Neinstein & Associates v. Bank of Nova Scotia Trust Company

Neinstein & Associates v. Bank of Nova Scotia Trust Company Collection Decisions of the Court of Appeal Date 2000-11-07 Docket numbers C33741 Judges Morden, John Wilson; Charron, Louise Vivianne; Borins, Stephen Subject Civil Decision Content DATE: 20001107 DOCKET: C33741 COURT OF APPEAL FOR ONTARIO MORDEN, CHARRON AND BORINS JJ.A. BETWEEN: ) ) Chris G. Paliare NEINSTEIN & ASSOCIATES, ) for the appellant BARRISTER-AT LAW ) (Appellant) ) ) and ) ) BANK OF NOVA SCOTIA TRUST ) Daniel J. Dochylo COMPANY, AS LITIGATION ) for the respondent GUARDIAN OF KEVIN FRANKLIN ) AND HIS GUARDIAN OF PROPERTY ) (Respondents) ) ) Heard: October 23, 2000 On appeal from the order of Mr. Justice James Spence dated February 7, 2000. BY THE COURT: [1] Spence J. ordered that the appellant’s account be assessed. The appellant appeals from this order on the ground that there was no basis to refer the account for assessment under s. 4(1) of the Solicitors Act, R.S.O. 1990, c.S.15, where the amount of the fees and disbursements has been incorporated in the terms of a judgment. [2] Section 4(1) of the Solicitors Act reads as follows: 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. [3] The account in question relates to services rendered by the appellant for the plaintiff Kevin Franklin in a motor vehicle accident claim. Mr. Franklin, who is an adult, is a person under disability within the meaning of rule 7 of the Rules of Civil Procedure. Judgment for the plaintiff was entered in that action at the conclusion of a pre-trial conference before O’Brien J. The judgment was made pursuant to minutes of settlement. It provided for judgment in the amount of “$980,447.79 inclusive of fees and disbursements.” The judgment also incorporated a management plan prepared by the respondent, Bank of Nova Scotia Trust Company, Kevin Franklin’s litigation guardian, which document included a reference to the plaintiff’s liability for legal fees for personal injury action in the specific amount of $432,888.81. It is on the basis of this material that the appellant submits that his account was fixed by the judgment and that no assessment could be ordered. [4] Spence J. considered contradictory affidavit evidence on whether the amount of the appellant’s fees had been discussed and agreed upon by the parties at the pre-trial conference and whether, by the above provision in the formal judgment, O’Brien J. had considered and fixed the appellant’s fees on the ground that they were fair and reasonable. He concluded that the judgment by its terms addressed only the amount to be paid by the defendant to the plaintiffs in the motor vehicle accident and that nothing in its terms supported an interpretation that the judgement fixed or approved any agreement respecting the fees payable by the plaintiff Kevin Franklin to the appellant as his solicitor. Spence J. also noted that Mr. Franklin is severely disabled and that there had been no scrutiny on his behalf by the respondent as his litigation guardian of a detailed statement of account from the appellant. The appellant conceded that he had never delivered an itemized account. [5] We agree with Spence J.’s decision. His interpretation of the judgment is entirely supported by the evidence. On the basis of his findings, it cannot be said that a judgment has been obtained with respect to appellant’s account within the meaning of s. 4(1) of the Solicitors Act. Nor is this a situation where more than twelve months have elapsed since the delivery of the solicitor’s bill which would call for special circumstances to be shown before an assessment could be ordered under s.4(1). In the circumstances of this case, the respondent was entitled to the order. [6] What caused the problem in this appeal was the failure of the appellant to follow the usual practice on an application for the approval of the settlement of a person under disability under rule 7.08 of the Rules of Civil Procedure. It is the usual practice for the solicitor for the person under disability, in his or her affidavit in support of the settlement, to include the details of the legal fees and disbursements the solicitor intends to charge the client. The appellant did not do so. A statement of his fees and disbursements did not form part of his affidavit. Nor was there any reference to the appellant’s fees and disbursements in Mrs. Franklin’s affidavit. She had been her husband’s litigation guardian until she was replaced by the respondent by an order of O’Brien J. at the pre-trial conference. Understandably, the respondent did not file any affidavit material at the pre-trial conference in respect to either the appropriateness of the settlement or the appropriateness of the legal fees which the appellant intended to charge Mr. Franklin. [7] Had the usual practice been followed, no doubt O’Brien J.’s judgment would have contained the usual order to the effect that the defendants in the Franklin action pay the appellant, as Mr. Franklin’s solicitor, a designated sum for his fees and disbursements, which he was to accept in full satisfaction of all fees and disbursements payable to him by Mr. Franklin, either as between party and party or solicitor and client, assuming that O’Brien J. had approved the amount of the proposed fees and disbursements. See Hurd & Hurd v. Dumont, [1955] O.W.N. 568. [8] What is in issue, because Mr. Franklin is a person under disability, is whether the fees charged by his solicitor are fair and reasonable relative to the usual criteria. It is the duty of the litigation guardian to be satisfied on the fairness and reasonableness of the solicitor’s fees. However, it is not for the court, on the approval of a settlement under rule 7.08, to “rubber stamp” the amount of the solicitor’s fees which are generally agreed to as the costs payable by the defendant in the minutes of settlement. As Meredith C.J.C.P. explained in Glynn v. Unwin (1926), 30 O.W.N. 188 at 189, “… whatever practice is followed, it should be plain that ‘sanctioning’ or ‘approving’ [an infant’s settlement] should be far removed from being only a matter of form”. As well, in Poulin v. Nadon, [1950] O.R. 219 (C.A.) Robertson C.J.O. stated at 222 that “the judge to whom application is made for the approval of [an infant’s] settlement has an important and onerous judicial duty to perform”. In our view, the judge must be satisfied that all aspects of the settlement, including the fees of the solicitor for the infant plaintiff, are for the plaintiff’s benefit. What was stated in those cases applies as well where the settlement is in respect to an adult plaintiff who suffers from a disability. Indeed, it is through judicial approval that such a settlement obtains its validity and becomes binding upon both the plaintiff under disability and the defendant. [9] In Andreacchi v. Perrucio, [1973] 2 O.R. 543, Addy J. was concerned with an infant’s settlement in which the parties had agreed that the defendant was to pay $6,500 for solicitor’s fees on a party-and-party basis. At p. 546 he observed that it is improper for the next friend of an infant, now referred to as the litigation guardian, to consent or agree to the payment of a particular amount to a solicitor “unless it be for the payment of a legitimate, legally enforceable debt owed by the infant or mentally incompetent”. Although he approved the settlement as it applied to the damages recovered by the infant plaintiff, he ordered that the solicitor’s fees be referred for taxation, stating at pp. 546-547: No question can then arise at any later date that there was any sort of arrangement between the solicitor involved and the other party or parties to the action, concerning payment of fees to the detriment of the person under legal disability or that the Court has, even quite innocently, put its official seal of approval on any such arrangement. In all such cases, payment into Court followed by taxation protects all of the parties and the solicitor involved and furnishes a complete and indisputable record that matters were properly settled and that justice was done. [10] We were not asked, nor was Spence J., by the respondent to order that the appellant pay into court the amount that he retained for fees and disbursements. [11] We would, therefore, dismiss the appeal with costs. Released: November 7, 2000 __________ (signed) “J.W. Morden J.A.” __________ (signed) “L. V. Charron J.A.” __________ (signed) “S. Borins J.A.”