Ardon Bay Industries Inc. v. Pavlovic Date:, 2015 BCPC 15

Citation: Ardon Bay Industries Inc. v. Pavlovic Date: 20150203 2015 BCPC 0015 File No: 39776 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: ARDON BAY INDUSTRIES INC. DBA PACIFIC CREDIT SERVICES CLAIMANT AND: MATE PAVLOVIC DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE L.S. MARCHAND Appearing for the Claimant: Mr. Howard Campbell Counsel for the Defendant: Jasmine K. Kooner Place of Hearing: Kamloops , B.C. Dates of Hearing: December 9, 2014 Date of Judgment: February 3, 2015 INTRODUCTION

INTRODUCTION [ 1 ] In February of 2010, Mate Pavlovic suffered a laceration to his left hand and his kitchen was damaged when a grinder he purchased at a local Canadian Tire store “exploded” during use. Mr. Pavlovic submitted an insurance claim regarding the damage to his kitchen and, with the assistance of Tracy Jobbagy of Ardon Bay Industries Inc., dba Pacific Credit Services (“Pacific Credit”), filed a Notice of Claim in Small Claims Court to obtain compensation from Canadian Tire for the injury to his left hand. [ 2 ] A Settlement Conference was held in September 2012.

By consent, an order was made adding the manufacturer of the grinder as a Defendant. This step appears to have been instigated by counsel for Canadian Tire. [ 3 ] In October 2012, shortly after the Settlement Conference, Mr. Pavlovic settled his personal injury claim for $18,000. [ 4 ] In May 2013, Ms. Jobbagy presented Mr. Pavlovic with two accounts for services rendered by Pacific Credit between July 18, 2011 and October 19, 2012 in relation to his personal injury claim. The two accounts totalled $3,571.92. [ 5 ] Mr. Pavlovic has refused to pay the accounts. Mr. Pavlovic says that Ms.

Jobbagy helped him as a personal friend and that he did not hire Pacific Credit to assist him. In the alternative, Mr. Pavlovic says that if he is found to have hired Pacific Credit then he does not have to pay the accounts as Pacific Credit was engaged in the unauthorized practice of law. Finally, if Mr. Pavlovic is found to have hired Pacific Credit and Pacific Credit was not engaged in the unauthorized practice of law, Mr. Pavlovic questions the value of the services provided by Pacific Credit. ISSUES [ 6 ] The issues are: 1. Did Mr. Pavlovic agree to pay Pacific Credit for the services provided by Ms.

Jobbagy? 2. If so, was Pacific Credit engaged in the unauthorized practice of law and, therefore, not entitled to collect a fee? 3. If Mr. Pavlovic agreed to pay Pacific Credit and Pacific Credit was not engaged in the unauthorized practice of law then what is the value of the services provided by Pacific Credit? [ 7 ] Before turning to my analysis, I will first set out some additional background. BACKGROUND [ 8 ] With the consent of Pacific Credit, Mr. Pavlovic entered a binder containing materials from Pacific Credit’s files as an Exhibit at trial.

Much of the following background comes directly from the materials within those files. [ 9 ] Fairly soon after Mr. Pavlovic was injured, he consulted with Ms. Jobbagy. As early as March 3, 2010, Ms. Jobbagy was assisting Mr. Pavlovic with communications with insurance adjusters and gathering information relevant both to his insurance claim and his personal injury claim. That work appears to have continued until Mr. Pavlovic settled his personal injury claim in October 2012. [ 10 ] At the same time, Mr. Pavlovic was also consulting with the local law firm of Morelli Chertkow LLP.

By letter dated August 11, 2010, Ms. Jobbagy delivered correspondence, a statement given by Mr. Pavlovic to an insurance adjuster, photographs, medical receipts and the grinder to Morelli Chertkow. Ms. Jobbagy’s letter was on Pacific Credit letterhead. [ 11 ] Letters from Morelli Chertkow to Mr. Pavlovic dated October 22, 2010 and May 2, 2011 make clear that Mr. Pavlovic never formally retained Morelli Chertkow. In fact, Morelli Chertkow’s letter to Mr. Pavlovic dated May 2, 2011 indicated that the firm was not prepared to assist Mr.

Pavlovic with his personal injury claim because the damages would be too low to justify the effort required. Morelli Chertkow returned all of Mr. Pavlovic’s file materials to him and made the grinder available for him to pick up. [ 12 ] The first entries in the Pacific Credit accounts to Mr. Pavlovic date to July 2011 and include such things as “Receipt of Client File Documents and Instruction as Directed by Scott Clarke, Morelli Chertkov” ( sic ), “T/C… AXA Pacific”, “T/C Canadian Tire”, “Review Product Liability & Defective Products” and “Corporations Canada Company Search”. AXA Pacific was Mr.

Pavlovic’s insurer. [ 13 ] There are further entries in October 2011 but the next significant time entries on Pacific Credit’s accounts date to November 2011. On November 9, 2011, the entry reads “Draft/Review/Finalize Of Notice Of Claim” ( sic ) and the associated time is one hour. On November 10, 2011 there is a further entry for 0.50 hours for “In Office - Client Review Of Notice Of Claim” ( sic ). Other entries from November 2011 include time to file and serve the Notice of Claim and communications with Mr. Pavlovic’s doctor’s office, Canadian Tire and Canadian Tire’s insurer, AVIVA Insurance.

A November 29, 2011 conversation with AVIVA is recorded to have lasted 0.50 hours and involved discussion of “Liability of Manufacturer, Grinding Disk Grit Discrepancy, Defendant’s Reply”. [ 14 ] On November 9, 2011, Mr. Pavlovic and Ms. Jobbagy signed a document titled “Contract For Document Preparation Services” ( sic ). That document reads, in part, as follows: Mr. Mate Pavlovic (the Client) is engaging Pacific Credit Services for the sole purpose of preparing court prescribed forms based on the information and documentation provided by the client to Pacific Credit Services .

All information provided to the client is and will be of a procedural nature only and should not be considered as legal advice or instruction. It is our recommendation that you consult a lawyer or other legal professional for advice relating to all legal matters.

… I, Mate Pavlovic, have reviewed at length the documents prepared by Pacific Credit Services, and by affixing my signature below approve them to be of the content to which I provided for processing (sic). (Italics in original) [ 15 ] From November 2011 to October 2012, Pacific Credit’s file materials and accounts show that Ms. Jobbagy provided extensive assistance to Mr. Pavlovic, including communications with Canadian Tire’s insurer and lawyer, communications with Mr.

Pavlovic’s doctors, review of documents regarding the operation of the grinder, research and/or review of various statutes, court decisions and legal concepts, the preparation, filing and service of Mr. Pavlovic’s Certificate of Readiness, preparation for and attendance at the Settlement Conference, discussions with Mr. Pavlovic regarding a settlement offer and signing a “Final Release” and Notice of Withdrawal to conclude Mr. Pavlovic’s personal injury claim. [ 16 ] As indicated above, Mr. Pavlovic settled his personal injury claim for $18,000.

I have no idea whether this was a provident or improvident settlement but I do not doubt that Ms. Jobbagy played a significant role in the settlement being reached. ANALYSIS Credibility and Reliability [ 17 ] I will begin my analysis by setting out my findings regarding the credibility and reliability of the two witnesses I heard, Ms. Jobbagy and Mr. Pavlovic. [ 18 ] Credibility refers to whether a witness is doing his or her best to tell the truth and reliability refers to whether the evidence of a witness is actually true.

In assessing credibility and reliability, courts look to a number of factors such as demeanour, ability to observe and recall events, bias, internal consistency and external consistency. [ 19 ] This is one of those rare and unfortunate cases where I found both witnesses to lack credibility and reliability. I did not believe either of them. [ 20 ] Ms. Jobbagy and Mr. Pavlovic both presented as honest and sincere witnesses. They were polite and respectful to one another and to the court. There were, however, significant problems with the testimony each of them gave. [ 21 ] Ms.

Jobbagy portrayed herself as being well aware of the limits of what she could and could not do as a non-lawyer and as being unbiased and very “professional”. She confidently asserted throughout her testimony that she limited her services to secretarial tasks such as typing documents, receiving mail and obtaining information to provide to Mr. Pavlovic for his consideration. As English is a second language for Mr. Pavlovic, Ms. Jobbagy says that she read various pieces of correspondence and other documents to Mr. Pavlovic. She was specific regarding what Mr. Pavlovic did himself and what she assisted him with.

The objective evidence does not match well with Ms. Jobbagy’s testimony. [ 22 ] Ms. Jobbagy testified that she typed the Notice of Claim with Mr. Pavlovic present and telling her what to type. The Pacific Credit account, on the other hand, indicates that Ms. Jobbagy spent an hour working on the Notice of Claim herself and a half-hour reviewing the Notice of Claim with Mr. Pavlovic the next day. [ 23 ] Ms. Jobbagy testified that Mr. Pavlovic ran a company search to obtain the name of the company that owned the Canadian Tire store where he purchased the grinder. The Pacific Credit account, however, shows that Ms.

Jobbagy charged Mr. Pavlovic 0.75 hours to perform the search and also charged him for the disbursement incurred by Pacific Credit for performing the search. [ 24 ] In her testimony, Ms. Jobbagy denied that she assisted Mr. Pavlovic as a friend but held herself otherwise out to third parties. In emails dated August 26 and September 4, 2012 to the lawyer acting for Canadian Tire, Ms. Jobbagy specifically indicated that she was “just a personal friend of the Claimant”. Ironically, Pacific Credit billed Mr. Pavlovic for Ms. Jobbagy’s time in sending these emails to the lawyer for Canadian Tire. [ 25 ] Ms.

Jobbagy denied having completed legal research. For example she testified that she only “obtained” information regarding legal concepts for Mr. Pavlovic as he was unable to do so because of his limited language and computer skills. This does not match well with the accounts rendered by Pacific Credit which bill significant time for “research”. [ 26 ] Ms. Jobbagy testified that she did not prepare Mr. Pavlovic’s Certificate of Readiness. She later acknowledged that she “keyed it in” for Mr. Pavlovic. The Pacific Credit accounts show that Pacific Credit billed Mr. Pavlovic 0.50 hours for this task to be completed.

I have reviewed the Certificate of Readiness and it is hard to imagine how “keying it in” could have taken this amount of time. [ 27 ] Throughout her direct testimony, Ms. Jobbagy left me with the impression that she had no stake in the outcome of the proceeding. She explained that she was no longer working for Pacific Credit and had ended a personal relationship with the owner of the company. In cross-examination, Ms.

Jobbagy acknowledged that Pacific Credit had sued her for misappropriating a very substantial amount of money from the company and that she had subsequently signed a Consent Order granting judgment against her and in favour of Pacific Credit in the amount of $105,000 plus $1,000 in costs. That order was entered in the Supreme Court of British Columbia on July 30, 2013. Ms. Jobbagy testified that the claim related to her having been “pre-paid” for services to be provided by her to Pacific Credit. Ms. Jobbagy acknowledged that any proceeds received by Pacific Credit as a result of the claim against Mr.

Pavlovic would be credited to her judgment debt to Pacific Credit.

[ 28 ] There were other problems with Ms. Jobbagy’s testimony but the bottom line is that the numerous internal and external inconsistencies in her testimony leave me in the unenviable position of disbelieving her testimony. [ 29 ] Mr. Pavlovic’s testimony was similarly concerning. [ 30 ] In direct examination, Mr. Pavlovic asserted that Ms. Jobbagy had prepared his Notice of Claim. In cross-examination, Mr. Pavlovic testified that it was his lawyers at Morelli Chertkow who had done so. Finally, in answer to my questions, Mr. Pavlovic testified that he did not recall who drafted his Notice of Claim. Mr.

Pavlovic appeared to me to be tailoring his evidence to suit his needs but he could not keep straight whether it was better for him to say that Ms. Jobbagy did “everything” or “nothing”. [ 31 ] Mr. Pavlovic testified that he never went to Ms. Jobbagy for help with any other legal matters before he asked her to help him with his personal injury claim. In fact, Pacific Credit produced accounts showing that Pacific Credit had assisted Mr. Pavlovic and his wife on two previous occasions with landlord-tenant disputes. [ 32 ] Before retaining counsel, Mr.

Pavlovic prepared and filed his own Reply to the claim filed against him by Pacific Credit. In that Reply, Mr. Pavlovic asserted that he had no idea Ms. Jobbagy was obtaining information from medical experts. In cross- examination he agreed that he took various medical records to Ms. Jobbagy making the statement in his Reply inaccurate. The Pacific Credit file materials go further and show that it was Ms. Jobbagy who prepared letters for Mr. Pavlovic to sign to obtain medical records and reports to support his personal injury claim. In the circumstances, it is inconceivable that Mr. Pavlovic was unaware that Ms.

Jobbagy was obtaining information from medical experts. [ 33 ] Likewise, Mr. Pavlovic’s Reply also asserted that he had no idea that Ms. Jobbagy was working with “experts” on his behalf. In cross-examination, Mr. Pavlovic acknowledged he included insurers and adjusters in the list of people he considered to be “experts”. It is hard to accept the statement in Mr. Pavlovic’s Reply when the file materials from Pacific Credit show that Mr. Pavlovic signed authorizations to permit Ms. Jobbagy to communicate with the “experts” on his behalf. Based on Mr.

Pavlovic’s ability to draft his own Reply and on his ability to communicate from the witness box, I do not believe that Mr. Pavlovic was confused about the authorizations he was signing or what they would be used for. He functions quite well in the English language. [ 34 ] There were other problems with Mr.

Pavlovic’s testimony but the bottom line is that the numerous internal and external inconsistencies in his testimony and his habit of tailoring his evidence to suit his needs also leaves me in the unenviable position of disbelieving his testimony. [ 35 ] Ordinarily in a case where the court does not believe the testimony of any witness it might be difficult to sort out what actually happened and make a decision on the merits of the claim. In this case, however, Ms. Jobbagy’s time records and the file materials tell the true story. Did Mr. Pavlovic Hire Pacific Credit? [ 36 ] I accept that, over the years, Mr.

Pavlovic and his wife formed a friendship with Ms. Jobbagy and that they did kind acts for each other. It is also true that Ms. Jobbagy held herself out to third parties as merely a personal friend of Mr. Pavlovic’s. Nevertheless, and despite Mr. Pavlovic’s protestations otherwise, I have no hesitation in concluding that Mr. Pavlovic hired Pacific Credit to assist him with his personal injury claim.

He had hired Pacific Credit to assist him with landlord-tenant issues in the past, signed the “Contract For Document Preparation” ( sic ) regarding his personal injury claim and signed multiple authorizations permitting Ms. Jobbagy to obtain documents and other information on his behalf. [ 37 ] In my view, Mr. Pavlovic knew very well that Ms. Jobbagy was assisting him on behalf of Pacific Credit in the expectation of a fee. He may have hoped that his personal friendship with Ms. Jobbagy would result in Ms.

Jobbagy providing services at a highly discounted rate and he may have been surprised at the magnitude of the accounts Pacific Credit ultimately presented but he had no reasonable basis for concluding that Ms. Jobbagy was assisting him purely as a favour for a friend. Was Pacific Credit Engaged in the Unauthorized Practice of Law? [ 38 ]

Section 1 of the Legal Profession Act , SBC 1998, c. 9 defines the “practice of law”, in part, as follows: "practice of law" includes … (

b) drawing, revising or settling … (ii) a document for use in a proceeding, judicial or extrajudicial, … (

c) doing

an act or negotiating in any way for the settlement of, or settling, a claim or demand for damages, … [ 39 ]

Section 15 of the Legal Profession Act contains a prohibition against non-lawyers practicing law. It provides, in part, that “(n)o person, other than a practising lawyer, is permitted to engage in the practice of law.”

[ 40 ] Both ss. 1 and 15 provide some exceptions which permit non-lawyers to perform tasks normally restricted to practicing lawyers but none of the exceptions arises on the facts of this case. [ 41 ] It goes without saying that the prohibition against non-lawyers engaging in the practice of law is designed to protect the public.

Without the prohibition, vulnerable parties with important legal rights and financial and other interests at stake could be irreparably harmed by people with no legal training, no Code of Professional Conduct and no errors and omissions insurance. [ 42 ] It is a sad reality that there are many parties who need the assistance of a lawyer but cannot afford to pay for one. In other cases, there are parties who would prefer not to pay for a lawyer. In still other cases, there are parties who cannot find a lawyer willing to take their case.

In any of these circumstances, there is an opportunity for non-lawyers to try to fill the void. In some cases this can be done without crossing the line into the unauthorized practice of law. This is not one of those cases. [ 43 ] I place significant weight on Ms. Jobbagy’s contemporaneous time-keeping records to conclude that Pacific Credit contravened s. 15 of the Legal Profession Act when Ms. Jobbagy spent one hour on November 9, 2011 “drafting, reviewing and finalizing” the Notice of Claim for Mr. Pavlovic’s personal injury claim.

This amounted to “drawing… a document for use in a (judicial) proceeding.” The time records make clear that Ms. Jobbagy drafted the Notice of Claim on her own as she also recorded time for an in-person half hour meeting with Mr. Pavlovic on the following day to “review” the Notice of Claim with him. [ 44 ] Ms. Jobbagy’s time-keeping records and Pacific Credit’s file materials also make clear that Pacific Credit contravened s. 15 of the Legal Profession Act by doing many acts “for the settlement of (Mr. Pavlovic’

s) claim… for damages.” Ms. Jobbagy was much more than a “secretary” who typed documents and completed purely administrative tasks for Mr. Pavlovic. On my review of the time- keeping records and file materials, I conclude that Ms. Jobbagy was the point person on the file with whom the opposing parties dealt and initiated and completed many steps to advance Mr. Pavlovic’s claim, including gathering medical evidence, completing legal research, preparing both the Notice of Claim and the Certificate of Readiness, preparing Mr. Pavlovic for the Settlement Conference and concluding the settlement.

CONCLUSION [ 45 ] I have no doubt that Ms. Jobbagy’s heart went out to Mr. Pavlovic when he was unable to find a lawyer to take his case. I also have no doubt that Ms. Jobbagy felt that Mr. Pavlovic could achieve a better result with her help than without it. While I am in no position to say whether Mr. Pavlovic’s settlement was good or bad, I can say that Ms. Jobbagy jeopardized Mr. Pavlovic’s claim when she initiated it against only the vendor of the grinder and not the manufacturer. Mr. Pavlovic was fortunate that counsel for Canadian Tire brought the manufacturer into the litigation.

If that had not occurred and Mr. Pavlovic’s claim went to trial only against Canadian Tire, the claim could well have been dismissed. Pacific Credit exposed Mr. Pavlovic to a very significant risk - the type of risk that the prohibition against the unauthorized practice of law in Legal Profession Act is designed to avoid. [ 46 ] As a consequence of Pacific Credit engaging in the unauthorized practice of law, I dismiss Pacific Credit’s claim against Mr. Pavlovic. [ 47 ] Because I have concluded that Mr. Pavlovic was not honest in his testimony, I decline to award any fees, costs or other expenses to Mr.

Pavlovic and I dismiss his request that a penalty be assessed against Pacific Credit for proceeding with a claim that had no reasonable prospect of success. [ 48 ] I ask the Court Registry to deliver a copy of these Reasons for Judgment to the Law Society to take any action they consider appropriate. ______________________________ L.S. Marchand Provincial Court Judge