APR/05/2012/THU 05:29PM DIGI FAX No P. 002

Transcription

1 APR/05/2012/THU 05:29PM DIGI FAX No P. 002 ONTARIO c_ v~ l ~- 45<D\o lo~-occ p Court File No. SUPERIOR COURT OF JUSTICE BETWEEN: CASSIE HODGE Plaintiff -and- GARYNEINSTEIN and NEINSTEIN & ASSOCIATES LLP Defendants Proceeding under the Class Proceedings Act, 1992 STATEMENT OF CLAIM TO THE DEFENDANTS A LEGAL PROCEEDING HAS BEEN CO:MlVIENCED AGAINST YOU by the plaintiff. The claim made against you is set out in the following pages. IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a staten1ent of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiff's lawyer or, where the plaintiff does not have a lawyer, serve it on the plaintiff, and file it, with proof of service in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario. If you are served in another province or territory of Canada or in the United States of America, the period for serving and filing your statement of defence is forty days. If you are served outside Canada and the United States of America, the period is sixty days. Instead of serving and filing a statement of defence, you may serve and file a notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more days within which to serve and file your statement of defence. IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTIN'G A LOCAL LEGAL AID OFFICE.

2 APR/05/2012/THU 05:30PM DIGI FAX No P IF YOU PAY THE PLAINTIFF'S CLAIM, and $3,000 for costs, within the time for serving and filing your statement of defence you may move to have this proceeding dismissed by the court. If you believe the amount claimed for costs is excessive, you may pay the plaintiffs claim and $400 for costs and have the costs assessed by the court. Date... ~C,\...?.... ~.1.~... Issued by Local registrar.t_ t.~ ~""""LI.r..) TO Gary Neinstein 129 Ava Road Toronto, Ontario M6C1W2 Neinstein & Associ?.tes LLP 1200 Bay Street Suite 700 Toronto, Ontario M5R2A5 SUPERiOR COUfrr OF just!ce 39.'3 UNIVERSITY AVE. 10TH FLOOR ioronto. ONTARIO M5G 1E6 COW~ SUPERIELJRE o:: JUSTICE 393 AVE. UNIVERSITY 10E ETAGE TORONTO, ONTARIO MSG 1E6

3 APR/05/2012/THU 05:30PM DIGI FAX No P The Plaintiff claims against the Defendant Neinstein and Associates LLP and the Defendant Gary Neinstein: a. A declaration that the Plaintiff is the class representative; b. A declaration that the members of the class are those clients past or present of the Defendants who signed a retainer and contingency fee agreement with either of them (the "CF A") or who were charged a percentage contingency fee by them; c. A declaration that the Defendants and the CF A are in violation of the Solicitors Act, R.S.O (the "Act"), c. S. 26 and the Contingency Fee Agreements, O.Reg. 195/04 (the "Regulation"); d. A declaration that the Defendants breached their fiduciary duty owed to the Plaintiff and to class members; e. A declaration that the Defendants are in breach of contract with the Plaintiff and class members; f. A declaration that the Defendants are not entitled to take as fees any amount in excess of the percentage fees set out against damages in the CF A; g. A declaration that Defendants are not entitled to charge as fees any amount for costs relating to any settlemen~ judgment or other detem1ination on either a partial indemnity or substantial indemnity basis;

4 APR/05/2012/THU 05:30PM DIGI FAX No P h. A declaration and Order that Defendants repay to the Plaintiff and class members any amounts taken for partial indemnity fees or other costs in addition to the percentage to be taken against damages as set out in the CF A, including any payment taken for taxes on these amounts; i. A declaration that the CF A and the Defendants' fees are not fair or reasonable to the Plaintiff and class members; J. An Order that the Defendants repay to the Plaintiff and class members disbursements whi0h are excessively or improperly charged; k. Damages in the amoun:t of $1 0,000,000.00; l. Punitive damages of$1,000,000.00; m. Pre-judgment and post-judgment interest in accordance with the Courts of Justice Act on all amounts ordered to be repaid to the Plaintiff and class members; n. Costs of this class proceeding action plus applicable taxes; and o. Such further and other relief as this Honourable Court permits. The Parties 2. The Plaintiff, Cassie Hodge, resides in the Town of Brooklin, in the Province of Ontario. She is married to Albert Chin and is the mother of minor childten Alexander Chin and Aretha Chin.

5 APR/05/2012/THU 05:30PM DIGI FAX No P The Defendant, Gary Neinstein, Q.C. ('~einstein") is a lawyer, licensed to practice law in the Province of Ontario and was at material times carrying on practice in the City of Toronto, in the Province of Ontario and was engaged in a solicitor-client relationship with the Plaintiff. 4. The Defendant, Neinstein & Associates LLP (''N&A'') is an Ontario Limited Liability Partnership, and its Business Identification Nutnber is Its registered office is located in the City of Toronto, in the Province of Ontario. 5. At all material times, Neinstein was a principal of the Defendant law firm Neinstein & Associates LLP and practised law with the Defendant N&A. Background 6. On December 23,2002, the Plaintiff was a passenger in an automobile which was involved in a motor vehicle accident. A!J a result of the collision, the Plaintiff sustained serious and permanent bodily injuries. 7. At the time of the collision, the Plaintiff was employed as a legal assistant. 8. As a result of her injuries, the Plaintiff has not been able to work since the collision and remains in chronic pain. 9. In or about January 2003, the Plaintiff retained Zwiebel & Associates, and dealt with the Thomas Zwiebel as her lawyer to commence an action against the Forsters and Liberty with respect to the collision.

6 APR/05/2012/THU 05:30PM DIGI FAX No P On or about September 11, 2006, the Plaintiff changed counsel and retained the Defendant N&A and the Defendant Neinstein on behalf ofherself and her minor children's claims pursuant to the Family Law Act, R.S.O. 1990, c. F.3, to continue the action with respect to their damages as a result of the motor vehicle accident. The Retainer and Contingency Fee Agreement 11. On or about September 13, 2006, the Defendants N&A and Neinstein required that the Plaintiff sign N&A's standard form Retainer and Contingency Agreement ("CFA") which CFA was in the sante form as signed by all oftheir clients. The CFA stated: RETAINER AND CONTIGENT FEE AGREEMENT JJWe (hereinafter CLIENT) hereby employ NEINSTEIN AND ASSOCIATES (hereinafter N&A) to prosecute any legal action that CLIENT may have for uuuries or accident benefit claims resulting from the accident (other incident or event) which occurred on or about the_ day of, 20_. The CLIENT instructs N & A to do all things necessary on my/oux behalf, and for this purpose to incur such disbursetn.ents, commence such proceeding or action, and retain such counsel, agents and experts as they may, in their discretion, deem necessary; an~ the undersigned hereby authorizes the firm of N&A to deduct from any settlement proceeds on my/our behalf their proper fees and disbursements. In consideration fo~ the professional services provided and the risks in funding all costs and disbursements by N &A, IIW e do hereby understand and agree that N&A's legal fees arising from this Retainer agreement will be 25% of the damages recovered on my/our behalf, plus partial indemnity costs (which will be no more than 40% of the total recovered) plus disbutsem.ents. Initials

7 APR/05/2012/THU 05:30PM DIGI FAX No P As an example, if at the conclusion of the case, we are able to obtain $100, for your damages, you [sic] account may appear as follows; Damages Partial Indemnity Costs Disbursements $1 00, $10, $ 5, Therefore, you will receive approximately $75, less any applicable taxes and levies. CLIENT is responsible for any N&A disbursements not paid for by the Defendants. In the event the matter does not settle 60 days prior to trial, and trial preparation and work is performed, our fees at that point will increase to 30% of the amounts recovered on my/our behalf, plus partial indemnity costs, plus disbursements. In further consideration for the execution of this Retainer by N&At CLIENT deposits with N&A the sum of$ which sum shall be placed in trust and used only to defray disbursements actually incurred and related solely to the subject tn.atter of this Retainer. In the event of a successful result, these monies will be returned to you. It is agreed that if no money is recovered by settlement or judgment,!!!! fees shall be charged or billed to CLIENT. The CLIENT will, however, remain responsible for disbursements expended by N &A on their behalf in prosecution of this action. In the event that costs of other parties are awarded against the client, those costs are the sole responsibility of the CLIENT. CLIENT further acknowledges that costs for an appeal of any judgment or order, or services rendered for collection on said judgment or order are separate and apart and not covered by this contract and shall be mutually agreed upon at the appropriate time. Subject to review by a court of competent jurisdiction at the request of the CLIENT, the cost percentages charged in this agreement are not set by law, but were negotiable and freely agreed to between N&A and CLIENT. CLIENT agrees that N&A shall have a first lien on any settlement or judgment obtained in this matter for all fees and disbursements.

8 APR/05/2012/THU 05:30PM DIGI FAX No P In the event that th~s :retainer is cancelled for any reason whatsoever, prior to resolution of the matter, the CLIENT agrees and understands that the contingent fee will no longer apply and the CLIENT will be immediately responsible for all disbursements expended and hourly-rated fees incutted by N&A to the date of termination. N&A hourly fees are to be calculated based on our rates outlined in our initial letter. CLIENT acknowledges that N&A will not handle any Family Law.Act claim without written instructions. IfN&A are unable to locate CLIENT after a reasonably diligent search, CLIENT hereby grants N&A general power of attorney to settle CLIENTS' claim/case, sign drafts, releases, orders for dismissal and any other documents and to do all other things in N&A [sic] discretion necessary to protect CLIENT'S interests, including advancing the CLIENT'S case. N&A shall hold CLIENT'S portion of recovery in trust until CLIENT is located, or until an order from a court of competent jurisdiction directs otherwise. CLIENT acknowledges receipt of a duplicate copy of this Retainer, signed by N&A and CLIENT. DATED at. this day of 20_. (Witness) BY: (client) (client) (Witness) BY: Neinstein & Associates LLP [emphasis in original] 12. The Defendants refused to provide the Plaintiff \\rith a copy of the CF A as signed, but she obtained afterward a blank-unsigned version of their standard form retainer agreement which was in the same form as the one the Plaintiff signed.

9 APR/05/2012/THU 05:30PM DIGI FAX No P. 01 C The CF A provided that N&A' s fees would be 25% of damages recovered, or 30% of amounts recovered if within 60 days prior to trial, and trial preparation and work.is performed, and that the Plaintiff was responsible for all disbursements. 14. In addition to the percentage of damages recovere~ the CPA required that all partial indemnity costs up to 40% of the 'total recovered' would be also taken for N&A' s fees. 15. On Apri16, 2010, a settlement was entered into during attendance at a pre-trial conference wherein the action was resolved by payment to the Plaintiff of$150, all inclusive of damages, interest, costs and disbursements. There was no award to the Plaintiffs children. 16. The Minutes of Settlement did not specify any apportionment between damages, interest, costs or disbursements. 17. The Plaintiff was advised by Neinstein at the pre.. trial conference that she would receive $100, from the settl~ment proceeds. 18. By letter dated April?, 2010, Neinstein advised the Plaintiff that her settlement was $100, for the claim and $50, for costs. 19. By letter of August 10,2010, Neinstein & N&A rendered their account ("Account'') which was unsigned and showed the $150, settlement proceeds as being apportioned $100, for all claims, $30, for party & party costs and $20, for assessable disbursements.

10 APR/05/2012/THU 05:30 PM DIGI FAX No P The Plaintiff pleads that this apportionment was made unilaterally by Neinstein and N&A without her authority or knowledge and in order to maximize the Defendants' fees. 21. The Defendants charged disbursetnents of a total of$48, including GST to the Plaintiff. 22. The listed disbursements included $4, in photocopies and $2, in laser copies and $1, for scanned documents:~ being a total for copies of$8, There were other items listed such as for 'interest recovery' of$1, The Plaintiff, through counsel, requested the back-up invoices and receipts for the disbursements claimed. Neinstein required payme~t of a $ retainer in advance in order to put together his invoices for the Plaintiff's disbursements. 23. The Account provided fees to N&A and Neinstein of $28, labelled as LEGAL FEES and $28,571.43labelled as PARTY & PARTY COSTS. 24. The amount billed by the Defendants for Party & Party Costs equalled with GST the $30, which the Defendants had ascribed in the Account to "Amount received on behalf of Party & Party Costs''. 25. The total fees to N&A and Neinstein were $57, The fees amounted to 57.45% of the amountneinstein ascribed to the claim. 27. The result was the Defendants received more than the Plaintiff of the damages or ''claim'' portion set out in the Account.

11 APR/05/2012/THU 05:31 PM DIGI FAX No P Neinstein had arranged that the Plaintiff receive a loan of$19, at 26% p.a. interest from Bridge Point Financial Services Inc. to assist the Plaintiff with her living expenses. This loan was deducted from the settlement proceeds in the ammmt of $31, M a result the net amount received from the settlement by the Plaintiff was $10, The Defendants had earliei taken $2, from the Plaintifrs accident benefits settlement for disbursements so her net amount considering this was $8, The CF A was in violation of the Act and Regulation and the Rules of Professional Conduct of the Law Society of Upper Canada in that: (a) The CF A is not made in accordance with s. 28(1) of the Act; (b) The CF A provides that it includes amounts payable as a result of an award of costs or costs obtained as part of a settlement, without any joint client and solicitor application to the Superior Court of Justice for approval, and such application has.~ot been made, contrary to s. 28(8) of the Act; (c) The CF A was not signed, dated and witnessed as required by s. 1 (1) of the Regulation; (d) The Plaintiff was not provided with an executed copy of the CF A, contrary to s.l(2) ofthe Regulation; (e) The CFA does not contain the name, address and telephone number ofthe Plaintiff and N&A contrary to s. 2 (I) ofthe Regulation;

12 APR/05/2012/THU 05:31 PM DIGI FAX No P (f) The CF A does not contain a statement that the client and the solicitor have discussed options for retaining the solicitor other than by way of a contingency fee agreement, including retaining the solicitor by way of an hourly-rate retainer, contrary to s. 2(3)(i) of the Regulation; (g) The CF A does not contain a statement that the client has been advised that hourly rates may vary among solicitors and that the client can speak to other solicitors to compare rates, contrary to s. 2(3)(ii) of the Regulations; (h) The CF A does not contain a statement that the client has chosen to retain the solicitor by way_ of a contingency fee agreement, contral"y to s.2(3)(iii) of the Regulation; (i) The CF A does not contain a statement that the client understands that all usual protections and controls on retainers between a solicitor and client, as defined by the Law Society of Upper Canada and the conunon law, apply to the contingency fee agreement contrary to s. 2(3)(iv) of the Regulation; G) The CF A does not contain a statement that sets out the method by which the fee is to be determined contrary to s. 2(5) of the Regulation; (k) The CPA, which sets out a percentage of the amount recovered as the fee, does not contain a statement that for the purpose of calculating the fee the amount of recovery excludes any amount awarded or agreed to that is separately specified as being in respect of costs and disbursements, contrary to s. 2(5) of the Regulation;

13 APR/05/2012/THU 05:31 PM DIGI FAX No P (1) The CFA does not contain a statement that infonns the client of their right to ask the Superior Court of Justice to review and approve of the solicitor's bill and which includes the applicable timelines for asking for the review, contrary to s. 2(8) of the Regulation; (m} The CF A does not contain a statement that outlines when and how the client or the solicitor may terminate the contingency agreement, and the consequences of the termination for each of them and the manner in which the solicitor's fee is to be determined in the event the agreement is terminated, rather it just contains a statement that if the agreement is "cancelled for any reason", the client will be immediately responsible for all disbursements expended and hourly-rate fees incurred by N&A based on the rates in N&A's initial letter, which letter was not provided to the Plaintiff, contrary to s. 2(9) of the Regulation; (n) The CF A does not contain a statement that the client retains the right to make all critical decisions regarding the conduct of the matter, contrary to s. 2(1 0) of the Regulation; ( o) The CF A contains a provision that the client grants N&A a power of attorney to settle the client's claim or case, sign releases and any other documents if N&A after a reasonably diligent search is unable to locate the client, contrary to s. 2(1 0) of the Regulation; (p) The CF A does not contain a general description of disbursements likely to be incurred contrary to s. 3(2)(i) of the Regulation;

14 APR/05/2012/THU 05:31 PM DIGI FAX No P ( q) The CF A does not contain a statement that explains costs and the awarding of costs and that the client is entitled to receive any costs contribution or award on a partial or substantial indemnity scale if the client is entitled to costs, contrary to s. 3(3)(i) of the Regulation; (r) The CFA contains a provision that if the retainer is cancelled for any reason whatsoever prior to resolution ofthe matter, the client agrees and understands that the contingent fee will no longer apply and the client will be imme~iately responsible for all disbursements expended and hour-rated fees incutred by N&A to the date of termination. This provision is contrary to the requirement to not include in any contingency fee agreement a provision that prevents the client from terminating the contingency fee agreement or changing solicitors made mandatory by s. 4(1 )(b) of the Regulation; ( s) The CF A is in breach of the requirement that if it provides that the fee is determined as a percentage of the amount recovered, it shall exclude any amount aw& ded or agreed to that is separately specified as being in respect of costs and disbursements mandatory by s. 6 of the Regulation; and (t) The CFA provides for potentially fees equal to 30% of the damages plus 40% of the total amount recovered to go to N&A, which together can amount to 90% of the damages in the settlement, and this is contrary to the requirement that the solicitor not recover more in fees under the agreement than the Plaintiff recovers as damages in s. 7 of the Regulation.

15 APR/05/2012/THU 05:31 PM DIGI FAX No P The result was that N&A and Neinstein took for itself the costs in addition to its percentage fee set out in the CFA, and obtained for its fees over 57.45% of the dau1age award, contrary to the Act, Regulation and Rules of Professional Conduct. 32. The Plaintiff pleads, and the fact is, that N&A and Neinstein have taken amounts for costs which are not permissible under the Act and Regulations with respect to the Plaintiff and other class m~mbers. 33. The Plaintiff pleads, and the fact is, that N&A and Neinstein have taken amounts for disbursements to which they are not entitled, and for which they did not provide supporting documentation when asked. 34. The Plaintiff pleads that, the Defendants Neinstein and N & A, knew that the Plaintiff at all material times was relying upon the Defendants for advice and disclosure of the legal requirements for proper contingency fee agreements. As the Plaintiff's counsel, the Defendants owed a fiduciary duty to the Plaintiff to comply with the requirements set out in the provisions of the Act and Regulations for contingency fee agreements and for rendering accounts for legt:il fees and disbursements. The Plaintiff repeats and relies upon the allegations set out above and further states that the Defendants deliberately did not disclose their obligations to the Plaintiff under the Act and Regulation. In so doing, the Defendants breached their fiduciary duties owed to the Plaintiff and the class members. As a result of the breach of fiduciary duties by the Defendants, the Plaintiff and class members have sustained losses as set out herein. 35. The Plaintiff pleads that there is an implied tenn in the contract between the Defendants and the Plaintiff and the class member that the contract is to be in compliance with the

16 APR/05/2012/THU 05:31 PM DIGI FAX No P requirements of the Act, Regulations and Rules of Professional Conduct that govern the relations between lawyers and their clients. The Plaintiff repeats and relies upon the allegations set out above and further states that the Defendants breached the contract with the Plaintiff and the class members. As a result of the breach of contract by the Defendants, the Plaintiff and class members have sustained losses as set out herein. 36. The Plaintiff pleads that the CFA is neither fair nor reasonable ~o her or the class members. 37. The Plaintiff pleads that N&A and Neinstein are obliged to repay her and the class members the amounts for fees taken in excess of what is pennitted by the Act and the Regulation, and in particular any amount taken for fees which are related to or should be calculated to be related to costs and disbursements in the class members' settlements and judgments. 38. The Plaintiff pleads that the conduct of the Defendants was so highhanded and in total disregard of the Plaintiff's rights pursuant to the Act and Regulation that punitive damages should be awarded against the Defendants. AprilS, 2012 Peter I. Waldmann (LSUC #23289M) Banister & Solicitor 4903 Cordova Bay Road Victoria BC V8Y 2Kl Tel: (250) Fax: (250) Lawyer for the Plaintiff

17 APR/05/2012/THU 05:31 PM DIGI FAX No P Stein Law Office Banister & Solicitor Bay Street Toronto, Ontario MSH 288 Tel: (416) Fax:: (416) Andrew Stein (LSUC #3206SK) Lawyer for the Plaintiff

18 CASSIE HODGE -and.. GARY NEINSTEJN and NEINSTEIN & ASSOCIATES LLP Plaintiff Defendants c v~ t ~- 45~lo 7o_ lc~tf Court File No. ONTARIO SUPERIOR COURT OF JUSTICE Proceeding commenced at Toronto. STATEMENT OF CLAIM STEIN LAW OFFICE Barrister and Solicitor 330 Bay Street- Suite 820 Toronto, Ontario M5H2S8.. L..C"l c::j Andrew Stein Solicitor No. 3206SK Telephone: ( 416) Facsimile: ( 416) Solicitor for the Plaintiff