Rakesh Gupta and Ontario Ltd., Respondents ENDORSEMENT

Transcription

1 SUPERIOR COURT OF JUSTICE - ONTARIO CITATION: Zeppieri & Associates v. Gupta, 2016 ONSC 6491 COURT FILE NO.: CV DATE: RE: Zeppieri & Associates, Applicant/Moving Party AND: Rakesh Gupta and Ontario Ltd., Respondents BEFORE: S.F. Dunphy, J. COUNSEL: Gregory Gryguc, for the Moving Party No one appearing HEARD: October 13, 2016 ENDORSEMENT [1] Both lawyers and their clients are increasingly frustrated with the delays in the process for assessing accounts under the Solicitors Act, R.S.O. 1990, c. S.15. This case provides a very good case in point to understand that frustration as well as confirming a small pressure relief valve. [2] The plaintiff law firm in this simple case claims to be owed $5, for services rendered and billed under bills dated July 24 and September 2, 2015, the latter invoice having been rendered when the client indicated that he wished to terminate the relationship. When the bills were not paid, the firm sought an order for assessment on October 5, 2015 in Toronto. It was not until more than six months later (May 16, 2016) that the assessment office responded and the plaintiff law firm was given the first available appointment, in this case June 28, [3] Thus from inception until first hearing a delay of almost three years is required for a simple case without even considering any delays that might be entailed should the respondents have substantive issues to be raised in response. More than three years to hear a simple and very possibly unopposed application for a small claim amount is exceedingly frustrating for the parties involved. [4] The endemic delays affect more than just lawyers. While the applicant in this case is a law firm seeking payment, it might just as well be a client seeking a refund of retainer amounts applied to a contested bill. [5] The firm would like to proceed to seek a judgment in the Small Claims Court instead. The amount is well within Small Claims Court jurisdiction and a hearing can be obtained in a

2 - Page 2 - fraction of the time needed to get in front of an Assessment officer. There is no reason to believe the retainer of the firm is contested. [6] The firm recognizes that leave of this court is required in any event since it has already commenced the assessment process: s. 6(4) Solicitors Act. However, in light of the recent Divisional Court decision of Dambrot J. in Cozzi v Heerdegen, 2016 ONSC 3082 (CanLII), the applicant law firm sees an opening to proceed more swiftly in Small Claims Court. Can the firm do so? [7] The plaintiff attempted to obtain the client s consent to moving forward in Small Claims Court. Its letter was not responded to. The plaintiff has therefore moved on notice before me to stay the assessment proceedings pending and to have the matter continued in the Small Claims Court. The client has not appeared on this motion although served. [8] It is clear from a review of s. 2 and s. 3 of the Solicitors Act that there are two avenues by which a solicitor may seek to collect fees alleged to be owing from a client. The solicitor may proceed by way of action to collect upon the fees providing that a bill is rendered satisfying the technical requirements of s. 2 or the solicitor may proceed to requisition an assessment of the bill before an assessment officer under s. 3. Neither avenue is exclusive. [9] The solicitor is not the only one with access to the assessment process under s. 3 of the Solicitors Act. The client may invoke the procedure (s. 3(a) and (b)) or indeed a non-party who pays or is liable to pay the bill: s. 9. In assessing a bill referred for assessment, the assessment officer is entitled to consider the full range of circumstances described in the extensive jurisprudence on the topic in order to determine what amount is fair and reasonable in all of the circumstances. In appropriate cases, the solicitor s bill may be reduced. [10] The plaintiff s problem lies with s. 23 of the Solicitors Act that provides as follows: 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 [11] Does s. 23 of the Solicitors Act divide the universe of bills potentially rendered by a solicitor into two piles: (i) bills rendered pursuant to any such agreement that may only proceed by way of assessment and (ii) bills rendered at large without any specific written agreement that may be enforced by legal action or by a reference to assessment? [12] As judges, ours is not to question why when interpreting statutes. However, the job is not that of an automaton. Ascertaining legislative intent is the aim of the exercise and that intent can only be discovered after a close examination of both the words used and their full context.

3 - Page 3 - [13] There would not appear to be any obvious policy reason for requiring all collection procedures involving written engagement agreements to proceed exclusively by way of assessment while oral or unwritten engagements may proceed by way of action in the courts or by way of assessment. If anything, the policy consideration would likely weigh in the opposite direction. [14] The anomaly that would be entailed in so finding is all the more curious when s. 17 of the Solicitors Act is considered. If the written agreement is made in respect of business done or to be done in any court, except the Small Claims Court, section 17 provides that 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. If the effect of s. 23 is that any bill arising from a written engagement agreement must go to assessment, then s. 17 would mean that a happy client with no disputes could not even pay the lawyer s account until after the agreement had been referred to assessment should the written engagement agreement happen to be in respect of a court proceeding. That outcome would be plainly absurd. Further, since section 17 of the Solicitors Act does not apply to contingent arrangements (Solicitors Act s. 28.1(10)), lawyers who opt for a non-contingent ordinary engagement would have to apply for assessment before receiving any payments while lawyers with contingent fee engagements would not. That outcome also appears entirely counterintuitive and unintended. [15] That outcome would also make nonsense of generations of training of lawyers in the Bar Admissions program where young lawyers have long been admonished to strive to reduce all retainer agreements with clients to writing as far as possible to help guard against disagreement or misunderstanding. If the effect of heeding that advice would be to prohibit the lawyer from being paid for any services involving court action until three more years down the road even with a happy and consenting client, not many lawyers could be expected to allow their engagements to be reduced to writing unless their personal wealth or capital could withstand a three years or longer delay before receiving any payment. [16] The legislator is entitled to prescribe strange or even arbitrary outcomes if the intent to do so is clear. However, in most cases, arbitrary or unexpected outcomes offer good evidence that a different interpretation was intended and if the words used will bear it, the sensible outcome is more likely to be the intended one. [17] This question came before Dambrot J. in Cozzi v Heerdegen, 2016 ONSC 3082 (CanLII). I have had the advantage of reading his reasons and concur with them. Dambrot J. concluded that any such agreement in s. 23 of the Solicitors Act refers to the agreement in writing described in s. 16(1) thereof. He further concluded after a careful review that s. 16 was intended to refer to what might be described as alternative billing arrangements. Contingent fees are the most obvious form of alternative billing arrangement, but other arrangements are also covered including block fee or other arrangements. [18] There is another path to arrive at the same result. The trigger for bringing an action or referring an account for assessment under the Solicitors Act is the solicitor s bill. Bills may be rendered monthly, quarterly, after major steps in a proceeding or whenever the parties think it

4 - Page 4 - appropriate to do so through the life of an engagement. A single retainer agreement may result in dozens of bills being rendered. In that sense, an action or an assessment aimed at collecting one or more outstanding bills as part of a larger or on-going engagement is an action on those individual bills and not an action on the underlying agreement that gave rise to them. [19] Viewing an assessment of or action on an individual bill as being on the bill itself and not on the underlying engagement agreement also results in a harmonious reading of s. 17 of the Solicitors Act in a manner that does not produce absurdities. Section 23 only prohibits an action on the agreement itself, not individual bills. In connection with a review of the entire agreement, under s. 23, the agreement may be enforced or set aside without action. [20] In the present case, the invoices rendered by the solicitor refer to the preparation of a retainer agreement among the list of services and time charges outlined. The invoices themselves make clear that the client was billed for a specified number of hours at a specified hourly rate. No agreed alternative fee arrangement is mentioned. The invoices do not purport to enforce or be pursuant to a retainer agreement nor is a retainer or engagement agreement referenced in the Requisition for an Order for Assessment. [21] I conclude that a standard engagement agreement is not the sort of agreement contemplated by s. 16, s.17 or s. 23 of the Solicitors Act. I further conclude that an action on one or more bills pursuant to a written agreement that is not an alternative fee arrangement is not covered by s. 23. Accordingly, there is no bar to proceeding to enforce collection of liquidated sums owing in the Small Claims Court. [22] An important caveat is required. The Solicitors Act is fundamentally a consumer protection statute and not a monopoly protection statute. The monopoly granted to solicitors comes with heavy responsibilities. Among these are the right of clients to refer bills to assessment if the client is of the view that the amount charged is not fair and reasonable having regard to all of the circumstances. The Small Claims Court has no jurisdiction to reduce or adjust a bill in the way an assessment officer or judge can (barring agreement of all parties at least). [23] A lawyer who chooses to seek collection of an account by way of action cannot thereby preempt the undoubted right of the client to have that bill assessed. The client s right to assess a solicitor s bill is a matter of overriding public policy and cannot be defeated by tactical manoeuvres of a swift or clever lawyer. [24] That being said, clients are subject to time limits if they seek an assessment of a bill under the Solicitors Act. These time limits can be extended in appropriate cases, but only upon establishing some basis for seeking relief. Where a client has failed to object to request assessment in a timely way of a lawyer s account properly rendered, a late attempt to seek an extension of time to do so may take on the appearance of being motivated by an desire to defeat a pending collection action and may well require convincing evidence to justify a court extending the times stipulated in s. 3 and s. 4 of the Solicitors Act.

5 - Page 5 - [25] In the present case, the client was served with this Notice of Motion and was contacted in writing before the motion was brought without raising any objection to this matter being transferred to Small Claims Court. The client has had every opportunity to seek an assessment if there was a bona fide desire to do so. Accordingly, I am granting the solicitor leave in this case to bring an action in Small Claims Court to collect upon the two outstanding accounts. S.F. Dunphy, J. Date: October 18, 2016