Byl v. Carrier Lumber Ltd.

2003BCSC1337 Citation: Byl v. Carrier Lumber Ltd. Date: 20030714 2003 BCSC 1337 Docket: L023557 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA Oral Reasons for Judgment Registrar M.B. Blok July 14, 2003 BETWEEN: DICK BYL and DICK BYL LAW CORPORATION SOLICITORS AND: CARRIER LUMBER LTD. CLIENT Counsel for the Solicitors Gordon Turriff, Q.C. Counsel for the Client Robert J. Sewell, Q.C. [1] MR. REGISTRAR: An important point of practice arises in this Legal Profession Act review proceeding. The issue is the extent to which discovery, both of documents and of party representatives, can or should be ordered in hearings before the Registrar. [2] This case is unique in that it involves a claim for legal fees of $6 million, an extraordinary sum, but as counsel emphasizes, it arises out of an extraordinary, and I might add, somewhat notorious case. [3] The background facts can be briefly stated. Carrier Lumber Ltd. is a privately-held forestry company which carries on business in northern and central parts of British Columbia. From 1983 onward Carrier was the holder of a timber licence granted to it by the Province of British Columbia. The Province cancelled that licence in 1993. [4] The reasons for judgment of the trial judge, which are fully 231 pages long, indicate that the Province induced Carrier Lumber to move into the Chilcotin area with assurances of a certain wood supply, that Carrier established all the necessary industrial infrastructure including five mills, and that the Province then effectively refused to deliver the promised wood. In effect, the government kept for itself the benefit of all of Carrier's efforts, and over half of the wood, without paying compensation. [5] There was a lengthy trial which commenced in September 1997 and ended in April 1998. Liability was found in favour of Carrier Lumber on July 29th, 1999. A telling feature of the trial judge's decision was his finding that certain conduct of the government servants in the case was deceptive and was motivated by bad faith. [6] As the trial dealt only with the question of liability the matter then turned to the damages phase. The Province also appealed the trial decision, although this appeal was later abandoned. Prior to the hearing of the damages trial the claim was settled for consideration having a value in the range of $70 million to $100 million, at least according to the solicitor. [7] Throughout the proceedings the solicitor for Carrier Lumber, Mr. Byl, rendered accounts every two weeks. Following the conclusion of the matter Mr. Byl rendered a final account for fees in the total amount of $6 million. After subtraction of what were described as the earlier interim bills and the addition of taxes, the net amount billed was about $5 million. The solicitor maintains that the earlier bills were interim bills, many of which were expressly marked as such, and that the final bill reflects a proper overall quantum meruit fee. [8] The client maintains that there was an express agreement with the solicitor that the client would be billed bi-weekly on a straight hourly rate basis. Thus, according to the client, the rendering of the final bill to reflect, inter alia, success in the matter, was improper. The client asserts alternatively that the solicitor is precluded from rendering a bonus account by virtue of the principles set out in Campney and Murphy v. Arctic Installations (1994), 86 B.C.L.R. (2d) 226 (C.A.). [9] Within these review proceedings the solicitors have brought an application for an order to compel the client to provide a list of documents and to make a principal of the company available to be examined for discovery. The solicitor maintains that these steps are necessary in order to ensure that he is fully aware of the evidence of the client on the relevant issues, and so that he can properly prepare for the hearing. [10] The client opposes the application, maintaining that there is no jurisdiction to order these pre-hearing procedures and that they are otherwise inappropriate or unnecessary. The overriding concern of the client is that this proceeding ought not to be turned into a full-blown trial with all of the remedies, procedures and other formalities that that implies. [11] Before turning to an examination of the issues on the application I consider it appropriate to give some general procedural context. In the major urban centres at least it is the practice of Registrars to require pre-hearing conferences in matters of a certain magnitude or expected hearing duration. In general the purpose of a pre-hearing conference is to identify the issues between the parties, to ascertain what information and documents need be disclosed in order for the parties to properly deal with those issues, to determine how that disclosure is to be effected, to deal with experts' reports, if any, to identify witnesses, and to arrive at a consensus about the length of the hearing, a hearing that typically would not yet have been scheduled. The overall goal is to ensure reasonable pre-hearing disclosure and preparation so that when the hearing takes place it is done fairly and efficiently and there is much less likelihood that a party will complain of ambush and request an adjournment. [12] Of course, the other advantage for making for an even informational playing field, if I may put it that way, is that there is a greater likelihood that the matter might settle. [13] Thus at pre-hearing conferences Registrars, and Masters sitting as Registrars, typically make directions or orders of various sorts for the pre-hearing preparation of the proceedings. It must be noted, however, that very little of this procedure is set out or prescribed in either the Legal Profession Act or the Rules of Court. [14] The pre-hearing conference form, which is filled out by the Registrar to record the event, itself contains a section dealing with discoveries. Of course, this is not determinative of anything on this application, but it does provide some indication of Registrars' practice. [15] As I indicated to counsel, my own informal and limited inquiries of some long-time Masters revealed that orders for pre-hearing examinations for discovery have been made in relatively few cases, perhaps no more than 10, in the past 10 or 15 years. I was unable to confirm, however, whether jurisdiction to make orders for examinations for discovery was argued in any of those cases. [16] Having given that general context I now give some further background to this proceeding. As was required, an initial pre-hearing conference was held before me in this matter on December 12th, 2002. An order was made that the parties exchange formal statements of their position, something that I intended to be less formal than pleadings, but which would still define the essential issues at play in this review. [17] The solicitor's statement of position discloses his assertion that there was no agreement in place concerning fees, that the bi-weekly bills were not and were not intended to be final bills in and of themselves, and that one of Carrier's principals indicated to him that he would be paid a bonus. The result achieved, for which he says he should be fully or at least largely credited, was far better than the client had expected. [18] Through its statement of position the client maintains that there was an express agreement between solicitor and client that Mr. Byl's work for Carrier would be billed bi-weekly on a straight hourly rate basis, that hourly billing was the practice on this and other matters handled by the solicitor, that the solicitor owed a fiduciary duty to inform Carrier either at the outset of the matter or at the latest prior to settlement of his intention to seek a bonus, that the amount of the then-expected legal fees was a factor taken into account by Carrier in considering settlement, and that credit to the solicitor for success must be moderated because it was the client itself that discovered a certain crucial document. [19] I turn to the submissions of the parties on this application. Mr. Turriff, for the solicitor, argued that but for the insistence of the client that there be a review before the Registrar, the solicitor would have commenced an action and would have had all procedures available to him under Rules 26 and 27. He referred to Rule 1(4), which states that the Rules apply to every proceeding in the Supreme Court unless an enactment otherwise provides, and to Rule 32(5) which deals with, inter alia, Registrars' hearings, and submitted that Rule 32(5) can be used as authority to "borrow" discovery mechanisms where appropriate. [20] Rule 32(5) reads as follows: (5) A master, registrar or special referee may hold a hearing at a convenient time and place, may adjourn it from time to time, may administer oaths, take evidence, direct production of documents and give general directions for the conduct of the hearing. [21] In support of his submission, Mr. Turriff relies upon Holmes Greenslade v. Starcom International Optics Corp. (1997), 49 B.C.L.R. (3d) 159 (S.C.), where the court confirmed that the Registrar may exercise powers under Rule 32(5), with the court stating at pages 161 to 162: The Registrar must have the power to control those proceedings that are within his or her jurisdiction otherwise he or she becomes a mere spectator. A review of a solicitor's bill is such a proceeding. Reviews such as the review in this case, are often long, complex and may take many days, in some cases weeks, and involve large sums. The fees in this case totalled some $500,000. The registrar must have power to control the course of the review. [22] The court in the Holmes Greenslade case approved an extract from the Judgment of Madam Justice Baker in Davies v. Hunter (1995), 40 C.P.C. (3d) 273 (B.C.S.C.) at page 280 which I reproduce in part: Arguably, however, Registrars are intended by the legislature to have the power and discretion to control the review process entrusted to them to ensure that reviews proceed in a fair, orderly and efficient manner. ... In appropriate circumstances, particularly where the amounts involved are large or a review is predicted to be lengthy and the evidence or the law complex, it would seem advantageous for a Registrar to have the authority to direct early disclosure of the nature of the objection to a bill. [23] Mr. Turriff thus maintains that the Registrar has the power to order discovery in an appropriate case. Alternatively the question ought to be referred to the court. [24] As for the appropriateness of discovery Mr. Turriff points to the assertion by the client of an hourly fee agreement, the allegations of a legally significant course of dealings, the solicitor's assertion that a bonus was promised and the sheer magnitude of the fees in issue, and he argues that if ever there was a case before the Registrar that required discovery, this was it. [25] Mr. Sewell, for the client, argued that the relief sought is not available to the parties to a review under the Legal Profession Act. He noted that if the solicitor wanted these procedures he ought to have commenced an action. Rules 26 and 27 are restricted to actions. Rule 32(5), which does apply to reviews, deals only with production of documents, not discovery of documents. Production of specific classes of documents is not opposed but full discovery certainly is. [26] Mr. Sewell also submits that, apart from the question of jurisdiction, the relief sought is inappropriate to review proceedings, which are intended to be summary proceedings. To order full discovery in this matter would be tantamount to having this matter proceed as a trial. [27] Finally, Mr. Sewell maintains that the orders sought are in any event unnecessary because the solicitor does not need an examination for discovery to prove his case and, as for documents, the solicitor already has in his possession all documents in the client's possession. The client is willing to prepare a list of those documents of which it is aware dealing with the specific issues in the case. It is also willing to consent to an order requiring both parties to deliver lists of witnesses and a summary of the evidence of each witness prior to the hearing. [28] I deal firstly with the question of jurisdiction. I accept that Rules 26 and 27 have no direct application to proceedings under the Legal Profession Act. Aside from the specific power to order particulars or details of a bill, fee agreement or bill of costs, the power contained in Rule 57(29.02), the general power of a Registrar to control proceedings before him or her is found in Rule 32(5). As will be seen from my earlier comments, there is a variety of practices and procedures adopted in Registrars' proceedings which are not specifically mentioned in Rule 32(5). These include making orders that the parties identify the issues in the case, orders concerning the exchange of experts' reports, orders or directions concerning the identification of witnesses or the exchange of witness lists and statements, and orders concerning the exchange of document briefs or hearing briefs. Even pre-hearing conferences themselves are excluded from any mention in the rule. I conclude from the fact that these matters are well settled practices that it is proper to give wide effect to the words "and give general directions for the conduct of a hearing" contained in Rule 32(5). I also consider that the inclusion of the word "general" in the phrase just quoted means that matters of wider scope are intended then merely directions relating to the actual hearing. If only matters relating to the hearing were intended then there would be no need to include the word "general" and the rule would read: "and give directions for the conduct of the hearing." [29] Thus I conclude that Rule 32(5) is intended to empower Registrars to make orders and directions for not only the hearing but also for matters preparatory to the hearing. This conclusion is consistent with the comments of the court in Holmes Greenslade v. Starcom International Optics Corp. and Davies v. Hunter, both of which support the view that Registrars ought to have the power and discretion to control the review process entrusted to them in order to ensure that reviews proceed in a fair and efficient manner. [30] The question then is whether or not this general power includes the power in that rare but appropriate case to direct an examination of a party. I have concluded that it does. Taking this case as an example, one allegation is that there is a specific agreement between solicitor and client for the billing of this matter on a strict hourly basis. I was not told what, if anything, the solicitor knows of the evidence relied upon for this. In the event that he is unaware of this evidence then absent other disclosure the first he will hear of it will be at the hearing. It is not hard to envisage circumstances under which the solicitor might be taken by surprise by the evidence, or might wish to muster evidence to meet it, evidence for which an adjournment might well be needed. [31] An adjournment of a hearing of this length, which is tentatively set for three weeks commencing February 2004, would be a grave disruption both to the parties and to the Office of the Registrar. In my view such an eventuality is part of the "general conduct of the hearing" to use the words of Rule 32(5), so as to give the Registrar the power to make all necessary pre-trial directions that will maximize the fairness and efficiency of the hearing and minimize the prospects for disruption. [32] In answer to these concerns, counsel for the client very fairly proposes that an order be made that summaries of the evidence of witnesses be exchanged. The client concedes that such an order is within the power of the Registrar to make. After careful thought on the matter I have concluded, however, that summaries of evidence would not suffice in the circumstances of this case. Also, the effort required in the careful crafting of a variety of witness statements might not be materially different from that required to conduct an efficient examination of a party representative. [33] Although the client argues that discovery is unnecessary in this case because the solicitor does not need the evidence to prove his case and, in any event, the solicitor cannot read in discovery evidence because Rule 40(27) does not apply, this submission ignores the several purposes of discovery, one of which is to ascertain the basis of the opposing case. Another purpose, of course, is to provide a basis for cross-examination. [34] In answer to the argument of counsel for the client that formal discovery procedures are inconsistent with the intended summary nature of review proceedings, I say he is right, in the vast majority of cases. But here in this case the very use of the word "summary" to describe a hearing three weeks in duration seems entirely discordant. [35] Reviews and examinations of agreements, both held under the Legal Profession Act, encompass a wide variety of matters which range from cases in which clients acting in person dispute bills of just a few hundred dollars, or even less, to cases such as the present where millions of dollars are at stake and the parties are represented by counsel who have taken silk. Small cases may be resolved in as little as half an hour; large cases may take several weeks. It is my view that there must be a spectrum of preparatory procedures available to Registrars to meet the varying demands of the cases they hear. [36] I note, too, that orders for discovery have been made by Registrars in the past without any apparent undermining of the typically summary nature of the process. [37] In concluding that the examination of party representatives is appropriate and necessary in the unusual circumstances of this case I do not wish to be seen as encouraging discovery applications generally in Registrars' hearings. As I noted earlier, past history, so far as I could informally ascertain, shows that orders for discovery were rare, and they should remain so. [38] In summary, then, I conclude that Registrars have the jurisdiction to make orders akin to discovery in proper cases and that it is appropriate to make such an order in this case. Had I concluded otherwise on jurisdiction I would have referred this matter to the court for directions under s. 70(14) of the Legal Profession Act and with the recommendation that the court make an order that examinations be conducted. [39] Most of my comments thus far have been directed to examinations of party representatives, a phrase I use advisedly to distinguish them from examinations for discovery conducted under Rule 27. Discovery of documents is a more straightforward issue, at least in the sense that Rule 32(5) gives the specific power to order production of documents. The debate between the parties is really one relating to the breadth of the order that ought to be made in this case. [40] On the matter of documents I have concluded that the appropriate order is for the parties to produce those documents in their possession or control relating to the matters in issue as defined by the statements of position. I am fully aware that the documents in the underlying litigation number in the thousands upon thousands. These do not have to be produced, nor do these documents necessarily have to be pored over to meet the document production order. I expect most relevant documents have already been identified. To the extent that it might assist, the parties might be well advised to make a request for specific documents or classes of documents to be produced that are known or suspected to exist. The documents produced should be listed. The accounts, if I need say this, need only be listed as a bundle. [41] Each side will have the right to examine under oath a representative of the other party. These examinations will last no longer than two days each, with liberty to apply. In keeping with what ought to be the more restrictive nature of these examinations I have it in mind that there will be a minimum of outstanding requests, or questions left on undertakings, left with the representative. If there are any issues that arise on the production of documents or the examinations of the party representatives then the parties have liberty to apply to have these resolved at a further pre-hearing conference. [42] I remain seized of the pre-hearing aspects of this matter. [43] Those conclude my reasons and I ask counsel now if there are any aspects arising from those reasons or if they require any directions on the timing of these events. [44] MR. TURRIFF: Mr. Registrar, I had asked that the discovery happen within a certain time frame. Now, my friend's unfortunate illness has delayed everything by a month or so. I still would like to see these happen sooner rather than later, especially given that just before I came here this morning I signed a praecipe which will cause the review to be scheduled on the 15 days beginning, I think it's February the 16th. And so if we could have some guidance I would hope that we could, for example, have the documents by the end of the summer, August 31st, and discovery by the end of September. That will give us time to produce any further evidence that we might need in and still have ample opportunity to deal with any surprises before the review begins. [45] MR. REGISTRAR: Any submissions on timing, Mr. Sewell? [46] MR. SEWELL: I think, your honour, I think we could - that that sounds reasonable to me. So August 31st for a list of documents and - or production of documents, rather. [47] MR. REGISTRAR: I perhaps need not remind you that we're halfway through July and you may have holiday plans ourselves, so I - don't make promises you can't keep, I guess, is the phrase that comes to mind. [48] MR. SEWELL: Well perhaps then we should say September 15th and - [49] MR. REGISTRAR: Would it be realistic to expect discoveries to be completed by mid October? [50] MR. SEWELL: I don't see why not, or perhaps we could say October 31st, which is still plenty of time before the - before the hearing. I think my friend and I are both going to cooperate to try and get this sooner rather than later. [51] MR. REGISTRAR: I don't - I don't see - I don't see vast disagreement. [52] MR. TURRIFF: I would prefer the 15th of October for the discovery, oral discoveries. [53] MR. REGISTRAR: All right. We'll say on or before October 17th, which is a Friday. And working backwards on the documents we'll say on or before September 12th, which is also a Friday. [54] MR. TURRIFF: Sorry, September 12th? [55] MR. REGISTRAR: Yes. Documents September 12th. Oral discovery or examinations of party witnesses, as I have phrased it, October 17th. [56] MR. SEWELL: Now, your honour, the other matter which was in my friend's Notice of Motion that you haven't dealt with and it's because we didn't direct any real submissions to you with the question of delivery of experts' reports. [57] MR. REGISTRAR: I noted that as a matter to deal with. Do the parties currently anticipate having experts' reports? [58] MR. TURRIFF: Yes. [59] MR. REGISTRAR: Yes? [60] MR. TURRIFF: Absolutely. [61] MR. REGISTRAR: All right. [62] MR. SEWELL: Well, I understand my friend already has his. He's asked for a motion requiring me to deliver mine. I don't have any yet. [63] MR. REGISTRAR: I think it - [64] MR. SEWELL: Sorry - I was about to say, your honour, that it seems to me in these circumstances it's reasonable that my friend give me his and then I can consider whether I even need them, because it may well be that I don't disagree with what's in the reports. [65] MR. TURRIFF: Mr. Registrar, I can't put my mind to a report until the discovery process has been completed. Only then will my experts have - be able to give me their final view of things. [66] MR. REGISTRAR: That makes sense to me. I'd like to put a tight leash on this though. What do you say, Mr. Turriff, to a - the earliest you might expect to deliver your experts' report. [67] MR. TURRIFF: December 1st with my friend's by January 1st or the 2nd. [68] MR. SEWELL: Well, the only problem with that, your honour, is that for all practical purposes it gives me a couple of weeks to deal with the solicitors' reports because people will be going on holidays and whatnot. If Mr. Turriff could get me his reports by 5th of November - November the 15th - [69] MR. REGISTRAR: Just sort of musing here, assume for the moment the discoveries don't take place until late in October, it may be the transcripts will be ordered and it may be that counsel feel the necessity to put their expert in hand of those transcripts. That makes the 15th or something like mid November problematic just because of the transcript issue. I'm just trying to mull this over and be fair to everyone here, but I also want to be realistic. Is that - I don't know, Mr. Turriff, maybe I'm musing in a - [70] MR. TURRIFF: Well, if my friend wants to have more time around Christmas then we should advance the date for the production of documents and oral discovery more in line with the dates that I had proposed earlier. [71] MR. REGISTRAR: All right. Well, we've got - misapprehended my own deadline I set for the discoveries of October the 17th and the 31st. I think it appropriate, Mr. Turriff, that you deliver your experts' reports by November 14th, on or before the 14th, which is a Friday again. And I don't have a January calendar here, but say the first Friday in January for Mr. Sewell. That's on or before. [72] MR. SEWELL: Your honour, I just have one question arising out of your Reasons, and it may be that my notes were not - maybe my note taking is the problem. Your honour has made a direction restricting the issues on which document discovery should be made; does that ruling apply also to oral discovery? [73] MR. REGISTRAR: Yes. I have it in mind, gentlemen, that counsel disabuse their minds somewhat of the long entrenched habits of discovery and treat these as more restrictive procedures appropriate to a review of this type. [74] MR. SEWELL: I think my friend and I catch the spirit of what your honour is saying and we'll try and comply with that. [75] MR. REGISTRAR: I'm satisfied that I have experienced cooperative counsel in front of me that will be able to find a reasonable interpretation to those comments and if anything goes off the rails I'm available to put it back on track. [76] MR. SEWELL: Thank you, your honour. [77] MR. REGISTRAR: All right. Thank you. "District Registrar M.B. Blok"