Miller Thomson LLP v. van Driesum, 2013 BCSC 401

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Miller Thomson LLP v. van Driesum, 2013 BCSC 401 Date: 20130311 Docket: 12 2402 Registry: Victoria In the Matter of the Legal Professions Act , S.B.C. 1998, c. 9 Between: Miller Thompson LLP Solicitors And: John van Driesum and John van Driesum Law Corporation Clients Before: Master Bouck (Sitting as Registrar) Reasons for Decision Counsel for the Solicitors: J.R. Shewfelt, V. Ing Appearing for the Client: J. van Driesum Place and Date of Trial/Hearing: Victoria, B.C. February 4-5, 2013 Place and Date of Decision: Victoria, B.C.

March 11, 2013 Introduction [ 1 ] In this Legal Profession Act [1] (“ LPA”) review, the Solicitors seek recovery on four accounts issued over the course of an approximate six-month retainer. [ 2 ] The bills in question were issued on October 19, October 31, December 31, 2011 and January 11, 2012. All of the bills are addressed to Mr. van Driesum personally. [ 3 ] Altogether, the bills claim $17,963.30 for fees, disbursements and taxes. The bills have not been paid.

Three other bills issued by the Solicitors earlier in the retainer have been paid in full. [ 4 ] Mr. van Driesum disputes liability for the bills under review, suggesting that the Solicitors have overcharged and/or failed to adequately perform the necessary services in the retainer. [ 5 ] While the Appointment in this matter names John van Driesum Law Corporation as a Client, the evidence does not support a finding that this entity is responsible for payment of any of the bills. Thus, Mr. van Driesum in his personal capacity will be considered the only Client.

The Retainer [ 6 ] Mr. van Driesum is a practicing lawyer and businessman. This retainer relates to litigation over a failed business relationship. That litigation has now settled but the pleadings and other evidence concerning that law suit were before me on this review. [ 7 ] The business relationship involved the sale of fabric-covered buildings. Mr. van Driesum was introduced to the business through an acquaintance named Mike Ursel. Mr.

Ursel and his companies were clients of Mr. van Driesum’s former law partnership Cox, Taylor. [ 8 ] In 2010, after taking steps to remove himself from the law partnership, Mr. van Driesum (or his Family Trust) purchased shares in the business. Mr. van Driesum prepared a memorandum of understanding (the “MOU”) which set out the terms of the business venture.

[ 9 ] Among other things, the MOU addresses the financial contribution to be made by Mr. van Driesum and the day to day operations of the business. Mr. van Driesum was given signing authority on the business’ bank accounts. [ 10 ] Mr. van Driesum says that while the MOU was not signed until the spring of 2011, Mr. Ursel was well aware of its content and agreed to the terms set out in the document. Mr.

Ursel says that he did not see the MOU until it was presented by Mr. van Driesum for signature in or about March 2011. [ 11 ] After June 2010, Mr. van Driesum maintained his practice certificate and operated his law practice from his home. However, most of Mr. van Driesum’s energies were directed towards the operations of the business. [ 12 ] In February 2011, Mr. van Driesum was involved in a motor vehicle accident. The resulting injuries curtailed his involvement in the business to some degree. However, Mr. van Driesum also says that he alone (i.e. not Mr.

Ursel) conducted day to day operations of the business until departing on a long-planned three-week trip to Israel in April 2011. Upon his return, Mr. van Driesum found himself locked out of the business by Mr. Ursel. [ 13 ] For a short period of time, Mr. van Driesum attempted to resolve matters with Mr. Ursel on his own. However, it soon became clear that the dispute would result in litigation. [ 14 ] Mr. Shewfelt practices at the Vancouver office of Miller Thompson.

He was called to the Bar of British Columbia in 1995 and has practiced in the area of civil litigation, including commercial law cases, since that time. [ 15 ] Mr. van Driesum was first introduced to Mr. Shewfelt in March 2011 when both participated in a conference call regarding a separate business venture. Mr. van Driesum recalls Mr. Shewfelt advising the other participants that his legal services are charged at the hourly rate at $395. Mr. Shewfelt has no specific recollection of any such comment. In fact, Mr.

Shewfelt says that he has never charged for services at that particular rate. [ 16 ] In early May 2011, Mr. van Driesum contacted Mr. Shewfelt by telephone to discuss representation in the Ursel business dispute. Mr. Shewfelt agreed to take on the matter but says that there was no specific discussion regarding hourly rates or, indeed, any other financial aspects of the retainer. The parties did agree that Mr. van Driesum would take on some of the necessary legal work involved, including pleading drafting and document gathering. Mr.

Shewfelt was aware that the Client was very “cost sensitive” with respect to legal fees. [ 17 ] During the very early part of the retainer, Mr. van Driesum and Mr. Shewfelt discussed strategy and even a proposal to settle the business dispute. It was presumed that Mr. van Driesum would initiate an action if the dispute could not be resolved in a timely manner. However, in mid-May, Mr. Ursel and related parties (the “Ursel Parties”) commenced an action against Mr. van Driesum, his law corporation, the Van Driesum Family Trust and Cox, Taylor.

The action was commenced out of the Victoria registry. [ 18 ] On May 30 th , a written retainer agreement was forwarded by Miller Thompson to Mr. van Driesum with the request that the latter sign and return the document. The retainer agreement provides that Mr. Shewfelt would charge for his services at the rate of $430 per hour but that the hourly rate might be “adjusted annually”. [ 19 ] The first account of the Solicitors issued June 30, 2011 charges Mr. Shewfelt’s services at $430 per hour. However, thereafter, the bills charge for those services at $435 per hour. Mr.

Van Driesum was aware of the $435 hourly rate charge before those subsequent bills were issued. [ 20 ] In June 2011 Mr. van Driesum questioned that hourly rate with Mr. Shewfelt’s assistant suggesting that a rate of $395 had been quoted in April 2011. Mr. van Driesum never returned a signed copy of the agreement but did pay subsequent bills which charged the hourly rate of $435. [ 21 ] According to Mr. van Driesum, the two primary objectives in the retainer were to ensure preservation of electronic records in the Ursel Parties’ possession and secure an early trial date. [ 22 ] Over the next several weeks, Mr.

Shewfelt took instructions and prepared a Response to the claim. Mr. van Driesum made a significant contribution to the content of that pleading. [ 23 ] At the same time, the Ursel Parties pressed for Mr. Van Driesum’s cooperation in signing cheques in order to pay the business’ suppliers and other creditors.

Mr. van Driesum was concerned that not all requested payments were necessary for the day to day operation of the business. [ 24 ] The Ursel Parties threatened a court application requiring Mr. van Driesum’s compliance with the cheque signing request. [ 25 ] An arrangement was eventually made allowing for Mr. van Driesum to review the payables and endorse cheques that he believed were intended for proper business expenses. [ 26 ] On Mr. van Driesum’s instructions and with his drafting input, a counterclaim was filed. [ 27 ] In late August 2011, Mr.

Shewfelt began pressing the Ursel Parties’ counsel for a trial date. Certain dates for a 15-day trial were proposed but opposing counsel was unwilling to commit to any dates until his assistant returned from holidays. [ 28 ] Meanwhile, Cox, Taylor came to be represented by another Vancouver law firm, Webster Hudson and Coombe LLP. [ 29 ] By this time, the Solicitors had already issued the first three bills. No complaints were made by the Client with respect to those bills.

[ 30 ] In late September, the trial in the proceeding was agreed to be set for 15 days commencing October 22, 2012. Counsel for Cox, Taylor was not consulted about these dates. Mr. Shewfelt acknowledges that this may have been an oversight. However, he also says that Cox, Taylor had yet to deliver its Response and, based on earlier discussions with counsel, might not play an active role in the proceeding. [ 31 ] Both Mr. Shewfelt and Mr. van Driesum considered the inclusion of Cox, Taylor in the proceeding as primarily a pressure tactic aimed at the van Driesum Parties.

Cox, Taylor held monies owing to Mr. van Driesum in the latter’s capital account. Once the action was commenced, the capital account was effectively frozen by Cox, Taylor. In addition, Cox, Taylor advised Mr. van Driesum that it would be seeking partial indemnity for its legal costs related to the lawsuit. [ 32 ] In other communications issued in late August, the Ursel Parties declined the request to produce Mr. Ursel’s hard drive from his computer. The Ursel Parties took the position that their document disclosure was complete.

They pressed for a list of documents from the van Driesum defendants. [ 33 ] Mr. van Driesum was concerned that the Ursel Parties might erase or destroy relevant electronic records. Prior to Miller Thomson’s involvement, Mr. van Driesum had asked that the Ursel Parties produce or safe keep those records. [ 34 ] By early October, Mr. Shewfelt provided advice in writing on a method of obtaining the Ursel hard drive, including the need to make formal demand under the Supreme Court Civil Rules, and allow 35 days for a response to that demand.

Mr. van Driesum says that the demand had already been given in the spring of 2011. [ 35 ] Mr. Shewfelt believed that no further steps could be taken with respect to document production by the Ursel Parties until the van Driesum Parties provided their own list of documents. [ 36 ] At the same time, the Solicitors wished to provide documents and instructions to a business valuator. [ 37 ] Mr. van Driesum continued to attend cheque signing meetings but also declined to endorse various cheques.

The Ursel Parties set down an application compelling Mr. van Driesum to endorse certain cheques. [ 38 ] The hearing of that application proceeded before Gropper J. in October 2011 in Victoria. Mr. van Driesum was in Prince George on that day but left a contact phone number with Miller Thompson. Mr. van Driesum was aware that Mr. Shewfelt was unable to attend to speak to the matter. Instead, Mr. Ing, a junior lawyer from Miller Thompson, attended the application. Despite the extensive cross-examination on the issue, there is no evidence to suggest that Mr.

Ing was ill-prepared for the application. [ 39 ] At some point during the hearing, the court suggested that Mr. van Driesum be contacted to discuss resolving the matter without the necessity of a court order. That contact was attempted by Mr. Ing but without success. Mr. van Driesum says that Mr. Ing was not diligent enough in his efforts. [ 40 ] Mr. van Driesum also says that if he had been contacted, an agreement could have been reached to obviate the need for a court order. He suggests that his proposal for resolving the issue would have been seen by Gropper J. as “reasoned and measured”.

There is no evidence to suggest that Mr. van Driesum’s proposal to resolve the issue would have been acceptable to the Ursel Parties or the court. [ 41 ] Gropper J. ordered Mr. van Driesum to cooperate with the cheque signing for certain payables. Costs of the application were ordered to be in the cause. No appeal was taken from the order. [ 42 ] Mr. van Driesum advised Miller Thomson that he was “unimpressed” with the result of the application. He suggests that the Gropper J. order was a turning point in the litigation. [ 43 ] In the meantime, the van Driesum Parties’ list of document remained outstanding.

The Ursel Parties advised that they would apply to strike the van Driesum pleadings if the list was not provided forthwith. [ 44 ] Mr. van Driesum was tasked with gathering these documents and presenting an electronic list. Many of the documents were stored on Mr. van Driesum’s personal computer. A computer technician was retained to search that computer within certain parameters and gather the documents together. A disc with those documents listed was then provided to Miller Thomson. [ 45 ] The disc provided by Mr. van Driesum needed to be put in the proper form for a list of documents.

That task was delegated to a legal assistant. [ 46 ] In late October, Mr. Shewfelt advised the Ursel Parties’ counsel that the van Driesum defendants’ list of documents would not be forthcoming for another four weeks or so as there were “over 4,000 individual [electronic] files of potential relevance”. [ 47 ] Around this same time, Mr. van Driesum provided instructions to amend the counterclaim. Mr. Shewfelt raised some concerns with respect to causes of action proposed by Mr. van Driesum. The amended counterclaim was filed on October 28, 2011.

It includes a claim of civil conspiracy. [ 48 ] The notice of trial, which did not include reference to Cox, Taylor’s solicitors, was filed the same day. The trial was set to commence on October 22, 2012. [ 49 ] Mr. van Driesum proposed mediation of the dispute. He suggested using an individual acquainted with all parties but who had no formal mediation training. The idea was canvassed with the Ursel Parties but no agreement reached. [ 50 ] In mid-November, Mr. van Driesum advised Mr. Shewfelt that he would be looking for other representation and to cease any work on the file.

Mr. van Driesum identified “cost and pace” of the Solicitor’s representation as two factors which led to this decision. [ 51 ] The van Driesum list of documents had still not been finalized. Mr. Shewfelt says that the list was “about one hour” from

completion when the retainer was terminated. [ 52 ] Despite the retainer’s apparent termination, Miller Thomson remained the van Driesum Parties’ solicitors of record. In January 2012, the Solicitors were served with a notice of application to strike the van Driesum pleadings for failure to provide the list of documents. Mr. van Driesum instructed the Solicitors to finalize the list of documents. This was the last step taken in the retainer. [ 53 ] Mr. van Driesum eventually retained new counsel.

It was then discovered that Cox, Taylor’s solicitors had not been apprised of the October 2012 trial date. [ 54 ] Mr. van Driesum says that he was then met with two applications brought by Cox, Taylor: one to adjourn the trial; and the second to “split” the trial. Mr. van Driesum complains that the applications resulted in additional cost to him, the amount of which was not identified.

The trial was ordered to be split with the action between the Ursel Parties and the van Driesum Parties preceding the Ursel Parties’ action against Cox, Taylor. [ 55 ] As noted, the action brought by the Ursel Parties was eventually settled.

Discussion [ 56 ] As has been oft-stated, the Solicitors are entitled to a fair fee commensurate with the value of the work performed. [ 57 ] In this case, the Solicitors’ services included advising on litigation strategy, preparing pleadings and affidavits (albeit with a significant contribution from the lawyer-client), preparing for and attending a contested chambers application, setting a trial date, receiving and reviewing documents and overseeing the proper disclosure of those documents.

Based on the evidence before me, I accept the Solicitor’s characterization of this matter as a “busy” file with communications between lawyers and between solicitor and client exchanged on a frequent -- and sometimes urgent -- basis. [ 58 ] The Client says that the two objectives in the retainer were not met: an early trial date and ensuring that electronic records in the possession or control of the Ursel Parties were secured. [ 59 ] With respect to the trial date, the Solicitors’ failure to include Cox, Taylor in setting those dates does indeed appear to have led to the expense of an adjournment application.

However, there is no evidence before me as to the cost incurred by the Client as a result of that adjournment. [ 60 ] As for any order securing the Ursel Parties’ electronic records, I accept the Solicitor’s submissions that such an application would have difficulty succeeding when the van Driesum Parties had yet to comply with the Supreme Court Civil Rules and provide their own list or lists of documents.

There is no evidence of any detriment suffered by the van Driesum Parties in failing to secure the hardware or other electronic documents during the retainer period. [ 61 ] With respect to the factors under s. 71(4) of the LPA , I find as follows: Complexity, Difficulty or Novelty of Issues Involved [ 62 ] Having considered the pleadings in the Ursel action and evidence received at this hearing, I am not persuaded that the issues involved in this retainer were on the higher end of complexity, as the Solicitors suggest.

Essentially, the action is a shareholders’ dispute, although the plea of civil conspiracy may have added some complexity to the action. Given the timing of the retainer’s termination, the Solicitors were not required to deal with that potential complication. Skill, Specialized Knowledge and Responsibility Required of the Solicitors [ 63 ] I find this to be a neutral factor in this review. Lawyer’s Character and Standing in the Profession [ 64 ] This factor is not an issue in this proceeding. Amount Involved [ 65 ] Mr. van Driesum invested approximately $250,000 in the business.

The counterclaim sought additional damages based on Mr. van Driesum’s potential future income in the business but that amount was never determined in the course of the retainer. Time Reasonably Spent [ 66 ] The time intensive period in this retainer was the fall of 2011. In that period, the Solicitors record close to 50 hours of billable time, including time spent by the Solicitors’ legal assistant preparing the list of documents.

With one exception, I find that the time spent by the Solicitors was reasonable, even taking into account Mr. van Driesum’s very active involvement in the drafting of pleadings, correspondence and preparation of the list of documents. [ 67 ] I find that the final bill should allow for only one hour of the legal assistant’s time for finalizing the list of documents. Agreement as to Fees and Whether that Rate is Reasonable [ 68 ] While the retainer agreement went unsigned, Mr. van Driesum did pay the Solicitors’ bills with the knowledge that Mr. Shewfelt was charging an hourly rate of $435. Given Mr.

Shewfelt’s years at the Bar, together with his experience in commercial litigation, I find that hourly rate to be reasonable.

Importance of the Matter to the Client [ 69 ] There is no doubt that the outcome of this litigation was of extreme importance to Mr. van Driesum. He had invested both his time and money in the business and was reliant on the business for his future income. Nonetheless, the business was not Mr. van Driesum’s sole source of potential income. Mr. van Driesum maintained a law practice, although apparently a rather modest one. He also explored other business opportunities. There was evidence before me of success in those endeavours.

Result Obtained [ 70 ] While Mr. van Driesum is generally critical about the slow pace of the retainer, he is specifically critical of the outcome of the application before Gropper J. He suggests that a junior lawyer should not have been sent to speak to such an important application. [ 71 ] As already observed, there is nothing in the evidence to suggest that Mr. Ing was ill-prepared. Nor is there any evidence to suggest that anything done or not done by Mr. Ing led to the complained of result. As further observed, there is no evidence to suggest that a conversation between Mr. van Driesum and Mr.

Ing would have led to a different order or outcome. The dispute over cheque signing had gone on for months; both parties had taken particular stands on the issue. That is why the court became involved. All of the Circumstances [ 72 ] As the Solicitors acknowledge, the total amount billed to the Client during the course of the retainer may be taken into account on this review. In this case, the Solicitors’ total charges over a six-month period amount to more than $30,000 in fees, taxes and disbursements. [ 73 ] While Mr.

Shewfelt was aware that the Client was cost conscious, there was never a suggestion of an inability to pay accounts as rendered. Again, the costs were somewhat ameliorated by Mr. van Driesum’s input.

Result [ 74 ] Given all of the above factors, I find that the bills under review ought to be allowed as presented except for modest reductions in the October 31, 2011 and January 11, 2012 accounts. [ 75 ] That October 31 st bill is reduced (somewhat arbitrarily) to $12,000 to address the time and disbursements wasted in setting the October 2012 trial date. [ 76 ] The fees charged in the January 11, 2012 account are reduced to $295.00. [ 77 ] There were no other specific concerns raised by the Client regarding disbursements. [ 78 ] Accordingly, the bills are allowed as follows: 1. October 19, 2011 $1,676.70 2.

October 31, 2011 $12,000.00 3. December 31, 2011 $2,327.30 4. January 11, 2012 $355.60. [ 79 ] The Solicitors claim interest on the outstanding amounts at 18% per annum in accordance with the unexecuted retainer letter. On this issue, I adopt the observations of (then) Registrar Blok in Hutchison v. Victoria Golf Club, 2008 BCSC 55 at paras. 106-108 . While the retainer agreement went unsigned, the Client’s conduct during the retainer demonstrated an acceptance that interest would be paid at 18% per annum on overdue accounts.

Specifically, the payment in October 2011 of accounts rendered in July and August of that year includes an interest component. The Client is obliged to pay interest at 18% per annum on the bills as determined in this review. [ 80 ] As the accounts have been reduced by less than 1/6 th , the Solicitors are entitled to its costs of this review unless special circumstances exist that I am unaware of: s. 72 of the LPA . If such circumstances are said to exist, the parties are directed to provide written submissions on the issue.

Those submissions should be delivered to the manager of Court Scheduling on or before March 31, 2013. “C.P. Bouck” Master C. P. Bouck