McKenzie & Company v. Paraskake Date:, 2012 BCPC 382

Citation: McKenzie & Company v. Paraskake Date: 20121017 2012 BCPC 0382 File No: 1239870 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: McKENZIE & COMPANY CLAIMANT AND: MICHAEL PARASKAKE DEFENDANT REASONS FOR JUDGMENT OF HIS WORSHIP DONALD YULE Counsel for the Claimant: Kevin McKenzie Appearing on their own behalf: Michael Paraskake Place of Hearing: Vancouver , B.C. Date of Hearing: October 10, 2012 Date of Judgment: October 17, 2012

INTRODUCTION [ 1 ] The Claimant law firm (the Law Firm) sues to recover on its account for legal services dated October 3, 2011. The amount owing on the account, after giving credit for an initial $1000.00 retainer, is $2109.19. The Law Firm also claims contract interest. [ 2 ] The Law Firm was retained in May, 2010, to represent the Defendant, Michael Paraskake, doing business as Micom Technologies (the Client) in connection with an action brought by the Client in Provincial Court against Saafnet Canada Inc. (Saafnet) (the Underlying Lawsuit).

In the Underlying Lawsuit, the Client claimed for $25,000.00 plus interest and costs for monies owing to the Client by Saafnet for services rendered by the Client pursuant to a consulting agreement with Saafnet. The Client was a long standing client of another Vancouver law firm that had commenced on the Client’s behalf the Underlying Lawsuit. Saafnet had filed a counterclaim in the Underlying Lawsuit also seeking the jurisdictional limit of $25,000.00. A further Trial Conference had been scheduled for June 15, 2010.

The lawyer who had been acting on behalf of the Client was unable to attend this Trial Conference because of a scheduling conflict. The Client was aware of other substantial creditors of Saafnet and that Saafnet was in the process of selling its real property and moving or disposing of its other limited assets. The Client had also been attempting to minimize his own legal expense by drafting some documents, to be “vetted” by counsel, and by appearing without counsel at some hearings in the Underlying Action.

Owing to the scheduling conflict of existing counsel for the June 15, 2010 Trial Conference, the Client engaged the Law Firm. [ 3 ] The Client signed a written 2 page letter Retainer Agreement dated May 6, 2010 (the Agreement). The Agreement provided that the Law Firm would bill on the basis of a combination of the extent and character of the services rendered, the labour and time involved, the character and importance of the matter in dispute, the amount of money or value of the property involved, the professional skill and experience called for and the results achieved.

The Law Firm was specifically not retained on a contingency fee or hourly basis. The Agreement provided for interest of 2% per month (26.8% per annum) on overdue accounts. The Law Firm was made aware by the Client of the pertinent background circumstances and given a binder of relevant documents. PROGRESS OF THE UNDERLYING LAWSUIT [ 4 ] Mr. McKenzie attended the Trial Conference on June 15, 2010. Shortly before the Trial Conference, Saafnet retained counsel. Counsel requested an adjournment in order to have sufficient time to prepare a Trial Statement. Mr.

McKenzie refused to consent to an adjournment as it was in the Client’s interest to obtain judgment as quickly as possible (the Saafnet counterclaim was regarded as being without merit). At the Trial Conference, Judge Yee, who was seized of the case, ordered Saafnet to file its Trial Statement within 30 days, ie. by July 15, 2010. According to the Client, Judge Yee was initially prepared to order that the Trial Statement be filed within one week, as this was the second or third occasion in which the Trial Statement should have been filed. According to the Client, Mr.

McKenzie offered to allow Saafnet’s counsel one month to deliver its Trial Statement, which was the Order made by Judge Yee. This is one issue about which the Client complains. [ 5 ] Saafnet did not file its Trial Statement within 30 days. Subsequently, its counsel withdrew from the case. By letter dated August 17, 2010, Mr. McKenzie wrote Saafnet directly advising that the Trial Statement had not been filed and that an application would be brought for judgment if the Trial Statement was not delivered within two weeks. The Client was copied with this letter. [ 6 ] Mr.

McKenzie filed an application on September 8, 2010 and obtained the first available hearing date of October 19, 2010. The application was to strike out the counterclaim and for judgment on behalf of the Client’s claim. Mr. McKenzie sent the Client a copy of the application materials by letter dated September 28, 2010. There appears to have been no communication between the Law Firm and the Client about this step in the sense that the Law Firm was proceeding without specific instruction or comment from the Client. [ 7 ] The application was heard by Judge Phillips on October 19.

She dismissed Saafnet’s counterclaim and granted judgment for the Claimant in the amount of $23,582.17, plus interest and costs. The amount of the judgment is another matter in dispute.

The Claimant asserts that the judgment should have been for $25,000, plus interest and costs, as the Client’s total claim was well over the jurisdictional limit of the court. [ 8 ] The Law Firm advised Saafnet on October 25, 2010, with a copy to the Client, of the fact that default judgment had been obtained and that if payment was not made within 5 days then execution proceedings would be commenced. [ 9 ] In January, 2011, the Law Firm issued an order for seizure and sale which was given to bailiffs. Their initial efforts were unsuccessful as the address provided was for a post-office box.

By letter dated January 31, 2011, the Law Firm advised the Client that it could not execute without knowing the whereabouts of Saafnet and the Law Firm asked whether the Client had any additional information about Saafnet. A follow-up letter dated March 25, 2011, was to the same effect. As evidenced by a note to file dated April 28, 2011, the Client provided additional information about Saafnet and a corporate office and the following day, on April 29, 2011, that information was provided to the bailiff. By letter dated May 12, 2011, the bailiff reported upon its efforts.

The Vancouver address for Saafnet provided by the Client was non-existent. Attendance at the personal residence of a corporate officer/director indicated that the officer/director was in China and the company was closed. The bailiff interim invoiced the Law Firm on May 12, 2011 for $487.60. The account was paid by the Law Firm from funds in trust.

The Law Firm forwarded to the Client the bailiff’s report by letter dated May 17, 2011, and requested a further retainer of $1000.00. [ 10 ] Not having received any response, by letter dated June 28, 2011 the Law Firm asked whether the Client wanted to proceed further with execution proceedings or to have the file closed. [ 11 ] On July 7, 2011, the bailiff re-attended at the personal residence of the director/officer without result. By letter dated July 28,

2011, the bailiff reported on this development and proposed to close its file on the basis that it was unable to locate exigible assets. [ 12 ] On October 3, 2011, the Law Firm rendered its account. The account has not been paid. OBJECTIONS OF THE CLIENT [ 13 ] The Client has four complaints respecting the legal services provided. The first is that Mr. McKenzie volunteered to allow Saafnet one month to file its Trial Statement rather than the week that Judge Yee was inclined to allow at the Trial Conference on June 15, 2010. Mr. McKenzie does not recall but does not deny this offer.

I am not sure how the longer time for filing the Trial Statement would benefit the client. However, at that Trial Conference Mr. McKenzie did obtain the first available two day trial date for January 20 and 21, 2011. On the assumption that the matter would have to go to trial to obtain judgment, the extra three weeks for filing a Trial Statement would not make any difference. At the trial conference, Saafnet was represented by counsel. By letter dated July 12, 2010, a few days before the deadline for filing the Trial Statement, counsel for Saafnet withdrew and the default occurred.

In the ultimate result, no harm was caused to the Client both because an early Default Judgment was obtained and because no exigible assets were located. [ 14 ] The Client’s second complaint relates to delay in obtaining the Default Judgment. Saafnet was in default as of July 15, 2010. On August 17, 2010, the Law Firm gave Saafnet two weeks to file or an application would be brought. The application was filed promptly thereafter on September 8 and the earliest available hearing date of October 19 was set.

In a perfect world, the August 17 letter might have been sent on July 17 and the letter might not have offered a further extension but rather given notice of an intended application. One overarching issue on which the Law Firm and the Client appear not to have had the same understanding is the ability to obtain a quick judgment in Provincial Court. The Client’s expectation appears to have been that every single day counted, before Saafnet might be able to remove its assets from the jurisdiction. On the other hand, Mr.

McKenzie says that while the Client needed to obtain judgment as soon as possible, there is no “summary trial” process in Provincial Court and the default pre-trial judgment that he obtained for a technical breach of an Order at a Trial Conference was a rare decision achieved through his own initiative. Mr. McKenzie says that he advised the Client at the outset that one cannot obtain early judgment in Provincial Court, and, as Judge Yee was seized of the matter, any trial date was dependent upon his schedule.

While there may have been some short delay in initiating the default judgment proceedings, that needs to be off set against Mr. McKenzie’s initiative in obtaining a default judgment in non-routine circumstances several months before any judgment could have been obtained at trial. [ 15 ] The Client’s third complaint relates to the amount of the Default Judgment for $23,582.17 rather than $25,000.00, plus interest and costs in both cases. The application on October 19 was based on existing file materials, and not viva voce or Affidavit evidence.

The Client correctly notes that the claim in the Underlying Action was for $25,000.00 and he refers to spreadsheets and other correspondence that show a higher amount acknowledged to be owing. The Client’s own materials, filed in this action include a spreadsheet apparently from Saafnet showing an amount owing to the Client as of September 30, 2008 of $23,582.17, the exact amount for which Default Judgment was granted. I conclude that document was in the Court file in the Underlying Action and was the basis upon which Judge Phillips granted Default Judgment. Paragraph 15 of

Schedule ‘A’ of the Notice of Claim in the Underlying Action alleges that the principal amount owed to the Client by Saafnet was $28,127.96. The Client abandoned the sum of $3127.96 to bring the claim within the Court’s jurisdiction. The Client asserts and I accept that he did have documents supporting the higher amount owed to him. These documents may well have been in the binder of materials given by the Client to the Law Firm at the outset. One issue in this law firm/client relationship does appear to have been communication.

The Client was advised of the Default Judgment application hearing date and advised that it was not necessary for him to attend. He did not do so. Had the Client attended, it is possible that he might have been able to direct counsel to other documents which, had they been included in the Court file, might have supported judgment for $25,000.00. This is speculative because I do not know what documents were in the Court file in the Underlying Action as of October 19, 2010.

Ultimately, the shortfall, if it was truly an avoidable shortfall, in the amount of the Default Judgment did not result in a loss to the Client as no exigible assets of Saafnet were located. [ 16 ] The final complaint of the Client relates to incurring bailiff charges after instructions were allegedly given by the Client to the Law Firm to “put everything on hold” whilst the Client made further inquiries about Saafnet and the location of possible assets. [ 17 ] On January 6, 2011, the Law Firm sent the Client a copy of the Order for Seizure and Sale.

There is no evidence of any response or objection from the Client. After the initial unsuccessful attempt of the bailiff, the Law Firm sent the Client the letter dated January 31, 2011 inquiring about any further information which might assist in locating Saafnet or Saafnet assets. A follow up letter was sent March 25, 2011, and as noted earlier information was provided by the Client on April 28, 2011. That information was passed to the bailiff the following day and the bailiff acted upon it. The Client could not recall when he instructed the Law Firm to put everything on hold.

It is not likely on receipt of the January 6 letter as otherwise, on receipt of the January 31 letter, I would have expected the Client to record an objection to the initial bailiff attempt to execute. There is no logical reason why the Law Firm, in the face of an instruction to put everything on hold would instead instruct the bailiff to take further steps knowing that further expense would be incurred. The most likely time when the Client may have given instructions to put everything on hold is on receipt of the January 31 letter. [ 18 ] Between then and April 29, no steps were taken by the bailiff.

It is unlikely that the Client would provide additional information regarding Saafnet on April 28, 2011 but at the same time, request the Law Firm to put everything on hold. Had that instruction been given, I expect it would have been included in the memorandum dated April 28, 2011 of the phone call. The further attempts of the bailiff were reported by letter dated May 17, 2011. [ 19 ] As of June 28, 2011, the Law Firm was asking for instructions about proceeding with execution proceedings or closing the file.

Subsequently, on July 7, 2011, the bailiff re-attended at the personal address of an officer/director of Saafnet. There is no indication that re-attendance was done on the

instructions of the Law Firm; it appears to have been done by the bailiff on its own initiative. I cannot conclude that the Law Firm instructed the bailiffs to take further steps contrary to the Client’s instructions. [ 20 ] Although the Law Firm’s bill is not based on an hourly basis, and Mr. McKenzie does not keep time records, he estimates that he worked on the file for more hours than he actually billed. [ 21 ] The Client does not dispute that the work was done. Rather, the basis for not paying the account relates to quality of service issues.

Ultimately, the result would have been disappointing to the Client, because although he has a judgment against Saafnet, he has not been able to recover anything on it. That of course is not the fault of the Law Firm, unless it was possible to have obtained an earlier judgment at a time when there would have been locatable, exigible assets. There is no evidence of that being the case in this instance. I have addressed the Client’s complaints individually. I think the principal problem was one of communication.

Insufficient communications can lead to error and misunderstandings; greater communications come at the cost of higher legal expense. Overall, I conclude that the Client’s complaints are either not established, or minor, and did not ultimately result in any harm to the Client’s interest.

I accordingly conclude that the account is reasonable and payable in full. [ 22 ] The Law Firm will have judgment for the amount of $2109.00 plus filing fees of $100.00 plus service fees of $80.00 plus contract interest at 26.8% per annum from October 3, 2011 to the date of judgment. [ 23 ] Judgment accordingly. __________________________________ Justice of the Peace, Donald W. Yule, Q.C.