Posts Tagged ‘Civil procedure’

Written Retainer Agreement Ousts Small Claim Court’s Jurisdiction

December 8, 2014

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If you’re an Ontario litigator and thought suing your client for fees in Small Claims Court based upon a written retainer agreement was an option, then take a read of Justice Nordheimer’s decision in Jane Conte Professional Corporation v. Josephine Smith, 2014 ONSC 6009 (CanLII), (Div.Ct.).

The case dealt with an appeal by the defendant client from the decision of Deputy Judge Prattas, dated April 29, 2014, dismissing her motion to dismiss her former counsel’s action for unpaid accounts.  The plaintiff lawyer commenced an action against the client defendant in the Small Claims Court seeking to recover payment of the sum of $26,051.59 pursuant to a contingency fee agreement relating to a personal injury action.  Nordheimer J. allowed the appeal, set aside the order of the Deputy Judge and dismissed the claim for want of jurisdiction and held, in part:

[16]      It will be seen from these sections that the Legislature has established a process by which the validity and enforceability of written fee agreements between lawyers and clients are to be handled.  There is nothing in any of these sections that gives any authority to the Small Claims Court to consider issues arising under a written fee agreement including a contingency fee agreement.  Indeed, as I have already mentioned, the Small Claims Court is expressly excluded from considering such matters.

[20] In my view, once a lawyer chooses to enter into a written agreement with his or her client “respecting the amount and manner of payment for the whole or a part of any past or future services in respect of business done or to be done by the solicitor” then the lawyer is bound by the procedures set out in ss. 20 to 32 of the Solicitors Act. In particular, if the lawyer wishes to enforce the agreement then he or she must, as set out in s. 23, bring an application for that purpose in the court “in which the business or any part of it was done or a judge thereof, or, if the business was not done in any court, by the Superior Court of Justice”. I repeat that s. 23 expressly excludes the Small Claims Court from this authority.

Nordheimer J. expressly rejected the former lawyer’s argument that the contingency fee agreement was a “hybrid” agreement, ousting it from judicial scrutiny under ss.20-32 of the Solicitors Act, R.S.O. 1990, c. S.15, stating:

[23]      Further, even if the respondent is correct that the Agreement in this case was both a contingency fee agreement and a regular fee agreement, depending on how events unfolded, that result would not take the Agreement outside the application of ss. 20 to 32 including the enforcement procedure set out in s. 23 since those provisions apply to all written fee agreements.

[24]      Consequently, I concluded that the Small Claims Court had no jurisdiction to consider a claim made by a lawyer based on a written fee agreement including a contingency fee agreement.  I would note, in passing, that this conclusion appears to be consistent with the general rule that questions involving the nature, validity or effect of a contingency fee agreement should be resolved by judges:  Cookish v. Paul Lee Associates Professional Corp.,[2013] O.J. No. 1947 (C.A.) at para. 39.

This decision may come as a big surprise to most who sue their clients for unpaid legal accounts in Small Claims Court.

It is puzzling that the Small Claims Court retains jurisdiction in actions between a lawyer and client for unpaid accounts where there is no written retainer agreement, but loses jurisdiction where there is a written retainer agreement. Of course, all contingency fee agreements must be in writing pursuant s. 28.1(4) of the Solicitors Act.

Incidentally, the Court of Appeal for Ontario previously held that where a written retainer agreement includes an  arbitration clause for fee disputes, it is enforceable, as long as the arbitrator applies the protections under the Solicitors Act: : see, Jean Estate v. Wires Jolley LLP, 2009 ONCA 339 (CanLII) (Ont. C.A.).

Happy Trails and Happy Trials: Supreme Court of Canada Rules On the Test for Summary Judgment

January 23, 2014

 Today’s Supreme Court of Canada decisions on the summary judgment appeals in Hryniak v. Mauldin, 2014 SCC 7 and  Bruno Appliance and Furniture, Inc. v. Hryniak2014 SCC 8  offer a somewhat less than “full appreciation” of the test summary judgment established by the Court of Appeal for Ontario. [See my backgrounder on the Court of Appeal for Ontario’s “full appreciation” test  here.] 
(more…)

How NOT To Bring a Motion for Interim Recovery of Personal Property

January 22, 2014

[2]        On other occasions, I have seen and expressed – both orally and in handwritten endorsements – concerns about the approach adopted on matters such as these.   Since this motion follows the same path, I am hopeful a more formal endorsement may have the effect a less forceful approach did not.

….

[8]        The court must be vigilant to ensure that orders are not made without notice easily.  The moving party must satisfy the court that all procedural and substantive requirements have been met.  Even then, the terms of the order should be carefully tailored to ensure that rights are not trampled.  Its terms and duration should be no more than is required to ensure that the court can effectively and fairly adjudicate the ultimate dispute.

[9]        This case provides a useful example of one requiring caution.

So begin the sobering reasons of Justice Grace in Paccar Financial Services Ltd. v. 2026125 Ontario Limited, 2014 ONSC 456 (CanLII),. a cautionary tale of the perils of moving without notice when notice is not only advisable,  but mandatory. It also serves as an object lesson in the vital importance of formulating a sound litigation strategy, including filing a factum that cites not only the applicable procedural rules, but also the cases upon which one intends to rely.

The plaintiff’s motion under  Rule 44 of the Rules of Civil Procedurewould appear to most practicing commercial litigation as relatively straightforward.  The problem identified by Grace, J. is that plaintiff’s counsel failure to follow basic procedural requirements:

[12]       Rule 44 establishes a number of requirements.  For example, an affidavit filed in support of a motion for interim recovery of personal property must contain listed information.  Rule 44.01(2) addresses the issue of service in these terms:

The notice of motion shall be served on the defendant unless the court is satisfied that there is reason to believe that the defendant may improperly attempt to prevent recovery of possession of the property or that, for any other sufficient reason, the order should be made without notice.

[13]        If a motion is made under Rule 44 without notice, the court may make an interim order.  Rule 44.03(2) provides in part:

On a motion for an interim order for the recovery of possession of personal property made without notice to the defendant, the court may,

(a)…direct the sheriff to take and detain the property for a period of ten days after service of the interim order on the defendant before giving it to the plaintiff… [Italics added]

[14]       I noted that the draft order provided by Paccar’s counsel contained no temporal limitation.  It did not comply with Rule 44 and importantly if signed, completely obliterated the rights of a party given no voice.

[15]       Furthermore, rule 44.03(2) clearly contemplates that an order for interim recovery of personal property will be enforced by the sheriff.[2]  That comes as no surprise.  Section 141(1) of the CJA provides that the court’s orders arising out of a civil proceeding shall be directed to the sheriff for enforcement in Ontario unless a statute provides otherwise.

[16]       The draft order contemplated enforcement by a bailiff retained by Paccar.  That, too, is not in accordance with the CJA or rule 44.

Although moving party’s counsel also relied upon  s. 67 of the Personal Property Security Act, R.S.O. 1990, c. P.10 (“PPSA”)which empowers a judge to “grant a range of orders at the request of, among others, a secured party ‘[u]pon application’.  ”  Since the proceeding was commenced by way of a notice of action, it too failed to follow the correct procedure.

Justice Grace’s consternation is evident:

[26]       Those differences are not cosmetic.  By way of example only, an affidavit filed in support of a motion may contain statements of the deponent’s information and belief.  An affidavit filed in support of an application must confine such statements “to facts that are not contentious”: see rules 39.01(4) and (5).  Much of the solicitor’s affidavit in this case is based on information and belief.  In paragraph 11 of his affidavit, the solicitor deposed:

I do verily believe that the acts of each of the Defendants are intentional and designed to deprive the Plaintiff of the Equipment and convert same to their own use.

[27]        The affidavit strays beyond issues which can be termed “not contentious”.

[28]       On a motion under Rule 44, the general rule applicable to facta applies.  A party may file a factum but is not obligated to do so: rule 37.10(6).  On an application, a factum is required: rule 38.09(1) (a).  While, in my view, even on motions counsel should file copies of provisions of statutes that are not included within publications containing the Rules, the importance of a factum in a case like this should be obvious.  The PPSA is not referenced on a daily basis on dockets in this region.  I suspect that is so elsewhere in Ontario with the possible exception of the Commercial List.

 The learned judge also expresses dismay over the lack of notice:

[37]       One would have thought that an inquiry would have been made before a motion was brought without notice.  One would have thought that the duty to provide full and frank disclosure necessitated disclosure of the existence of a lawyer who was believed to represent 125 in a piece of litigation raised by Paccar in support of its position before me.[6]  One would have thought that, out of an abundance of caution if nothing else, that lawyer would have been given notice – even if abridged – of the January 14, 2014 attendance.  One would have thought that full and accurate information would have been volunteered to the court.

[38]       After raising the issue, I was told that a copy of Paccar’s motion record had been sent to 125’s lawyer after the first attendance.  At my request, counsel filed a copy of the January 16, 2014 e-mail enclosing same and advising 125’s lawyer of the January 17, 2014 return date.

[39]       For now I will go no further than expressing my profound disappointment.  Advocacy has boundaries.  They were not respected.  Some notice could and should have been provided.  The solicitor’s affidavit on this motion was sworn on January 7, 2014, the very day that the same lawyer was writing to 125’s lawyer in respect of the CLE matter.

[40]       While my concerns with the lack of notice have overtaken my concerns with the procedure Paccar adopted, I will address the procedural issues too.

Ultimately, the motion failed for a variety of procedural deficiencies, the most telling of which was that interim relief was sought, yet no return date for the defendant was provided.  After telegraphing on what terms the court may be willing to entertain an application under  s. 67 of the PPSA,  Grace J. ends with this parting shot:

[61]                … Whirlwind justice is rarely just.  Paccar’s current motion is flawed in every respect.  It is dismissed without prejudice to the right of Paccar to start afresh.   

Back to the drawing board.

(Access to) Justice Delayed, (Access to) Justice Denied

September 17, 2013

Access To Justice Problem Solved

Yamri Taddese at Law Times reports on some welcome, albeit late, efforts to resolve the interminable motion delays in Toronto:

Acknowledging there are “real delays” with scheduling long motions in Toronto, Smith said she and regional senior Justice Edward Then “have already begun to review scheduling efficiencies and how the court’s judicial resources can be maximized.”

Then has asked Superior Court Justice Geoffrey Morawetz to lead a motions effort to identify ways of maximizing both facilities and judicial resources for a more efficient system, Smith said, noting the review will also consider the issue of better case management.

The Law Times article adds,

Superior Court Justice Mary Vallee called the delays “shameful” and decided against moving the case to Toronto.

A case, of course, would need some connection to Toronto for counsel to bring up the idea of moving it there, says Oatley. But his firm has decided that even when there’s some connection to Toronto, it will challenge such motions on access to justice grounds.

“The government is simply going to have to accept the fact that if we’re going to have a viable justice system in Ontario, they need to provide the administration of justice the resources to do the job,” he says.

Whenever he can, lawyer John McLeish says he’ll book cases outside of Toronto. “It’s a shame because the judges here are great,” he says.

In my opinion, the causes of the systemic delay are easily identifiable:

1. The revision of the Rule 77 case management rule has hoisted onto plaintiff’s counsel’s shoulders the sole burden to move a case along to trial. Defence counsel are prone to bringing superfluous motions to tie up the litigation, armed with the knowledge of institutional delay of 6-7 months to secure a motion date in Master’s court;

2. The concept of a Litigation Timetable and Discovery Plan is great in theory; however, the failure to abide or comply with a consent or court-ordered timetable rarely results in any tangible consequences for non-compliance, such as substantial indemnity costs or striking of a defence. Having to wait half a year to bring a motion to force an opposing party to comply is quixotic;

 

3.  The Rules of Civil Procedure are skewed towards procedural inefficiency. For example, while any Superior Court judge has jurisdiction to hear all motions, many motions are implicitly designated to be brought “to the court” (i.e. Masters), leaving an access to justice vacuum.

4.  There are simply not enough Masters appointed to hear motions based upon the sheer volume of court files in Toronto. This is a function of chronic underfunding of the civil justice system in Ontario.  What is the Ministry of Attorney General’s response?

Brendan Crawley, spokesman for the Attorney General of Ontario, said the ministry isn’t planning on appointing new masters.

The ministry, he said, has worked with the legal community “to improve and modernize Ontario’s civil justice system, making it more accessible and affordable for the public.”

I am cautiously optimistic that Mr. Justice Morawetz —who is among the leading jurists in Ontario and fully conversant with judicial efficiency on the Commercial List Court — will find a practical and practicable solution to this motion court boondoggle.  The following are my unsolicited solutions:

1.  Restore the procedural balance under the Rules of Civil Procedure by imposing an equal obligaiton between plaintiffs and defendants and counsel of record to ensure that a case moves efficiently and speedily towards trial;

2.  Consider revising Rule 77 case management screening when an action is commenced by allowing the plaintiff or defendant to request case management as an option, rather than an exception to litigation management;

3. The Ministry of the Attorney General  must appoint at least 3 additional full-time Masters and loosen the requirement of Regional Senior Justice judicial oversight for case management transfers;

4. When all else fails, amend the mechanism of administrative dismissal by the Registrar, by allowing Status Hearing judges or Masters to transfer matters to case management sua sponte, or upon request of one or more of the parties; rather than slavish reliance on consent litigation timetables;

5. Allow Masters or Judges to schedule case conferences via telephone or email ,rather than requiring in person attendances, where available.

Access to Justice is inchoate unless it is equal, timely, effective and efficient:  Justice delayed is justice denied.

Two Important Ontario Attornment Decisions

September 16, 2013

The first decision is from the Court of Appeal for Ontario in Van Damme v. Gelber2013 ONCA 388  (Ont. C.A.) per  Doherty, J.A. (Cronk and Lauwers JJ.A. concurring). In Van Damme, the plaintiff, a successful businessman and philanthropist obtained judgment in the Supreme Court of New York against the defendant, Nahum Gelber (“Gelber”), relating to Van Damme’s purchase of a painting from Gelber. The painting was being held in Ontario pursuant to an Ontario court order.  Van Damme successfully moved in the Ontario proceeding for an order of recognition and enforcement New York judgment in Ontario and a variation of the earlier Ontario order directing that the painting be released to him, with costs on a substantial indemnity basis. (more…)


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