2014 QCCQ 5254, 2014 QCCQ 5254

Brouillette & Associés, s.e.n.c.r.l. c. Halperin 2014 QCCQ 5254 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-22-184914-110 DATE: June 25, 2014 ______________________________________________________________________ BY THE HONOURABLE SUZANNE HANDMAN, J.C.Q. ______________________________________________________________________ BROUILLETTE & ASSOCIÉS, S.E.N.C.R.L. Plaintiff/Cross Defendant v.

IAN HALPERIN Defendant/Cross Plaintiff ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The law firm of Brouillette & associés, S.E.N.C.R.L. (“Brouillette & associés”) instituted this action against Ian Halperin, claiming $26,470.82, with interest at 12% per year, from the date of each invoice, for professional services rendered. [ 2 ] Mr.

Halperin, originally invoked the existence of verbal agreements which relieved him of any obligation to pay the legal fees sought, but subsequently pleaded that the systemic actions of Me. Brouillette violated the Code of Ethics of advocates [1] , resulting in the forfeiture of the legal fees claimed. [ 3 ] Mr. Halperin instituted a cross demand for $41,369.52. He maintains that money held in trust, by Brouillette & associés, pursuant to a publishing contract, is owed to him.

More specifically, he contends that he received trust funds only after the law firm deducted, without right, a total of $41,369.52 qualified as “Legal” and “Other” and submits he is entitled to this sum. [ 4 ] Brouillette & associés deny having committed any fault with respect to the management of its trust account and submit, amongst other grounds, there is no lien de droit between Mr. Halperin and Brouillette & associés; any litigation with respect to the amounts owed is between Mr. Halperin and Transit Publishing inc., a publishing company, and should be submitted to arbitration.

THE QUESTIONS IN LITIGATION: 1. Is the firm Brouillette & associés entitled to the legal fees it claims? 2. Is the firm Brouillette & associés precluded from claiming its legal fees because of a verbal agreement reached by the parties and/or do the alleged violations of the Code of ethics by Me. Brouillette and his law firm result in the forfeiture of the firm’s legal fees? 3. Did the firm Brouillette & associés commit any fault in the management of its trust account and if so, did it cause damages to Mr.

Halperin? 4. In the affirmative, what is the amount of the damages? THE EVIDENCE [2] : The players with respect to the claim for legal fees: [ 5 ] Brouillette & associés is a law firm, founded by Me. Brouillette, an engineer and a lawyer admitted to the Bar in 1977, who is also the law firm’s principal partner. Brouillette & associés acted as legal counsel in a number of files involving Mr. Halperin and in others involving a company called Transit Publishing Inc. [ 6 ] Mr. Halperin is an author, film maker and an award winning investigative journalist.

At all pertinent times, he was a client of Brouillette and associés; his files were handled primarily by Me. Frenière. [ 7 ] At the end of 2008 or the beginning of 2009, Mr. Halperin contacted a person called Pierre Turgeon about writing and publishing a biography about Guy Laliberté, the owner of Cirque du Soleil. [ 8 ] Mr. Turgeon wanted to launch a publishing business but did not have the necessary capital. Me. Brouillette decided to invest in the business, as he had done on other occasions, assisting young entrepreneurs in difficulty. He described himself as an Angel Investor . Me.

Brouillette incorporated Transit in March 2009 and became a joint owner and director with Pierre Turgeon. It was through Mr. Turgeon that Me. Brouillette and Mr. Halperin met. The Mandate and the Laliberté file: [ 9 ] On June 2, 2009, Transit published a biography written by Mr. Halperin, entitled “Guy Laliberté: The Fabulous story of the Creator of the Cirque du Soleil” . Mr. Laliberté was displeased with the book’s contents and instituted lawsuits against Transit and Mr. Halperin. [ 10 ] Mr. Laliberté allegedly made derogatory comments concerning Mr. Halperin and Transit in front of journalists. Mr.

Halperin wanted to sue Mr. Laliberté for defamation while Transit was not interested in being implicated. [ 11 ] From the outset, Mr. Halperin was concerned about repercussions from his book and the possibility of a colossal legal battle with billionaire Guy Laliberté. Mr. Halperin asked that his manuscript be vetted before it went to press and wanted assurance his legal expenses would be covered in the event of a dispute. [ 12 ] On June 17, 2009, Mr. Halperin met Me. Frenière and signed a mandate for legal services, dated June 10, 2009 with Brouillette & associés at its law firm and provided a $500 advance.

The mandate lists two files: Guy Laliberté’s Biography and Talkradio CJAD 800 AM. Work on these files had already begun before the mandate was signed. [ 13 ] The file of Radio Canada was added subsequently. It was covered by the initial mandate, which included any additional services requested by a client. A client number was attributed to Mr. Halperin and a number was assigned to each file. [ 14 ] The mandate specifies the hourly rates applicable, the manner of billing and the rate of interest charged.

Michelle Frenière, then a young attorney at Brouillette & associés, was responsible for the services rendered to Mr. Halperin. Mr. Halperin has no recollection of the mandate, although it was signed by him. [ 15 ] Immediately after the mandate was signed, Me. Frenière, Mr. Halperin, Me. Brouillette and Mr. Pierre Turgeon went to eat at Le Bifthèque Restaurant. The discussion centered on the issue of legal fees. While they all affirmed that a verbal agreement was reached, each presented a different version with respect to the payment of legal fees. [ 16 ] Mr.

Halperin claimed an author has no responsibility to pay any legal fees when litigation arises in the context of a publication; the publisher assumes such costs. According to Mr. Halperin, Mr. Turgeon and Me. Brouillette agreed to his terms, namely that Transit would cover his legal fees. [ 17 ] Me. Brouillette claimed he proposed that legal fees would be capped at the sum Mr. Halperin had received or would receive, as an advance or as royalties, from the publication of his book and Mr. Halperin had accepted his proposal. Since the legal fees were less than the amount Mr. Halperin had received, Me.

Bouillette contends Mr. Halperin is liable for his legal fees. [ 18 ] Me. Frenière testified that according to the agreement reached, Me. Brouillette proposed that Mr. Halperin renounce to his royalties from the publication and sale of the Laliberté book in exchange for Transit paying the legal fees for all the lawsuits involving Laliberté.

[ 19 ] A demand letter was sent to Laliberté, seeking a rectification of his allegedly defamatory comments as well as damages. This was followed by an action instituted on Mr. Halperin’s behalf. This case was ultimately settled at the same time as Laliberté’s actions against Mr. Halperin and Transit. Me. Frenière declared Mr. Halperin was satisfied with the services rendered. The CJAD and Radio Canada files: [ 20 ] In the CJAD file, Mr. Halperin considered he had been defamed by the radio station during an interview. He wanted CJAD to withdraw the allegedly false comments made and sought an apology.

Brouillette & associés sent a demand letter on his behalf and, although CJAD did not formally apologize, Mr. Halperin was satisfied with its explanations. [ 21 ] In the Radio Canada file, Mr. Halperin had appeared on a TV program “Tout le monde en parle” and, during the interview, anti Semitic remarks had been made. Mr. Halperin, being Jewish, wanted to institute an action against Radio Canada and the interviewer. A demand letter was sent in accordance with his instructions. Ultimately, Mr. Halperin decided not to pursue the matter. [ 22 ] According to Mr.

Halperin, his legal fees in the Radio Canada file were covered by an agreement reached among the parties, namely that he would exchange his royalties from the publication of the Laliberté book for any legal fees payable in this file. He claimed Me. Brouillette and Mr. Turgeon had agreed to his proposal. [ 23 ] However, both Me. Brouillette and Me. Frenière denied the existence of any agreement with respect to legal fees in the CJAD and the Radio Canada file. ******** [ 24 ] Mr.

Halperin’s claim against Brouillette & associés concerns deductions it allegedly made, without right, from its trust account and which Mr. Halperin contends are owed to him, as a beneficiary. The law firm contests his claim. The Context of Mr. Halperin’s Claim regarding the Trust Funds : [ 25 ] Mr. Ian Halperin is the author of the book entitled “Unmasked: The Final Years of Michael Jackson” (the Work). His literary agent is Objective Entertainment inc., represented by Jarred Weisfeld. Mr. Weisfeld is also Mr. Halperin’s manager. [ 26 ] On March 30, 2009, Mr.

Halperin entered into a publishing contract with Transit with respect to this Work (D-7). In virtue of this contract, he assigned to Transit the exclusive rights to the Work, including copyrights. [ 27 ] Me. Brouillette drafted the contract. As indicated, at all pertinent times, he was both the senior partner of Brouillette & associés and a co-shareholder in Transit with Pierre Turgeon [ 28 ] Mr.

Halperin was represented by Jarred Weisfeld but not by separate legal counsel. [ 29 ] On June 30, 2009, Transit concluded a contract with Simon & Schuster inc., a U.S. publisher, granting it the exclusive right to publish the Work (D-8). [ 30 ]

Article 5 of this contract D-8 foresees that an amount of $350,000 USD was to be paid by Simon & Schuster, as an advance, to the order of Brouillette & associés in trust and then was to be distributed to Transit (referred to as the Proprietor) and to Mr. Halperin’s agent, Objective Entertainment: “ Advance 5.

Publisher shall pay Proprietor, as an advance against all amounts accruing to Proprietor under this Agreement, the sum of $350,000, payable as follows: $175,000 on signing of this Agreement, payable 42.5% to Brouillette & Partners, in trust for the Proprietor and 57.5% to Objective Entertainment inc.; and $175,000 on Publisher’s first publication of the Work, payable 85% to Brouillette & Partners, in trust for the Proprietor and 15% to Objective Entertainment, Inc….”

Article 9.4 of the contract between Mr. Halperin and Transit (D-7) foresees that the net sums received by Transit, as publisher, for assignments throughout the world (including the Simon & Schuster US rights advance of US $350,000), after deduction of various costs will be split 50/50 with the Author, Mr. Halperin : “9.4. On assignments, licenses or any other rights, throughout the world of any portion of the rights identified at

Section 1 hereof, including the Simon & Schuster US rights advance of US $350,000…, the net sums received by the Publisher for such assignments, licenses or any other rights after deduction of any fees, commissions, taxes or any other costs of any nature whatsoever will be split 50/50 with the Author…The Author hereby authorizes the Publisher to pay such amounts to Objective Entertainment directly.” [ 31 ] In 2009, Mr. Halperin received funds from the Simon & Schuster advance, paid by Brouillette & associés out of its trust account. Mr.

Halperin’s agent noted from a spreadsheet that sums described as “Legal” and “Other” had been deducted from money paid to Mr. Halperin. Mr. Halperin claims these sums were unlawfully deducted. The spreadsheet and the trust account: [ 32 ] In August 2009, Me. Brouillette’s law firm received the second payment of the advance sent by Simon & Schuster for the Michael Jackson publishing rights. The funds, which it held in trust amounted to $148,740 [3] ; the remaining 15% had been remitted by Simon & Shuster directly to Objective Entertainment. [ 33 ] In September, 2009, Mr.

Weisfeld received a spread sheet (D-9) from Transit’s co-shareholder, Mr. Turgeon, regarding the accounting he had requested. In all, he received seven (7) versions of the same document, with certain variations. He noted amounts listed as “Legal” and “Other” had been deducted. [ 34 ] Jarred Weisfeld, Objective Entertainment’s principal and Mr. Halperin’s agent, attempted to determine how much money Mr. Halperin was owed from the advance. He asked Transit for an audit, which was carried out in the summer 2010. Mr. Halperin, Mr. Weisfeld and Transit’s accountant were among those present. [ 35 ] Mr.

Weisfeld was unable to obtain any explanation or supporting documents from Mr. Turgeon or Me. Brouillette as to what the categories listed as “Legal” and “Other”, totalling $41,369.52, referred to. As a result, Mr. Halperin filed a Notice of Dispute on July 12, 2010 in virtue of his contract with Transit and, on August 11, 2010, he sent Transit a notice to arbitrate under the “Jackson contract” (D- 7). [ 36 ] A hearing was held and an award was rendered in favour of Mr. Halperin on May 2, 2011 condemning Transit to pay Mr.

Halperin $74,915.24 for unpaid sale of rights with respect to the “Jackson contract” (in addition to sums awarded to him in relation to other contracts). A spreadsheet, similar to D-9, which Mr. Weisfeld had received from Transit, was filed in the arbitration proceedings and in this case. They all contain deductions described as “Legal” and “Other”. [ 37 ] The arbitration award indicates that Mr. Turgeon was unable to explain the amount under the heading “Other” in the spreadsheet while Transit’s employee responsible for accounting, Ms.

Ionescu, could not explain the composition of the amounts referred to under the heading “Legal”. [ 38 ] Me. Brouillette had prepared the spreadsheet template with its headings and had transmitted the template to Mr. Turgeon, asking Transit’s accountant to complete it with the appropriate figures and return the spreadsheet to him. [ 39 ] According to Me. Brouillette, Mr. Turgeon had inserted the amounts found in the spreadsheet. Me.

Brouillette maintained he had nothing to do with the figures and was not involved in Transit’s management; his sole implication was as an Angel Investor. [ 40 ] He contended the spreadsheet D-9 is not an accounting of his firm’s trust account; rather it is an accounting of the money due in virtue of the publishing contract D-7 between Mr. Halperin and Transit and he did not know what the terms “Legal” and “Other” referred to. When cross examined, he could not find any reference in his trust account to amounts related to these headings. [ 41 ] Before releasing funds from his firm’s trust account, Me.

Brouillette testified that he had asked Mr. Turgeon to transmit a formal request with written instructions as to whom the money should be sent. He did not question or verify the figures given to him. [ 42 ] In short, he accepted the amounts established by Mr. Turgeon and followed his instructions, which he declared were those of Transit, his client. Me. Brouillette maintained he did not represent Mr. Halperin and his authorization was not required. [ 43 ] Initially Me.

Brouillette testified that he never had documentation justifying the amounts to be released from the trust account; subsequently, he stated he had seen supporting invoices but had not kept them. He presented a number of invoices, recently obtained from Mr. Turgeon, which were admitted in evidence under reserve of an objection. [ 44 ] The Court considers Me. Brouillette is not the appropriate witness to testify as to these documents. Even if admissible, they have no probative value as they do not correspond to any entry in the trust account. [ 45 ] Me.

Brouillette received an e-mail in September 2009 (PR-4), from Mr. Turgeon, with instructions to pay certain sums to Mr. Halperin’s agent. The previous e-mail, referring to the same amounts, had as an attachment a spreadsheet (PR-3).

[ 46 ] According to Me. Brouillette, Mr. Weisfeld had accepted the spreadsheet, which included the deductions under “Legal” and “Other”, except for $5,900, which he claimed should not have been deducted for legal fees. Mr. Weisfeld, however, had only estimated the amount of legal fees that were deducted since he had never seen an invoice to justify them and he had no knowledge as to the composition of the category “Other”. The Acts reproached against Me. Brouillette and Brouillette & associés [ 47 ] Me. Brouillette received Halperin’s notice of dispute under the “Jackson contract” in July 2010.

He testified that he was in the process of withdrawing completely from Transit at that time. [ 48 ] In August 2010, Me. Brouillette registered a conventional hypothec against Transit’s assets for $248,250.88 and Brouillette & associés also registered a conventional hypothec against Transit’s assets for $190,055.19. [ 49 ] Me. Brouillette explained that in the spring of 2010 investors had approached him and wanted to do a reverse take over of Transit with Kurrent Mobile Catering, a company registered on the U.S. stock exchange.

He eventually agreed to sell his shares for $200,000 and accepted 10 million shares in Kurrent Catering. He had also invested in Kurrent Catering. [ 50 ] Me. Brouillette required a guarantee for the amount owed to him and his law firm. Given the investors’ failure to obtain the requisite financing, on August 23, 2010, two hypothecs were registered by him and his law firm against Transit’s assets. Me. Brouillette claimed that ultimately, his shares were worthless. [ 51 ] Me. Brouillette acknowledged that when the hypothecs were registered, Mr.

Halperin had an important claim against Transit but contended that was not the case when he had reached an agreement with the investors. He did not recall having advised Mr. Halperin or his agent that both he and his law firm had registered a hypothec against Transit’s assets nor did he recall advising Mr. Halperin after the arbitral award was rendered that these hypothecs had been registered against Transit’s assets. [ 52 ] As indicated above, the arbitration award in Mr. Halperin’s dispute against Transit was rendered on May 2, 2011. Me.

Brouillette sold his shares on May 6, 2011, explaining he had agreed to sell his shares in the spring of 2010. [ 53 ] Mr. Halperin’s motion to homologate the arbitral award was contested by Transit and the judgment of the Superior Court [4] was appealed. The Court of Appeal authorised the execution of the Superior Court judgment [5] which Mr. Halperin was ultimately unable to execute. [ 54 ] In the above mentioned case, following a seizure by garnishment by Mr. Halperin, Me. Brouillette on behalf of Brouillette and associés made a negative declaration on April 17, 2012.

The procedures were admitted into evidence under reserve of an objection. The undersigned concludes the declaration is admissible, as it is a public document, contained in Halperin’s Court file. [ 55 ] Me. Brouillette explained he had instructed his accounting department on January 12, 2012 to transfer funds from the trust account to pay Transit’s old accounts. The accounting entry had not been carried out until June 2012 but he was not aware of this fact. [ 56 ] Me. Brouillette is still a creditor of Transit but it no longer has any assets. He took whatever assets it had, one of which was the copyright to Mr.

Halperin’s books. [ 57 ] Me. Brouillette was aware at the time he became partners with Mr. Turgeon that Mr. Turgeon had already been bankrupt. Recently he learned that since 2013, Mr. Turgeon had a third bankruptcy which lists Brouillette & associés and Robert Brouillette as creditors in the file of Ian Halperin for $490,000. [ 58 ] Me. Brouillette denied he had made a claim in the bankruptcy. When shown a document where his name appears, he replied that he did not know whether someone in his office filed a claim although he had said not to. [ 59 ] Me. Brouillette was aware of fraud accusations against Mr.

Turgeon, with respect to another company and had discussed the circumstances with Mr. Turgeon. Because of the fraud accusations and Mr. Turgeon’s guilty plea, Me. Brouillette insisted on being a signatory to Transit’s checking accounts, to protect himself. [ 60 ] Finally, questioned as to his involvement in another company called Tonality, Me. Brouillette admitted that in a lawsuit involving that company, he had been reproached by a judge in the file for having acquired a litigious claim. [ 61 ] Because of the Court’s conclusions, it is appropriate to first consider the Cross demand.

ANALYSIS OF THE CROSS DEMAND: [ 62 ] Mr. Halperin is claiming $41,369.52 from Brouillette & associés, which he alleges was unlawfully deducted from the law firms’ trust account and is owed to him [6] . [ 63 ] Brouillette & associés raised numerous arguments in its defence, including Mr. Halperin’s status as a third party in relation to the law firm, the lack of fault on the part of the firm, etc. At first blush its arguments against the claim appear compelling.

However, an analysis of the trust account documents and other evidence lead the Court to conclude differently. [ 64 ] Brouillette & associés undertook to place the funds received from Simon & Shuster in a trust account, to be distributed,

according to the percentages stipulated in the contract D-8, to Objective Entertainment and to Transit. The payment to Transit is to be split 50/50 between Transit and Mr. Halperin, after deduction of fees, commissions, taxes etc. from the sums received for the assignment, licenses or any other rights related to the Michael Jackson Book . [ 65 ] Me. Brouillette was well aware of the foreseen distribution to both Mr. Halperin and Transit since he drafted D-7 and either drafted or reviewed D-8. [ 66 ] Brouillette & associés’ argument - that any dispute regarding amounts due to Mr. Halperin is between Mr. Halperin and Transit and should be submitted to arbitration, pursuant to

article 13.2 of D-7 - fails to take into account that the firm Brouillette & associés has the burden to explain the “comings and goings” of its trust account with respect to the Simon & Shuster advance. [ 67 ] It is not a question of the accuracy of the amounts deducted from the trust account; rather the issue is whether Brouillette & associés transferred money from its trust account without right, such that Mr. Halperin, as a beneficiary of the trust funds, did not receive the full amount to which he was entitled. [ 68 ] Me. Brouillette contends that Brouillette & associés was simply an intermediary between Mr.

Halperin and Transit and at all times acted in accordance with the Transit’s instructions. [ 69 ] However, Me. Brouillette was not at an arm’s length relationship with Transit when he took instructions from the company. While he insisted he had no role in its management and qualified himself as an Angel Investor , he was a co-shareholder of Transit with Pierre Turgeon as well as a director and a signing officer; a role he insisted on having after learning that Mr. Turgeon had been accused of fraud and had pleaded guilty to the charges. [ 70 ] In short, Me.

Brouillette was not only Transit’s lawyer but he was also an integral part of Transit. An example of his involvement may be seen from an e-mail D-11 in which he assured Mr. Weisfeld that all amounts payable to him and/or to his clients would be paid by Transit as soon as “ we ” receive the cash to do so. [ 71 ] Me. Brouillette argued he had not committed any fault by assuming different roles since Mr. Halperin was aware of this fact, a fact Mr. Halperin claimed he did not know at the outset. However, Me.

Brouillette cannot maintain that he was taking instructions from Transit when he and Transit were interchangeable. [ 72 ] Me. Brouillette testified he had requested written instructions in order to release trust funds. However, the only document produced in this regard was PR-4, namely an e-mail in which Mr. Turgeon requests that $7,632.27 U.S. and $12, 811.78 Canadian be transmitted to Mr. Weisfeld, Mr. Halperin’s agent, for the Michael Jackson Book. Attached to Mr. Turgeon’s previous e-mail containing the same figures is a spread sheet showing deductions for “Legal” and “Other”. [ 73 ] Mr.

Turgeon, Transit’s president and co-shareholder, and Ms. Ionescu, responsible for Transit’s accounting, were unable to explain, during the arbitration proceedings, what these categories referred to. During the trial in the present case, Me. Brouillette had no explanations to offer. [ 74 ] Brouillette & associés contend that the spreadsheet D-9 is a Transit working document and is not a valid means of showing that the division of the advance proceeds was not respected.

In reviewing the evidence, the Court reviewed the actual trust account transactions which document the deposit of the second payment made by Simon & Schuster as an advance for the publishing rights of the Michael Jackson Book [7] and the transfers of funds out of the trust account. [ 75 ] An examination of the trust account transactions shows transfers to Objective Entertainment described as: “re christopher heard advance” and a commission payable for the “Brangelina Book”, which do not concern the Michael Jackson book. [ 76 ] In June 2012, Me.

Brouillette sent a note to his firm’s accounting department to apply the remaining trust funds of $4,632.73 to Transit’s outstanding legal fees. Me. Brouillette pointed to Pierre Turgeon’s signature on his note to establish Transit’s acceptance of this transfer. However, with the exception of $592.60 listed in D-13, as legal fees under the heading of the Michael Jackson account, the funds were used to pay Transit’s outstanding legal fees in various files unrelated to that of Michael Jackson, although Transit owed Mr. Halperin money. [ 77 ] Me.

Brouillette, in his testimony, identified the recipient of each transfer but offered no explanation for the fact that trust funds remitted to his law firm in relation to the Michael Jackson Book were paid for other purposes. He provided no supporting invoices and, with one exception, no proof of instructions for amounts removed from this particular trust account. [ 78 ] In short, other than $3,500 paid to Me. Kaufman, which Mr. Weisfeld admitted to be a legal expense, and $592.50 which relates to legal fees charged by Brouillette & associés [8] for the Michael Jackson book, Me.

Brouillette failed to explain, to the Court’s satisfaction, what expenses were paid relating to this book. [ 79 ] Brouillette & associés had an obligation to account for the money held in trust, payable in part to Mr. Halperin. By accepting to make payments according to Transit’s instructions, for its benefit or for its other obligations, Me. Brouillette was in a position of conflict of interest, breaching his obligations to Mr.

Halperin as well as his obligations pursuant to the Code of ethics of advocates [9] . [ 80 ] The Court concludes that from the $148,740 deposited in the trust account, the above mentioned amounts of $3,500 and $592.60, as legal fees for the Michael Jackson Book are to be removed, leaving a balance of $144,647.40. [ 81 ] This sum should be shared equally by Mr. Halperin and Transit and amounts to $72,323.70 each. Mr. Halperin received $57,632.27. In the absence of evidence of any other expenses, there remains $14,691.43 payable to Mr. Halperin, for which Brouillette & associés is responsible.

This amount, as were all the amounts in the trust account, is in U.S. dollars; the amount in Canadian dollars, after conversion, is $15,816.79, as of the date of judgment.

ANALYSIS OF THE PRINCIPAL ACTION: [ 82 ] The firm Brouillette & associés is claiming $26,470.82 for unpaid legal fees and disbursements, at a rate of 12% per year, for services rendered with respect to the files identified as G. Laliberté, CJAD 800 TalkRadio and Radio Canada. [ 83 ] Brouillette & associés point to the mandate Mr. Halperin signed on June 17, 2009, outlining the conditions of the law firm’s services, including the hourly rate and interest charged, and submits it provided the legal services Mr. Halperin requested. Mr.

Halperin never complained about the quality of the services rendered or the fees and the results sought were achieved. [ 84 ] Mr. Halperin had disputed the fees claimed, despite the mandate he had signed. He alleged verbal agreements with Brouillette & associés whereby he would not be required to pay any legal fees. While Mr. Halperin, Me. Frenière and Me. Brouillette each referred to a verbal agreement or agreements, they each differed as to the nature of the agreement(s). [ 85 ] Me.

Brouillette maintained the only agreement he had made was that his legal fees would not exceed the amount of royalties or advance Mr. Halperin had received or would receive from the Laliberté book and since his legal fees were ultimately less than the royalties Mr. Halperin received, as an advance, his fees were payable. Me. Brouillette denied he had renounced to Mr. Halperin paying his legal fees. [ 86 ] Brouillette & associés regularly sent its invoices to Mr. Halperin by e-mail and although Mr. Halperin contended his principal account was not hotmail.com, the evidence shows he sent e-mails to Me.

Frenière from that account. [ 87 ] Mr. Halperin has the burden of proving that he does not owe the legal fees sought by Brouillette & associés because of verbal agreements reached with the firm. In light of the contradictory testimonial evidence and given the documentary evidence, the Court concludes that the alleged agreements, whereby Transit would pay Mr. Halperin’s legal fees, have not been established, by preponderant evidence. [ 88 ] However, Mr.

Halperin also contends that the firm is not entitled to any legal fees because of professional misconduct. [ 89 ] From the evidence adduced, the Court has no hesitation in concluding that Me. Brouillette, by virtue of various acts, failed to maintain his professional independence. He put his personal interest above that of Mr. Halperin and placed himself in a situation of conflict of interest. [ 90 ] Brouillette & associés’ invoices show that the law firm began providing services to Mr. Halperin on June 10, 2009 and continued to do so until November 26, 2010. While Me. Frenière was responsible for the files, Me.

Brouillette intervened and provided advice on many occasions, as seen by the description of the law firm’s services. [ 91 ] On March 17, 2009, Transit was incorporated, with Me. Brouillette and Pierre Turgeon as co-shareholders. Shortly thereafter, in March 2009, Me. Brouillette drafted the publishing contract concluded between Mr. Halperin and Transit regarding the publication of Mr. Halperin’s book on Michael Jackson. [ 92 ] On June 30, 2009, Transit concluded a contract with Simon & Schuster for $350,000 payable to Brouillette & associés in trust. The contract between Transit and Mr.

Halperin foresees that the net sums Transit receives from assignments, licences or any other rights including the $350,000 advance from Simon & Schuster will be split 50/50 with Mr. Halperin. [ 93 ] Brouillette & associés received the first payment of the advance from Simon & Schuster to be placed in the firm’s trust account in July 2009 and the second payment in August 2009. Given Me. Brouillette’s interest in Transit, which he incorporated and in which he was a co-shareholder and director, as well as his role as counsel to Transit, Mr.

Halperin should have been referred elsewhere for professional services in order to assure that his interests were protected. [ 94 ] Issues arose over the division of money between Mr. Halperin and Transit. In May 2010, Me. Brouillette wrote to Mr. Halperin’s agent to assure him that all amounts will be paid as soon as “we get the cash”. [ 95 ] Mr.

Halperin, after failing to receive adequate explanations with respect to payment of amounts he claims were owed to him in virtue of several publishing contracts, sent Transit Notices of Dispute in July 2010 and on August 11, 2010 he sent Transit a notice to arbitrate under the Michael Jackson contract. [ 96 ] On August 23, 2010, less than two weeks after receiving the notice to arbitrate, Me Brouillette as well as Brouillette & associés each registered a conventional hypothec against Transit’s assets for $248,306.07 and $190,000 respectively, for a total of $438,306.07. [ 97 ] Me. Brouillette failed to advise Mr.

Halperin, who was a client of his law firm, that he had registered the conventional hypothecs and did not warn Mr. Halperin of the futility of the arbitration proceedings given that nothing would be recovered as a result of the registered hypothecs against Transit’s assets. Me. Brouillette put himself in the privileged position to take the assets first. [ 98 ] Transit’s assets constituted Mr. Halperin’s guarantee that he would be paid. However, the actions of Me. Brouillette and his law firm effectively removed Transit’s property as a receivable from the company and assured that Me.

Brouillette and his law firm would be in a position to collect from Transit’s assets, to Mr. Halperin’s detriment. Me. Brouillette’s actions on his own behalf and on behalf of his law firm clearly fall within the definition of a conflict of interest, contrary to the Code of ethics of advocates [10] . [ 99 ] The arbitration award was rendered on May 2, 2011, ordering Transit to pay a total of $290,343.94 plus interest to Mr. Halperin. Four days later, on May 6, 2011, Me. Brouillette sold his shares in Transit, again acting in his personal interest.

[ 100 ] Transit attempted to prevent the execution of the arbitration award. Halperin’s motion to homologate the arbitration award was contested by Transit. It then appealed the Superior Court judgment which had homologated the award. The Court of Appeal authorized the execution of the Superior Court judgment but Mr. Halperin’s attempts to execute the judgment against Transit were unsuccessful. [ 101 ] In January 2012, Me.

Brouillette instructed his firm’s accounting department to transfer the remaining trust funds, received from Simon & Schuster, to pay Transit’s outstanding accounts with his firm, although Transit owed money to Mr. Halperin. [ 102 ] Me. Brouillette identified himself as an Angel Investor and an attorney with no implication in Transit’s management. However, as already indicated, he was a joint owner and director of Transit as well as a signing officer. He was also Transit’s attorney at the same time as his firm was rendering legal services to Mr. Halperin and he personally provided advice to Me. Frenière in Mr.

Halperin’s files. He ultimately became a creditor to Transit. He and his firm rendered professional services to Mr. Halperin but he chose to place his personal interests above those of Mr. Halperin. [ 103 ] In short, Me. Brouillette failed to maintain his professional independence. His personal interest dominated his conduct and was in conflict with Mr. Halperin, a client of his law firm (as well as with his client Transit and his co-shareholder in Transit). [ 104 ] The Court concludes there were breaches by Me.

Brouillette of several articles of the Code of ethics of advocates [11] , namely articles 3.03.04 (e), 3.05.08 , 3.06.05 , 3.06.05.01 , 3.06.06 and 3.06.07 . [ 105 ] In addition, the Court in its examination of the invoices in the present case has noted an excessive amount of time was devoted to research and the preparation of demand letters. There are multiple entries described as discussions between the named attorneys and a considerable number of charges are simply described as exchange of e-mails with Mr. Halperin, his agent or the opposing attorney. [ 106 ] The Code of ethics of advocates [12] at

article 3.08.02 stipulates that fees must be fair and reasonable. Our jurisprudence has established that billing on an hourly basis should not be carried out as a simple mathematical process whereby the number of hours is multiplied by the hourly rate to arrive at the amount of the fee. Rather, attorneys must carefully review the charges and establish a proper amount to be billed and exercise their judgment as to the value of the services that were rendered [13] . In the Court’s opinion, such an exercise has not been carried out in this instance. [ 107 ] Mr.

Halperin submits that all these violations should result in the forfeiture of the legal fees claimed by Brouillette & associés. [ 108 ] According to our jurisprudence, in cases involving a lawyer’s violation of his duties pursuant to the Code of ethics of advocates [14] , the proper sanction for a Court in such circumstances is to impose a reduction. The amount of reduction can vary from case to case and is left to the Court’s discretion, based on the principle of fairness [15] . As the Court of Appeal held in Mathieu c.

Marchand [16] , “… le quantum de la diminution peut varier d’un cas à l’autre selon les elements et circonstances propres à chaque espèce. C’est affaire d’appréciation et d’équilibre.” [ 109 ] In the present case, Brouillette & associés is seeking $26,470.82 for its professional services. Legal services were provided to Mr. Halperin and according to the evidence, the files in question were resolved. However, as outlined above, the Court has concluded that the various actions taken by Me. Brouillette and Brouillette & associés constitute a brazen conflict of interest.

As well, the amount of fees charged fails to meet the requirement of being fair and reasonable. [ 110 ] As established by our case law, the multiple breaches of the Code of ethics of advocates [17] in the present case provide the Court with discretion to reduce the fees sought. [ 111 ] In conclusion, after taking all relevant considerations above into account and in particular the breaches of the Code of ethics of advocates [18] , the Court, in its discretion, reduces the amount of $26,470.82 sought by Brouillette & associés for legal fees (by $10,654.03) to $15,816.79.

Following compensation for the sum of $15,816.79 awarded to Mr. Halperin with respect to his cross demand, no legal fees are payable by Mr. Halperin. [ 112 ] In light of the conclusion reached by the Court, there is no need to calculate interest for any of the amounts in issue or refer to the additional indemnity.

FOR THESE REASONS, THE COURT: GRANTS, in part, the principal action; CONDEMNS Ian Halperin to pay Brouillette & associés, S.E.N.C.R.L. $15,816.79, without costs; GRANTS, in part, the cross demand of Ian Halperin against Brouillette & associés, S.E.N.C.R.L.; CONDEMNS Brouillette & associés, S.E.N.C.R.L. to pay Ian Halperin $15,816.79;

DECLARES compensation between the amount awarded to Brouillette & associés, S.E.N.C.R.L. in the principal action against Ian Halperin with the amount awarded to Ian Halperin against Brouillette & associés, S.E.N.C.R.L. on the cross demand; CONDEMNS Brouillette & associés S.E.N.C.R.L. to pay Ian Halperin costs on the cross demand; and ORDERS the release of the funds in the amount of $1,985 provided by Ian Halperin, as security for costs. __________________________________ SUZANNE HANDMAN, J.C.Q. Attorney for Plaintiff, Brouillette & associés, S.E.N.C.R.L. Me Rachid Benmokrane BROUILLETTE & ASSOCIÉS, S.E.N.C.R.L.

Attorney for Defendant/Cross Plaintiff, Ian Halperin Eric Clark CLARK ATTORNEYS Attorney for Cross Defendant, Brouillette & associés, S.E.N.C.R.L. Me Marie-Josée Bélainsky DE MICHELE ET AVOCATS Dates of hearing: May 22, September 3 and November 29, 2013; June 3 and 4, 2014