



COURT OF APPEAL FOR ONTARIO

CITATION: Newell v. Sax, 2019 ONCA 455

DATE: 20190531

DOCKET: C65765

Feldman, Roberts and
    Fairburn JJ.A.

BETWEEN

Eileen
    P. Newell

Applicant (Respondent)

and

Lawrence Sax and Sax
    Lawyers

Respondents (Appellants)

J. David Sloan, for the appellants

Robert G.
    Tanner
, for the respondent

Heard: March 5, 2019

On appeal from the
    order of Justice E.M. Morgan of the Superior Court of Justice, dated July 24,
    2018, with reasons reported at 2018 ONSC 4517.

Roberts J.A.:

A.

OVERVIEW

[1]

This appeal deals with the proper approach to be taken on a
quantum
    meruit
assessment of a solicitors account.

[2]

The appellants appeal from the order setting aside the Report and
    Certificate of Assessment Officer A. Palmer dated October 6, 2017, reducing the
    appellants assessed $149,635.52 account to $26,375.00.

[3]

For the reasons that follow, I would allow the appeal, set aside the
    order of the application judge, and substitute an assessment of the appellants
    impugned account in the amount of $100,000, inclusive of all amounts.

B.

FACTUAL BACKGROUND

[4]

The respondent is 93 years old and a longstanding client of the
    appellant, Lawrence Sax, an 87-year-old real estate lawyer. Over the course of
    about seventeen years, Mr. Sax had acted on several matters for the respondent.

[5]

The focus of the December 31, 2014 account was on the services performed
    by Mr. Sax in relation to the $14 million sale of the respondents three-storey
    eleven-unit commercial building at 102-104 Yorkville Avenue (the property) in
    Toronto. Mr. Saxs account before assessment was in the amount of $187,044.40
    for all fees, disbursements and taxes. Without issuing an account or seeking
    the respondents authorization, Mr. Sax paid the amount of the account in full
    from the respondents trust account held by Mr. Sax. He later provided the
    respondent with his account that he reconstructed from memory since he had no
    written retainer agreement with the respondent and kept no time dockets.

(a) Assessment Officers Report and Certificate

[6]

The respondent sought an assessment of Mr. Saxs account of fees,
    charges, and disbursements pursuant to the
Solicitors Act
, R.S.O.
    1990, c. S.15, s. 3. The matter was heard over the course of three days in
    April of 2017.

[7]

The respondent did not personally appear at the hearing, although she
    was represented by counsel.  In her reasons, under a heading titled, Failure
    of the Client to Appear for Hearing, the Assessment Officer noted that the
    respondent was absent from the hearing without having provided a doctors note.

[8]

The Assessment Officer confirmed with the respondents counsel that he
    and the respondent understood that his clients absence constituted a waiver of
    her right to testify to the reasonableness of any evidence submitted. She
    referenced s. 5 of the
Solicitors Act
that permitted her to proceed
    with the assessment without further notice to the respondent who did not attend
    the assessment. She concluded:

Accordingly, the Court will weigh
    any evidence submitted by the Clients solicitor [Mr. Sax] based on its face
    value, as the Client failed to appear for hearing, and therefore, was unable to
    testify to the Court as to the reasonableness of the arguments made or evidence
    presented. The Clients counsel had no personal knowledge of the facts in this
    case.

[9]

Mr. Sax was the only witness at the hearing.  The Assessment Officer
    made a ruling that curtailed the respondents cross-examination of Mr. Sax. 
    The Assessment Officers ruling arose in relation to an objection by Mr. Saxs
    counsel, Mr. Sloan, to a suggestion from the respondents counsel, Mr. Tanner, that
    he was told to create some time records by the Assessment Officer at the
    preliminary hearing. The exchange and the ruling occurred as follows:

Mr. Tanner: do you recall at the preliminary hearing, it was
    suggested to you that you ought to create some time records by the assessment
    officer?

Mr. Sloan: Dont answer the question. I object.

Mr. Tanner: Do you

The Court: Counsel, I believe this is cross-examination,
    correct?

Mr. Tanner: Yes.

The Court: Okay, so
were limited to the scope of the direct
    that was done, right, until you can present your case in-chief
, you can do
    what you need at that time.  But
youre limited to the scope of what was
    brought up in examination
. I dont think we talked [about] the preliminary
    conference in the direct examination.

Mr. Tanner: I would have thought that in cross-examination on
    an account where the records are insufficient, I can cross-examine the witness
    on why, and by what means we come to have such

The Court: Oh, absolutely, and thats what youve been doing
    until you asked about the preliminary conference

Mr. Tanner: Yes.

The Court: was
certainly not a
    topic in direct examination
. So why dont we just move on, thank you. 
    [Emphasis added.]

[10]

The
    Assessment Officer accepted Mr. Saxs evidence that he had taken on significant
    responsibility for and spent considerable time and effort dealing with the
    various complex issues that arose to ensure that the $14 million sale
    transaction successfully closed. However, she found the following deficiencies,
    at para. 72:

I find that there was a deficiency
    in the Solicitors degree of responsibility in his duty owed to the Client with
    respect to keeping a record of the actual time being accrued and ultimately
    billed in rendering services to the Client; as well as, in his action of
    transferring fees from the proceeds of the sale being held in the Clients
    trust account without first issuing a bill or getting authorization from the
    Client.

[11]

The
    Assessment Officer stated that she would assess Mr. Saxs account on a
quantum
    meruit
basis. She accepted the amount billed was fair and reasonable in
    the circumstances of this case, but reduced it by 20% because of the
    deficiencies earlier noted.

(b) Application Judges Order

[12]

The
    respondent moved to oppose confirmation of the Report and Certificate of the
    Assessment Officer, pursuant to s. 6(9) of the
Solicitors Act
.

[13]

The
    application judge agreed with the respondent that the Assessment Officer had
    shown inexplicable animus towards her. The application judge found that
    because the respondent did not attend the assessment hearing, the Assessment
    Officer made unwarranted adverse inferences against her, and felt compelled to
    accept Mr. Saxs evidence without question.

[14]

The
    application judge criticized the Assessment Officers actions that he
    characterized as the admonishment of an elderly party for not testifying, the
    taking of the appellants evidence at face value because the respondent did not
    testify and the denial of full cross-examination.  He concluded that these actions
    resulted in the spectre of pre-judgment and a reasonable apprehension of
    bias: citing from
R. v. Villota
, [2002] O.J. No. 1027, at para. 108.

[15]

The
    application judge reasoned that the Assessment Officers animus and bias
    against the respondent caused her to uphold the account as fully payable,
    notwithstanding the shortcomings of the solicitors account and of his evidence
    in support of it.

[16]

As
    a result, the application judge concluded that the Assessment Officer denied
    the respondent natural justice and undermined due process of law and that it
    cannot be left to stand.

[17]

In
    consequence, the application judge gave no deference to the Assessment
    Officers findings and undertook afresh the assessment.  He reduced the account
    to $26,375.00.

C.

ANALYSIS

(1)

Reasonable apprehension of bias

[18]

I
    agree with the appellants that the application judge erred in finding that the
    Assessment Officer showed a reasonable apprehension of bias.

[19]

There
    is a very stringent standard for finding a reasonable apprehension of bias. The
    test asks whether an informed person, viewing the matter realistically and
    practically ‒ and having thought the matter through would conclude,
    whether consciously or unconsciously, that the matter was not decided fairly:
Committee
    for Justice and Liberty et al. v. National Energy Board et al.
(1976),
    [1978] 1 S.C.R. 369, at p. 394. The grounds for this apprehension must be
    substantial:
Committee for Justice and Liberty
, at p. 395.

[20]

Apposite
    is this courts observation in
Bales Beall LLP v. Fingrut
, 2013 ONCA
    266, at para. 20, in relation to a similar allegation of bias against a motion
    judge reviewing an assessment officers report and certificate:

The suggestion of judicial bias 
    actual or perceived  is a serious allegation. It is tantamount to the assertion
    that a miscarriage of justice occurred. As a result, it should not be advanced
    lightly and without evidentiary support.

[21]

In
    my view, it is clear that the test for bias is not met in this case.

[22]

It
    is important to recall that the issue of the respondents absence was not
    raised by the Assessment Officer, but by counsel for the appellants.  It arose
    at the outset of the hearing when counsel for the appellants expressed concern
    over the respondents absence and implied that they had been deceived as to the
    respondents intentions to appear. Counsel for the respondent rejected the
    allegation of any deceptive behaviour and noted that his client was not
    required to attend the assessment hearing.

[23]

The
    Assessment Officer then asked the respondents counsel a series of questions,
    in which it was confirmed that the respondent was alive, capable of giving
    instructions, and able to appear. The Assessment Officer asked the respondents
    counsel to confirm that the respondent was waiving her right to put forward evidence,
    including her personal knowledge of the circumstances of the solicitor-client
    relationship, if she failed to appear at the hearing. The respondents counsel
    indicated that would be the case.

[24]

The
    five short paragraphs in the Assessment Officers reasons and the brief
    exchange with counsel on the transcript concerning the respondents absence
    from the assessment hearing do not meet the very high threshold required to
    displace the strong presumption of impartiality of judicial officers:
Cojocaru
    v. British Columbia Womens Hospital and Health Center
, 2013 SCC 30,
    [2013] 2 S.C.R. 357, at para. 20;
Wewaykum Indian Band v. Canada
, 2003
    SCC 45, [2003] 2 S.C.R. 259, at para. 59.

[25]

I
    see no evidentiary basis for the application judges finding of animus or bias
    by the Assessment Officer against the respondent. The 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 respondents absence,
    namely, that there would be no testimonial evidence from the respondent to
    challenge the appellants version of events.

[26]

The
    Assessment Officers reasons clearly demonstrate that she did not feel compelled
    to accept without question Mr. Saxs evidence. Rather, the Assessment Officer
    wrote that she would 
weigh
any evidence submitted by the Clients
    solicitor [Mr. Sax] based on its face value, as the Client [the respondent]
    failed to appear for hearing, and therefore, was unable to testify to the Court
    as to the reasonableness of the arguments made or evidence presented (emphasis
    added). In other words, while Mr. Saxs evidence was unchallenged by any
    testimonial evidence from the respondent, the Assessment Officer acknowledged
    that she still had to assess or weigh Mr. Saxs evidence. To that end, the
    Assessment Officer detailed the deficiencies in Mr. Saxs evidence and her
    recognition of its frailties led her to reduce his account by 20%.

[27]

The
    respondent submits that the Assessment Officers erroneous curtailment of the
    cross-examination of Mr. Sax demonstrated bias, violated her right to be heard,
    and more generally, amounted to a denial of natural justice and denied her a
    fair hearing, thus justifying appellate intervention by the application judge.

[28]

I
    disagree.  While it is common ground that the Assessment Officer erred by
    making her ruling curtailing cross-examination, in my view, it did not indicate
    bias or animus on her part, nor did it deny the respondent a fair hearing. 
    Moreover, the erroneous ruling did not taint the entire evidentiary record and
    the Assessment Officers findings such that no deference was owed to them.  In
    my opinion, the effect on the respondents fair hearing rights and the
    evidentiary record was limited to the narrow issue of the accuracy of Mr. Saxs
    time records.

[29]

For
    these reasons, I am of the view that the application judge misapplied the test
    for bias. This skewed his analysis of the Assessment Officers decision and erroneously
    caused him to reject her findings.

(2)

Did the application judge err in
    his assessment of the solicitors account?

(i) Failure to give deference to the Assessment Officers
    findings

[30]

The
    appellants submit that the application judge erred by failing to give
    appropriate deference to the findings of the Assessment Officer and by retrying
    the assessment, rather than assessing the account based on her findings or
    sending the assessment back for a hearing before another assessment officer.

[31]

I
    agree that the application judge erred in rejecting the Assessment Officers
    findings on matters not affected by her curtailment error. The Assessment
    Officer made numerous findings about Mr. Saxs efforts that were subject to
    full cross-examination and not affected by her curtailment error concerning his
    time records.

[32]

Importantly,
    the Assessment Officer accepted Mr. Saxs evidence regarding the exigencies and
    complications of the transaction.  She found that the transaction was
    complicated because of its size but also due to other complex issues that arose
    and threatened the closing of the transaction. These included the respondents
    documentation and accounting issues with the property that created other
    problems, as well as potential tax exposure for the respondent, and estoppel
    certificates required by the purchaser from each tenant of the property. In
    addition to creating a lot of work, these issues made the handling of the
    transaction more complicated, including a renegotiation of the purchase price
    as well as a delay in the preparation of the taxes, maintenance and insurance
    statements that were required for the sale.

[33]

As
    the Assessment Officer concluded, Mr. Saxs interventions were instrumental in
    closing the $14 million transaction that was of undisputed importance to the
    respondent.  It is clear from the cross-examination that did take place that
    the respondent was able to mount a vigorous challenge to the nature, extent and
    level of skill of the work carried out by Mr. Sax to complete the $14 million
    transaction.

[34]

These
    findings were open to the Assessment Officer and free of any error.  As a
    result, they are owed considerable deference on appeal and should not have been
    rejected by the application judge:
RZCD Law Firm LLP v. Williams
, 2016
    ONSC 2122 (Div. Ct.), at paras. 46-48.

(ii) Flawed approach to the assessment

[35]

However,
    appellate intervention was and is nevertheless warranted because of the
    erroneous analysis undertaken by the Assessment Officer and repeated by the
    application judge in assessing the solicitors account.  Specifically, they
    erred by taking an overly mechanical approach to the assessment of the
    solicitors account.

[36]

Notwithstanding
    the many deficiencies that the Assessment Officer found in the calculation of
    the solicitors account, she accepted its amount as fair and reasonable and
    merely applied a percentage deduction.  As the application judge noted in the
    following passage:

At para. 67 of her reasons for
    decision, the Assessment Officer states candidly that, the Solicitor
    determined what his fees should be based on criteria that could not be
    demonstrated or explained to the Court. In fact, in his testimony the
    respondent admitted that in calculating his fees he included a significant
    amount of time spent prior to the dates shown on the account  going back up
    to 10 years  on work that pre-dated and was entirely unrelated to the present
    transaction.  None of that previous work was described or itemized in the
    bill.  Given the magnitude of the account and its disproportion to the transaction
    to which it purportedly pertained and the amount of time ostensibly devoted to
    this file, the Assessment Officers comment about the inexplicability of the
    account appears to be an understatement.

[37]

The
    Assessment Officer erred in adopting a mathematical rather than the nuanced,
    contextual approach required in
quantum meruit
analysis.  This error
    was exacerbated in the light of the Assessment Officers findings of the
    accounts deficiencies that significantly undermined its numerical validity.

[38]

While
    correctly highlighting the Assessment Officers error, the application judge
    nevertheless failed to undertake a proper
quantum meruit
approach.
    Like the Assessment Officer, he effectively carried out a mathematical analysis
    of the account:  he calculated the number of hours that he found appropriate to
    allot to the appellants work, multiplied them by an hourly rate that he found
    was reasonable, and thus arrived at a total assessed amount.

(iii) Correct
quantum meruit
approach to a
    solicitors assessment

[39]

A
quantum meruit
assessment is not a bookkeeping exercise or a
    mechanical calculation.  Rather, a
quantum meruit
assessment is
    concerned with the reasonable value of services rendered and requires an
    assessment officer to undertake a nuanced, contextual approach having regard to
    all the relevant circumstances:
Tri Level Claims Consultants Ltd v.
    Koliniotis
(2005), 257 D.L.R. (4th) 297 (Ont. C.A.), at para. 34; C
onsulate
    Ventures Inc. v. Amico Contracting & Engineering
(1992) Inc., 2011
    ONCA 418, 334 D.L.R. (4th) 445, at paras. 46-50.

[40]

In
    solicitors assessments, the relevant circumstances are usually examined in
    reference to the well-established criteria articulated by this court in
Cohen
    v. Kealey
(1985), 10 O.A.C. 344 (C.A.), at p. 346. These criteria involve factors
    beyond a mathematical calculation of a solicitors time records and turn on the
    evidence underlying them:

1. The
    time expended by the solicitor;

2. The
    legal complexity of the matter dealt with;

3. The
    degree of responsibility assumed by the solicitor;

4. The
    monetary value of the matters in issue;

5. The
    importance of the matter to the client;

6. The
    degree of skill and competence demonstrated by the solicitor;

7. The
    results achieved;

8. The
    ability of the client to pay; and

9. The reasonable expectation of
    the client as to the amount of fees.

[41]

Since
    the purpose of a
quantum meruit
assessment is clearly to assess the
    reasonable value of a solicitors account, it is an error in principle for an
    assessment to focus principally, as was the case here, on the mechanical
    application of an hourly rate to a given number of hours rather than
    meaningfully address all relevant factors to determine the value of a
    solicitors account. To the point is Anderson J.s oft-cited maxim from
Re
    Kruger and Giverty and York
(1981), 23 C.P.C. 3 (Ont.H.C.J.), at p. 5 that
    a taxation of costs is not a matter of precision in which one arrives at a
    conclusion simply on the basis of a mathematical formula.

[42]

For
    example, in
Greenglass (Re)
(1988), 32 C.P.C. (2d) 55 (Ont. H.Ct.J.),
    at pp. 59-60, where the assessment officer also listed the nine
Cohen
factors but strictly applied the solicitors hourly rate to the time
    expended, the court observed that the mechanical application of an hourly rate
    can lead to error. Similarly, in
Hooper v. Sheehan
, 2012 ONSC 4315, at
    paras. 20-21, where the assessment officer listed the nine
Cohen
factors but spent little time addressing these factors, except for the time
    set out in the solicitors dockets, the court found this approach to be an
    error in principle and set aside the certificate.

[43]

The
    quantity of time spent does not solely determine the fairness or reasonableness
    of the account:
Solicitors (Re)
, [1946] 2 D.L.R. 382 (Ont. H.Ct.J.),
    at p. 385, citing to
Lynch-Staunton v. Somerville
(1918), 44 O.L.R.
    575 (C.A.). Since time is only one factor to consider in determining the
    reasonableness of the bill, a fee, although reduced, may nevertheless be
    allowed even if not all time is docketed, provided there is other evidence
    available, as there was here, to support the fairness and reasonableness of the
    bill.  That said, the failure of a solicitor to keep proper time dockets may
    justify a significant reduction in the assessed account.  See, for example:
8867799
    Canada Inc. v. Paul A. MacLeod Barrister Solicitor
, [2016] O.J. No. 4398
    (Sup. Ct.);
McAllister v. Cleary
(1999), 213 N.B.R. (2d) 156 (C.A.);
Rouben
    v. Toth
, [2000] O.J. No. 2514 (Sup. Ct.), affd, [2002] O.J. No. 2523
    (Div. Ct.).

(iv) Principles applied

[44]

Returning
    to the present case, the Assessment Officer considered the
Cohen
factors and made detailed credibility and factual findings based on Mr. Saxs
    evidence of his responsibility for bringing the $14 million transaction to
    fruition, the complications that arose, and the time and effort that he
    expended that went beyond his time records.

[45]

However,
    the Assessment Officer nevertheless fell into error because she failed to
    analyze and apply her findings to arrive at a fair and reasonable assessment. 
    Instead, she appears to have taken the numerical value of Mr. Saxs account at
    face value, notwithstanding its many deficiencies, and simply mechanically
    reduced the total amount of Mr. Saxs account by 20%.  This erroneous approach
    led her to make an unreasonably high assessment in the circumstances of this
    case based on her own findings.

[46]

Similarly,
    while listing the
Cohen
factors, the application judge failed to
    engage meaningfully with them, especially the degree of the appellants
    responsibility, skill and competence, and the importance to the respondent of
    the significant result attained in the completion of a $14 million transaction
    that had run into complicated difficulties.

[47]

The
    application judge did not address these issues or analyze the evidence relevant
    to them in any significant way. He failed to recognize that this was not the
    kind of case that could be disposed of principally by a calculation of hours
    and hourly rates when Mr. Sax did not maintain dockets. As earlier noted, time
    spent and hourly rates are only two of the many factors to be considered on an
    assessment of the fairness and reasonableness of a solicitors account.

[48]

While
    it was certainly open to the application judge to make significant deductions
    to Mr. Saxs account because of its serious deficiencies, the application
    judges mechanical approach did not reasonably assess the value or
quantum
    meruit
of the account and led to an unreasonably low assessment.

[49]

While
    I agree that the amount of the assessment should be altered, I reject the
    appellants submission that this matter should be sent back for reassessment. 
    It is neither practical nor fair to do so given the advanced ages of the
    parties and the account. The Assessment Officers findings not tainted by her
    error allow for reassessment of the amount of Mr. Saxs account.

[50]

I
    agree with the appellants submission that the amount of $26,375.00 does not
    properly reflect the Assessment Officers findings concerning the value of Mr.
    Saxs work.  However, I also accept the respondents position that even the
    discounted amount of $149,635.52 fails to properly take into account the
    deficiencies in Mr. Saxs account in accordance with the Assessment Officers
    findings.

[51]

In
    following the correct approach on a
quantum meruit
analysis of a
    solicitors account, I am mindful that to avoid a mechanical application, the
Cohen
and other factors relevant to the assessment should not devolve to mere
    checklists to be applied in a rote fashion, but should serve as triggers for
    analysis and not substitutes for it:
Bales Beall LLP v. Fingrut
,
    2012 ONSC 4991 (S.C.J.), at para. 15, affd, 2013 ONCA 266.

[52]

As
    earlier stated, I see no error in the Assessment Officers detailed findings
    arising from her consideration of the evidence through the analytical lens of
    the
Cohen
factors.  These included the importance of the $14 million
    transaction, the difficulties that arose, and the skill and effort expended by
    Mr. Sax to bring it to a successful conclusion, as well as Mr. Saxs failure to
    keep proper dockets and to substantiate the time actually spent, his hourly
    rate, or the basis for the calculation of the account.

[53]

In
    my view, these findings militate against merely accepting the face value of Mr.
    Saxs account.  However, as the Assessment Officer correctly noted, Mr. Sax is
    entitled to be properly compensated for the value of the important work that he
    performed for the respondents significant benefit. To put the value of Mr.
    Saxs significant work over several months on an important $14 million
    transaction into proper perspective, one need only recall in comparison that
    the application judge awarded $48,535.29 in costs to the respondent for the
    three-day assessment and one-day application, over a disputed $187,044.40
    account.

[54]

In
    the circumstances of this case, I am of the view that a fair and reasonable
    assessment of Mr. Saxs account would be $100,000, inclusive of disbursement
    and taxes.

D.

DISPOSITION

[55]

For
    these reasons, I would allow the appeal, set aside the order of the application
    judge, and order that Mr. Saxs account be assessed in the amount of $100,000.

[56]

The
    appellants costs of the appeal should reflect their limited success.  I would
    grant the appellant their partial indemnity costs in the amount of $10,000.

Released: KF
    May 31, 2019

L.B. Roberts
    J.A.

I agree. K.
    Feldman J.A.

I agree.
    Fairburn J.A.


