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Lawyers can't contract out of statutory account assessments

|Written By Jennifer McPhee

Lawyers cannot use retainer agreements to contract out of the 30-day time period in the Solicitors Act during which clients can seek assessments of their accounts, ruled the Court of Appeal for Ontario on June 28 in Javornich v. McCarthy.

Lawyers cannot avoid assessment by creating one-sided retainer agreements with reduced time periods, says Edwin Upenieks.

"It would, in my view, be contrary to the public interest to allow solicitors and clients to contract out of the statutory rights granted to clients to have their accounts assessed within the statutory time frame," wrote Justice Paul Rouleau on behalf of himself, Justice Russell Juriansz and now-retired chief justice Roy McMurtry.

Mary Javornich hired Terri McCarthy to act for her in matrimonial matter, and signed a retainer agreement in November 2003. Along with stating the retainer would be held in trust and used to pay accounts, the agreement stated she would receive interim accounts and a final account. It also contained a clause stipulating the client had just 15 days to requisition an assessment of the account.

On April 29, 2005, Javornich terminated the retainer and, after receiving an interim bill dated April 15, asked for a final account. According to an affidavit filed by an employee of the solicitor's office, Javornich was told by telephone to treat the interim account as a final account on May 5, 2005.

But Javornich argued she was not told to treat the interim bill as a final bill until June 3, and produced a May 30 e-mail indicating she was still waiting for a final account. On June 3, she also received a cheque for the reimbursement of the balance of the retainer.

On June 13, Javornich requested an assessment and received an order for this assessment two days later. McCarthy moved to set aside the order, arguing that assessment request fell outside of the 30-day time limit.

On March 3, 2006, Ontario Superior Court Justice Kendra Coats decided the magic date was June 3, and therefore allowed the assessment because it fell within limitation period in the act.

The Court of Appeal ruled that there was ample evidence to support her decision. The court agreed that the account only became final on June 3, and so the request actually fell well within both the 30-day statutory time period and the abbreviated time period in the contract.

The retainer agreement clearly set out that the client would receive a final bill, and so she was justified in seeking a final bill and waiting to receive it before requesting an assessment, wrote Rouleau.

But he went on to reject the argument that a clause in a retainer agreement can override the statutory limitation period - even though the client did not object to the clause earlier and the act does not contain a clause that prohibits parties from contracting out or waiving rights.

This decision protects clients' rights and means that lawyers cannot avoid assessment by creating one-sided retainer agreements with reduced time periods, said Javornich's lawyer Edwin Upenieks of Lawrence Lawrence Stevenson LLP in Brampton.

The court also confirmed its 2002 decision in Price v. Sonsini, which stated that lawyers should consent to assessments and not put up roadblocks, said Upenieks.

It's common for litigators, especially when they act for clients in lengthy matters, to send a series of interim accounts.

"Here, the court says if you have a series of interim accounts, you can't wait 30 days after the last interim account and then take the position, 'Sorry, you're too late client, you missed the 30-day period so that's final account.' You can't do that."

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