422252 Alberta Ltd v. Robert F MacRae, 2021 ABQB 753

Court of Queen’s Bench of Alberta Citation: 422252 Alberta Ltd v McLennan Ross LLP, 2021 ABQB 753 Date: 20210921 Docket: 1903 02852 Registry: Edmonton Between: 422252 Alberta Ltd and Robert F MacRae Plaintiffs - and - McLennan Ross LLP Defendant _______________________________________________________ Reasons for Decision of L.A. Smart , Master, Court of Queen's Bench of Alberta _______________________________________________________ Introduction [ 1 ] This matter arises from a Reference to the Court from the Review Officer D. Pawlowski.

The first issue for which direction is sought is whether or not the accounts that were presented for review are final or interim accounts. The second issue arises only if I determine that the accounts were final. In that case, should the out-of-time accounts that are not barred by section 3(1) of the Limitations Act , RSA 2000, c L–12 , be reviewed, notwithstanding Rule 10.10(2) of the Alberta Rules of Court ? [ 2 ] The Clients, 422252 Alberta Ltd and Robert MacRae filed an application on February 7, 2019 seeking a review of 61 statements of account.

The accounts from June 22, 2011 to October 26, 2018 are for services provided by the Law Firm, McLennan Ross LLP under a retainer letter dated June 9, 2011. On February 19, 2019, Mr. Graham McLennan appeared for the Law Firm and challenged the jurisdiction of the Review Officer on the basis that the majority of the accounts fell beyond the time limit specified by Rule 10.10(2). Other than the last two accounts, the jurisdiction of the Review Officer will be determined by whether the accounts are characterized as interim or final.

[ 3 ] The Review Officer determined that the agreement or arrangement between the Law Firm and the Clients is set out in the June 9, 2011 retainer letter and the attached “Explanation of Billing Policies”. This is not disputed by the parties. The

interpretation of the fee provisions of the retainer agreement (the “Retainer”) made between the parties is in dispute and must be referred to the Court for a decision. The Law Firm has also raised the issue of a delay in proceeding with this Reference and argue that Rule 4.31 should be applied due to the inordinate, inexcusable delay and the significant prejudice to the Law Firm.

The Delay Issue [ 4 ] The Reference dated April 5, 2019 provided that the parties select a suitable date and time for the hearing of the Reference before a Master, provided however, if the parties were unable to agree on a date and time, then either side could request that the Review Officer prescribe the date and time. On May 24, 2019, then counsel for the Clients indicated that he would be waiting until the conclusion of the appeal of the Clients’ matter before proceeding with the Masters Special to hear the Reference.

No response was made by the Law Firm to that advice. [ 5 ] The Clients’ matter under appeal arose from the striking of the action by Master Schlosser in August, 2018 for long delay of the underlying matter for which the Law Firm had been retained. In October, 2018 the Clients retained new counsel to appeal Master Schlosser’s decision such appeal being successful before Justice Lema. His decision was further appealed to be heard on March 4, 2020. During the course of a JDR on February 14, 2020, the matter was settled.

On March 26, 2020 the Clients advised the Law Firm the matter had been settled and that they were ready to proceed with the review of the Law Firms accounts. No mention was made of the Reference but instead the Clients indicated that they wished to set another date to proceed with the review. Parenthetically, on April 14, 2020 the Clients new counsel withdrew from the record. Attempts at securing dates were suspended due to COVID-19.

Eventually the date of November 9, 2020 was obtained and when the parties attended, the Review Officer confirmed that he had no jurisdiction to hear the matter until the Reference had been heard. [ 6 ] The Law Firm argues that the delay was inordinate and inexcusable pointing to the difficulty for them to demonstrate the reasonableness of the Retainer and charges as over the past 9 to 10 years as since the retainer was signed memories would have faded, documents may have been lost and individual lawyers who had performed work on the file may no longer be available.

Furthermore, the physical file was transferred to new counsel in December, 2018 and it would not be available for purposes of refreshing memories as to all the activities that took place on the file and the reasons for time and effort being required, as reflected in the various monthly accounts. The Law Firm says there were no compelling reasons not to pursue the Reference. [ 7 ] Dealing with the last point first, Mr.

MacRae in his affidavit filed in relation to this Reference points to the failure of the Law Firm to diligently advance his claim resulting in dismissal of the action for long delay as one of his primary concerns. Furthermore, he was concerned that certain correspondence (which he believed to be privileged) from another law firm he had previously retained found its way into the hands of opposing Counsel and the apparent insistence by the Law Firm that its use on the long delay application not be opposed.

In that context, particularly the Clients primary concern, the eventual outcome of the appeal may well have some relevance to the assessment by the Review Officer. [ 8 ] Although the Law Firm no longer has the physical file, it was acknowledged that it has an electronic copy. The relevant delay in my view is the time from February, 2019 to March, 2020. It was open to the Law Firm to have the Review Officer set a date but they did not respond to the correspondence on delaying the Reference or object to the proposal.

The additional delay in having this Reference proceed can be attributed to institutional delay and the request by the Law Firm for a Master to recuse herself. Finally, with respect to the lawyers no longer at the firm, there is no reason to believe they are not available. [ 9 ] I do not find the delay in proceeding with the Reference inordinate. It would be excusable in any event and there is no evidence of actual prejudice. The Agreement and Position of the Parties [ 10 ] The Law Firm asserts that its Accounts were final and not interim accounts.

They rely on the language of the Retainer and by the actual account billings sent to the Clients during the working relationship. [ 11 ] The Explanation of Billing Policies (“Billing Policies”) stated: Fees: There are a number of factors which will be considered and reflected in any account we send to you. Each lawyer, paralegal and document clerk has an hourly billing rate and that rate multiplied by the number of hours spent on a project is the initial basis for determining our fee. These rates vary by lawyer, and are subject to increase from time to time.

As well, the difficulty and importance of the matter, whether special skill or service has been required and provided, the amount involved or the value of the subject matter, the results obtained, the efficiency of our work, the magnitude of the risk pursuing the matter, and the value you receive from our work on your behalf, are other factors that enable us to arrive at our fee.

Billing Frequency: It is our policy to bill you monthly or when the combined total of fees, disbursements and other charges reaches $2500 unless we reach another agreement with you. [ 12 ] The Law Firm argues the variance considerations only apply to a specific billing period (bill to bill basis) in which they occurred and cannot be reflected in subsequent billing periods. The agreement does not contemplate the ability to retroactively adjust prior billings or at the end of the Retainer.

In support of this position the legal assistant of Graham McLennan swears she was informed by him that during the course of the retainer there was never any adjustment made to the accounts pending any outcome achieved or not achieved, and charged by the hour, regardless of the outcome. There was no contemplation by the Law Firm, and no discussion with the Clients that the Law Firm would receive a bonus or penalty at specific milestones throughout the course of the retainer or at its end.

[ 13 ] The Clients do not opine as to their

interpretation of the Retainer. They do not contradict the hearsay evidence from the Law Firm that accounts were only rendered on an hourly basis nor that there had been no discussion regarding bonuses or penalties at specific milestones during or at the end of the Retainer. [ 14 ] Neither the Law Firm or the Clients provided any evidence as to nature of the suit involved. Although the Review Officer provided a

schedule listing all of the Accounts, no copies of any Account, or covering correspondence in relation to the Accounts, were provided. Discussion There is the written Retainer agreement here. The question is whether under the Retainer, properly interpreted, the accounts sent by the Law Firm to the Clients would be final periodic accounts, or periodic interim accounts subject to review at some later date ( Attila Dogan Construction and Installation Co Inc v Bennett Jones LLP , 2015 ABQB 407 at para 19 (“ Attila Dogan ”)). In my view, the starting point is to apply ordinary contractual

interpretation principles enunciated in Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 , that is, to “read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.” In Attila Dogan , the Court stated that in addition to ordinary contractual principles the Court of Appeal in Sampson Cree Nation ( infra ) provided the following principles for consideration: 1. Certainty has value for the client and the lawyer; 2.

If there is any doubt as to how to interpret the words in the contract, Courts can and should look to what is practical and workable to achieve the aim of the parties; 3. Where a contract has several clauses or parts or terms, they are to be interpreted harmoniously to achieve the overall objective; 4. A claim for a remedial order in the context of a dispute between a lawyer and client is made within the meaning of the Limitations Act , RSA 2000, c L-12 when the Appointment for Assessment is taken out.

Any account predating two years prior to this appointment is statute barred. [ 15 ] In my view items 1 to 3 merely reflect factors the Court should look to in applying Sattva . [ 16 ] As in Attila Dogan , the Retainer here clearly contemplates an agreed upon basis for charging an hourly rate, however, in Attila Dogan the Court also determined that the agreement was clear that the law firm was not entitled to a bonus for a good result.

The Retainer makes no express reference to the term “interim” although based on Samson Cree Nation v O’Reilly & Associés , 2014 ABCA 268 at para 110 because “interim” is susceptible to differing meanings that would be inconclusive, regardless. The failure to include the term “final” in my view is more telling. [ 17 ] It is perhaps notable that the Retainer agreement was drafted by the Law Firm which based on its evidence was done without discussion with the Clients, at least as it related to bonuses under the Retainer.

Indeed, the Court in Re: Van Brabant Estate , 2013 ABQB 547 at para 37 observes that “The lawyer has a special knowledge of the law and knows the importance of clarity in contracts. Therefore, we must expect lawyers to write their Retainer Letters with clarity. It was completely open to the Law Firm to clearly and expressly state that each periodic account was final and it did not do so.

If they do not, they should not benefit.” This is said to support all the more that the application of the contra proferentem rule to lawyers’ retainer letters applies and any kind of ambiguity must be construed against the lawyer who wrote it. Although I concede such an approach is attractive to me, I see no need to give “retainer letters” any additional attention. If there is ambiguity the rule will apply. [ 18 ] The part of the Retainer relevant to this consideration is the Explanation of Billing Policies referred to above.

The first three lines speak to application of the hourly rate as the starting point when preparing an account. It then speaks to the difficulty and importance of the matter along with various other factors it may consider in arriving at their fee. It does not expressly contemplate subsequent revision of accounts to incorporate those factors. Nonetheless, there is no temporal boundary expressed in relation to the application of those factors. Although these factors were not applied, there is no limitation on subsequent accounts reflecting them.

Indeed, results obtained or value received are often difficult to measure during the course of the litigation, and not until the end of the day in litigation. Should a favourable result be achieved there is nothing to restrict the Law Firm from taking in to account all the factors in arriving at a substantial fee reflective of the entire course of the litigation. Under the specific circumstances it is not difficult to see why no such adjustment was made when the relationship between the Clients and the Law Firm was terminated.

Conclusion I see no ambiguity in the language used in the Retainer and, therefore, no need to resort to the contra proferentem rule for its

interpretation. Using the ordinary contractual

interpretation principles outlined in Sattva , I conclude that the Retainer, properly interpreted, contemplates that the accounts sent by the Law Firm were periodic interim accounts subject to review at the end of the Retainer. Having reached the foregoing conclusion, I need not consider whether it is appropriate to grant an extension of time for those accounts that would not otherwise be statute barred. Regardless, the parties have not provided the necessary evidence to make a determination in that regard.

Heard on the 19 th day of July, 2021. Dated at the City of Edmonton, Alberta this 21 st day of September, 2021. L.A. Smart M.C.Q.B.A. Appearances: S Chorney McLennan Ross LLP for the Applicant Robert MacRae for the Self-Represented Litigant/Respondents/Clients