2022 QCCQ 460, 2022 QCCQ 460

Goldwater, Dubé inc. c. J.N. 2022 QCCQ 460 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTREAL Civil Division N° : 500-22-262701-207 DATE : February 14, 2022 ______________________________________________________________________ PRESIDED BY JUDGE HENRI RICHARD, J.C.Q. ______________________________________________________________________ GOLDWATER, DUBÉ INC. Plaintiff v. J. N.

Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] This case illustrates the difficulties for a law firm to claim its professional fees when there is no signed writing between the parties. [ 2 ] Invoking a "verbal suretyship", the law firm Goldwater, Dubé Inc. ( GDI ) claims from Mr. J. N. a contractual balance of $47,304.49 for unpaid professional fees. [ 3 ] At the trial, Mr. N. admits that he provided suretyship for the payment of GDI's professional fees in the case of his daughter, Ms. M.

N., relating to the custody of her minor child and the determination of child support, but up to a maximum of $80,000. ISSUE [ 4 ] Is Mr. J. N.'s verbal suretyship in regards to GDI's fees unlimited or limited to $80,000? CONTEXT [ 5 ] In April 2019, Ms. M. N. hired a lawyer to obtain sole custody of her minor child and support. [ 6 ] On April 9, 2019, the Superior Court issues an interim joint custody order, which is a significant disappointment to Ms. N. and her parents. [ 7 ] On May 1, 2019, unsatisfied with her lawyer's services, Ms.

N. met with Me Leanne Greenberg who was then practising with GDI, along with her father, to mandate her to be represented for the review of the interim shared custody order. [ 8 ] At the trial, Me Greenberg testified that she explained to Ms. N. and her father the difficulties of this case and the costs that would be associated with it, which could reach $100,000.

She was adamant that she had never estimated the cost of this case at $80,000. [ 9 ] Yet, on cross-examination and re-examination, Me Greenberg acknowledges that she may have indicated that the first phase of this case, an application to change shared custody to sole custody, would cost approximately $40,000 and that a second phase, the trial on the merits, could cost the same amount, for a total of $80,000. [ 10 ] For their part, Ms. N. and her father specifically recall that Me Greenberg evaluated this file at $80,000, that is, two phases at $40,000 each. [ 11 ] After this first meeting, Me Greenberg sent Ms.

N. a fee agreement entitled "Rates for the year 2019" which mentions an hourly rate of $295 for her professional services. Ms. N. signs this agreement on May 3, 2019. [ 12 ] When asked why she did not involve Mr. N. in this fee agreement, Me Greenberg was rather vague and referred to an alleged relationship of trust when she did not know whether Mr. N. or his daughter before their first meeting on May 1, 2019. [ 13 ] Therefore, Mr. N. does not sign any contract, mandate, fee agreement or rates sheet with GDI. [ 14 ] This is why GDI relies on a verbal suretyship in which Mr.

N. presumably undertook to pay all professional fees charged to his daughter in the execution of the mandate relating to the custody and support file. [ 15 ] Between May 1st and November 19, 2019, Ms. N. made nine payments to GDI for a total of $64,691.81 on a credit card in her name, but for which she is a secondary holder since the main account belongs to her mother.

[ 16 ] The evidence reveals that Ms. N.'s credit card account is paid for by her parents and is used primarily to cover GDI's professional fees, in addition to ongoing expenses that they agree to pay given her precarious financial situation. [ 17 ] In the fall of 2019, a change in strategy occurs in Ms. N.'s Superior Court case, which is scheduled for trial on November 25 and 26, 2019. She modifies her application to be allowed to move to her parents' home in Town A, along with a motion for sole custody. [ 18 ] Throughout the legal proceedings before the Superior Court, Mr.

N. was informed of the progress of the proceedings and he regularly intervened with his daughter and Me Greenberg to give his opinion. [ 19 ] Ms. N. and Me Greenberg testified that this change in strategy led to an increase in the costs of the case and that Mr. N. was informed of this. However, Me Greenberg did not inform her client, Ms. N., and the surety, Mr. N., of the additional costs involved. [ 20 ] It should be noted that GDI's professional fees notes are sent directly to Ms. N., without her father receiving a copy.

Nevertheless, she informs him of the amounts billed. [ 21 ] GDI's final professional fees note (P-2) to Ms. N. is dated November 28, 2019, for services rendered between November 6 and 26, 2019 in the amount of $65,439.72. This note includes, among other things, the two-day trial in Superior Court on November 25 and 26, 2019, on Ms. N.'s application for permission to move with her daughter to Town A, coupled with the application for sole custody. [ 22 ] After receiving the P-2 fees note, Ms. N. is shocked by the amount billed.

She is reluctant to tell her father about it because she anticipates a negative reaction from him. [ 23 ] When Ms. N. finally decides to share the amount of the P-2 professional fees note with her father, the anticipation of his reaction is confirmed. He is shocked and refuses to pay any amount over $80,000, as discussed at the first meeting with Me Greenberg. [ 24 ] The evidence shows that Mr. N. speaks with Me Greenberg in this regard and agrees that his daughter will pay GDI an additional $15,000, in two instalments, on January 3 and 15, 2020.

Settlement discussions are held with respect to any outstanding balance, without success. [ 25 ] In total, GDI receives from Ms. N. $79,691.81. [ 26 ] By judgment of February 5, 2020, the Superior Court dismisses all of Ms. N.'s applications and concludes that joint custody of the minor child will be granted without any support being payable [1] . Obviously, Ms. N., her parents and Me Greenberg are disappointed with this judgment. [ 27 ] In June 2020, Ms. N. declares bankruptcy, which explains why GDI is directing its action solely against Mr. N., without first putting him on notice.

ANALYSIS [ 28 ] The parties acknowledge that Mr. N. is bound by a verbal suretyship for the benefit of GDI. The issue is the scope of that suretyship. [ 29 ] Articles 2333 and 2335 of the Civil Code of Québec ( CCQ ) provide : 2333. Suretyship is a contract by which a person, the surety, binds himself towards the creditor, gratuitously or for remuneration, to perform the obligation of the debtor if he fails to fulfil it. 2335.

Suretyship is not presumed; it is effected only if it is express. [ 30 ] In respect of a contract of suretyship, the jurisprudence teaches [2] : - A suretyship is a contract by which a person undertakes to perform the obligation of another person if the other person fails to do so; - A suretyship cannot be presumed. It must be expressed in a clear and unequivocal manner; - A suretyship is a consensual contract which requires the manifestation of the express will to enter into an undertaking for another person.

Consequently, a suretyship does not emanate from presumptions nor does it result from conjecture; - The burden of proving the existence of a suretyship rests on the party invoking it and any ambiguity in the contract must be construed against the party who stipulated it; - The term "express" has the following legal meaning: "which formally expresses the will of a person"; - Both authors and jurisprudence accept the existence of verbal suretyship since this contract is not subject to any condition of form, subject to the difficulties of proof; - However, the Superior Court has already quoted an author who is of the opinion that: Even if the rules of suretyship do not formally require it, a writing is nevertheless necessary, for all practical purposes, if the creditor wants to prove before the courts that the suretyship has really guaranteed the debt [3] ; - In any case, the existence of the suretyship must be admitted only if there is no possible doubt about the will of the person who has committed himself as surety. - A suretyship may be subject to a limitation on its scope [4] .

[ 31 ] In addition to the legal principles relating to the existence of a contract of suretyship, articles 2345 and 2355 CCQ provide : 2345. At the request of the surety, the creditor is bound to provide him with any useful information as to the content and the terms and conditions of the principal obligation and as to the stage reached in its performance. 2355. A surety may not renounce in advance the right to be provided with information or the benefit of subrogation. [ 32 ] With respect to the obligation to inform, the Court of Appeal, in Trust La Laurentienne du Canada inc. v.

Losier [5] , established : [41] Le professeur Ciotola résume, à mon avis, correctement la portée de l'article 2345 CCQ. : " Le créancier est astreint à un devoir d'informer la caution de tout événement susceptible d'affecter substantiellement les obligations de cette dernière ; ce droit à l'information exige du créancier une conduite franche et sincère. Ce droit découle également de l'interprétation prédominante de la Cour suprême (citant Soucisse et Bail) à l'égard de situations nettement désavantageuses pour la caution (…).

Ce droit à l'information implique l'obligation pour le bénéficiaire du cautionnement de ne pas dissimuler toute information vulnérable pour son cocontractant, (…). Cette obligation diffère du droit de la caution d'exiger du créancier, en conformité de l'art. 2345, tout renseignement utile sur le contenu et les modalités de l'exécution principale et sur l'état de son exécution ." (Emphasis added) [ 33 ] Thus, in civil law, GDI has an obligation to inform Mr. N. of any event that may substantially affect its obligations towards it. [ 34 ] In addition,

article 2353 CCQ provides : 2353. A surety, whether or not he is a solidary surety, may set up against the creditor all the defences of the principal debtor, except those which are purely personal to the principal debtor or that are excluded by the terms of his undertaking. [ 35 ] This last

article therefore allows Mr. N. to invoke the Code of Professional Conduct of Lawyers [6] and more particularly its articles 99 , 100 , 101 and 102 : 99. A lawyer must, before agreeing with the client to provide professional services, ensure that the client has all useful information regarding his financial terms and obtain his consent thereto , except if he has reason to believe that the client is already informed thereof. During the course of the mandate, the lawyer must keep the client informed of circumstances that could entail significant changes to the anticipated cost of his professional services . 100.

A lawyer must provide to his client, in a timely manner , all the explanations necessary for the client to understand the amount of the fees or the statement of fees and the terms and conditions of payment. 101. A lawyer must charge and accept fair and reasonable fees and disbursements. The same applies to advances he asks the client to provide. 102. The fees are fair and reasonable if they are warranted by the circumstances and proportionate to the professional services rendered.

In determining his fees, the lawyer must in particular take the following factors into account : (1) experience; (2) the time and effort required and devoted to the matter; (3) the difficulty of the matter; (4) the importance of the matter to the client; (5) the responsibility assumed; (6) the performance of unusual professional services or professional services requiring special skills or exceptional speed; (7) the result obtained; (8) the fees prescribed by statute or regulation; and (9) the disbursements, fees, commissions, rebates, costs or other benefits that are or will be paid by a third party with respect to the mandate the client gave him. (Emphasis added) [ 36 ] In Joli-Coeur, Lacasse, Geoffrion, Jetté, St-Pierre v.

D.A. [7] , the Court of Québec exhaustively sets out the principles applicable to a claim for lawyers' professional fees.

Judge Yves Hamel concludes his review as follows : [34] Ainsi, les avocats doivent non seulement facturer ponctuellement les honoraires professionnels encourus dans le cadre de l'exécution de leur mandat, mais également informer leurs clients des coûts approximatifs à encourir à l'égard des services professionnels à venir afin que ceux-ci puissent décider, en toute connaissance de cause, soit d'entreprendre et poursuivre les procédures judiciaires ou d'y mettre fin en cours du processus lorsqu'il devient évident que les honoraires professionnels prévisibles seront largement dépassés.

(Emphasis added) [ 37 ] Applying the legal principles relating to the contract of suretyship, the Court concludes, based on the evidence presented, that Mr. N. is under a verbal suretyship with respect to GDI which is limited to the sum of $80,000. [ 38 ] Me Greenberg acknowledges that she may have told to Mr. N. and his daughter, at their first meeting on May 1, 2019, that the fees to be considered would amount to $80,000, divided into two phases. In this respect, Ms.

N. and her father are categorical about the explanations provided by Me Greenberg. [ 39 ] Furthermore, neither GDI nor Me Greenberg ever informs Mr. N. that an amount in excess of $80,000 will be required to complete the mandate given by Ms. N. to GDI. In the present state of the law, a lawyer cannot simply tell his client that a case will be expensive or require additional costs without informing him of the approximate costs to be incurred in respect of the professional services to be provided. [ 40 ] The evidence reveals that Mr.

N. is left in the dark as to the extent of the professional fees to be charged by GDI to Ms. N. as a result of the change in strategy and the amendment of the application in the fall of 2019. [ 41 ] In fact, the evidence shows that Ms. N. has always paid GDI for its professional fees with the credit card that her mother provides to her as a secondary holder. Throughout the execution of its mandate, GDI never required Mr. N. to pay any amount whatsoever. [ 42 ] It was only after Ms. N.'s bankruptcy that GDI turned exclusively to Mr.

N. to recover the balance of the last P-2 professional fees note. [ 43 ] It should also be noted that GDI did not send a demand letter to Mr. N. for payment of its fees before initiating the proceedings in this case in August 2020. [ 44 ] Even if Ms. N.'s credit card account was ultimately paid for by her parents, this does not concern GDI's nor does it affect its obligation to provide with information to Mr. N. as a surety. [ 45 ] Moreover, in an email from Mr.

N. to his daughter dated May 28, 2020, which GDI entered into evidence (P-11), he makes it clear that he had agreed, despite his reluctance, to pay a maximum of $80,000 rather than $128,000, which he described as "excessive and far beyond what I expected and agreed to". [ 46 ] In civil matters, the burden of proof is on Plaintiff’s shoulders in accordance with the principle provided in

article 2803 CCQ, which states that “A person seeking to assert a right shall prove the facts on which his claim is based.” [ 47 ] The Court decides on the balance of probabilities, pursuant to

article 2804 CCQ, which states that “Evidence is sufficient if it renders the existence of a fact more probable than its non-existence.” In other words, the Court must determine what is more probable and plausible, rather than improbable and implausible. [ 48 ] After analyzing the evidence, the Court concludes that GDI does not discharge its burden of establishing, by a preponderance of proof, the merits of its claim. [ 49 ] In fact and in law, GDI fails to prove that Mr. N. had an express, unequivocal and unambiguous willingness to guarantee all of the fees billed to his daughter.

On the contrary, the evidence shows that he agreed to act as surety up to $80,000, without more. [ 50 ] In addition, in view of GDI's failure to provide with information to Mr. N., he is entitled to argue that this constitutes a bar to any claim beyond what was discussed with Me Greenberg, namely a suretyship limited to $80,000. [ 51 ] If GDI argues otherwise, it had to establish by a preponderance of the evidence that Mr.

N. was aware that an amount in excess of $80,000 would be charged to him and to keep him informed of the progress of the case in terms of professional fees, which GDI failed to do. [ 52 ] However, according to the evidence presented, Mr. N. owes GDI a balance of $308.19 but, exercising its judicial discretion, the Court does not impose any costs. FOR THESE REASONS, THE COURT : GRANTS in part Goldwater, Dubé Inc.’s originating application against J. N.; CONDEMNS J. N. to pay Goldwater, Dubé Inc. $308.19 with interest at the legal rate and the additional indemnity provided for in

article 1619 CCQ from August 28, 2000, date of the summons; THE WHOLE, each party paying its own costs. Henri Richard, J.C.Q. Me Jeffry Awwad

Me Shannen Valente-Kent GOLDWATER, DUBÉ INC. Plaintiff Me Victor Glazer LEITHMAN & GLAZER Defendant Dates of hearing : February 3 and 4, 2022