Josephson Angus Barristers v. 662470 B.C. Ltd.

2011 BCSC 749 Josephson Angus Barristers v. 662470 B.C. Ltd. IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Josephson Angus Barristers v. 662470 B.C. Ltd., 2011 BCSC 749 Date: 20110608 Docket: S102112 Registry: Vancouver Between: Josephson Angus Barristers Solicitors And 662470 B.C. Ltd., Core Education & Fine Arts Ltd., and CEFA Systems Inc. Clients Before: Master Taylor Reasons for Judgment Counsel for the Solicitors: C. McLeod, Articled Student on behalf of Ian Donaldson, Q.C. Counsel for the Clients: L. Tsang Place and Date of Hearing: Vancouver, B.C. September 20 to 22, 2010; November 22 to 24, 2010; January 31, February 1 & 2, 2011 Written Submissions: Solicitors: February 23, 2011; Clients: March 9, 2011; Solicitors: March 16, 2011 (received March 23, 2011) Place and Date of Judgment: Vancouver, B.C. June, 8 2011 [1] Natacha Beim is the president and director of the three corporate entities referred to as the clients. She is well-educated having attained a degree in Journalism at University in Uruguay; and the Canadian equivalents of Bachelors and Masters Degrees of Education from Lycee Francais/Alliance Francaise. In attaining her latter degree, she specialized in the education of young children. [2] Ms. Beim ultimately developed a unique teaching method for children up to five years of age, with a one-of-a-kind curriculum. The method became known as the CEFA Method, where CEFA is an abbreviation for "Core Education and Fine Arts". She operates a school under one of the corporate entities, while she operates as a franchisor under another of her corporate entities. [3] In 1998, Core Education and Fine Arts Ltd., obtained a license to open and operate a junior kindergarten in West Vancouver. A North Vancouver school was opened in 2004 with a franchise agreement, and another school also opened in Burnaby in 2004. [4] The numbered company, 662470 B.C. Ltd. became the third franchisee and arranged to build the school in leased premises near the intersection of Highway 1 and 200th Street in Langley, B.C. A dispute between the landlord, CVL Properties Ltd. (the "Landlord"), and the tenant, 662470 B.C. Ltd. (the "Tenant"), is the genesis of the proceedings before me in relation to the legal fees charged by the solicitors in their representation of the Tenant. [5] The total of fees, disbursements and taxes in issue is $184,494.94. The Landlord-Tenant Dispute [6] In order to properly determine the issues between the current parties, and to consider all of the circumstances of s. 71(4) of the Legal Profession Act, S.B.C. 1998, c. 9 some background of the Landlord/Tenant dispute must be set out herein. [7] The Tenant obtained its licence to open and operate a school in Langley in 2006, with the hope of beginning operations in September of that year. [8] Jay Fleming, the president and director of CVL met Ms. Beim when her own child attended the West Vancouver school for a number of years starting in 1999. Ms. Fleming and Ms. Beim became friends and discussed business matters from time to time. Eventually, Ms. Fleming suggested that she was interested in having her company purchase properties to lease to CEFA's franchisees. [9] The parties entered into a lease of premises for the Langley school dated May 30, 2006. [10] The contractor retained by the Landlord to construct the required tenant's fixtures for the school started doing site preparation in March, or early April, 2006, even though the lease had not been entered into by that time. Unfortunately, construction of the premises was not substantially completed until October 9, 2006. [11] The lease negotiations on behalf of the Tenant were conducted by Mr. Homenick, the Tenant's corporate solicitor. [12] I now quote from the oral reasons for judgment of Butler, J. in the second petition brought by the Landlord seeking to terminate the tenancy, found at 2007 BCSC 1987: [5] The tenancy got off to a poor start when CVL was not able to deliver possession until mid-October. As a result of the delay, the Tenant had trouble attracting students. It had been anticipated by the parties that the Tenant would experience some difficulties in starting up as the lease provided for a rent-free period of two months. That came to an end in mid-December 2006. [6] On December 22, 2006, Ms. Beim and Ms. Fleming met to discuss a possible rent deferral to further assist the Tenant in starting up the business. The Tenant says that at that meeting, CVL agreed to a rent deferral that allowed it to defer the rent for January, February, and half of March. The rent deferral is central to the petition and to the disputes before the court. CVL says that it entertained discussions, but never entered into an agreement to defer rent. The events that followed in 2007 hinge upon what, if any, agreement or understanding was arrived at between the parties. There is no dispute that the rent for the months in question was not paid when due under the lease. While CVL also relies on two other allegations of default - failure to provide an acceptable certificate showing insurance coverage and failure to pay for construction charges - those are secondary to the alleged default in payment of rent. [7] In response, the Tenant says that there was an agreement to defer rent. Alternatively, it says that CVL waived the requirement that rent be paid or is estopped from insisting upon its rights under the lease. In the alternative, the Tenant says it should be entitled to relief from forfeiture if it cannot establish the rent deferral agreement, waiver or estoppel. ... [12] Following the December meeting, and in accordance with the agreed course of action, the Tenant did not make the January or the February rent payments. CVL did send monthly statements showing that the rent was unpaid and showing the amount of interest. However, it did not demand payment from the Tenant. Further, it did not try to negotiate the post-dated cheques for rent that had been provided by the Tenant to CVL. [13] On January 26, 2007, Ms. Fleming sent an e-mail to the Tenant which attached two spreadsheets. The first showed a repayment plan whereby the Tenant would start repaying the deferred rent in April, as opposed to May, at $2,000 per month, with larger payments starting in October. The second was similar except that the initial payments were $3,500 per month. Ms. Beim asked her bookkeeper, Stacey Baker, to work out the payment plan with CVL, and if she thought it would be difficult for the Tenant to meet the schedule sent by CVL, to propose a less onerous payment plan. Ms. Baker took some time to do this and it was not until February 19 that she proposed a repayment plan to CVL. However, that plan was very different from the one put forward by Ms. Fleming. [14] Under Ms. Baker's proposal, the Tenant would only pay $2,000 on March 1, rather than half a month's rent, and another $2,000 on March 22. Ms. Fleming responded by saying that the proposal from Ms. Baker was "very concerning" and that CVL needed a signed commitment from Natacha/CEFA Systems, as to the proposed payment schedule. She asked Ms. Baker to send any further correspondence to Ms. Chan and indicated that she looked forward to a reasonable solution "for all of us." [15] On February 28, Ms. Baker wrote to Ms. Chan and said that the Tenant could not commit to anything more than what was in her earlier schedule. Ms. Chan responded as follows: For your information, Jay [Fleming] does not intend to change the verbal agreement with Natacha requesting at least ½ month's rent in March and the 2 ½ months of arrears being fully caught up by December, as in the schedule sent by her earlier. [16] On March 2, after the Tenant made a $2,000 payment on March 1, Ms. Chan e-mailed Ms. Baker and asked her to "[p]lease... try to send us what you can." There was no further correspondence until later in March. On March 23, Miller Thomson, solicitors for CVL, wrote to the Tenant and indicated that the Tenant's ambiguous proposal was unacceptable and that the $2,000 payment of March 1 and the further payment on March 26 would be applied against rent owing. [17] On March 26, the Tenant paid the further $2,000 in rent and Ms. Baker, who had been away on holidays for two weeks, sent Ms. Fleming an e-mail advising that the enrolment was increasing rapidly and that the Tenant was now in a position to pay the balance of the 50% of the March rent, all of the April rent and $2,000 towards the arrears as proposed in the first of CVL's spreadsheets. Ms. Fleming responded by saying: With respect to paying us, any payments we receive and process will be applied to the oldest outstanding arrears... first and will not constitute acceptance of any proposal that you have made. [18] In response, Ms. Baker sent an e-mail on March 27 indicating that, "I know that you will be applying this to the oldest amount...", but that the Tenant would keep track of it in accordance with the spreadsheets from CVL that contemplated the $2,000 per month arrears payment starting in April. She concluded by saying that she fully expected all arrears to be paid by December 31, 2007 and asked Ms. Fleming to "please let me know if you will accept this going forward." [19] On March 26, Miller Thomson sent a letter to CEFA giving notice of the default under the lease and enclosing a copy of the letter of March 23 that was sent to the Tenant. Both letters were sent to the same address as both companies operate out of that address. The March 26 letter also advised CEFA that it had ten days, pursuant to a guarantee, described as the Consent and Waiver agreement, to cure the default. [20] Ms. Baker then sent CVL the April cheque that included the March arrears and the first payment of $2,000 to the older arrears. Ms. Fleming responded on March 29 with an e-mail that confirmed her earlier advice that they would be applying the payment to the oldest outstanding amounts and concluded by saying, "We do not have any agreement or proposal in place other than the terms of the lease." She followed up with a further e-mail on March 30 indicating that CVL had not agreed to any proposal and that the Tenant had been unable to meet its obligations under the lease. She concluded with the demand that the Tenant should, "please arrange for immediate payment of all rent arrears." [21] The Tenant's cheque of April 1, 2007 in the amount of $23,368.98 indicated on its face the Tenant's allocation of the funds to March rent, April rent and to arrears. CVL negotiated the cheque. [22] On April 16, 2007, Miller Thomson purported to provide a Notice of Termination to the Tenant. The default referred to was the failure to make payment for the amounts owing under the lease. In addition to the outstanding rent, the letter enclosed a statement from CVL dated April 20, indicating that there was $110,644.05 owing to CVL. The reason for the substantial amount was a new "chargeback for additional daycare construction charges" in the amount of $65,999.31. I have described this letter as a purported Notice of Termination because CVL subsequently issued a petition on May 14, 2007, for a writ of possession. That petition was heard by me on June 4 and 5, 2007, and I dismissed the petition on the basis that the April 16 letter was not a valid notice of termination. [23] With regard to the construction charges, the Tenant has filed detailed affidavit material disputing the charges. In the first petition, CVL did not respond to the Tenant's evidence and Ms. Fleming swore in her affidavit of May 28 that while the amount had been demanded, it would be sought in further proceedings against the tenant, "notice of which has already been given to the tenant." In the present proceeding, Ms. Fleming has not provided any further evidence in response to the Tenant's detailed dispute of these charges. [24] Other relevant steps that have taken place since the letter of April 16, 2007, include: (a) On April 17, counsel for the Tenant, having just been retained, proposed payment of the arrears from January, February, and March. This offer was rejected by CVL on April 18. (b) On April 20, the Tenant and Core Education & Fine Arts Ltd. commenced an action against CVL by writ of summons advancing numerous claims based on the alleged rent deferral agreement and breaches thereof by the landlord. A lengthy statement of claim was filed on June 4. (c) Following CVL's rejection of the offer noted in paragraph (a) above, the Tenant's counsel advised Miller Thomson that the May rent along with the deferral payment of $2,000 was held in trust by the Tenant's solicitor. Once again CVL took the position that the lease had been terminated and that it would not accept any payment as rent. (d) At some time prior to June 1, the Tenant notified CVL that it had tendered the June rent payment along with $2,000 for the deferred rent. This amount was also paid into trust with their solicitors. (e) After my decision on June 5 dismissing the first petition, Miller Thomson again wrote to the Tenant on June 7 to give it a notice of termination of the lease and notice to quit. For the first time CVL raised in that letter the alleged failure of the Tenant to furnish a certificate of insurance and this was noted as another default. (f) On June 8, Miller Thomson wrote to the Tenant demanding that it deliver up possession. (g) On June 10, counsel for the Tenant again advanced an offer to CVL. The offer was to pay the entire amount of the deferred rent for January to March, plus interest on those amounts. The Tenant also indicated that it would pay the full amount of the rent as it became due thereafter. This offer was again rejected by CVL on the basis that the lease was terminated and that it would only accept funds as damages, not as rent. (h) On June 12, the [second] petition was issued. [13] At the hearing of the second petition, Butler, J. identified four issues as follows: 1. Is there an enforceable agreement between CVL and the Tenant to defer rent? 2. If not, has CVL either waived its right to rely on the provisions in the lease regarding payment of the January to March rent or is it estopped from doing so? If not, is it entitled to relief from forfeiture? 3. Can CVL rely upon the alleged failure by the Tenant to pay construction charges as a ground of default? 4. Can CVL rely upon the alleged failure of the Tenant to deliver an acceptable certificate of insurance as a ground of default? [14] The learned justice dealt with each issue in turn and then summarized his findings commencing at para. 54: [54] CVL waived the requirement that the January to March rent be paid on time. It originally advised the Tenant it could have until the end of 2007 to repay the deferred rent. When a schedule could not be agreed upon, it was required to give the Tenant reasonable notice so that the Tenant could pay the deferred rent. It failed to do so and the purported termination of the lease cannot be sustained. The appropriate order in the circumstances is: (a) a declaration that the lease remains in full force and effect and has not be determined; (b) the Tenant will pay the deferred rent for January through March 2007 as well as interest accruing on that deferred rent up to April 18, 2007, plus the rent owing for May, June, and July 2007 without interest within 30 days of the date of this order; (c) in the event that the payment of the deferred rent, the interest, and the rent as set out in paragraph (b) is made, the petition is dismissed; (d) in the event that the payment of the deferred rent, the interest, and the rent as set out in paragraph (b) is not made within 30 days of the date of this order, then the petition for a writ of possession is granted. [55] Once the payment has been made or 30 days have passed without payment, I will entertain written submissions from counsel regarding costs. I assume that counsel can agree on a timeframe for the delivery to me of the written submissions regarding costs. If not, the parties may apply to me for directions in that regard. The Solicitor-Client Dispute [15] Central to the dispute between the solicitors and the clients is the amount of fees charged by the solicitors in their successful representation of the clients in their dispute with the Landlords about the lease. First, some facts are required as they relate to the solicitor-client relationship and the fee dispute. [16] As earlier mentioned, Mr. Homenick was the corporate solicitor for the clients. When the dispute initially arose as between his client, the Tenant, and CVL as Landlord, he responded to a demand for possession of the property with a letter of his own on behalf of his clients. When he was rebuffed by the solicitors for the Landlord, he determined that it would be wise to obtain a barrister familiar with the issues of commercial tenancy. He made enquiries and left phone messages with some litigation lawyers. Subsequently, Mr. Angus, the solicitor who represented the clients throughout the ordeal with the Landlord, was the first to call back. [17] The first meeting between Mr. Homenick, Ms. Beim and Mr. Angus took place in Mr. Homenick's office on April 16, 2007. It took place over some hours where the matter was discussed at length. Mr. Angus ultimately indicated his willingness to represent Ms. Beim and her various corporations and requested a $5000 retainer. [18] By all accounts, Ms. Beim paid the requested retainer the next day by cheque dated April 19, 2007, thus Mr. Angus was formally retained, although no retainer agreement was signed, nor a letter of engagement sent to the Clients. [19] Thereafter, Ms. Beim or her bookkeeper provided a number of cheques to Mr. Angus at his request once the initial retainer had run out. For example, the Clients provided the following cheques at the request of the solicitor: · May 31, 2007 $5000 · June 20, 2007 $4500 · August 1, 2007 $7000 · September 19, 2007 $7500 · October 15, 2007 $5000 · December 21, 2007 $5000 · February 13, 2008 $5000 · March 20, 2008 $5000 [20] An example of a letter sent to the client enclosing a bill and requesting payment is the letter of October 17, 2007 as follows: Thank you for making your $7,500.00 payment on account of last month. I enclose my bill for professional services rendered to May 15, 2007, which I trust you will find to be in order. I look forward to receipt of your next $7,500.00 payment before the end of this month. [21] This process of payment in advance of being billed proceeded for approximately one year, during which time the Solicitors rendered 8 accounts dated between April 30, 2007 and April 30, 2008. The 8 accounts purported to bill for professional services rendered between April 16, 2007 and May 21, 2007, a period of approximately 5 weeks. [22] The 8 accounts total $49,009.45 comprised of $38,554.49 in fees, $5,346.05 in disbursements, and $5,108.91 in taxes. All of these accounts have been paid. [23] The Solicitors rendered 3 more accounts to the Clients all dated January 7, 2010. These 3 accounts purport to cover the period of May 22, 2007 to January 16, 2009 and total $135,480.49, the biggest component being fees of $119,650.00. Taxes comprised $14,416.15 and disbursements only $1,414.34. None of these accounts have been paid. [24] It is the last 3 accounts, all rendered on the same day, that have caused this matter to come before the court. The Solicitors took out the Appointment on March 24, 2010 for hearing on April 27 and 28, 2010, but due to a number of factors, including the preparation of the Clients' 10 objections to the accounts, the matter was not able to be heard until September, 2010, and continued into February, 2011 after 9 days of hearing, having originally been set for 3 days. [25] By order of Registrar Sainty, the Clients provided notice to the Solicitors of their objections to the accounts which were set out in a letter dated June 18, 2010. Because they form the basis of the manner in which the parties approached the hearing, I reproduce the Clients' objections in full, except for item 6 which is a lengthy spread sheet of time and charges which the Clients allege were duplications of time: 1. The time, disbursements and taxes that were invoiced by the Firm relating to the preparation of the Natasha Beim Affidavit #1. The affidavit was prolix and contained information that was irrelevant and unnecessary; 2. The time, disbursements and taxes that were invoiced by the Firm relating to the preparation of the Natasha Beim Affidavit #2. The affidavit was predominately prepared and filed to correct inaccuracies and errors contained in the Natasha Beim Affidavit #1. 3. The time, disbursements and taxes that were invoiced by the Firm to prepare the Statement of Claim. The Statement of Claim contained numerous unnecessary and irrelevant facts and pled copious amounts of evidence; 4. The time, disbursements and taxes that were invoiced by the Firm in the preparation of submissions, responses and reply submissions by Mr. Angus in relation to the Petitions were excessive; 5. The time, disbursements and taxes that were invoiced by the Firm in the preparation of submissions, responses and reply submissions by Mr. Angus in relation to the costs matter were excessive; 6. The firm invoiced duplicate time and taxes...in Invoices 10060 and 10061; 7. The time, disbursements and taxes that were invoiced by the Firm in relation to Mr. Angus' preparation and attendance in court for the various applications which time was excessive; 8. The Firm's delay in providing the Clients with the invoices dated January 2010 for work alleged to have been done by the Firm in 2007 was excessive. The work should have been invoiced by the Firm shortly after or within a reasonable time after the fees were incurred by the Firm. The failure of the Firm to do so denied the Clients the opportunity and right to determine the steps they should take in relation to the matters, to properly instruct counsel in relation to the matters and to determine whether they, in view of the time and costs spent by the Firm to deal with the matters would instruct the Firm to reduce its expenditure or time regarding certain items or, even, choose not to continue with the Firm as their counsel; 9. The disbursements invoiced for photocopying and Courthouse photocopying by the Firm were excessive, unnecessary, unreasonable and in excess of the rate allowed by the Registrar; and 10. The time spent by Mr. Angus and invoiced by the Firm in Invoices 10059, 10060 and 10061 were excessive, unnecessary and unreasonable. [26] While there may be some merit in discussing each and every objection with each party's submissions, I prefer to examine the objections in connection with the provisions of s. 71 of the Legal Profession Act, S.B.C. 1998, c. 9 as set out herein: (1) This section applies to a review or examination under section 68 (7), 70, 77 (3), 78 (2) or 79 (3). (2) Subject to subsections (4) and (5), the registrar must allow fees, charges and disbursements for the following services: (a) those reasonably necessary and proper to conduct the proceeding or business to which they relate; (b) those authorized by the client or subsequently approved by the client, whether or not the services were reasonably necessary and proper to conduct the proceeding or business to which they relate. (3) Subject to subsections (4) and (5), the registrar may allow fees, charges and disbursements for the following services, even if unnecessary for the proper conduct of the proceeding or business to which they relate: (a) those reasonably intended by the lawyer to advance the interests of the client at the time the services were provided; (b) those requested by the client after being informed by the lawyer that they were unnecessary and not likely to advance the interests of the client. (4) At a review of a lawyer's bill, the registrar must consider all of the circumstances, including (a) the complexity, difficulty or novelty of the issues involved, (b) the skill, specialized knowledge and responsibility required of the lawyer, (c) the lawyer's character and standing in the profession, (d) the amount involved, (e) the time reasonably spent, (f) if there has been an agreement that sets a fee rate that is based on an amount per unit of time spent by the lawyer, whether the rate was reasonable, (g) the importance of the matter to the client whose bill is being reviewed, and (h) the result obtained. (5) The discretion of the registrar under subsection (4) is not limited by the terms of an agreement between the lawyer and the lawyer's client. [27] It is to be noted that subsection (2) is mandatory, as is subsection (4), but subsection (3) is discretionary. Both subsections (2) and (3) are subject to subsections (4) and (5). Also noted is that the list of circumstances set out in subsection (4) is not an exclusive list of circumstances to be considered. Considerations Pursuant to the Legal Profession Act: (a) the complexity, difficulty or novelty of the issues involved [28] The Solicitors maintain through the evidence of Mr. Angus that the litigation involved numerous factual and legal issues, some of which were particularly complex, difficult or novel. In relation to this sub-subsection, the Solicitors have made 14 points in their submissions regarding the complexity, difficulty or novelty of the issues, including the Lease itself being of some 67 pages and some of its specific terms; the Tri-Partite Agreement where CEFA Systems Inc. became a party to the Lease agreement between the Landlord and the Tenant such that it could remedy any defaults by the Tenant; the rent deferral issue; the Landlord's Notice to Terminate dated April 16, 2007; the Landlord's Notice to Terminate dated June 7, 2007; and the Tenant's lawsuit. As well, the Landlord commenced 2 petitions; one on May 14, 2007 the other on June 12, 2007, both seeking writs of possession pursuant to the Commercial Tenancy Act, R.S.B.C. 1996, c. 57. [29] The Clients take the position that the work done was neither complex, difficult nor novel and, in fact, contained all the sort of issues one would expect in a commercial lease dispute. [30] Mr. Angus said in his direct evidence, as part of a summary of his experience as a commercial litigator, that he had previously done many cases involving summary eviction proceedings. He added that he has acted as counsel in the past on both sides of these issues. He said that while this case involved summary eviction proceedings under the Commercial Tenancy Act, he also said this case involved an indemnity and guarantee. While that may be so, I find it difficult to believe that cases of this kind would not include one or both an indemnity or guarantee in the normal course. [31] Mr. Angus told the court that he always saw his role as trying to resolve these cases, especially so as to remove risk from the client such as the destruction of the client's business in the event of eviction. He said that settlement was impossible in this case due to the Landlord's intractability. [32] In his direct examination Mr. Angus discussed the implications of using relief from forfeiture in that that it is only available to a tenant once in any proceeding. He said that while relief from forfeiture will result in the tenant being able to retain possession of the premises, all amounts due and owing, including special costs must be paid forthwith and the relief must be endorsed on the lease. [33] In dealing with the Landlord's first petition, Mr. Angus determined that relief from forfeiture should be a remedy of last resort, such that he fashioned a defence to the Landlord's first petition based on a jurisdictional issue. He argued that the court did not have jurisdiction to grant a Writ of Possession to the Landlord as the April notice was invalid legally, both at common law and statute. This strategy was successful such that the landlord's first petition was dismissed on a preliminary objection. [34] Within 7 days of successfully having the Landlord's petition dismissed, the Landlord issued a second petition. The issues were essentially the same in both matters, although in his reasons after a full hearing of the second petition, Butler, J. stated that rent deferral was the central issue to the petition and to the disputes before the court. The learned justice also remarked that while the Landlord raised two other allegations of default in the second petition, those issues were secondary to the alleged default in payment of rent. [35] As well, on behalf of the Tenant, Mr. Angus had earlier commenced an action by way of endorsed writ, in order to register a Certificate of Pending Litigation against the property to prevent the Landlord from renting the premises to others. This action he felt necessary because the lease was not registered in the Land Title Office. He then subsequently drafted a statement of claim in the action. [36] "All litigation is hard fought and difficult. That is the usual situation when matters are contested in court. In that sense, I agree with the submission of counsel. But if the submission was intended to carry the meaning that there was effort and skill required over and above the usual then, with respect, I must disagree": M.T.H. General Contractors and Consulting Engineers Ltd. v. Hislop, [1977] B.C.J. No. 1060. The adversary system of litigation presupposes a battle between worthy opponents, however a battle in and of itself does not connote complexity or novelty. There must be something else. [37] What I did not hear in evidence was that this was the most complex case of summary eviction ever heard in our courts. I did hear that the Landlord was intractable, and that after losing the first petition, the Landlord commenced a second petition, and that it was heard over 2 days in chambers. At most, I am left to conclude that this case may have been slightly more complex than the usual case of its kind; however, Mr. Justice Butler has already made the determination in his reasons on costs, 2008 BCSC 1743, at para. 44 that the matter heard on the second petition was a matter of ordinary difficulty when determining whether or not Scale C should be applied to costs. He went on to say in his reasons that the application took less than 2 days, and the issues had the complexity one would expect in a commercial lease situation. He also found that the effort required in the collection and proof of facts was not great. (b) the skill, specialized knowledge and responsibility required of the lawyer [38] Mr. Angus gave evidence that the time frames were compressed, thus he was required to work harder and longer in preparation for the hearings of the petition, including drafting a lengthy affidavit for Ms. Beim and then the lengthy statement of claim. He also drafted three Notices of Motion. There is no question but that Mr. Angus worked hard for his client and did so in a relatively short time frame - a time frame shortened by the fact the Landlord was proceeding on a petition and not a Notice of Civil Claim, however, Mr. Angus was familiar with this process. [39] There is also no question but that Mr. Angus applied all of his talents and skills to the problem at hand, and, gave due consideration to the possibility that Ms. Beim might suffer a loss to her business where she required to find another location for the Langley School. He used his skill as a lawyer familiar with the issues to provide professional services to his client. (c) the lawyer's character and standing in the profession [40] The Clients do not take issue with the character of Mr. Angus or his standing in the profession. (d) the amount involved [41] Quantifying the case is difficult as many matters could be considered in completing this portion of the analysis. How much would the Clients have lost were they to have to move the location of the school? Would the Clients' business be devastated if forced to move? Were the construction costs included or not? What about interest on unpaid rent? [42] Ultimately, the amount ordered paid by the Clients to the Landlord for rent owing was $92,204.20. (e) the time reasonably spent [43] This is probably the most contentious of these sub-headings and, in fact, represents the majority of the concerns set out in 7 of the 10 Clients' objections. [44] In essence, most of the 9 days of hearing dealt with the tasks performed by the Solicitors and, of course, the time spent on those tasks. The Clients take the position that the concept of prolixity should be applied in relation to the work performed and the time expended in the performance of those tasks by the Solicitors. As an example, the Clients point to the reasons of Butler, J. in his reasons in the costs issue and in particular at para. 4: 4. On April 8, 2008, the parties appeared before me to settle the terms of the order. I was advised that the Tenant made the payment within the 30 day time limit. The terms of the order were settled and included a provision that the parties exchange written submissions on costs of both proceedings. I anticipated that the exchange of written submissions would allow the issue of costs to be resolved quickly and at less expense to the parties. Unfortunately, this has not happened. Over the next two months, the Tenant delivered voluminous materials including six binders, more than 200 pages of argument and more than 60 authorities. [45] The Tenant referred to in the above reasons is now the Client or Clients in the case at bar. [46] For the present hearing, the Solicitors submitted 94 pages of written argument and 20 cases in their original written submissions at the end of 9 days of hearings, and a further 24 pages and 7 cases in their reply brief. The Clients tendered 31 pages of submissions and 9 cases. [47] It is clear that some 540 hours were expended by the Solicitors in the performance of their professional services for the Clients. It is also clear that the Solicitors did give the Clients the benefit of some $17,590.00 in fee reductions over the course of the billing period. But it must also be remembered that the proceedings were chambers applications of ordinary complexity. Ultimately, at the end of the day, one has to wonder why it was necessary to spend the amount of time shown in the time sheets for these services. There surely is no need to proceed on the basis that no stone should be left unturned or case unread, no matter how minor a case in the areas of commercial leases or special costs. [48] The Solicitors maintain that throughout the litigation Ms. Beim was assisted by Mr. Homenick and that even if she wasn't paying attention to the amount of hours being charged to her matters, Mr. Homenick should have known. [49] Mr. Homenick's evidence was that he was copied with most correspondence from Mr. Angus to Ms. Beim's attention but that he merely skimmed most of it and then filed it. [50] With the greatest of respect to the Solicitors, there is a positive obligation on a solicitor to keep the client apprised of the cost of the proceedings, such that the client has the opportunity to make decisions on the course of the litigation, especially from the client's perspective of ability to pay for the services. Obviously, not every client will be prepared or able to pay for Cadillac service and will wish to discuss the cost of the professional services with the solicitor at important steps along the way. It appears this did not occur in this case. [51] As well, Ms. Beim gave evidence that early on in the retainer she doesn't recall options or risks being discussed. [52] Ms. Beim also gave evidence that when she received the first invoice from the Solicitors, she looked it over and then gave it to her bookkeeper. She remembers being surprised that the $5000 retainer had already run out. All the other accounts were sent directly to her bookkeeper's attention. They all showed as having been paid. [53] When the Landlord's first petition had been dismissed, Ms. Beim was extremely satisfied, but had no idea how much it had cost, as there had been no discussion about cost up to that point. [54] Over the course of the first part of the litigation, a process developed between solicitor and client where Mr. Angus would telephone Ms. Beim and tell her he needed more money. Ms. Beim would then arrange to deliver a cheque to Mr. Angus' office or do it herself. It was her understanding that Mr. Angus would not do any work for her until there were funds in his account against which he could bill for his time. At the very first meeting Mr. Angus told Ms. Beim that since they didn't know each other, payment would have to be made in advance. Thus, when the invoices stopped and calls for further funds stopped, Ms. Beim was left with the impression that all the work done had been paid for and that nothing was outstanding. There was even a call from Mr. Angus' assistant to request further payments on account. This occurred in the middle of July, 2008. Then, Mr. Angus' assistant sent an email to Ms. Beim on July 15, 2008, which said in part: "All invoices issued to you to date have been paid. There is no outstanding balance". [55] The next sentence in the same email said that Mr. Angus requested a cheque for $5000 to be used against the balance of future accounts, as was past practice. [56] It appears numerous attempts were made to contact Mr. Angus to determine what future invoices there might be, especially since Ms. Beim was under the impression that all work performed had been paid for. In fairness to Mr. Angus, a number of matters intervened that caused him to be unavailable to Ms. Beim and her staff, including a long and arduous trial, and some health problems with one or both of his children. Yet, while enquiries were being made, and messages left, none were returned for many months. [57] Ms. Beim attended a meeting with Mr. Angus in January, 2009, but the discussion only touched on the costs Ms. Beim could expect to receive for her success in the first petition, and the possibility she might be successful in the application for special costs. [58] It wasn't until July, 2009, when Ms. Beim and Mr. Homenick met with Mr. Angus, that Mr. Angus presented his time sheets for his unbilled time and announced that the Clients owed him a further $135,000 for his professional services. Needless to say, Ms. Beim was not pleased with this news. (f) if there has been an agreement that sets a fee rate that is based on an amount per unit of time spent by the lawyer, whether the rate was reasonable [59] Mr. Angus was called to the Bar of British Columbia in 1983. I accept his evidence that when he met with Mr. Homenick and Ms. Beim for the first time he told them that his hourly rate was $325 and that Ms. Beim agreed to this hourly rate. [60] While there was no expert evidence about the hourly rate of $325 for a solicitor practicing law for 23 years at the time of the retainer, it would seem an appropriate hourly rate for a solicitor who has a broad range of experience in corporate, commercial, estate and trust litigation, as well as complex equity cases. [61] What the agreement regarding the hourly rate does not do is permit a carte blanche amount of hours at the sole discretion of the solicitor. In other words, just because a solicitor logs a certain number of hours on a client's matters, doesn't mean that all the hours should be billed to the client. The solicitor still has an obligation to assess the value of the time spent on the matter versus the value of the professional services received by the client and make a determination as to whether or not the fees to be charged exceed what would be a reasonable fee in the circumstances. (g) the importance of the matter to the client whose bill is being reviewed [62] There is no question but that the matter was of extreme importance to the Clients. The eviction from the Langley premises at the very least would have set back the plans for the Langley franchise as well as cost the Clients a substantial amount of money, or may have caused the complete demise of the Clients' business. (h) the result obtained [63] There were three results that need to be examined: the Landlord's first petition and the Tenant's costs in the matter; the Landlord's second petition; and the Tenant's application for special costs. 1. The Landlord's First Petition [64] As earlier indicated the Landlord's first petition was dismissed on a preliminary objection. The Tenant was awarded costs. This was an excellent result. 2. The Landlord's Second Petition [65] I have already quoted from the decision of Butler, J. which indicated the Cients were successful in their substantive defence of the Landlord's application to have the tenancy terminated. In fact, the learned judge made a declaration that the lease remains in full force and effect and was not determined. He then invited written submissions on costs. 3. The Tenants' Application for Special Costs. [66] In finding that there was no basis for an award for special costs to be made against the Landlord, Butler, J. found that the submissions of the Tenant were not helpful to the court as they were inflammatory, misleading or inaccurate, and caused the Landlord to be put to additional effort and expense in preparing its response. [67] Mr. Justice Butler also found that there was a tremendous volume of material but said it was entirely the fault of the Tenant. He ordered the Landlord to pay the Tenant costs at Scale B. [68] However, in determining whether costs should be awarded for the costs application, the learned justice said at para. 46 there was no reason for the Tenant to marshal the vast volume of written argument and authorities it submitted for consideration. While the Tenant was successful in having costs awarded to it of the Second Petition, CVL succeeded on most issues. It was successful on the issue of special costs which was the primary issue raised. In the circumstances, he awarded costs of the costs application to CVL. His Lordship then ordered that the Tenant pay costs of the costs application to CVL at Scale C. [69] Thus, while essentially successful on the substantive issue in the second petition, the costs application by the solicitors on behalf of the Clients was less than successful. Many less objective observers might call it a disaster. General Discussion and Decision [70] Every individual solicitor has his or her own work habits and methodologies. In my view, the court should be slow to engage in determining what are the best methods of preparing for and trying a case in court. Other forums are available for that purpose, however, the court is entitled to make enquiries pursuant to s. 71(2) of the Legal Profession Act (supra at para. 26) [71] In discussions between the Solicitors and Clients, I accept Ms. Beim's evidence that Mr. Angus was quite forceful in his encouragement of her to pursue special costs. Ms. Beim's evidence was that at one point when seeking information from Mr. Angus about the cost proceedings, his response was that "you'll just have to trust me". Surely, this attitude of condescension to one's client is anathema to the practice of law in the 21st century. [72] The concept that a solicitor pay slavish attention to the hours spent on a file in preparing a bill for the client contradict the idea that records of time spent on a task should be the only method by which a solicitor renders accounts for his or her professional services. Madam Justice Southin, as she then was, commented on contracts for fees by the hour in Doig v. Davidson Muir, [1998] B.C.J. No. 723, 158 D.L.R. (4th) 1, [1998] 9 W.W.R. 99 a decision of our Court of Appeal at para. 25: The entering into of a contract for fees by the hour, it should be made clear, does not make the solicitor, and cannot make him, the absolute judge of the propriety or necessity of the time spent. A solicitor, without the express approval of his client, founded upon the client's appreciation of the risks of the undertaking, cannot tailor for his client a carriage trade lawsuit when the solicitor knows full well the client cannot afford such a luxury. Although some clients are so foolish as to pay willingly and knowingly for a victory no better than Pyrrhic, most, properly advised, will be sensible. [73] I find the client was not consulted as to the costs of the process along the way. [74] The main issue in this case is whether, in all the circumstances, the sum of $184,494.94 is the appropriate amount of fees, disbursements and taxes to have been charged for the work performed and the results obtained. [75] I have no doubt but that the fees, disbursements and taxes totalling $184,494.94 in this case are excessive. I use the term, "excessive" in the context of not being reasonably necessary and proper, as set out in s. 71(2)(a). I also use it in its ordinary definition of exceeding more than what is right, appropriate or desirable; immoderate; given to excess, as per the Shorter Oxford English Dictionary. [76] The Solicitor is entitled to be compensated for his knowledge, advice, experience and expertise, some of the many qualities for which a solicitor is engaged, but not for running up the clock with unnecessary work. [77] The bill presented to the Client for the Costs-related issues accounted for 109.5 hours being spent on the task of preparing for and submitting on the issue of special costs. At $325 per hour, the total fees for the number of hours spent converts to $35,587.50, although the Solicitors reduced this account by $15,590.00 to $20,000.00 from the original fee of $35,590.00, which apparently was rounded up from $35,587.50. [78] In taking into account s. 71(2)(a) of the Legal Profession Act, I do not think it could be said that the fees charged for the unsuccessful pursuit of special costs are reasonably necessary and proper, especially in light of the comments made by Mr. Justice Butler in his decision on costs (supra). Accordingly, I would disallow all fees and resultant taxes claimed by the Solicitors in their Statement of Account No. 3 dated January 7, 2010. [79] On the same account, I would reduce the photocopying charges to $440 in total for copying and taxes. [80] In a fact situation such as the one at bar, it is difficult to determine the quantification of the benefit or value to the Clients as I described at paras. 41 & 42 (supra). It is known that the Tenants had to pay rent owing in the amount of $92,204.20. [81] In my view, the Clients have obtained more benefit from the Solicitors' services than they have paid for, while, at the same time, the Solicitors have billed far more to the Clients than was reasonably necessary in the circumstances of this case. [82] I determine that a fair and reasonable fee, including taxes and disbursements, taking into account all the circumstances described above is $80,000.00. As the Clients have already paid the sum of $49,009.45 in fees, disbursements and taxes to date, they shall pay the difference between that and the sum of $80,000.00 to the Solicitors. I determine that amount to be $30,990.55. [83] In their submissions, the Clients requested that should I find more amounts owing, that I allow such amounts to be paid by instalments on terms considered appropriate. In accordance with the request of the Clients, I determine that the outstanding balance owing to the Solicitors be paid at a rate of $4500.00 per month until the total amount of $30,990.55 is paid to the Solicitors. [84] Section 72 of the Legal Profession Act mandates that should I tax off more than 1/6 of the lawyer's bill, then costs are to be paid by the lawyer, and if less than 1/6 is taxed off, the person(s) charged should pay the costs. [85] By my calculations, the sum of $84,494.94 has been taxed off, which is more than 1/6. Accordingly, the Solicitors will be responsible for paying the Clients' costs of the proceedings at Scale B. Once those costs have been agreed to or assessed, the Clients are entitled to set off the costs owing to them as against fees owing to the Solicitors. "Master Taylor"