Former client should pay $100,000 legal bill, judge says

A client should pay $100,000 toward her lawyer’s disputed bill, the Court of Appeal of Ontario said.

Former client should pay $100,000 legal bill, judge says
J. David Sloan says the decision shows that when it comes to billing clients, the courts will look at more than just the hourly rate.

A client should pay $100,000 toward her lawyer’s disputed bill, the Court of Appeal of Ontario said.

The new decision overturns a lower court’s finding that the bill should be reduced to $26,375 from $149,635.52 and that the assessment officer was biased against the elderly client.

In the case, lawyer Lawrence Sax, 87, had worked for applicant Eileen Newell, 93, for about 17 years, including the $14-million sale of a Yorkville commercial building in Toronto. The May 31 decision, Newell v. Sax, 2019 ONCA 455, centred on whether an assessment officer was biased when evaluating Sax’s bill.

J. David Sloan, senior associate at Rochon Genova LLP in Toronto, who represented the lawyer, says the decision shows that when it comes to billing clients, the courts will look at more than just the hourly rate.

“The transaction was in real jeopardy, and through the work that he did, the lawyer saved the transaction. And that was important. The Court of Appeal at least recognized that good work had been done by Mr. Sax for which he ought to have been given credit. . . . The lawyer was justified and he did prove it through his evidence, but no through dockets,” says Sloan. “The decision does give guidelines into what should be looked at when assessing a lawyer’s account. It’s not just a mechanical kind of thing.”

The panel’s decision, written by Justice Lois Roberts with justices Kathryn Feldman and Michal Fairburn concurring, is the third review of the bill, which was previously examined by an assessment officer and the Superior Court.

Newell did not appear at a 2017 assessment hearing but was represented by counsel. Still, the assessment officer noted that Newell “was absent from the hearing without having provided a doctor’s note.” The assessment officer upheld Sax’s account as payable save for a 20-per-cent reduction for his record-keeping deficiencies.

A Superior Court of Justice decision from 2018 said Sax’s original bill amounted to 75 hours of billable time at a rate of $2,220 per hour.

“[Sax] never explained his bill to [Newell] or informed her of the basis for his account. In fact, he likely could not have done so; three years after the transaction at issue was completed he still could not explain his bill at the assessment hearing,” wrote Justice Edward Morgan in the 2018 Superior Court decision. Morgan wrote that the assessment officer seemed to have “inexplicable animus” toward Newell in regards to her absence and ordered Sax to refund Newell $160,669.40 of the total of $187,044.40.

“[S]he effectively treated the Applicant like a child in school whose teacher is skeptical that she really stayed home with a cold,” Morgan wrote. “A person in her 90’s has rights, just like a more robust person, even if she does not make the kind of personal appearances that she might have done at an earlier age. To assume that a person at that stage of her life is indicating anything untoward, or that she somehow attaches minimal importance to a proceeding by hiring a lawyer and having him appear in her place, is to display a blindness for the human condition.”

The Court of Appeal acknowledged that Sax’s account was “reconstructed from memory since he had no written retainer agreement with the respondent and kept no time dockets.”

“Without issuing an account or seeking the respondent’s authorization, Mr. Sax paid the amount of the account in full from the respondent’s trust account held by Mr. Sax,” the decision said of the building’s sale.

However, unlike Morgan, the appeal court judges did not find that the assessment officer’s decision to cut 20 per cent of the legal bill met the “very stringent standard for finding a reasonable apprehension of bias.”

“[T]he Assessment Officer drew no adverse inferences against the respondent because of her absence. Rather, as earlier noted, the Assessment Officer fairly set out in her reasons the inevitable evidentiary consequences flowing from the respondent’s absence, namely, that there would be no testimonial evidence from the respondent to challenge the appellants’ version of events,” wrote Roberts for the panel of appeal judges. “I am of the view that the application judge misapplied the test for bias. This skewed his analysis of the Assessment Officer’s decision and erroneously caused him to reject her findings.”

Still, the appeal court did not revert Sax’s bill back to the assessment officer’s version. The appeal court said both the assessment officer and Superior Court “erred by taking an overly mechanical approach to the assessment of the solicitor’s account.”

Instead, Roberts suggested a “quantum meruit” assessment, which is “not a bookkeeping exercise or a mechanical calculation” but rather “a nuanced, contextual approach.” The appeal court’s calculation did not involve just the number of hours and the hourly rate but also looked at how complex the sale of the building was. The court decided on $100,000, inclusive of disbursement and taxes, rather than sending the account back for reassessment.

“It is neither practical nor fair to do so given the advanced ages of the parties and the account,” the appeal court said.

Robert Tanner, who represented Newell, did not respond to requests for comment on the appeal decision.

“A lawyer has a duty to be able to explain, first to his client and then to the court, the basis upon which he has charged the client,” Tanner told Law Times last year, referring to the earlier decision by Morgan.

Sloan says that, despite the court’s “quantum meruit” approach on appeal, it’s still crucial that lawyers keep good time records to avoid disputes.

“The problem here was that Mr. Sax did not keep good time records, that would have avoided all the problems that ended up occurring. The reason he didn’t is that they were close and had a long relationship … he didn’t worry about keeping time dockets because thought their relationship was close enough that he didn’t have to. You can’t let your guard down, because you are going to have to justify the fee you charge at a later time. Time dockets are not the only way, but they are the first way.”  

 

 

 

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