AGF Trust Company v. Soos, 2012 ABQB 747

Court of Queen ’ s Bench of Alberta Citation: AGF Trust Company v. Soos, 2012 ABQB 747 Date: 20121203 Docket: 1003 02534 Registry: Edmonton Between: AGF Trust Company Plaintiff - and - Melissa Soos Defendant _______________________________________________________ Memorandum of Decision of L.A. Smart, Master in Chambers _______________________________________________________ Background [ 1 ] The Plaintiff AGF's (AGF) Bill of Costs in a foreclosure action was reviewed and assessed by the Assessment Officer on a without notice basis as contemplated by Rule 9.35(1)(b).

If dissatisfied with the assessment a plaintiff may before entry re-attend before the Master who granted the Order for purposes of settling the costs or further directions. I am informed by Plaintiff's counsel that documents were entered through inadvertence and I have been requested to review the matter of costs. I accept that the Bill of Costs was entered in error and have agreed to further address the costs as contemplated by Rule 9.35(4). For purposes of this review Ms Vinci appeared before me in private chambers. I have had the benefit of reviewing her files and the court file.

In response to my request for time records I received the Bill submitted to the Assessment Officer with the time spent in minutes beside each entry.

[ 2 ] This action is one that I would describe as a standard residential foreclosure. There appears to be little out of the ordinary. The Statement of Claim consists of 10 boiler plate paragraphs with the particulars of the mortgage and the indebtedness being the most material variables. A generic paragraph is added that refers broadly to a renewal and the mortgagor agreeing to its terms but no specific terms are mentioned. When setting out the balance reference is made to a 5.99% interest rate which is presumably the current rate established on renewal as the original mortgage was at 8.75%.

One paragraph includes reference to reliance on the National Housing Act along with other statutes. It is apparent that the National Housing Act has no application to the case as the mortgage security does not support it. A lis pendens was filed and subsequently registered against title. A certified copy of title dated Feb 18, 2010 was filed March 1, 2010. [ 3 ] After sending a demand letter, the Statement of Claim was issued and served on Defendant Soos (Soos). No defence was filed and Soos was noted in default on March 18, 2010. An application was made on May 14th, 2010 for an Order Nisi/Order for Sale.

The Notice of Motion consists of 3 paragraphs and seeks a shortened redemption period. The Affidavit of Default is again a boiler plate document with particulars of the mortgage and indebtedness being the only significant variables. The mortgage terms are attached as an exhibit which refers to the standard terms being registered at Land Titles. No mention is made of a renewal nor is a copy attached as an exhibit. The interest is referenced as 5.90% which differs from the Statement of Claim. The Affidavit of Value was filed which set a market value of $395,000.

The balance outstanding was $350,469.73 at April 21, 2010. No current title was filed as required by Rule 9.31(

a) but counsel has a title stapled to the back folder of the file. Service of the material was effected upon Soos and the two subordinate registrants disclosed on that title. Master Wacowich granted the usual Order Nisi/Order for Sale with a six month redemption period. The Order was served on the same parties that received notice of the application. [ 4 ] On November 12, 2010, days before the redemption period was to expire, a request was made for a brief extension as there was an offer to purchase on the property. An updated balance was obtained and the time extended to November 22, 2010.

Nothing is on the file to indicate what happened with that sale but the judicial listing took effect November 23, 2010. [ 5 ] On December 10, 2010 a notice of application was filed to accept an offer to purchase. The filed Application refers to the Offer as being

Schedule A. There was no

Schedule attached to the document filed with the court. No other material was filed in support of the application notably no Final Affidavit of Default. Following representations made at the application on December 17, 2010, I granted an Order for sale at a price of $400,000 and rejected all other offers. No current title was filed but again there is one stapled to the inside cover of counsel's file. There is no affidavit of service for the application filed. I was informed at the application that service was in Order although there was a request to abridge time to serve Soos.

An unfiled affidavit of service is on Counsel's file regarding service on Soos. There is another offer on Counsel's file which ostensibly was the "all other offers", I rejected. No notice appears to have been given to the other offeror. There is nothing on the court or counsel's file to indicate the Order was served on anyone. Finally, I was informed that the balance outstanding on the mortgage was $362,750.07.

I observed on counsel's file a statement from AGF that sets out that amount effective December 16, 2011 with a per diem of $5,6.5429 thereafter. [ 6 ] I would be remiss if I did not mention one minor "twist" on the file. A prior caveat from the original purchase transaction remained registered. After some correspondence to counsel for the caveator, a discharge was provided followed later by a direction signed by Soos to pay any surplus to him as counsel for the vendor from her 2007 purchase of the subject property. [ 7 ] The sale transaction closed after some delay apparently due to couriers misplacing documents.

Regardless, a ledger on counsel's file shows she received net proceeds of $383,040.24 by January 17, 2011. A utility bill of $17.81 was paid on January 18, 2011. What happened with the balance according to the ledger is rather curious. On February 1, 2011 $370,407.68 was paid to AGF. A hand written note on an accompanying ledger indicates $371,751.72 was due to AGF and a further cheque $1,344.04 was paid to AGF on February 28, 2011 to make up the "shortfall". Other than this notation there is no Statement or other documentation to establish this amount.

By simple calculation from December 16, 2010 to February 1, 2011 the accrued interest would be $2,600.97 (46 days x $56.5429) for a total balance due to AGF of $365,351.24. An explanation of the approximate $6,000 difference is warranted. In addition there is a trust transfer to pay what is described as a foreclosure account of $414.75. There is an account on counsel's file for the cost paid for the appraisal and affidavit of value for that amount. On the same date $4,200 was transferred to A/R but no account is on the file.

That transaction was subsequently reversed on March 3, 2011. [ 8 ] The Plaintiff sought legal fees of $6,500 plus disbursements of $941.50 and other charges of $755.00 plus applicable GST for a total of $8,588.62 on the Bill of Costs. The Bill presented to me indicates time spent of 1857 minutes (30.95 hours) at $350 per hour with no differentiation between lawyer and paralegal time. Based on the practice followed in Edmonton, the Assessment Officer reviewed the bill and was prepared to allow a total amount of $5,073.75 being $3,500 for fees and the balance for disbursements, other charges and GST.

Discussion [ 9 ] Standard residential foreclosure actions are not difficult. They are of a nature that I would describe as commodities work. When comparing it to other commodities type work such as residential real estate conveyancing it is very low risk from a lawyer liability perspective. The vast majority of the work on the file ( I would estimate 95%) is done by paralegals filling in blanks of precedents and following checklists which were by in large prepared years ago. Seldom is there any real challenge or complex legal issues that need to be addressed.

The lawyers role is to review documents and provide general instruction although most is done without their direction or involvement.

Of course, the lawyer must attend in Court for the applications where, far too often, they demonstrate their limited involvement in the file by knowing little beyond what notes someone (the paralegal) has prepared for them and present Orders for signature that they clearly haven't reviewed. [ 10 ] Having cut my teeth as a junior lawyer on foreclosures over 30 years ago, I am comfortable when I say that the majority of files including those that might be considered somewhat complex can be adequately handled by a third year associate.

I concede that I continued doing these types of foreclosures as part on my practice until my appointment as a Master. Indeed, many lawyers of my approximate vintage still carry on an active residential foreclosure practice although that level of experience is seldom necessary. [ 11 ] Legal accounts or bills of costs when "taxed" have been treated somewhat differently for foreclosures than other types of litigation. In the early 1980's (when solicitor/client costs were provided for under the mortgage) a two part bill was prepared and submitted with Orders to be reviewed by the Chambers Clerk.

The first part was party/party enumerating items covered under

Schedule C and the second part was a solicitor/client bill. So long as the bill fit within a reasonable range as determined by the clerk and taxing officers from time to time, it was approved along with entry of your Order. Only in extraordinary circumstances where fees or disbursements exceeded those ranges was it necessary to submit time records and other documentation.

Many years ago the two part bill was replaced with a single Solicitor/Client Bill of Costs but the practice of the clerks and taxing officers of following general guidelines for taxation remains the same to this day with adjustments obviously having been made to increase amounts over that time.

I observe that the costs allowed are not tied to the amount of the mortgage. [ 12 ] The Statement of Claim in this action although lacking any pleading of entitlement to solicitor client costs seeks in the relief recovery of "The party and party costs as well as the solicitor and client's costs of this action." An interesting use of what might be considered almost archaic language. [ 13 ] Lenders consider recovery proceedings on delinquent mortgages an unfortunate inconvenience and expense. They have over the years consistently looked to ways to reduce costs.

As part of that strategy lenders have downloaded more and more responsibility to lawyers including many of the administrative responsibilities that their staff used to perform. Lenders may demand their lawyers do their clerical and administrative work but that does not make those things legal services recoverable against a mortgagor. Nonetheless, lawyers are unhappy with the increasing responsibilities imposed upon them and have recently sought both aggressive increases in the guidelines as well as attempting to identify and isolate specific items for additional compensation.

Historically, the latter was restricted to applications for preservation orders, substitutional service orders and the like. An example for compensation now being sought relates to the receipt of a “ cinderella ” payment. (An unfortunate and demeaning moniker adopted and used by many legal counsel, an ostensible attempt at analogy and characterization that escapes me.) This circumstance arises when the lender agrees to accept or in my view far too often only when the court orders that the mortgagee receive payments from mortgagors towards arrears.

Despite the sophisticated computerization existing today it seems lenders don ’ t wish to receive payments at their branches as communication of receipt with the law firms would be extra work. It is almost invariably the practice now that payments on arrears, at the request of the lender, must be made directly to the law firm. This, of course, is an administrative burden on the law firm but performing the services of a bank teller hardly warrants a lawyer processing fee of $150 per payment as proposed.

Although not applicable to this case, in my view if lenders want lawyers to receive their deposits then they can pay the lawyers for that. [ 14 ] Recently, there was one item identified that was not being addressed the same by all assessment and review officers, at least, in Edmonton. That item was an additional fee for completing the conveyance of a property to a third party under an Order for Sale after Judicial Listing or advertisement in some other fashion. As there was a conveyance in this case there should be an adjustment to the bill.

Reflecting back, there was once a tariff for conveyancing but that has long since been abolished. What followed was an extreme reduction in fees charged for conveyancing although there has been a slow rise in what the market allows since the 80's. Recently, I am informed the Alberta CBA Residential Real Estate sections adopted a Recommended Minimum Fee Guideline for legal services

provided for real residential real estate transactions. The fee amount recommended for a conveyance (sale) under $600,000 is a fee of $700 and $850 for properties valued over $600,000. It is perhaps trite to say that these “ simple ” transactions have multiple requirements that create a minefield of potential liability. There is little doubt that the strategy for the CBA

section is to convince practitioners to follow the guideline and increase what is charged by lawyers generally. Interestingly, it is still a far cry from that proposed by some foreclosure practitioners of $1,850 for a sale. This is particularly so as a foreclosure conveyance is covered by the virtually mandatory

Schedule A which makes it clear the property is sold “ as is ” with no representations and warranties of any kind whatsoever and no requirement for other documentation like RPR ’ s and compliance certificates. Essentially all that need be tendered is the Order along with the appropriate trust letter and a statement of adjustments. Furthermore, the “ minefield ” of potential liability simply doesn ’ t exist. Regardless, the amount generally allowed in Edmonton is $250 to $350 for fees.

In light of the correspondence with the previous owners counsel and the need to tender documents twice, I would allow the upper end of $350. I see nothing remarkable or significant that would warrant an overall increase in fees per se. [ 15 ] Based on the foregoing I would allow fees of $3,850 with the balance for disbursements and other charges the same as approved by the Assessment Officer, however, there are other considerations.

There is first the failure to comply with the requirements of the foreclosure rules regarding titles, notice on offerors, failure to file a final affidavit of default and service of the “ final ” order. I also have serious concerns over what appears to be a significant over-payment to the mortgagee although I recognize that a final statement regarding dispersal of sale proceeds has not as yet been done. Also significant is the deficiency in the pleadings and evidence with respect to entitlement to solicitor/client costs.

As noted above there is no pleading of entitlement to that level of costs, and with no evidence of entitlement. [ 16 ] Under

Schedule C the Plaintiff would be entitled to 50% of Item 1 as the matter proceeded by default, two uncontested applications under Item 6(1) and one under Item 17 of Column 3 for a total of $2,600. Based on my review of the commentary in the Rules, it seems I am without jurisdiction to set aside the Order which granted the solicitor/client costs. I do, however, take some solace in that it would be a most unusual circumstance for a mortgage not to include a contractual provision for costs on a solicitor/client basis. Conclusion [ 17 ] Masters deal with numerous applications in morning chambers.

Most often Affidavits in support are not on the Court file. We must be able to rely on representations of regularity given either expressly or by implication if deficiencies in material or process are not brought to our attention.. In this case, many of the mandatory requirements prescribed by the Rules have not been performed. Consequently, the fee of $3,850 I indicated above I would allow will be reduced by $1,000. The disbursements and other charges approved by the Assessment Officer plus GST as applicable are allowed.

There will be no costs to the Plaintiff for this application. [ 18 ] Finally, counsel will provide a full and detailed explanation of the mortgage balance calculation including supporting documentation from the Plaintiff when filing the accounting, all of which is to be copied to me. Once I have reviewed those materials, I will further consider whether or not this is a proper case for costs to be assessed pursuant to Rule 10.49(1). Dated at Edmonton, Alberta this 3 rd day of December, 2012. L.A. Smart M.C.C.Q.B.A.

Appearances: Gloria Vinci for the Plaintiff AGF