squared Inc. v. Low Murchison Radnoff LLP, 2021 ONSC 2587; Bui v. Alpert, 2014 ONCA 495 at para. 7; Echo Energy v. Lenczner Slaght Royce Smith Griffin LLP, 2010 ONCA 709 at para. 32, leave to appeal refused [2010] S.C.C.A. No. 484.
- Davies, Ward & Beck v. Union Industries Inc. (2000), 2000 5722 (ON CA), 48 O.R. (3d) 794 (C.A.).
- Hofman v. Bennett Jones LLP, 2011 ONSC 7124; Echo Energy v. Lenczner Slaght Royce Smith Griffin LLP, 2010 ONCA 709, leave to appeal refused [2010] S.C.C.A. No. 484; Guillemette v. Doucet (2007), 2007 ONCA 743, 88 O.R. (3d) 90 (C.A.); Enterprise Rent-a-Car Co. v. Shapiro, Cohen, Andrews, Finlayson (1998), 1998 1043 (ON CA), 38 O.R. (3d) 257 (C.A.); Randell v. Robins & Robins (1979), 1979 1921 (ON SC), 22 O.R. (2d) 642 (H.C.J.).
- Ilic v. Ducharme Fox LLP, 2022 ONCA 463; Clatney v. Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377; Echo Energy v. Lenczner Slaght Royce Smith Griffin LLP, 2010 ONCA 709 at para. 36 (C.A.), leave to appeal refused [2010] S.C.C.A. No. 484; Andrew Feldstein & Associates Professional Corp. v. Keramidopulos, [2007] O.J. No. 3683 at para. 63 (S.C.J.); Price v. Sonsini (2002), 2002 41996 (ON CA), 60 O.R. (3d) 257 (C.A.).
- TJ Squared Inc. v. Low Murchison Radnoff LLP, 2021 ONSC 2587; Carducci v. Paliare Roland Rosenberg Rothstein LLP, 2017 ONSC 4717; Clatney v. Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377 at paras. 86–87; Warnica v. Van Moorlehem, 2012 ONSC 4241 at para 49.
- Adler v. Thomson, Rogers 2019 ONSC 861, aff’d 2019 ONCA 709 at para. 29, leave to appeal ref’d, [2010] S.C.C.A. No. 484.
- The law firm’s evidence was that the legal fees for the preliminary inquiry had already been discounted from the docketed time by $50,000, which evidence was corroborated by the dockets.
- College of Traditional Chinese Medicine Practitioners and Acupuncturists of Ontario v. Federation of Ontario Traditional Chinese Medicine Assn., 2015 ONCA 851 (C.A.), leave to appeal refused [2016] S.C.C.A. No. 25; Re EnerNorth Industries Inc. (2009), 2009 ONCA 536, 96 O.R. (3d) 1 at 54 (C.A.). Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 ; Minott v. O’Shanter Development Co. (1999), 1999 3686 (ON CA), 42 O.R. (3d) 321 (C.A.).
- 2001 SCC 44, [2001] 2 S.C.R. 460. See also Penner v. Niagara (Regional Police Services Board), 2013 SCC 19.
- Apotex Inc. v. Schering Corp., 2018 ONCA 890; Amtim Capital Inc. v. Appliance Recycling Centres of America, 2014 ONCA 62;Penner v. Niagara (Regional Police Services Board), 2013 SCC 19.