Ontario Solicitors Act s. 3

Ontario: the limitation of a solicitor-initiated assessment

The Superior Court decision in Fasken Martineau DuMoulin LLP v. Behdad Hosseini et al. sets out the principles of the limitation of a solicitor-initiated assessment under s. 3(c) of the Solicitors Act and concludes that the Limitation Act’s basic limitation period applies:

 

[83]           Both parties advised that they could not find any case law that has dealt with the issue of the applicable limitation period for solicitor-initiated assessments under s. 3(c) of the Solicitors Act, or the interplay between that section and either s. 4(1) of the Solicitors Act or s. 19 of the Limitations Act. Accordingly, this appears to be a case of first impression.

[84]           It is common ground that the requisition for the subject order for assessment was obtained under s. 3(c) of the Solicitors Act which provides:

Where the retainer of the solicitor is not disputed and there are no special circumstances, an order may be obtained on requisition from a local registrar of the Superior Court of Justice,

(b)   by the solicitor, for the assessment of a bill already delivered, at any time after the expiration of one month from its delivery, if no order for its assessment has been previously made. [Emphasis added.]

[85]           The Client’s argument is that as there is no fixed time imposed by s. 3(c) on a solicitor’s right to obtain a requisition, therefore the 12-month period reflected in s. 4(1) of the Solicitors Act must apply. The Client supports this position by noting the consumer protection nature of the Solicitors Act, and his bald assertion that it is “common knowledge” that the court “always” applies a 12-month limitation period in these types of solicitor-initiated assessments.

[86]           Section 4(1) of the Solicitors Act states:

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. [Emphasis added.]

[87]           The issue raises one of statutory interpretation. The essence of the Client’s position is that the 12-month time period, together with the “special circumstances” requirement for late filing, from s. 4(1) of the Solicitors Act should effectively be read into s. 3(c) of that Act in order to prevent the “absurd” result of there being no limitation period whatsoever imposed on solicitors seeking to have their accounts assessed.

[88]           The Solicitors Act was enacted in 1990 and is a consumer protection statute: Zeppieri &Associates v. Gupta, 2016 ONSC 6491. The Client urges that it would be inconsistent with the nature of consumer protection if solicitors were permitted an unlimited timeframe within which to request an assessment of accounts as against clients, whereas clients must commence their assessment proceedings within 12 months from the rendering of the final account, absent demonstrating special circumstances. The Client further submits that it is logical that the 12-month time period from s. 4(1) be read into s. 3(c) to fill this ostensible gap in the legislation. I disagree.

[89]           Section 3(c) explicitly states that a solicitor may bring a requisition to have its accounts assessed “at any time” after delivery of its account provided:

(a)   the retainer is not disputed,

(b)   there are no special circumstances,

(c)   the solicitor has waited one month after delivery of its account to file the requisition, and

(d)   no order for assessment of it has been previously made.

[90]           In this case, it is agreed by the parties that the retainer is not under dispute, no special circumstances have been advanced by either party, the requisition was filed more than a month after the subject accounts were delivered, and there was no prior order for an assessment made.

[91]           Second, s. 4(1) of the Solicitors Act explicitly refers to applications for a reference brought “by the party chargeable with such bill”. The party chargeable is the client, not the solicitor. Hence this provision has no application to the solicitor-initiated assessment under s. 3, again on a plain reading of this section.

[92]           The Solicitor submits that in the event there is a limitation period, then s. 4 of the Limitations Act is the only statute to fill that ostensible gap, as the Assessment Officer ultimately concluded based on her interpretation of Guillemette.

[93]           The Assessment Officer carefully reviewed the arguments made on this issue in the course of her September 11, 2019 reasons for decision and affirmed in the Assessment Certificate (with the benefit of written submissions from both parties). She reached the conclusion that, if there is a fixed limitation period, it is set out by s. 4 of the Limitations Act; namely two years from one month after the date of the last rendered account. As the requisition was filed approximately 17 months from the date of the last rendered account, she found that the requisition had been filed in a timely manner. The Solicitor was not required to prove special circumstances under s. 4(1) of the Solicitors Act in order to proceed with the assessment.

[94]           I do not agree with the Client’s submission that the Assessment Officer’s concurrence “with the [Client’s] representation that the Solicitors Act states that there is a twelve (12) month limitation on the right to file an Assessment” meant that she agreed with the further submission that the 12-month limitation contained in s. 4(1), together with that provision’s added requirement that special circumstances had to be proven to the satisfaction of a judge in order to extend that limitation period, therefore applied to an assessment conducted under s. 3(c). Indeed, it is clear from a review of the Assessment Officer’s decision rendered on September 11, 2019, in advance of issuing the Assessment Certificate, that she rejected the Client’s extension of that argument.

[95]           At para. 23f.iii. of her decision, in response to the Clients Objections (dated September 11, 2019), the Assessment Officer held:

23f.iii. After review of the parties’ arguments and submissions, the Assessment Officer concurred with Hosseini’s representation that the Solicitors Act states that there is a twelve (12) month limitation on the right to file an Assessment. However, the Assessment Officer also stated that precedent is clear that the Statute of Limitations Act trumps the twelve (12) month period and extends it to two (2) years for the Solicitor to bring an assessment. Based on the date that the Requisition of Assessment and Order for Assessment was filed, the Assessment Officer held that it is clear that the Application was filed well within the two (2) year limitation requirement.

[96]           At paras. 28 and 29 of the Assessment Decision, the Assessment Officer concluded:

28. In my review of the Objection submissions, the evidence shows that the final bill was issued to the Client on dated June 26, 2014. As noted above, Section 3(c) of the Solicitors Act permits the Solicitor to file an assessment a month after the bills are delivered. In this instance, one month after the final bill was delivered is approximately July 26, 2014, which means that under the Act the earliest the Solicitor was permitted to initiate an assessment was on July 26, 2014.

29. Further, consistent with the court’s holdings in Echo Energy Canada Inc. and Guillemette, the two (2) year limitation in the Limitations Act trumps the twelve (12) month limitation provision in the Solicitors Act. This means that the Solicitor in this instance would have had two (2) years from July 26, 2014, which is approximately July 26, 2016, to file a requisition and get an order for assessment from the Court. The facts in this case show that the Solicitor filed the Requisition and Order for Assessment on November 25, 2015, well within the limitations period. Therefore, an order from a Judge granting extension of the limitations period is not required based on the facts in this instance.

This analysis is probably wrong because a solicitor-initiated assessment isn’t a “claim” as defined by the Limitations Act, and so the Limitations Act doesn’t apply to an assessment proceeding. Is an assessment a cause of action? I’ve never seen any authority suggesting that it is.  If it’s not a cause of action, it’s not a “claim”.

This area of limitations law is so arcane that flawed analyses are understandable.  The solution is legislative reform. It’s inexcusable that there should be any ambiguity in the timelines for assessing lawyer accounts.

 

Ontario: the limitation of assessing solicitor bills

Gardiner Roberts v. Canada International Distributing Inc. provides a useful overview of the operation of the time limit (which is not strictly a limitation period) in s. 3 of the Solicitors Act. In particular, it underscores the importance that an account be final in order to trigger the running of time:

[28]           Section 3 of the Solicitors Act provides that where the retainer is not disputed and there are no special circumstances, a client may obtain an order for:  a) the delivery and assessment of the solicitor’s bill; or b) for the assessment of a bill already delivered, within one month from its delivery.

[29]           Gardiner Roberts argues that it provided its “‘final’ account, i.e. the last account” on November 30, 2016.  This, it is argued, is more than one month before Cana sought an assessment.  Thus, Cana is not able to obtain an assessment under s. 3.

[30]           Cana counters that the “last” account is not a “final” account; Gardiner Roberts has refused to render a final account in order to deprive Cana of its ability to assess the accounts.  Cana is entitled to have a final bill delivered and an assessment of the bill, which would include all interim accounts rendered.

[31]           When assessing the submissions of counsel, I keep in mind that the purpose of the Solicitors Act and the assessment process is “to regulate the legal profession and protect the public in their dealings with solicitors”: Laushway Law Office v. Simpson, 2011 ONSC 4155 (CanLII), at para. 143.

[32]           As explained by Sharpe J.A. in Price v. Sonsini, 2002 CanLII 41996 (ON CA), [2002] O.J. No. 2607 (C.A.), at para. 19:

Public confidence in the administration of justice requires the court to intervene where necessary to protect the client’s right to a fair procedure for the assessment of a solicitor’s bill.  As a general matter, if a client objects to a solicitor’s account, the solicitor should facilitate the assessment process, rather than frustrating the process.

[33]           With this legal framework in mind, I have concluded that Cana is entitled to an assessment. Gardiner Roberts has failed to render a final bill: the November 30 account sent by Gardiner Roberts is an interim account, as were all previous accounts rendered by the law firm.  Given Gardiner Roberts’ failure to render a final account, it was open to Cana to obtain an order pursuant to s. 3(a) for the delivery of a final bill and an assessment.   All of the interim accounts were related to the same matter, and therefore the limitation period flows from the date of delivery of the final account.  Thus, Cana is entitled to an assessment of all of the accounts, even though many of them were paid.

Gardiner Roberts has Failed to Render a Final Bill

[34]           Following the November 30 account, Gardiner Roberts prepared written submission on costs.  Gardiner Roberts seemed (at least initially) to view the costs submissions as simply a continuation of the ongoing work being done on the Standard Innovation matter.  This seems clear from the email of Mr. Wolch on November 21, where he said “… I must also prepare submissions with respect to costs…”  Indeed, it is difficult to see the costs submissions following a lengthy trial as being anything other than part and parcel of the same matter.

[35]           Despite repeated requests by Cana, Gardiner Roberts has refused to provide a bill for the work done on the costs submissions.  Cana argues that Gardiner Roberts cannot simply refuse to render a bill for this final work done, in order to circumvent Cana’s right to an assessment under s.3 of the Solicitors Act.  I agree.  Cana properly moved pursuant to s. 3(a) of the Solicitors Act for the delivery of the final account.

            The Limitation Period Flows From the Final Account

[36]           Upon delivery of such final account, Cana is entitled to an assessment of all previous interim accounts.  As noted in Price v. Sonsini, at para. 15, where interim accounts are rendered in connection with the same matter, the limitation period for assessment under the Solicitors Act begins to run from the date of the final account, even if some of the interim accounts have been paid.

The Accounts Rendered Thus Far Have Been Interim Accounts

[37]           In Shapiro, Cohen, Andrews, Finlayson v. Enterprise Rent-a-Car Co., 1998 CanLII 1043 (ON CA), [1998] O.J. No. 727 (C.A.), at para. 14, the Court of Appeal referred to a number of factors that supported the motions judge’s conclusion in that case that all accounts rendered prior to the final account were interim accounts.  Most of those factors apply to the present case.  For example:

•        All accounts relate to once piece of litigation.  The accounts all involve the action against Standard Innovation.  It was the same matter; they are part of a continuum.  This is illustrated by the fact that all accounts said “Re: Standard Innovation” and had the same file number.

•        None of the account were marked as final accounts.  Moreover, the retainer agreement specifically said that the firm would render interim accounts and reserved the right to take into account the result achieved in the final account.

•        Considerable adjustments were at times made to the accounts.  According to Gardiner Roberts, it wrote off more than $70,000 because of request for discounts by Cana.  An example of such a discount occurred on December 9, 2011.  On that date, Mr. Wolch agreed to reduce the amount owed by Cana by $20,000.  But in reducing the account, Mr. Wolch noted that if the firm was successful in the matter, and recovered a reasonable amount, that this money would be repaid.  This supports that the accounts were interim, not final.

•        Cana was led to believe that the work on the interlocutory injunctions would not be lost.

•        Given the nature of the services, Cana could only appreciate the services performed at the end of the retainer.  This is highlighted in the retainer agreement, where Gardiner Roberts reserved the right to take into account the results obtained in determining its final account.

[38]           Looking at these factors, I find that the accounts rendered thus far have been interim. No final bill has been delivered.  Gardiner Roberts cannot avoid s. 3 of the Solicitors Act by refusing to render a final account.  I find that pursuant to s. 3(a) Gardiner Roberts is required to deliver a bill.  The limitation period for the interim accounts rendered flows from the final bill.  Thus, Cana is not time barred from an assessment of the interim accounts in this matter, even where those accounts have been paid.

[39]           I turn now to the alternative submission raised, which is that there are special circumstances which justify an assessment of the accounts.

The decision also describes the test for special circumstances:

[40]           Where there are special circumstances, pursuant to s. 4(1) of the Solicitors Act a client may obtain an assessment of an account more than 12 months after it was delivered.  This applies whether the bills are paid or unpaid.  Further, pursuant to s. 11 of the Solicitors Act, a client may obtain an assessment of bills already paid within 12 months of delivery of an account, if the special circumstances of the case appear to require the assessment.  For bills rendered within 12 months, but that remain unpaid, the court has inherent jurisdiction to order an assessment: Enterprise Rent-a-Car, at para. 8.

[41]           There is a presumption that payment of a bill constitutes implied acceptance of its reasonableness.  This presumption, however, is rebuttable.  As noted in Enterprise Rent-a-Car, at para. 19, the presumption is refuted to some extent by the fact that clients cannot be expected to bring an assessment while the lawyer is representing them, as they would not wish to alienate the lawyer.

[42]           In Enterprise Rent-a-Car, at para. 21,  the Court outlined a number of factors showing that the special circumstances test had been met in that case.  Similar factors can be found in the present case, including the following:

•        Cana was not familiar with commercial litigation nor with injunctions;

•        Cana understood that if the interlocutory injunction were granted, it would effectively resolve the dispute and end the litigation, and the work done would contribute significantly to trial preparation;

•        Cana did not give instructions to proceed at all costs; to the contrary, Cana communicated to Gardiner Roberts that it expected that the firm would keep legal costs within reason;

•        It is unrealistic to expect that Cana should have sought to have the bill assessed during the course of an ongoing matter such as this case;

•        Cana could only have appreciated the nature of the services at the conclusion of the retainer.   This is supported by the retainer agreement, which specified that Gardiner Roberts may take into account the result obtained in the final bill;

•        Cana was not aware that it could seek to have its accounts reviewed until it retained new lawyers.  As noted in Enterprise Rent-a-Car, at para 20, lawyers “should take the opportunity to inform their clients of their right to an assessment at appropriate times during the solicitor-client relationship.”  Gardiner Roberts, however, failed to advise Cana of its right to have its accounts assessed, even when Cana had raised objection to certain accounts;

•        Gardiner Roberts billed Cana more than $1 million, without achieving any success.

[43]           In light of the above factors, I find that the test for special circumstances has been met.   Cana is entitled to an assessment of the accounts rendered by Gardiner Roberts pursuant to ss. 4(1) and 11 of the Solicitors Act.