



COURT OF APPEAL FOR ONTARIO

CITATION: Bosnali v. Michaud, 2020 ONCA 7

DATE: 20200107

DOCKET: C66969

Brown, Huscroft and Roberts JJ.A.

BETWEEN

Caner Bosnali

Plaintiff (Respondent)

and

Robert Michaud and Central Graphics and Container
    Group Ltd.

Defendants (Respondents)

F. J. Burns and Allan Cocunato, for the appellant, Lofranco
    Corriero, plaintiffs former counsel

Nestor E. Kostyniuk, for the respondents, Robert Michaud
    and Central Graphics and Container Group Ltd.

Caner Bosnali, acting in person

Heard: December 16, 2019

On appeal from the
    order of Justice Cynthia Petersen of the Superior Court of Justice dated April
    23, 2019, with reasons reported at 2019 ONSC 2809.

BROWN
    J.A.:

OVERVIEW

[1]

The appellant solicitors, Lofranco Corriero Personal Injury Lawyers, were
    counsel to the respondent, Caner Bosnali, in a seven-week jury trial of Mr.
    Bosnalis motor vehicle accident claim against the respondents, Robert Michaud
    and Central Graphics and Container Group Ltd. (the Michaud Respondents). The
    appellant solicitors appeal from the motion judges dismissal of their request
    for a declaration that, pursuant to s. 34(1) of the
Solicitors Act
,
    R.S.O. 1990, c. S.15 (the 
Act
), they had a first charge on the monies
    awarded to Mr. Bosnali at trial in priority to any right of set-off claimed by
    the Michaud Respondents. Section 34(1) of the
Act
authorizes the court
    to issue a declaration, in respect of a proceeding in the Superior Court of
    Justice, that a solicitor is entitled to a charge on the property recovered or
    preserved through the instrumentality of the solicitor for the solicitors
    fees, costs, charges and disbursements in the proceeding.

[2]

For the reasons set out below, I would dismiss the appeal.

BACKGROUND FACTS

[3]

On February 17, 2017 the jury returned a verdict awarding Mr. Bosnali
    general damages, as well as damages for housekeeping and past and future
    medical expenses. The trial judge then heard submissions on the application of
    the statutory deductible under the
Insurance Act
, R.S.O. 1990, c. I.8,
    and costs, including the costs consequences of Mr. Bosnalis refusal to accept
    offers to settle made by the Michaud Respondents under r. 49 of the
Rules
    of Civil Procedure
that were more favourable than his result at trial. On
    June 26, 2017, the trial judge issued her decision on those issues and directed
    that a judgment issue in accordance with her reasons. Given the amount of her
    award of costs in favour of the Michaud Respondents, the net judgment would
    require a payment from Mr. Bosnali (plaintiff) to the Michaud Respondents
    (defendants): 2017 ONSC 3943.

[4]

The parties could not settle the terms of the formal judgment. In the
    result, the terms of the trial judges decision were finally embodied in a
    formal final judgment dated October 5, 2017 (the Judgment). Paragraphs 1
    through 4 of the Judgment ordered the Michaud Respondents to pay Mr. Bosnali
    certain sums for damages and some costs. Paragraphs 5 and 6 ordered Mr. Bosnali
    to pay the Michaud Respondents certain amounts which, when aggregated, exceeded
    the amounts payable by the Michaud Respondents to Mr. Bosnali. In her reasons
    explaining the Judgment, the trial judge specifically noted that her
    calculations yielded a net outcome to the effect that the plaintiff pay the
    defendants the sum of $11,675.59: 2017 ONSC 5958, at para. 20. As a result,
    the Judgment concluded with the following language: In summary, IT IS ORDERED
    AND ADJUDGED that the plaintiff pay the defendants the sum of $11,675.59,
    within 30 days from the date of this order.

[5]

Mr. Bosnali filed a notice of appeal from the trial Judgment but
    abandoned his appeal.

[6]

The appellant solicitors initiated their motion for a charging order in
    June 2017. On the initial return of the motion on June 30, 2017, Shaw J.
    adjourned the motion on terms, one of which was ordering an interim
    declaration that Lofranco Corriero has a charging order on the funds and costs
    recovered in this action on behalf of the Plaintiff, Mr. Bosnali. A subsequent
    endorsement of Shaw J. made it clear that she had not decided the appellant
    solicitors motion on its merits at the June attendance: at para. 29. The
    motion was not finally heard until April 23, 2019.

REASONS OF MOTION JUDGE

[7]

The motion judge dismissed the motion, stating at paras. 34 and 42:

If property or a fund is brought into existence through
    litigation, it must be as a result of a final court order, not merely as a
    result of a jury verdict.



I do not doubt that Mr. Bosnalis partial success at trial was
    achieved at least in part through the instrumentality of Lofranco Corrieros
    representation. I am not suggesting that he did not benefit whatsoever from the
    efforts of his lawyers, but he did not achieve a net benefit from their work.
    His solicitors efforts did not result in the recovery of any property/money.
    Rather, Mr. Bosnali was ultimately ordered to pay the Defendants the sum of $11,675.59
    in costs.

ISSUE ON APPEAL

[8]

The appellant solicitors submit that the motion judge erred in holding
    that there was no property recovered on which a charge could be imposed. They contend
    that a charge should be imposed on those portions of the Judgment that ordered
    payment of money to their client, the plaintiff Mr. Bosnali (paras. 1 to 4). To
    ascertain whether the Judgment created any property recovered through the
    instrumentality of the solicitor, the appellant solicitors contend that no
    effect should be given to the portions of the Judgment requiring Mr. Bosnali to
    pay money to the Michaud Respondents. In effect, a line should be drawn under
    para. 4 of the Judgment and the motion judge should have ignored what followed
    in the balance of the Judgment.

ANALYSIS

The bankruptcy of Mr. Bosnali, the
    client

[9]

Before dealing with the appellant solicitors submission on its merits, mention
    need be made of the procedure the appellant solicitors chose by which to
    advance their claim for a charging order. Their motion was brought in June 2017
    in the motor vehicle accident action between their client and the Michaud
    Respondents. However, on October 1, 2018, before the hearing of the motion, Mr.
    Bosnali made an assignment in bankruptcy pursuant to s. 49(1) of the
Bankruptcy
    and Insolvency Act
, R.S.C., 1985, C. B-3.

[10]

Mr. Bosnalis Statement of Affairs listed his debts to the appellant
    solicitors and the Michaud Respondents as liabilities but did not include as an
    asset any amount ordered payable to him by paras. 1 to 4 of the Judgment. The
    Notice of Bankruptcy and of Impending Automatic Discharge stated that an
    automatic discharge would issue on July 3, 2019 if no notice of opposition was
    filed.

[11]

Notwithstanding this assignment, the appellant solicitors did not
    convert their motion into one brought within the bankruptcy proceeding. From
    her reasons, it appears that the motion judge was not asked to consider the
    effect of the assignment into bankruptcy on the ability of the appellant
    solicitors to advance a claim outside of the bankruptcy proceeding in respect
    of their unpaid accounts, including the request for a charging order, either under
    s. 34(1) of the
Act
or the common law:
BIA
, s. 71;
Re
    Tots and Teens Sault Ste. Marie Ltd
. (1975), 11 O.R. (2d) 103 (S.C. (Bank
    & Ins Div));
Municipal Savings & Loan Corp. v. Evoy
(1992), 15
    C.B.R. (3d) 289 (Ont. C.J. (Gen. Div.)).

[12]

In response to an inquiry from this court, counsel provided materials
    that show: (i) the appellant solicitors did not file a proof of claim with Mr.
    Bosnalis trustee in bankruptcy; and (ii) on July 3, 2019 Mr. Bosnali was
    granted an automatic discharge. Pursuant to
BIA
s. 178(2), the discharge
    order released Mr. Bosnali from all claims provable in bankruptcy.

[13]

Given that: (i) the Judgment that forms the basis for the appellant
    solicitors claim for a charging order on recovered property was made prior to
    the assignment in bankruptcy; (ii) no charging order was made prior to the
    assignment in bankruptcy that treated the solicitors claim as that of a
    secured creditor:
Re Tots and Teens
, at p. 108; (iii) the solicitors
    filed no proof of claim in the bankruptcy proceeding; and (iv) Mr. Bosnali is
    now a discharged bankrupt, it is difficult to see how the solicitors claim for
    a charging order could survive the administration of Mr. Bosnalis bankruptcy
    estate and Ms. Bosnalis discharge from bankruptcy. However, it is not
    necessary to definitively determine that point as we see no error in the motion
    judges conclusion that there was no property recovered through the
    instrumentality of the solicitors against which a charging order could be made.

The denial of the charging
    order

[14]

In a standard motor vehicle accident action, a jury verdict determines
    some, but not all, of the issues between the parties. Following the jurys
    verdict, the trial judge must determine the issues of any statutory adjustments
    and costs. Once that is done, the disposition made of the issues between the
    parties can be embodied in a judgment. If a judgment creates an obligation on one
    party to pay an amount to the other  whether in respect of damages, interest,
    or costs  the judgment creates a debt obligation which, obviously, constitutes
    property recovered within the meaning of s. 34(1) of the Act.

[15]

As a general principle, if a judgment on its face creates mutual debt
    obligations from each party to the other, the debt obligations are set-off or
    netted against each other to determine which party can enforce the net amount
    against the other, absent language to the contrary in the judgment: see,
    generally,
Martin v. McColl
(1957), 10 D.L.R. (2d) 284 (Ont. C.A.), at
    p. 287.

[16]

In the present case, the trial judge incorporated into the express language
    of her Judgment the results of the process of netting out the itemized
    obligations of each party to the other. The Judgment ordered the plaintiff, Mr.
    Bosnali, to pay the defendants, the Michaud Respondents, the sum of $11,675.59.
    The Judgment thereby created an enforceable debt obligation owed by Mr. Bosnali
    to the Michaud Respondents.

[17]

By its terms, the Judgment did not create any debt obligation
    enforceable by Mr. Bosnali against the Michaud Respondents. Mr. Bosnali could
    not recover any money under the Judgment by standard enforcement mechanisms
    without first satisfying the countervailing Judgment-based claims by the
    Michaud Respondents, who were entitled to assert legal set-off as the debts
    were mutual as between the parties. It follows that Mr. Bosnali did not recover
    any property by reason of the Judgment. As a result of the Judgment, Mr.
    Bosnali became the judgment debtor of the Michaud Respondents.

[18]

This distinguishes the present case from the situation in
Guergis v.
    Hamilton
, 2016 ONSC 4428, a case relied upon by the appellant solicitors:
    at para. 8. As well, the present case does not involve a situation where the
    solicitor seeks a charging order against a fund recovered or preserved through
    the instrumentality of his work that is held in court or a trust account:
Bell
    v. Wright
(1895), 24 S.C.R. 656, at p. 659. Instead, the determination of
    who recovered what from whom had to await the trial judges decision on all
    monetary items in dispute between the parties to the action, including the
    issues of the statutory adjustments and costs. Only then could one ascertain
    who emerged from the proceeding as the judgment creditor and the judgment
    debtor  i.e., who recovered property in the proceeding.

[19]

The appellant solicitors argument that they could obtain a charging
    order on the payment obligations of the Michaud Respondents to Mr. Bosnali
    recorded in paras. 1 to 4 of the Judgment in priority to the Michaud
    Respondents entitlements against Mr. Bosnali created by paras. 5 and 6 of the
    Judgment rests upon on a rule of practice that was repealed 35 years ago. Rule
    673 of the
Rules of Practice
, R.R.O. 1980, Reg. 540, stated: A
    set-off of damages or costs between parties shall not be allowed to the
    prejudice of the solicitors lien for costs in the particular action in which
    the set-off is sought, but interlocutory costs in the same action awarded to the
    adverse party may be set off notwithstanding any lien. Rule 673 was not
    carried forward into the new 1985
Rules of Civil Procedure
. As a
    result, whether a client recovered property through the instrumentality of his
    lawyer for the purposes of s. 34(1) of the
Act
is subject to the
    general principle that mutual debt obligations created by a judgment are
    set-off against each other to ascertain which party can enforce the net amount
    against the other.

[20]

In the circumstances of the present case, the appellant solicitors
    could stand in no better position than Mr. Bosnali vis-à-vis the Michaud
    Respondents, and their right to a charging order or lien was subject to the
    right of set-off in the same action:
Durall Construction Ltd. v. H.J.
    O'Connell Ltd.
(1977), 16 O.R. (2d) 713 (H.C.), at p. 715;
Diamond v.
    Western Realty Co.
(1925), 28 O.W.N. 120 (C.A.), at p. 120;
Poulin v.
    Pettitt
(1992), 10 C.P.C. (3d) 29 (Ont. C.J. (Gen. Div.)), at para. 21.

[21]

It follows that the appellant solicitors did not satisfy the conditions
    for obtaining a charging order under s. 34(1) of the
Act
because their
    client did not recover any property through the instrumentality of their work.
    Consequently, the motion judge quite properly dismissed the motion.

DISPOSITION

[22]

For the reasons set out above, I would dismiss the appeal.

[23]

In accordance with the parties agreement, the Michaud Respondents are
    entitled to their costs of the appeal in the amount of $5,000, inclusive of
    disbursements and applicable taxes, and payable by the appellant solicitors,
    Lofranco Corriero.

Released: DB JAN 07 2020

David Brown J.A.

I agree. Grant
    Huscroft J.A.

I agree. L.B. Roberts
    J.A.


