Homersham v New Urban (Ramsay Exchange) GP Ltd, 2017 ABQB 384

Court of Queen’s Bench of Alberta Citation: Homersham v New Urban (Ramsay Exchange) GP Ltd, 2017 ABQB 384 Date: 20170615 Docket: 1501 03716 Registry: Calgary Between: Robert A. Homersham and Robert A. Homersham Professional Corporation Applicants - and - New Urban (Ramsay Exchange) GP Ltd., New Urban (Curtis Block) GP Ltd., Parke Seville Mortgage G.P. Ltd., RCS (Calgary Hotel) GP Ltd. and 12th Avenue Property General Partner Ltd., New Urban Development Inc. Respondents _______________________________________________________ Decision of the Honourable Mr. Justice G.H. Poelman on Reference from Review Officer _______________________________________________________

Table of Contents I. Introduction . 3 II. Facts . 3 III. Questions for Determination . 7 IV.

Interpretation of Retainer Agreement 8 A. Contractual

Interpretation Principles . 8 B. Surrounding Circumstances . 8 1) Principles . 8 2) Application . 9 C. Words of the Contract 10 1) Introduction . 10 2) Legal Services and Fees . 10 3) Joint and Several Liability . 11 4) Benefits . 12 5) Early Termination and Year Three Cap Reduction . 13 D. Parol Evidence . 13 E. Answers to Questions on Contractual

Interpretation . 14 V. Timeliness of Review Application . 14 VI. Other Matters . 15 A. Introduction . 15 B. Settlement 15 C. Benefits . 15 D. Deferred Billings . 16 VII. Conclusion . 16 I. Introduction [ 1 ] This decision is made in the context of a review of lawyer’s charges by a review officer under

Part 10, Division 1 of the Alberta Rules of Court, Alta Reg 124/2010. The accounts in issue were rendered by lawyer Robert A. Homersham and through his professional corporation, Robert A. Homersham Professional Corporation, referred to in his documents as “RAH.” [ 2 ] On April 2, 2015, Mr. Homersham filed an “Appointment for Review of Retainer Agreement/Lawyer’s Charges” to commence a review application, alleging that his clients, the respondents in this proceeding, had failed or refused to pay accounts rendered in 2014 and 2015.

On June 3, 2015, the review officer referred five questions to a Justice of the Court of Queen’s Bench of Alberta for determination pursuant to rule 10.18. They concern, in brief, the terms of a retainer agreement and timeliness of the review commenced by Mr. Homersham.

[ 3 ] Mr. Homersham and Daniel Van Leeuwen, a representative of the clients, testified at the hearing. Argument was submitted in writing and orally. [ 4 ] There are many issues in dispute between Mr. Homersham and his former clients. This is not a trial of those issues. It is a reference in aid of the review process, not a usurpation thereof. II. Facts [ 5 ] Most of the facts are not disputed. Therefore, they can be reviewed based on the evidence of both parties together, noting differences as they arise. [ 6 ] Mr. Homersham was called to the bar in 1997.

The accounts under review were issued when he was a sole practitioner from 2012-2015. Before then, he was a partner at Fraser Milner Casgrain and before that, a partner with another national firm. His special area of practice was commercial real estate with a focus on land use planning and development. [ 7 ] Beginning in 1999, he worked for a group of clients, who are named in this reference as the respondents. His main contact was Mr. Van Leeuwen.

The entities comprising the client group were: • New Urban Development Inc. (“New Urban”); and • The other respondents, each of which was a general partner of a limited partnership established to acquire ownership and develop certain lands in Calgary. [ 8 ] New Urban was retained by each of the limited partnerships as development manager. 642111 Alberta Inc. (the “Numbered Company”), controlled by Tim Harkema, is a limited partner in each of the limited partnerships. [ 9 ] Mr. Van Leeuwen and Mr.

Homersham had discussions in late 2011 and 2012 that led to execution of a two-page memorandum of understanding (“MOU”) dated March 15, 2012. It was entered into between Mr. Homersham’s professional corporation and New Urban “in its own capacity and as agent for the Principals,” which were the limited partnerships listed in an exhibit to the MOU. Mr. Homersham was resigning his partnership in the law firm Fraser Milner Casgrain.

The MOU provided, in general, that he would become in-house counsel for New Urban and the limited partnerships (which I will refer to sometimes as “the client group” or “the clients”) until he could obtain Law Society of Alberta approval for setting up trust accounts and an independent law practice. The MOU also addressed billing rates and aggregate fees. [ 10 ] The witnesses testified about discussions leading up to the MOU and the objectives the parties hoped to achieve. Mr.

Homersham had worked for the client group since 1999, and was billing $575 per hour, generating total annual fees from the clients of between $400,000-$500,000. Mr. Homersham and Mr. Van Leeuwen had at least two or three discussions before signing the MOU, which Mr. Homersham wrote, discussing possible arrangements. [ 11 ] The initial possibility of Mr. Homersham being employed as in-house counsel was quickly discarded in favour of him setting up his own law firm, with the client group as key clients. Mr. Homersham said Mr. Van Leeuwen indicated his purpose was to secure Mr.

Homersham’s services at a fixed cost amount. Mr. Homersham’s purpose was to establish his own practice with the security of a fixed amount of income while he developed his practice. He testified that they discussed that he would be paid $300,000 per year over a three-year term, which worked for the clients because it was the timeframe over which their major projects would come to fruition. There were discussions to the effect that if there was not enough legal work, he would still be paid $300,000 per year for three years. [ 12 ] Mr.

Van Leeuwen denied any discussion about what would happen if there was not sufficient work to generate the equivalent of $300,000 in billable work per year. He testified that Mr. Homersham was looking for a key client to start his practice, and they based the arrangement on the number of hours that had been billed in previous years. Mr. Homersham was planning to build up other clients, and Mr. Van Leeuwen’s group wanted to make sure they had continuity of service and capped the amount that could be billed in any year. [ 13 ] The discussions also involved costs of operating the practice. Mr.

Homersham would be provided with office space in New Urban’s building initially, and then move to his own office in an adjacent building also owned by New Urban or a limited partnership. Base rent would be free and he would pay operating costs to the extent there were any, as well as for a computer and for telephone service. On the same point, Mr. Van Leeuwen testified that after Mr. Homersham moved to his separate premises, he was to reimburse New Urban for shared services such as telephone, internet and IT help. [ 14 ] Mr.

Homersham’s last day as a Fraser Milner Casgrain partner was July 31, 2012 and he started under the MOU in August 2012. Thus, the term of the MOU was from August 1, 2012 to July 31, 2015, and the years for the purpose of billing were the periods of August 1 to July 31 (2012-13, 2013-14 and 2014-15). [ 15 ] Mr. Homersham began working in office space in New Urban’s offices. In October 2012, he received his Law Society approvals and thus began his independent practice. He moved into separate office space in an adjacent building, still part of the clients’ premises, in May 2013. [ 16 ] Mr.

Homersham continued to deal primarily with Mr. Van Leeuwen. This began to change in January 2014. Mr. Harkema decided to take a more active involvement in the business of the limited partnerships and directed the chief financial officer of one of his companies, John Spronk, to review the business of the limited partnerships and be part of the approval process for their payables, including legal bills. As of February 2014, Mr.

Homersham was receiving fewer new work assignments from the clients and some assignments were being directed elsewhere. [ 17 ] On November 10, 2014, the Numbered Company on the one hand, and Mr. Van Leeuwen and New Urban on the other,

entered into a memorandum of understanding effective September 1, 2014, designed to settle disputed amounts owed between the partnerships and New Urban as its development manager. Its terms also made Mr. Van Leeuwen and New Urban responsible for all contractual and invoicing matters involving Mr. Homersham before September 1, 2014. The agreement was prepared by a lawyer representing Mr. Harkema, and reviewed (with Mr. Spronk’s permission) by Mr. Homersham on behalf of Mr. Van Leeuwen and New Urban. [ 18 ] A memorandum of understanding dated January 5, 2015 was entered into between Mr.

Homersham on the one hand, and New Urban and Mr. Van Leeuwen on the other. It recites that the parties “have agreed to work together to advance their mutual interests,” and provides for the following: • “For value received,” New Urban agreed to transfer to Mr. Homersham a 50% interest in an attainable housing program it had developed with Mr. Homersham’s advice. • Mr. Van Leeuwen acknowledged and agreed Mr.

Homersham was entitled to a 50% interest in intellectual property relating to an artificial lift pump. • “For value received,” New Urban agreed to transfer a performance deposit for which it expected repayment from the City of Calgary to Mr. Homersham. [ 19 ] Mr. Van Leeuwen testified that “the purpose of this agreement was to try and find a solution for the dispute that was going on over fees and monies owed . . . , I was trying to find a solution that would say here is a compensation Mr. Homersham for saying you are not going to get paid your bills. . . .

It was a . . . settlement for all these issues that were going on with the prior . . . partnerships. That was the consideration for this.” [ 20 ] Mr. Homersham, in his testimony, “vehemently” disagreed with this position. He stated that the transfer of an interest in attainable housing memorialized something that had been agreed upon much earlier. Ultimately, there was nothing to transfer regarding the artificial lift pump, as they were working to put a deal together for Mr. Van Leeuwen’s father-in-law.

The assignment of a security deposit held by the City of Calgary was security for the debt New Urban owed for services rendered to that point. This agreement was not about discharging Mr. Van Leeuwen’s obligation to look after the contracting and invoicing matters that related to Mr. Homersham and the limited partnerships. [ 21 ] The January 5, 2015 memorandum of understanding does not contain any reference to legal fees owed to Mr. Homersham or a release of them. [ 22 ] As of January 2015, Mr.

Spronk became the sole director and officer of each of the general partners of the limited partnerships (apart from one, of which he was one of two directors and officers). Mr. Van Leeuwen resigned his positions. [ 23 ] For each engagement on which he worked, Mr. Homersham sent a standard retainer letter to the general partner of the limited partnership for which the work was being done. These briefly identified the matter for which services would be rendered and the client’s responsibility for fees (at $450 per hour) and disbursements.

The retainer letters did not refer to the MOU. [ 24 ] In the first year of the MOU (2012-13), invoices were issued for fees totalling $82,560, and all were paid. They were addressed to New Urban in one case, and to various general partners in other cases. The invoice dates ranged from May 21, 2013 to July 25, 2013. [ 25 ] In year two (2013-14), invoices for fees totalling $429,700 were issued, of which only $203,761.06 was paid. There were twenty three invoices, from October 16, 2013 to April 30, 2014. Seventeen of them were dated January 2, 2014. Five of them were not paid.

Four with dates from February 6 to April 30, 2014 were also not paid. [ 26 ] In the third year (2014-15), bills for fees of $572,991 were issued, of which $47,955 was paid. Apart from a small fee of $450 billed on January 16, 2015, no bills dated after December 4, 2014 were paid. [ 27 ] The billing pattern is irregular. Mr. Homersham explained this by saying Mr. Van Leeuwen asked him to defer some billings. As of July 2013 (the end of year one), he had work in progress that he did not bill – a choice he said was not just his, as deferral was discussed with Mr. Van Leeuwen. [ 28 ] Mr.

Van Leeuwen’s evidence is entirely to the contrary. He stated that it was important to him that bills be submitted on time for budget and financial control purposes. He testified that Mr. Homersham stated he was busy, and was working on the bills, which he would submit them when he could. [ 29 ] Issues concerning Mr. Homersham’s fees “came to a head,” to use Mr. Homersham’s description, at an October 31, 2014 meeting between him, Mr. Spronk and Mr. Harkema. Mr. Harkema and Mr. Spronk said they would not pay the bills without a significant reduction. [ 30 ] Mr.

Homersham did little work for the clients in December 2014 and January 2015, and none thereafter. No one purported to terminate the MOU. However, in January 2015, Mr. Homersham received a notice that he would be required to vacate his office. (The date he left is not on the record, but presumably it was around the end of the third year of the MOU, thus July 2015). [ 31 ] Though doing no work for the clients, Mr. Homersham issued seven further invoices from January to July 2015 totalling $168,695 in fees.

The invoices referred to a “monthly retainer fee pursuant to the Memorandum of Understanding dated March 15, 2012.” [ 32 ] In addition to dealing with fees, the MOU provided that while working within New Urban’s offices, Mr. Homersham would be “provided with office space, computer, telephone and legal assistance support . . . at no cost.” Thereafter, he would be provided with

office space in an adjacent building with no base rent. [ 33 ] During the three-year term of the MOU, Mr. Homersham had a legal assistant who also worked for New Urban, and used its office space and telephone and computer services. He made no contribution to the expenses of these benefits, testifying that he never received any requests for payment or statements about them. Further, he was never given a lease for his premises, having in effect only an oral license to occupy.

During the hearing, he was presented with details of the expenses claimed, but said there is no way he is now able to verify their accuracy or reasonableness. [ 34 ] Mr. Van Leeuwen testified that he raised Mr. Homersham’s obligation to pay for benefits with him at around the time Mr. Spronk was becoming involved. He said Mr. Homersham’s response was “when I get paid, you will get paid.” Mr. Homersham denied having that discussion. III. Questions for Determination [ 35 ] Rule 10.18 (1) of the Rules provides that a review officer:

a) Must refer any question arising about the terms of a retainer agreement to the court for a decision or direction, and

b) May refer any question arising about a lawyer’s charges to the court for a decision or direction. [ 36 ] The reference contains five questions referred for determination pursuant to rule 10.18: 1. What are the terms of the retainer agreement between the Lawyer and Clients? 2. Does the retainer agreement provide for joint and several liability? 3. Was a gross sum per year to be paid to the Lawyer, and if so, what was that gross sum? Or was there an hourly rate provided for, and if so, what was that hourly rate? 4.

Are any of the following invoices barred from review as a result of more than six months having passed after the date on which the accounts were sent to the Clients: a) 333; b) 337; c) 344; d) 345; e) 349; f) 355; g) 362; and h) 365? 5. Does the Court see fit to provide any direction to the Review Officer regarding conducting the review of the accounts? [ 37 ] The first three questions require

interpretation of the retainer agreement. Thus, they involve interpreting the contract between the parties pursuant to usual principles of construction, informed as necessary by the special features of the solicitor-and-client relationship. [ 38 ] The fourth question involves

interpretation and application of the rules governing the special procedure of reviewing legal accounts. [ 39 ] The fifth question enables me to address additional matters. As I ruled during the hearing, in my view, I can provide further directions that might arise naturally from the evidence and arguments addressing questions one through four. It is not a separate, standalone inquiry enabling me to go into the full scope of an assessment review. IV.

Interpretation of Retainer Agreement A. Contractual

Interpretation Principles [ 40 ] The object of contractual

interpretation is to ascertain what the parties objectively intended by their contract when they made it. Primacy is given to the parties’ words, particularly in a written contract, because it is presumed that the parties chose words that embodied their intentions: A.G. Clark Holdings Ltd. v HOOPP Realty Inc. , 2013 ABCA 101 , para 15 . [ 41 ] However, the objective remains the determination of the parties’ intention, not the meaning of words in a document. Thus, regard must also be had to the “factual matrix” or “surrounding circumstances” to help determine the parties’ contractual intention as

would be understood by a reasonable person so situated: Clark Holdings , paras 15 and 16; Sattva Capital Corporation v Creston Moly Corp. , 2014 SCC 53 , paras 47 , 48 and 57-58. The purpose of considering the surrounding circumstances is to assist the court in understanding the parties’ mutual and objective intentions as set out in the contract: Sattva , para 58. [ 42 ] The task is to determine the parties’ intention objectively understood: Hall, Canadian Contractual

Interpretation Law , 3rd edition (Markham, Ont: LexisNexis Canada Inc., 2016) at 50-51. If after that process it is found that there is ambiguity about what was intended, parol evidence may be considered. That is a different stage of analysis, and the facts to be considered when resolving ambiguity may be different from those admissible when interpreting the words of the contract. For example, evidence of conduct after the contract was made may only be considered if an ambiguity exists: Scurry-Rainbow Oil Ltd. v Kasha , 1996 ABCA 206 , 18 A.R. 177, para 45 ; leave to appeal ref’d, [1996] S.C.C.A.

No. 391. [ 43 ] Retainer agreements are a special form of contract, in that they are partially regulated by the Rules ,

Part 10, Division 1, and the Law Society of Alberta’s Code of Conduct . However, subject to those restrictions, “a court must hold the lawyer and the client to promises made in a retainer agreement regarding amounts a lawyer may charge and a client must pay for legal services in the absence of a compelling reason not to”: Steinke v Hajduk Gibbs , 2014 ABQB 34 , para 51 (footnotes omitted). B. Surrounding Circumstances 1) Principles [ 44 ] As stated earlier, the objective of contractual

interpretation is to determine the parties’ intentions, objectively understood, gleaned from the words used in their agreement in the relevant context. Evidence of surrounding circumstances is part of that process. [ 45 ] There are strict limitations on what evidence of surrounding circumstances may include. As held in Sattva , “[i]t should consist only of objective evidence of the background facts at the time of the execution of the contract . . ., that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting”: para 58.

This approach, which the Court of Appeal referred to as the “armchair rule,” lets “the court see what the author of the contract knew when they wrote it, in order indirectly to assist in resolving any difficulties in what certain words of the contract refer to”: Gainers Inc. v Pocklington Holdings Inc. , 2000 ABCA 151 , 255 A.R. 373, para 21 . [ 46 ] It follows from its purpose that some types of evidence are not part of the surrounding circumstances to be considered.

Evidence of subjective intentions is impermissible: Gainers , para 20; Hall , 32-33); as is evidence of the history of negotiations, because positions change and only the final contract shows the parties’ agreement: Prenn v Simmonds , [1971] 3 All E.R. 237 (H.L.) , 239-40; Nexxtep Resources Ltd. v Talisman Energy Inc. , 2013 ABCA 40 , para 32 ; and Hall, 32, n.112 and 113. 2) Application [ 47 ] The facts relevant as surrounding circumstances for

interpretation of the MOU may be summarized as follows:

a) The parties had a long-standing solicitor-client relationship, starting in 2009.

b) Before the MOU, Mr. Homersham provided his services through a large law firm. His billing rate was $575 per hour and his annual billings to the clients exceeded $400,000 per year.

c) The parties had discussions about Mr. Homersham providing services to the clients through another vehicle, which would address Mr. Homersham’s concerns over his firm’s future plans and assist him in establishing an independent practice. It also would give the clients continued access to his services at lower, more certain costs. [ 48 ] Mr.

Homersham also submitted as surrounding circumstances that his “objectives in entering into a new business arrangement with the Respondents were that he required certainty of payments from the Respondents of $300,000 per year, an office and administrative support and the ability to work for other clients so as to continue to develop his law practice.” I am not persuaded that this view of the arrangements forms part of the surrounding circumstances. [ 49 ] Mr. Homersham has not convinced me that there were express discussions about a guaranteed fee. His evidence is contradicted by Mr.

Van Leeuwen, who was not cross-examined. There are no compelling reasons to prefer the evidence of one over the other, except that I find Mr. Homersham’s testimony on this point implausible (given how he worded the MOU without reference to a guarantee) and because Mr. Van Leeuwen’s evidence was not challenged. [ 50 ] Furthermore, even if I accepted Mr. Homersham’s testimony in preference to that of Mr. Van Leeuwen, it is not within the realm of surrounding circumstances. It constitutes part of the negotiating history, which is overtaken by the subsequent execution of an MOU reduced to writing.

It represents only one party’s subjective expression of its objectives. Finally, it offends the rule that “[w]hile the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement”: Sattva , para 57. C. Words of the Contract 1) Introduction [ 51 ] In order to answer the question in the reference, I must interpret the MOU in respect of the legal services and fees, whether there is joint and several liability, the benefits to be provided, and early termination and the year three cap reduction.

2) Legal Services and Fees [52] The MOU establishes an in-house counsel arrangement for the first part of the term, in which Mr. Homersham’s professionalcorporation provides its “legal services full-time and exclusively” to New Urban and the limited partnerships. After Mr.

Homershamestablished his independent law practice, which evidence shows was as of October 1, 2012, the relationship was non-exclusive: “RAHmay provide services to other clients.” [53] The MOU then provides that “notwithstanding the foregoing [right to act for other clients], RAH will provide not less than 80hours per month on average, of legal services to NUC and its principals.” This is expressed as RAH’s obligation, but of course he couldnot perform it without a client requesting a corresponding amount of services.

The MOU nowhere expresses such an obligation on theclients. [54] Next, the MOU addresses fees, in three sentences:

a) RAH’s hourly rate will be “$450 per hour for the first three (3) years of this MOU.”

b) RAH will “cap it’s aggregate monthly fees . . . at $25,000 per month (on average) or $300,000 per year.”

c) New Urban and the limited partnerships “agree to pay $300,000 per year, based on an aggregate total of billings for that year, forthe first three (3) years of this MOU for legal services rendered, exclusive of disbursements and GST.” [55] The main difference between the parties is whether the MOU sets an annual fee of $300,000 regardless of whether the legalservices would generate that amount; or whether fees are payable only for services rendered and billed, up to a maximum of $300,000. [56] In my view, on the best construction fees are payable only for services rendered and billed, up to a maximum of $300,000.Mr.

Homersham’s argument that he is entitled to a fee of $300,000 per year regardless of work performed is based heavily on theprovision that the clients “agree to pay $300,000 per year.” He says that is a clear, express promise to pay, not conditional on servicesperformed. [57] The agreement, however, must be read as a whole.

The term “agree to pay” is, in the same sentence, “based on an aggregatetotal of billings . . . for legal services rendered.” Even in this one sentence, then, there is no promise to pay unless there are billings forservices rendered. [58] The other sentences regarding fees lead to the same conclusion. There is to be an hourly rate for services, which would besuperfluous on Mr. Homersham’s

interpretation. Most importantly, $300,000 (which works out to $25,000 per month, on average) isstated to be a cap on aggregate fees. It is this sentence to which the “agree to pay $300,000 per year” sentence, immediately following it,refers. A plain English understanding of “cap” means an upper limit on an obligation. Suggesting that it is a fixed fee turns the word onits head. [59] Mr. Homersham’s argument addresses the inclusion of an hourly rate by saying it would be necessary to allocateresponsibility for the fixed fee among the client group. But there would be no need to use an hourly rate for that purpose.

A simplekeeping of time records would suffice. [60] Reading the three sentences addressing fees in conjunction with the sentence on Mr. Homersham’s availability obligationleads to the following

interpretation: Mr. Homersham (or his professional corporation) is to provide legal services to the clients asrequested, up to an average of eighty hours per month, at $450 per hour. His fees are capped at $300,000 per year (even though 80 x 450x 12 = 432,000). The clients agree to pay that amount based on aggregate bills for services rendered. The clients have no obligation topay without billings for legal services rendered. [61] Mr. Homersham submits that this

interpretation also renders the 80-hour provision meaningless. He submits it would mean hecould simply bill whatever work he did at $450 per hour, subject to the annual cap of $300,000. But the 80-hour provision can havesignificance other than as part of a billing formula. It gave the clients certainty of continued access to their regular solicitor. [62] Mr. Homersham complains that this would be unreasonable because the clients have no corresponding obligation to give himwork. But a simple reciprocity of obligations on that point is not required.

There were other benefits the clients contracted to provide,such as an initial no-cost office space and full office support, free base rent thereafter, and the opportunity to use these benefits, togetherwith a connection with a key client to build a law practice. Whether that was a provident bargain for Mr. Homersham, in retrospect, is notthe issue. Even as of the date of contract, commercial reasonableness cannot be assessed solely from the perspective of Mr. Homersham,one of the contracting parties; it must be judged objectively: Kentucky Fried Chicken Canada v Scott’s Food Services Inc., (ON CA), [1998] O.J.

No.4368, 114 O.A.C. 357, para 27; and Shahinian v Precinda Inc., [2004] O.J. No. 476 (C.A.), paras 24-30. [63] Thus, in my view, the MOU is properly interpreted in its surrounding circumstances to provide that Mr. Homersham wasrequired to be available for three years, for up to eighty hours per month on average; and he was entitled to be paid for fees as billed forservices rendered at $450 per hour, subject to a maximum of $300,000 per year for the clients as a group.

I find no ambiguity in theMOU, construed in the context of the relevant surrounding circumstances, requiring resort to parol evidence. 3) Joint and Several Liability [64] New Urban and the limited partnerships are all parties to the MOU. New Urban expressly contracts “in its own capacity andas agent” for the limited partnerships listed. These clients share entitlement to be provided with Mr. Homersham’s legal services and thecap on aggregate fees, and collectively “agree to pay $300,000 per year” based on billings for services rendered. [65] From this, Mr.

Homersham urges that the clients are jointly and severally liable, although there is no express reference in the

MOU to “joint and several” liability. The effect of this

interpretation would be to make each of the entities responsible for the legal feesowed by others, as bills were rendered to the entity for which the work was performed. [66] The same arguments on similar facts were addressed in Borden Ladner Gervais LLP v CBI Investments Ltd., 2016 ABQB 220.The retainer agreement was signed by the primary client, which managed the affairs of a group of affiliates. The members of the groupwere listed in an exhibit to the retainer agreement.

Mahoney J. found that the retainer agreement was entered into by the primary clientas agent of the group, with the necessary authority: para 39. The solicitors performed services for the entire group.

However, they did notbill the group as a whole but, as directed for accounting purposes, billed the entity for which the work was done: para 40. [67] Mahoney J. rejected the argument that, just as the authorities preclude an employer from hiding behind a complex corporatefamily to evade paying employees, the client group should not be permitted to elude its obligations for legal services it commissioned.He noted that the solicitors’ position was not analogous to an employee who requires the protection of the common employer doctrine,because they drafted the retainer agreement and were in complete control of its terms: para 45.

The solicitors would have the knowledgenecessary to ensure its clients understood who was responsible for what account, and how the firm might be indemnified if thoseaccounts were not paid.

It was the clients, without independent legal advice, who were in the weaker position: para 48. “Reasonablenessand fairness must be questioned when, in a commercial contract, finding joint and several liability has the effect of placing full liabilityon a respondent who is not at fault or only marginally so, in order to provide full compensation to a plaintiff”: para 47. [68] Respectfully, I agree with and adopt Mahoney J.’s reasoning and conclusions in this case.

Further, I conclude that the wordsof the MOU are not made meaningless as a result. [69] The evidence shows that New Urban and the limited partnerships were managed collectively, essentially under Mr. VanLeeuwen’s direction. Thus, the client group had the benefits of Mr. Homersham’s guaranteed availability and the cap on his fees, andeach was obligated to pay for its own legal work. All of this could be coordinated by the common management of New Urban, throughMr.

Van Leeuwen. [70] I therefore conclude that each entity is responsible for its own legal bills, subject to the overall cap, and that there is no jointand several liability. 4) Benefits [71] The clients seek a set off against any legal fees owed for benefits provided to Mr.

Homersham, comprising the salary of alegal assistant, operating costs of premises he occupied, and computer and related expenses, for a total of $209,491.79. [72] The MOU provides that “office space, computer, telephone, and legal assistant support” would be provided during Mr.Homersham’s transitional period as in-house legal counsel at New Urban. Thereafter, it provides for “no base rent for the first threeyears of the lease.” It does not expressly address whether Mr.

Homersham was required to pay or account for office space, computer andtelephone expenses, and legal assistant support after establishing his independent practice in other space owned by the client group. [73] The retainer agreement which this reference requests that I interpret is silent on the point.

Whether there is an obligationoutside the terms of the MOU will be addressed as part of question five of the reference. 5) Early Termination and Year Three Cap Reduction [74] The clients submit that liability for fees in the last year of the MOU term should take into account that they would have givena notice of early termination if Mr. Homersham had advised them of that right.

They say that right always existed, as a matter of lawgenerally and under rule 10.6(2) of the Rules, which provides that “despite any agreement to the contrary, a client may change theclient’s lawyer or act on the client’s own behalf before a retainer agreement ends”. Therefore, the clients argue that the annual capshould be reduced because Mr. Homersham did no legal work for the last seven months of the term. [75] I see no merit to these arguments, although it is unclear to me how they would affect the result, in any event, given myultimate conclusions. [76] The clients cannot blame Mr.

Homersham for not advising them of their termination rights. They did not raise the issue withhim. The evidence shows that they were consulting with other solicitors, even on matters pertaining to their obligations to Mr.Homersham (for example, in the November 10, 2014 MOU). They even may have received such advice in giving notice of terminationof Mr. Homersham’s occupancy right on January 5, 2015. [77] I also conclude that it would be arbitrary to reduce the cap in a proportional way according to the months in which Mr.Homersham was active.

The MOU expressly states that monthly fees are capped at $25,000 on average, or $300,000 per year. It thuscontemplates that some months may involve little or no work for the clients as compared with others. It would be an odd result, forexample, if the clients demanded heavy amounts of work for the first half of a year and then cut Mr. Homersham off and could reap theadvantage of a lower cap being applied to those active months. A cap must be applied fairly for both parties. D.

Parol Evidence [78] If the MOU and its surrounding circumstances cannot be interpreted as I have concluded, then I find that part of the MOU “isof doubtful meaning or application and that extrinsic evidence may be admitted not only to demonstrate the ambiguity but to assist inclearing it up”: Qualico Developments Ltd. v Calgary (City) (1987), (AB KB), 81 A.R. 161 (Q.B.), 168. Accordingly,parol evidence is admitted to clear up ambiguity. [79] If there is ambiguity, it is to be found only in the fact that the MOU provides that “RAH will provide not less than eighty

hours per month, on average; of legal services”; that there is no corresponding obligation for the clients to provide a corresponding level of work, and that the clients “agree to pay $300,000 per year.” The MOU does not expressly state what happens when the clients do not provide the amount of work necessary to generate $300,000 in fees. [ 80 ] I stated earlier that the words of the MOU can be interpreted in their surrounding circumstances without ambiguity. However, if there is ambiguity, it is permissible to consider evidence of subsequent conduct to resolve it: Scurry-Rainbow , para 45. [ 81 ] The subsequent conduct here strongly supports the

interpretation already expressed. With respect to billing arrangements, the parties conducted themselves as though legal services would be paid on a fee-for-service basis. Not until the last months of the three-year term, when the legal dispute had already arisen, did Mr. Homersham purport to issue bills on a fixed-fee for availability basis. The clients were sent individual retainer letters for each engagement, and neither the letters or the bills referred to a fixed-fee. E. Answers to Questions on Contractual

Interpretation [ 82 ] I have found that the terms of the retainer agreement, or the MOU, are as follows:

a) Mr. Homersham must be available for three years for up to eighty hours per month, on average, to provide services to the clients named in the MOU.

b) His fees are to be billed at $450 per hour, but are capped at $300,000 per year for the clients as a group. The $300,000 cap applies to each of the three years.

c) The client must pay only according to bills for legal services rendered. There is no entitlement to a “gross sum per year,” as the reference puts it.

d) The MOU imposes no liability on Mr. Homersham to pay the clients for “benefits.” It speaks only to benefits the clients are required to provide him.

e) There is no joint and several liability. [ 83 ] As a result of the forgoing, Mr. Homersham is entitled to nothing further with respect to year one (2012-13). He was fully paid in accordance with his billings. There is nothing further for the review officer to consider. [ 84 ] For year two (2013-14), Mr. Homersham billed $429,700 in fees and was paid $203,761.06. He is entitled to $96,238.94, to bring his entitlement up to the cap. [ 85 ] For year three (2014-15), Mr. Homersham is entitled to fees billed for legal services rendered, to a total of $300,000 in fees.

He is not entitled to be paid on the invoices that do not bill for legal services rendered: numbers 483, 490, 501, 534, 486, 487 and 488. [ 86 ] The record does not make clear what amounts were billed and unpaid for legal services for the 2014-15 year, so that issue must be determined by the review officer if the parties cannot agree. V. Timeliness of Review Application [ 87 ] Mr. Homersham’s review application was filed on April 2, 2015. The clients object to the review of accounts that were issued more than six months before that date.

Their argument is based on rule 10.10(2) of the Rules , which provides that “[a] lawyer’s charges may not be reviewed, whether at the request of the lawyer or the client, if 6 months has passed after the date on which the account was sent to the client.” [ 88 ] The accounts at issue are numbers 333, 337, 344, 345, and 349 (all dated January 22, 2014); 355 (February 6, 2014); 362 (April 8, 2014); and 365 (April 25, 2014).

They were issued in year two of the MOU (August 1, 2013 to July 31, 2014). [ 89 ] The authorities hold that the six-month time limit does not apply to interim accounts as interim accounts can be changed and are not subject to taxation: Samson Cree Nation v O’Reilly & Associés, 2013 ABQB 350 , paras 45 and 46 , aff’d 2014 ABCA 268 .

Further, when the rule does apply, the court has jurisdiction to extend the time period: Samson (C.A.), para 184. [ 90 ] In my view, these were interim accounts because the charges were subject to adjustment: Samson (Q.B.), paras 45-46; Samson (C.A.), para 110; Lewis Estates Communities Inc. v Brownlee LLP , 2013 ABQB 508 , para 42 . The clients in this case argue, in another context, that accounts rendered to each member of the client group were subject to reduction in accordance with the cap.

Thus, it could not be known until the end of the year what fees were owed. [ 91 ] A final account for year two was never completed because, by then, the parties were falling out with each other. In effect, that annual adjustment is part of the work of the review and this reference. [ 92 ] Even if the six-month limitation applied, I would grant an extension pursuant to rule 1.4(2) of the Rules . Given the change in management direction of the client group and the difficulties arising between the clients and Mr.

Homersham, it was reasonable to wait until the three-year term of the MOU was nearing an end to pursue unpaid accounts. Mr. Homersham commenced an action on the accounts to preserve his rights, and it would be inefficient to exclude the review process. That is particularly so as other accounts between these parties are already part of the review process. Finally, there is no suggestion that an extension of time to review these accounts would prejudice the clients.

VI. Other Matters A. Introduction [ 93 ] Question five of the reference asks whether the court sees “fit to provide any direction to the Review Officer regarding conducting the review of the accounts.” Thus, I will address additional matters that arose in connection with the other reference questions. B. Settlement [ 94 ] The clients argue that some accounts of one or more of their group were settled and can no longer be pursued through the review process. Their argument is based on the January 5, 2015 agreement between Mr. Homersham, New Urban and Mr. Van Leeuwen under which Mr.

Homersham received interests in an attainable housing program, an artificial lift pump, and a security deposit – the first and last of these stated to be “for value received.” [ 95 ] As indicated earlier when reviewing the evidence, Mr. Homersham strongly disputes that this agreement was in settlement of legal accounts. Mr. Van Leeuwen’s evidence suggests otherwise, but falls short of stating that Mr. Homersham actually agreed that satisfaction of his accounts was consideration for what he received. [ 96 ] I conclude that this agreement cannot be used in defence for a claim for the accounts.

An agreement that obligations under the accounts were satisfied required clear terms. Use of the perfunctory phrase “for value received” falls far short of that. C. Benefits [ 97 ] I found earlier that the MOU is silent on whether Mr. Homersham must pay for the expenses of a legal assistant, operating costs of premises, and telephone, computer and internet services. The evidence is contradictory about whether there was any discussion about Mr.

Homersham’s liability for such matters during the working relationship. [ 98 ] It is clear, however, that no invoices were sent by the clients; nor did they particularize the amounts they would claim. Payment of operating costs might seem reasonable in a lease context, but Mr. Homersham was never given a lease – he had an oral right of occupancy with no fixed term. He testified that the computer was gifted and the legal assistant’s services were shared with New Urban.

As to all of it, he said he had been given no contemporaneous information he could use to determine if the charges were reasonable. [ 99 ] I conclude that there is no basis for a reduction in fees for these benefits. The MOU does not establish a contractual basis. In effect, the clients are pursuing an unjust enrichment claim without pleading it. There is good reason not to allow such a claim here, where the evidence of any deprivation to the clients is weak (most, if not all, of the costs would have been incurred anyway), and the delay in advancing the claim prevented Mr.

Homersham from having input into the costs when they were incurred. D. Deferred Billings [ 100 ] Mr. Homersham asserts that he did not bill regularly at Mr. Van Leeuwen’s request. This is relevant particularly to the 2012-13 year (year one), at the end of which he says he had significant unbilled work in process. [ 101 ] His evidence, as stated earlier, was disputed by Mr. Van Leeuwen. Mr. Van Leeuwen emphasized that it was important to the clients to receive timely billings. He was not cross-examined. [ 102 ] I am not persuaded by the argument, on the evidence, that Mr.

Homersham is entitled to reconstruct what he would be owed for year one. There is no evidence to support his contention that the client group had cash flow shortages that motivated a request for deferred billings. Furthermore, that contention is not very plausible in any event: a client with cash flow problems might request a delay in payment obligations, but there would be no reason to defer billings which would establish the amounts owing. Even if a request was made, it was open to Mr. Homersham to submit the bills as he was entitled to do. [ 103 ] I am not prepared to accept Mr.

Homersham’s evidence on this point, in light of its implausibility, lack of corroborating circumstances and the unchallenged evidence to the contrary of Mr. Van Leeuwen. VII. Conclusion [ 104 ] The forgoing addresses all of the reference question, including incidental matters addressed in response to question five. [ 105 ] The parties may

schedule a further appearance before me if any matters require clarification or if there is an application for costs of this reference on which they cannot agree.

Heard on the 13 th day of April, 2017. Dated at the City of Calgary, Alberta this 15 th day of June, 2017. G.H. Poelman J.C.Q.B.A. Appearances: Mark Klassen for the Lawyer (Applicant) Shaun T. MacIsaac, Q.C. and Shawna Nahal, Student-At-Law for the Clients (Respondents)