2013 QCCQ 7826, 2013 QCCQ 7826

Joseph c. Palnick 2013 QCCQ 7826 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division N°: 500-22-172087-101 DATE: December 20 , 2013 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ TUTINO EDWARDS JOSEPH Plaintiff, Cross Defendant v.

JUDITH PALNICK Personally and in her capacity as tutor of her minor son HARRISON PALNICK COHEN Defendants, Cross-Plaintiffs ______________________________________________________________________ CORRECTED JUDGMENT ______________________________________________________________________ I.

Parties and Proceedings [ 1 ] Tutino, Edwards, Joseph, a Montreal firm of advocates, sues on a balance of account of $ 48,487.50, on a total billing of approximately $ 80,000.00 for professional services, alleging solidary liability on the part of the Defendants Judith Palnick and her minor son Harrison Palnick Cohen. [ 2 ] Judith Palnick defends the action on the basis that the fee is not fair and reasonable, seeking a reduction of the fees through the application of quanti minoris as well as damages for contractual fault causing moral prejudice. [ 3 ] Combining these two recourses, she asks for the dismissal of the action and the award of a cross-demand, initially $ 25,000, amended to $ 60,000. [ 4 ] Harrison Palnick Cohen defends on the ground that the contract for professional services is void in so far as he is concerned under the law of California, the state where he is domiciled, and seeks the dismissal of the action on that basis.

Alternatively, if the Court does not recognise this defence, he seeks dismissal of the action on the basis of the same allegations as those raised in the defence of Judith Palnick. II. The underlying litigation [ 5 ] The services of Tutino, Edwards Joseph were retained in connection with a dispute that had developed among the heirs of the late Samuel Palnick.

We refer to this as the underlying litigation. [ 6 ] There were two issues in this underlying litigation: one involved the right of Harrison to interest on the bequest he would eventually receive of $ 100,000 at age 25; the other was a claim against Judith Palnick as debtor of the estate for reimbursement of alleged loans. [ 7 ] Beyond these issues affecting the substantive legal relationships between the heirs, the role and responsibility of the attorneys acting for the liquidator became a major concern. III.

Issues [ 8 ] At trial, Judith Palnick made it clear that she did not contest her personal liability for the fees, as determined by the Court, including the portion relating to the part of the underlying litigation that concerned her son’s interests exclusively. She felt strongly, however, that her son should have no liability for fees. [ 9 ] The Court must decide the remaining issues: 1. What is the balance of account owing to Tutino, Edwards Joseph, or the amount to be returned by them, as the case may be?

2. Is the agreement for professional services valid in respect of Harrison Palnick Cohen, in light of the applicable law? 3. If it is valid, and if a balance is owed to the professionals, is it owed by the two defendants as a solidary obligation? IV. Facts [ 10 ] Mrs Palnick, of Santa Monica California, along with her two brothers, was universal legatee of her late father, who died in 2000. Her son Harrison, then 18 months old, was a particular legatee of a bequest of $ 100,000 CAD, payable when he would reach the age of 25 years.

In 2006, the estate was not yet settled. [ 11 ] Though the legatees were all domiciled elsewhere, the estate opened in Quebec where the deceased lived, made his will and passed away. [ 12 ] The attorney of the estate, Maître Francine Wiseman of the Montreal law firm Spiegel Sohmer, had suggested to Mrs Palnick that she should seek independent counsel in respect of two issues, the first being whether interest would accrue to her son on the bequest pending its eventual payment, the second being loans allegedly owed by Mrs Palnick to the deceased in the amount of approximately $ 50,000 USD. [ 13 ] Maître Robert Joseph had an initial telephone call with Judith Palnick on November 21, 2006 during which he mentioned that he would send a letter of engagement for her to sign on her behalf and on behalf of her son.

In that conversation he offered the preliminary impression that an action against her for loans would, more likely than not, be prescribed since more than three years had elapsed after the death of her father.

He asked to be provided with certain documents, including the will, a codicil and a memo from the attorneys of the estate on the issue of interest. [ 14 ] The letter of engagement (P-3), dated November 22, 2006 is signed the same day, having been sent electronically. [ 15 ] The text of the letter sets out the substance of the agreement for professional services over two and one-half pages, and bears the printed signature TUTINO POTECHIN, as the firm was then known, with, under it, the signature of Robert M.

Joseph. [ 16 ] Below that signature, a text drafted as the client’s acknowledgment reads: […] I acknowledge receipt of this Engagement Letter and confirm that I have read, understood and agreed to the terms.

I agree to be solidarily liable, waiving the benefits of division and discussion, for all obligations arising from the provision of legal services by your firm. […] [ 17 ] Judith Palnick’s signature appears above the signature line followed by the printed text: JUDITH PALNICK, personally and in her capacity as tutor of her minor son, HARRISON PALNICK COHEN [ 18 ] The core of the agreement is the part about fees, which it is worthwhile quoting at length: Professional Fees In accordance with our professional code of ethics, we will charge a fair and reasonable fee which we will expect you to pay within one (1) month from the rendering of our account.

One of the components of our fee will be hourly charges at our prevailing rates for time spent on your matters by our personnel. Our current billing rates for the personnel most likely to work on this matter would be in the range of $ 100.00-$ 250.00 per hour for non-tax matters and $ 260.00-$ 350.00 per hour for tax matters. These rates are subject to change from time to time. The time charges to you may be adjusted as a consequence of various other factors such as the result achieved in the particular file, the amount in question, the complexity or time sensitive nature of the matter.

Without being limitative, we would like to point out that our charges will include time spent on telephone calls and correspondence as well as time spent by lawyers and non-lawyer personnel conferring among themselves about your file. If more than one person attends a meeting, each person will charge for the time spent. We will also charge for travel time and disbursements. [ 19 ] Maître Joseph testified that he explained the issues of judicial honorariums and disbursements. He refers to a chain of emails.

The document contains a handwritten comment that Mrs Palnick added to the text “No more than the tariff is due.” [ 20 ] According to him she did not raise any issue about the solidary obligation and the fact that she was signing on her son’s behalf. [ 21 ] In commencing work on the mandate, the first step taken by Tutino Potechin, as the firm was then known, was to send a letter to the liquidator taking issue with the position set out in a legal opinion given by Spiegel Sohmer on the question whether interest accrued on the specific bequest of 100,000 to Harrison, putting him on notice that, failing a favourable confirmation from him that interest would accrue on this sum, the appropriate legal proceedings would be taken (DR-12). [ 22 ] The previous day, Maître Wiseman had addressed a letter to Mrs Palnick and her two brothers, as the three universal legatees, summarising the file and giving her recommendations as requested by the liquidator (DR-11). [ 23 ] On the issues regarding interest on the particular bequest and the amounts totalling $ 58,500 owed by Judith Palnick as alleged by the two brothers, she suggests that the parties are unable to resolve the matter and recommends to the liquidator that he take a motion before the Superior Court to obtain a declaratory judgment. (DR-11)

[ 24 ] Maître Joseph delegated day-to-day management of the file to a more junior lawyer in the firm, Maître Jean-Thomas Desgagniers.

The initial course of action they adopted was to try to convince the lawyers retained by the liquidator to accept the position favourable to their client, namely that the claim for reimbursement of loans was, among other things, prescribed and therefore futile, and that interest accrued in favour of Harrison, not the estate, on the bequest of $ 100,000. [ 25 ] One approach they took was to suggest to their opponents to hold a discussion jointly with the notary who had drafted the will for the late Samuel Palnick. Based on his notes and his recollection of the matter, he would confirm the correct

interpretation of the will. They also armed themselves with research into the issue, confident that they had found the relevant codal provisions and jurisprudence. [ 26 ] Speigel Sohmer preferred submitting the matter to a judicial decision by way of a motion for declaratory judgment. [ 27 ] The approach of Spiegel Sohmer was perceived by maîtres Joseph and Desgagniers to be biased in favour of the positions of the two brothers.

Even an early proposal to settle, because it asked for half of the alleged loans, was seen as abusive on the part of the liquidator, because the underlying claim was thought to be both weak on the merits and prescribed. [ 28 ] Maître Desgagniers describes in his testimony the dynamics of the situation whereby the focus of the mandate shifted from that of a simple judicial determination of the issues to a strategy to "pave the way" to enable Mrs Palnick to recover reparation for all of her legal and other professional costs.

The plan was to bring a motion to disqualify Spiegel Sohmer as attorneys of record in the motion for declaratory judgment, which had since been instituted.

While declining the mandate to actually sue their opposing counsel for damages, Tutino, Edwards Joseph thought that the motion to disqualify would comprise much of the same work, and that the anticipated success on the motion would assist the attorney eventually acting in the liability action. [ 29 ] Mrs Palnick’s understanding of the purpose and effects of the motion are expressed in an email sent July 9, 2007 (DR-4): Dear Robert, Jean Thomas and Jean Phillipe, I want to be absolutely sure that what I understand the reason and the plan for this motion against Spiegel Sohmer is correct; that it is the only and surest way to pave the way for me to recoup my costs for not just the legal fees which are now considerable but for my time as well.

It is Spiegel Sohmer whose fault this really is – since it is their bad advice and their mishandling of the file that caused this. There was never any need for any action - not because I don’t agree but because their actions are not legally sound. The executor as an 88 year old man can really have no clue – and unless you can tie this to my borthers – Spiegel is it. I thought that a win on the motion ties into a claim with the syndic or their insurer (the taxes is another thing that they are actually liable for not covered under insurance) and this way the insurer will have no reason not to pay the claim.

I think it is a waste of time to go after the executor who has no money – and to simply settle for his share of his fee which is probably only realistically 5,000 doesn’t cover ¼ of the costs of this frivolous motion. And I don’t see based on his performance and the above that he can even submit a fee and expect to actually get it from me without being sued so I would venture he will forgo his fee.

In the event that after this is filed – and we are lucky and they withdraw – the issues at hand in their motion are a given --- SO the only settlement that will be acceptable is a complete recapturing of ALL MY FEES which are frivolous and which based on their withdrawal they would know that we would have a strong claim to recoup with damages so NOTHING LESS IS ACCEPTABLE.

If they go through with defending themselves – then we should have an even better claim against their insurance or any new information they would provide WOULD PROVE that they were ACTING AS OPPOSING COUNSEL representing my brothers and therefore we could sue my brothers for their share of the estate. Can you all confirm me with me that the plan is to get Spiegel removed in order to recapture my money and my time which was needlessly spent on legal actions and defending legal actions that did not need to be defended?

Sincerely, Judith Palnick [ 30 ] Work done in connection with this strategy begins in the billing of June 29, 2007 (P-4, invoice no. 4550).

The bulk of the $ 5,685 of billable time can be traced in the pre-bill worksheet to the research and analysis concerning conflict of interest followed by the drafting of a motion to disqualify Spiegel Sohmer. [ 31 ] In the billing of July 31, 2007 (P-4, invoice no. 4620), the bulk of the time billed at $ 13,548 is spent directly on the motion and its various revisions and on communications ancillary thereto. [ 32 ] The Defendant’s case also sheds light on the efforts and time spent by Judith Palnick in connection with the motion that of two of her friends and colleagues in revising and correcting the text for her during her period of illness. [ 33 ] The final version of the motion was signed July 10, 2007 and served with a notice of presentation for July 12, 2007 (DR-3). [ 34 ] It covers 21 pages and consists of 144 paragraphs divided into 6 chapters. [ 35 ] After recounting in detail the entire history of the conflict and the role played by the attorneys of record of the liquidator, it sets out the allegations of real and perceived conflict of interest and concludes for the disqualification of Spiegel Sohmer as attorney of record. [ 36 ] It must have come as a surprise to Tutino, Edwards Joseph when the liquidator reacted to this motion by discontinuing the

motion for declaratory judgement on August 16, 2007. [ 37 ] Maître Robert Joseph nevertheless refers to this new development optimistically in a belated reply to Mrs Palnick’s email (DR- 4) of July 9, 2007. Judith, I don’t think I ever replied to this email. As we previously discussed, we considered the option that we felt would ensure that your position and that of Harrison were properly defended and would put you in the best position to claim back your fees.

By having Speigel Sohmer removed it was our opinion that Gedaliah would be forced to find another attorney that would comply with the terms of the will and respect your father’s intentions. At the same time, the motion would lay the groundwork for an eventual claim against Spiegel for damages (including your legal fees) and give you an opportunity to gauge the court’s reaction to Speigel’s actions in this matter. Such a claim, however, would have to be taken by another firm, as we indicated to you on numerous occasions.

We are pleased to report (at least on a preliminary basis) that the Motion for Declaratory Judgment has been withdrawn. We received a desistment last night. This should mean that the issue of the loans is finished. On the issue of Harrison’s interest, we do not have a confirmation at this time that the liquidator will accrue the full amount to Harrison; however, the desistment of the motion would lead us to that conclusion. We are waiting a day or two longer to see if Spiegel sends us a letter confirming their position.

The withdrawal of the motion, on its face, appears to be an admission of wrongdoing following our motion to declare Spiegel unable. You are now in a good position to take things to the next step. Please call Jean-Thomas or me this morning (after 10:30 local time) to discuss.

Best regards, Robert Joseph [ 38 ] The consequence of this discontinuance was twofold: it rendered the motion for disqualification irrelevant, since there was no longer a proceeding in which Speigel Sohmer was attorney ad litem and it put the parties back to their position prior to the institution of the motion for declaratory judgment. [ 39 ] The much-anticipated result of forcing Spiegel Sohmer to withdraw as attorney for the liquidator, to be replaced by someone else, did not come about: Spiegel Sohmer continued to act as the liquidator’s advisor. [ 40 ] The liquidator then, acting ostensibly under his powers, stated his position on the two litigious issues, dropping the claim for reimbursement of the loans and confirming the position taken earlier that interest on the bequest of $ 100,000 accrued to the estate. [ 41 ] The net result of the exercise was therefore that the part of the dispute where Mrs Palnick was clearly in a strong position was dropped, and the more litigious aspect, where persuasion of the opposing party and/or of the court was necessary, continued.

To resolve it, Mrs Palnick’s attorneys were now forced to institute proceedings of their own, duplicating in effect, in large measure, the proceedings that had been abandoned by their opponents, in form, but not in substance. [ 42 ] After ascertaining the liquidator’s position in September 2007, Tutino, Edwards Joseph began, in October 2007, to draft its own motion for declaratory judgment. The work in September and October (see P-4, invoices no. 4776 and 4879, totalling approximately $ 6,000) includes the preparation of the motion and its service.

In November (invoice n° 4954, circa $ 6,000), the work includes the contestation of a motion for security for costs, the negotiation of a timetable, and the beginning of a new round of negotiations) [ 43 ] Me Desgagniers saw, based on his discussions with his new counterpart at Speigel Sohmer, an opportunity to settle the file on terms favourable to his clients and attempted to convince Mrs Palnick to entertain such discussions. [ 44 ] He testified at length as to the negotiations and, from his point of view, their probable outcome if Mrs Palnick had accepted his recommendations. [ 45 ] The invoice of February 29, 2008 (n°. 5230, approximately $ 7,500) shows extensive preparation and discussion with Mrs Palnick concerning a potential settlement. [ 46 ] In March, the process continues, focussing on the invoices for legal services that are now part of the settlement discussion. (March 31, 2008 invoice 5306, $ 3,314.01) [ 47 ] In the process, Mrs Palnick perceived that she now had the upper hand, and she lacked the willingness to compromise that Maître Desgagniers would have needed in order to bring about the settlement he envisaged. [ 48 ] From the whole of the evidence on this episode, a possible settlement in favour of Mrs Palnick’s interests does emerge, but, it is a settlement that the attorneys are willing to propose, not a settlement that Mrs Palnick’s opponents had approved or would necessarily approve.

We quote from Speigle Sohmer’s letter of January 28, 2008: […] That being said, if all the heirs and beneficiaries named in the Will are ready to settle the file once and for all, on a different basis, the Liquidator would be agreeable to the following offer :-

a) The amount of capital of $ 100,000.00 as well as the interest accumulated to date would be invested in a safe investment product in a renowned Canadian financial institution, with specific instructions to remit the capital and accrued interest to Harrison when he turns 25 years of age;

b) Settlement, on the basis of each party paying its own costs, would have to intervene in the court case instituted by Judith Palnick, ès qualité, against the heirs and the Estate of the Late S.H. Palnick;

c) Full and Final Receipt, Release and Discharge shall be executed by all parties in favour of all parties concerned as well as their representatives, mandates, attorneys, accountants, etc., the whole with a view of settling this matter in full, once and for all;

d) A fee of $ 40,000.00 shall be paid by the Estate to the Liquidator, Mr Gedaliah Rosenfeld;

e) A reasonable amount of fees to be discussed between the parties shall be paid by the Estate to Judith Palnick to cover the extra- judicial fees to be incurred by Judith Palnick, both personally and ès qualité.

It goes without saying that the present offer has to be agreed upon by all the heirs and beneficiaries, as well as by Judith Palnick, ès qualité for Harrison. […] [ 49 ] Maître Desgagniers testified that, based on a conversation subsequent to the letter that he had with his counterpart Me Guibault, the latter had intended to indicate, subtly, that it could be a payment of $ 20,000 to the liquidator, and $ 40,000 for legal fees. [ 50 ] At that point in the process, Mrs Palnick was looking to recover approximately $ 60,000 in fees.

The offer of $ 20,000 implied a net result to Mrs Palnick of only two thirds of that amount, because it was to be paid out of the estate, i.e. it would reduce her residual portion by one third. [ 51 ] Mrs Palnick’s position had hardened and the file could not be settled on the basis of the various terms of the proposal made by Me Guilbault, to which the real protagonists, the two brothers, had not necessary agreed. [ 52 ] Maître Desgagniers explains his motivation in recommending the settlement.

A central issue for him was that an action in damages against Spiegel Sohmer would be hard to "finance" in the sense that the fees in that action would not be recoverable and would be substantial, in an action that had inherent difficulties.

For him, it was more worthwhile to work toward a settlement. [ 53 ] He had also become aware that Mrs Palnick was a very demanding client: he speaks of 2,000 emails and wonders how many there would be in a subsequent action. [ 54 ] His instructions were clear, however, to press onward in the litigation, increasing the pressure. [ 55 ] Maître Desgagniers describes the position taken by the liquidator, again represented by Spiegel Sohmer in the litigation, as still being biased toward the interests of the two brothers on the interest issue. [ 56 ] Also of note, the brothers sought to appear late in the game, having neglected to contest Mrs Palnick’s proceedings at the early stages. [ 57 ] One area of contention in the present case is the forbearance that Mrs Palnick perceived on the part of her attorneys in not proceeding rapidly enough by default and foreclosing them from pleading. [ 58 ] Tutino, Edwards, Joseph, ceased representing on July 8, 2008.

At this point there were unpaid fees in the amount of $ 48,487.50. These consist in ten bills, at roughly monthly intervals, dating back to July 2007. V. Analysis [ 59 ] The Court will deal first with the issues particular to the action against Harrison Palnick Cohen, then with the merits of the action for fees generally and the cross demand. The particular defence of Harrison Palnick Cohen Applicable law [ 60 ] Under Quebec private international law defined in the Civil Code of Quebec , the capacity of a physical person to contract is governed by the law of that person’s domicile: […] 3083.

The status and capacity of a natural person are governed by the law of his domicile. The status and capacity of a legal person are governed by the law of the country under which it was formed subject, with respect to its activities, to the law of the place where they are carried on. 1991, c. 64, a. 3083. [ 61 ] Tutino, Edwards, Joseph argued that the incapacity of the minor was not something that they should have been aware of citing the principle of excusable ignorance recognised in the Civil Code of Quebec : 3086.

A party to a juridical act who is incapable under the law of the country of his domicile may not invoke his incapacity if he was capable under the law of the country in which the other party was domiciled when the act was formed in that country, unless the other party was or should have been aware of the incapacity. 1991, c. 64, a. 3086; 2002, c. 19, s. 15 .

[ 62 ] In the Court’s view, this

article does not assist a party who presumes the lawful representation of a minor person, not domiciled in Quebec, who would obviously be incapable under Quebec law and requiring representation. [ 63 ] In this case, Tutino, Edwards, Joseph presumed that because a parent is a natural tutor to her child under Quebec law, this was also the case under California law. [ 64 ] It also presumed that no formality would be required under the law of California for the tutor to represent the minor in forming a contract of services with the minor, since none is required under Quebec law. [ 65 ] In short, Tutino, Edwards, Joseph asks to be relieved of its erroneous presumption that the California law concerning how incapable minors are represented for contracts with lawyers is identical to the law of Quebec. [ 66 ] With respect, this

interpretation would stretch the excusable ignorance of the legal incapacity of a person beyond what was intended by the codifiers. [ 67 ] Knowing that Harrison would be considered a minor under Quebec law, and therefore incapable of contracting without proper representation, it was normal to consider that he would probably also be incapable under the law of his domicile. [ 68 ] Realising that the law of the minor’s domicile would govern the proper mode of representation, including any rules as to formalities and nullities, Tutino, Edwards, Joseph simply took the risk that the legal regime of the foreign state was the same as ours, not a very safe bet, given the dissimilar sources of private law in most states of the USA as compared with Quebec sources. [ 69 ] Different states protect their vulnerable persons differently, and the private international law directs the Court to the laws of the state of domicile in questions of status and capacity. [ 70 ] What is the law of California on the subject?

Application of California Law [ 71 ] The Defence presented the evidence of an expert witness on the law of the State of California concerning contracts for legal services for minor persons. [ 72 ] Tutino, Edwards, Joseph did not provide any evidence to contest this legal position. [ 73 ] Simply stated, the expert is of the view that […] the contract for attorney’s fees signed by Mrs Palnick on Harrison’s behalf is completely void and unenforceable under California Law with respect to Harison and Harrison is not liable for attorney’s fees under its terms. [ 74 ] The expert witness explained that the law provides for court approval of such contracts as a condition of their validity and enforceability. [ 75 ] No such approval was sought before the court having jurisdiction in the State of California. [ 76 ] In cases where an attorney has acted without the contract being so approved, the court hearing the case in which the attorney has acted sets the fee payable to the attorney based on the reasonable value of the services, not according to the void agreement. [ 77 ] Apart from this exception, there is no principle that would permit the award of legal fees to the attorney. [ 78 ] The Court surmised that it may be possible for a court in Quebec to exercise that jurisdiction, but it would have to be the court seized of the litigation in which the minor is represented, which is not the case here.

Besides, Tutino, Edwards, Joseph is seeking the enforcement of the contract for legal services, not an application of principles of unjust enrichment or some other source of extra- contractual liability.

The defence and cross demand of Judith Palnick [ 79 ] The defence and cross-demand calls upon the Court to analyse the case from the point of view of establishing the appropriate fee, and also from the point of view of contractual fault giving rise to damages. [ 80 ] The Amended Particularized Plea and Cross-Demand of Defendant Judith Palkick Personally" states the grounds for a reduction of fees ( quantum meruit ) with reference to

Article 3.08.02 a), c), d), e), f), and

g) of the Code of ethics of advocates and by invoking

Article 3.08.04 of that Code: 3.08.02. The fees are fair and reasonable if they are warranted by the circumstances and correspond to the professional services rendered. In determining his fees, the advocate must in particular take the following factors into account: (

a) experience; (

b) the time devoted to the matter;

(

c) the difficulty of the question involved; (

d) the importance of the matter; (

e) the responsibility assumed; (

f) the performance of unusual professional services or professional services requiring exceptional competence or celerity; (

g) the result obtained; (

h) the judicial and extrajudicial fees fixed in the tariffs. [ 81 ] Paragraph 17 of that procedure alleges that the entire billing, including the parts that have been paid “should not have been presented for payment” as "contrary to public order. [ 82 ] Paragraph 18, in answer to a request for particulars, states that all of the recourses combined amount to $ 60,000, without specifying which part of the cross-demand is a reduction due to quantum meruit and which

part is damages. [ 83 ] The Court’s discretion is invoked to sort that out. [ 84 ] We will deal in turn with the two sources of Mrs Palnick’s position. The appropriate fee [ 85 ]

Article 3.08.04 imposes on lawyers a duty to inform their clients; this is sometimes referred to as “ une obligation de renseignement ”. 3.08.04.

An advocate shall, before agreeing with the client to provide professional services, ensure that the latter has all useful information regarding the nature and financial terms of the services and obtain his consent thereto, except where he may reasonably assume that the client is already informed thereof. [ 86 ] One very effective way for lawyers to fulfill this obligation is to submit a budget for approval, describing the work to be accomplished, then to provide progress reports along with interim billing and modifications to the budget if required. [ 87 ] A client should know, on a regular basis, what has been done in furtherance of a resolution of the problem, what is to come, and what to expect in future fees. [ 88 ] In a perfect world, there would be no significant fee disputes, because adherence to methodology would prevent them from developing. [ 89 ] In the present matter, for the most part, there were no estimates of fees, no budgets and no real discussions on the cost/benefit of proceeding in a particular way. [ 90 ] The initial fee agreement simply states the principle of

article 3.08.02, without referring specifically to all the relevant elements. [ 91 ] The lawyers cannot really say that the client approved the billing by paying it, as the accumulated debt indicates: it amounts more than 60% of the total billing. [ 92 ] It cannot be said that the lawyers did not communicate regularly with their client on the progress of the matter, if fact, they complained at trial about the high volume of communications they were receiving and the time required to deal with it. [ 93 ] They attribute to a high degree the rather expensive cost of this litigation to an inordinate burden of communication by their client. [ 94 ] One searches in vain, however, for a clear written warning to the client that the volume of communications should be reduced to avoid unnecessary fees. [ 95 ] In the present matter, interim accounts were sent fairly regularly, and the client could monitor, after the fact, the quantification of the fees each month or two. [ 96 ] The bills describe the work done without providing the detailed time charges as found in the pre-billing worksheets. [ 97 ] There is no statement of account. [ 98 ] Payments were made from time to time, but, most of the time the firm was carrying overdue receivables which were substantial. [ 99 ] These unpaid balances quickly ramped up being in the range of $ 28,000 to $ 48,000 from July 31, 2007 onward. [ 100 ] So, while the billing was regular, payment was not.

It cannot be established that the interim billing was a sufficient substitute for a full and frequent disclosure of the anticipated charges.

[ 101 ] In cases where the lawyer’s performance of the obligation of information is inadequate, the Court may impose the sanction of a reduction of fees, applying the elements of

Article 3.08.02 to estimate a fair and reasonable fee. Each case must be examined on its merits, as Mr Justice Monet wrote: “ c’est affaire d’appréciation et d’équilibre ”. [1] [ 102 ] The defence raises all the elements of

Article 3.08.02 except

b) the time element and h), the impact of judicial costs. [ 103 ] Dealing with these, in turn: (

a) Experience [ 104 ] The firm and the particular lawyers acting in the matter were reasonably experienced, in the case of Maître Joseph in tax and estate planning and in the case of Maître Desgagniers, in general litigation. They could not be considered as estate litigation specialists, but they were competent for the matter at hand, a dispute over the

interpretation and application of a will, and a question of a loan and its prescription. (

c) The difficulty of the question involved [ 105 ] The issue of the loan was straightforward and not difficult. [ 106 ] The issue of the interest on the bequest was of moderate difficultly, but the firm was able, from an early point in the file, to make a legal determination of its client’s position.

Much time and effort were spent dealing with the extrinsic evidence of the notary’s notes and his recollection as means of ascertaining the testator’s intent. [ 107 ] The way in which opposing counsel had interacted with the notary became an issue in the motion to disqualify, and the possibility of examining the notary out of court became a concern in the underlying proceedings. Intrinsically, though, there was nothing particularly difficult about the matter to be resolved: the difficulty came about in the context of the reaction to what was perceived as partiality of the liquidator’s attorneys. (

d) the importance of the matter [ 108 ] Objectively, the interest question had a value estimated by the firm at approximately $ 100,000, though no real study of the value was done. The loan issue was ostensibly $ 50,000, but it really had no substantial value, because of the evidentiary problems inherent in it and the obvious vulnerability of the claim to prescription. [ 109 ] Bearing in mind that Mrs Palnick was a one-third universal legatee, the net financial impact was reduced by that fraction.

On paper, then, the cumulative quantum of both issues was effectively approximately $ 100,000. [ 110 ] There were other issues that the firm was grappling with, in terms of the winding up of the estate, which was a sort of backdrop to the particular dispute, such as inventories, and other formalities, but these matters were not the main focus. [ 111 ] There was also the question of the remuneration of the liquidator which became relevant in the settlement discussions.

At one point, $ 40,000 was suggested by the liquidator’s attorney, but this was, apparently, posturing. [ 112 ] The importance of the matter was, to a large degree, emotional, a power struggle of sorts where the issue of the potential liability of the attorney acting for the liquidator took on a life of its own. (

e) the responsibility assumed [ 113 ] There was no particular responsibility assumed by the firm (

f) the performance of unusual professional services or professional services requiring exceptional competence or celerity; [ 114 ] As above, there was nothing extraordinary about the mandate. (

g) the result obtained; [ 115 ] The firm suing argues strenuously that it obtained the result of a good settlement opportunity and that its recommendation was not accepted. [ 116 ] The Court rejects that argument: the lawyer’s conviction that he could settle the file on favourable terms is subjective and it cannot be verified because such a settlement would have required the consent of the two brothers, who were not represented in the discussions.

When the discussions broke off, the offer that had been declined by Mrs Palnick was voiced as a potential deal with the liquidator, subject to the consent of all the heirs. [ 117 ] As well, it did not address some of the issues that Mrs Palnick found to be essential such as her indirect contribution to fees for the liquidator and for the liquidator’s attorneys. [ 118 ] In the context of having been encouraged to put efforts into “paving the way” for an action in damages against Spiegel Sohmer, was it reasonable to expect her to make a substantial compromise when her lawyers were telling her that her opponent had been seriously shaken by the motion? [ 119 ] Because of these factors, the Court does not agree that there was a favourable result. [ 120 ] In terms of the motion to disqualify, it turned out to be a failure, because it was not a productive use of resources in the first place and because the opponent manoeuvred out of the situation.

[ 121 ] Even if it had succeeded, what then? There was still a motion in declaratory judgment to deal with, and the opponents in that litigation could have, directly through their own counsel or indirectly through another attorney of record acting for the liquidator, argued their points, however strong or weak. [ 122 ] In a sense, the firm was a victim of its success. It presented the matter so compellingly that its opponents decided to make the issue irrelevant by discontinuing the underlying proceedings. It was out-manoeuvred.

This had the side-effect of putting the onus on Tutino, Edwards, Joseph to re-initiate the legal proceedings, albeit on one issue only, rather than two (500-17-039156-073). [ 123 ] The result of the dropping of the action on the loans was not really significant if, by all accounts, the claim was doomed to fail anyway. [ 124 ] The settlement of the action, achieved the day of trial, after Tutino, Edwards, Joseph had been substituted for as attorneys of record, amounted to a victory for Mrs Palnick and her son on the interest issue, but she obtained nothing on her other objective on which so much energy had been expended, that of financial compensation for the costs of the matter. [ 125 ] Tutino, Edwards, Joseph’s drafting and arguing the case with their opponent must have had some impact on this outcome, both the positive and negative aspects of it.

A fair fee [ 126 ] In a matter where the ultimate financial matters at issue had a net value that the attorneys calculated at around $ 100,000, it is surprising, to say the least, that the total fee exposure is approximately $ 80,000 at a time when the file has not yet proceeded before a judge. [ 127 ] How did this come about?

The time spent and billed on the motion to disqualify, approximately $ 15,000, is only part of the answer to that question. [ 128 ] The success or failure of the mandate could have been measured by a judicial decision if the file had been oriented to a quick legal disposition of the conflict. [ 129 ] The approach was different. In reading through the correspondence the Court notices that much effort is deployed in trying to convince the lawyers acting for the liquidator to get to the right solution by coming around to the proper opinion. The goal is to not have a judicial resolution, but a change of opinion.

This presumed that the lawyer acting for the liquidator would be able to convince the real antagonists, the estranged brothers of Mrs Palnick, to abandon their positions. [ 130 ] In retrospect, it might have been a more efficient use of resources to argue the case before a judge.

That would have only taken a day or two, with a few days preparation and perhaps the necessity of submitting the notary to an examination on discovery, with a view to avoiding calling him to testify at the trial, and predetermining the possible impact of his testimony, if admissible, to help interpret the will. [ 131 ] While it is reasonable to spend a moderate amount of time in any given file to explore settlement possibilities, including, if appropriate, trying to convince the opponent of his error, if the effort does not bear fruit, there is no dishonour in trying a case before a judge if it is done efficiently. [ 132 ] Considering the elements analysed above, the total fee incurred is disproportionate to a matter of this small scale.

While the time billed was, admittedly, the measure of the time and efforts of the attorneys, the overall investment cannot be justified neither by the complexity of the problems underlying the conflict, the experience brought to bear, the skill required nor the result obtained. [ 133 ] The Court would have been inclined to arbitrate an all-inclusive fee, tax and disbursements included of $ 30 000, equal to 30% of the amount effectively at stake. [ 134 ] The firm argues that Mrs Palnick was an overly demanding client who engaged the attorneys in an extraordinary amount of communication.

It produces DR-7, a complete reproduction of the email exchanges between November 2006 and December 2007. [ 135 ] While the thickness of the email correspondence file is impressive, approximately 10 centimetres (four inches), there is much duplication as the emails are sometimes in chains which reproduce a given message more than once. Some of the pages are simply transmittals of documents.

Some of it consists of copies of correspondence between Mrs Palnick and other professionals. [ 136 ] In the absence of a written admonishment on their part to keep the communications to a minimum, the attorneys are not justified in pointing to the volume of emails as a special circumstance to justify the fee.1 [ 137 ] Reading the correspondence file does however give another dimension to the problem: beyond the two discreet problems that were litigated, there is a broader range of issues in the correspondence than that which became the object of the litigation mandate.

On some of these issues the firm was giving advice, or trying to accomplish a goal, on others it was being copied on correspondence to other professionals and would have kept informed on developments. [ 138 ] This broader aspect of the mandate has a mitigating effect on the Court’s reduction of the account . The Court estimates, somewhat arbitrarily, the equivalent of thirty hours, at Maître Joseph’s rate of $ 265 per hour: $ 7,950, plus GST 6 %, plus QST 7,5% = 9,059.25. [ 139 ] The total is $ 39,059.25 of which Mrs Palnick has paid $ 35,305.99, leaving a balance of $ 3,753.26. Professional liability

[ 140 ] The claim for professional liability is contained in paragraphs 16, 17 and 18 of the “ Amended Particularized Plea and Cross- Demand of Defendant Judith Palnick Personally”. [ 141 ] Formally, the particulars of fault alleged are that the attorneys:

a) Failed to inform Defendant Judith Palnick of their lack of experience in similar matters;

b) Failed to identify that the liquidator of the succession, through its attorneys, was acting improperly in taking the lead to prepare an improper and useless motion for declaratory judgement;

c) Failed to act upon lawful instructions of their mandatory or cease to act on her behalf by directing her to another lawyer thus placing their own business interest above the interest of their client ;

d) Failed to properly pursue and obtain the various annual accounting required from the Estate that would have put their client in a position to timely act against the Estate and its liquidator;

e) Failed to put said liquidator on notice to not proceed that way; and,

f) Then embarking on the wrong response of preparing an expansive and complex Motion to disqualify attorneys, with little chance of success, instead of the more appropriate and quick motion to dismiss. [ 142 ] With respect to a), the firm presents itself as competent without claiming that estate litigation is its specialty. The evidence does not disclose a failure to inform the client that could be considered a fault. [ 143 ] With respect to

b) and

e) there are two aspects to the alleged improper conduct of the liquidator: that he was wrong on the merits, and that he was wrong in the choice of procedure. [ 144 ] Tutino, Edwards, Joseph pointed out early and often its analysis according to which the liquidator was misguided on the two litigious issues at hand and that proceedings were premature if he had not ascertained all of the facts. [ 145 ] Much was made at trial as to the choice of remedies: whether a motion seeking declaratory conclusions was appropriate or whether there should have been a motion for dismissal at an early stage.

Central to the argument of the defence is the technical issue of whether the liquidator has standing to submit a question of application of the will to a court, as opposed to the right of the parties to challenge a position taken by the liquidator. [ 146 ] The Court is unconvinced of the merit of this argument.

Since the liquidator is charged with a duty to liquidate, a legal issue that has an impact on the distribution, even one that depends upon some factual determinations is, arguably, a question that the liquidator has an interest in being decided by a Court if the heirs are in conflict over it. [ 147 ] Even if an early motion to dismiss the motion for declaration would have been successful, what then?

The parties would have ended up before the Superior Court one way or another at least on the more litigious issue of the interest, in any situation where the parties whose rights were in play did not agree. [ 148 ] There used to be a real procedural difference between the motion for a declaratory judgement, which proceeded summarily and an ordinary action.

That distinction is, for the most part, absent in the current procedure where all matters are brought by way of motion to introduce proceedings, and subject to the same flexible system of written pleadings, joinder of issue and readiness, except in cases with an oral defence. [ 149 ] In substance, the initial motion (500-17-035678-070), the one that Tutino, Edwards, Joseph brought (500-17-039156-073) after the discontinuance of the first were both actions brought by way of introductory motions. The only thing declaratory about them was the conclusions.

In both cases the liquidator and the heirs were before the court in a proceeding that would be binding on all, with extensive written pleadings, joinder, and a trial with some oral evidence. [ 150 ] Procedure is a means to accomplishing a goal, the goal being a judicial determination of rights. In litigation, there are many ways to advance an interest, and the initial choice of procedural vehicle is seldom determinative because conclusions can be amended.

As well, there are many ways for courts to enable parties to overcome procedural errors, except when the error is so fundamental as to affect rights, such as late service and filing giving rise to a failure to interrupt extinctive prescription before it is acquired.

Such irremediable errors are not procedural, they are manifestations of the substantive law. [ 151 ] In this case, while it is debatable which procedure would have been the theoretical best to obtain satisfaction on the issues, the alternative, an action with conclusions in the nature of a condemnation or an order in the nature of a specific performance would not have been very different in terms of the time and effort in preparation, waiting periods and trial procedure. [ 152 ] The file was eventually settled after the change of attorneys.

The choice of method of proceeding was not determinative. [ 153 ] The issue of conflict of interest in above

c) is not of substantive merit. Mrs Palnick, in theory, had an interest in conflict with that of her son, because she stood to gain one third of the interest he would be deprived of if interest accrued in favour of the estate. But because she is the financial support of her minor son, his enrichment will eventually make him more financially independent at an earlier age, so that Mrs Palnick’s interests as a parent are indirectly the same as his. There was no need for separate representation, because Judith Palnick was leading the file for a solution that benefited her son.

Her position on the loans was not relevant, because the estate was solvent, without the reimbursement of these loans, to pay the $ 100,000 bequest. [ 154 ] The letter submitted in reply to a request for particulars dated November 16, 2012 alludes to “actions to be taken against the Liquidator of the estate and its counsel Spiegel Sohmer”.

[ 155 ] It seemed obvious to both attorney and client that the liquidator would not be an appropriate defendant, for reasons of age and financial standing while Tutino, Edwards, Joseph clearly and on several occasions stated that they would not accept to act as attorney of record in an action in damages against their confreres. [ 156 ] On the issue of accountings, item

d) the client’s concerns about the handling of the liquidation are present in the correspondence. These concerns are met in the correspondence on Mrs Palnick’s behalf to opposing counsel. [ 157 ] When a liquidator fails to act or acts faultily, one option is to move to have the liquidator removed. Another option is to try to pressure the liquidator to act in a certain way. The second approach only was taken.

It has not been demonstrated that it was a fault to fail to act according to the first. [ 158 ] Finally, the decision to take the motion to disqualify is treated by the defence as a professional error, inasmuch as the possibility of the discontinuance was not anticipated and therefore not discussed with the client. As well, it is argued, the possible negative outcome of the motion was also not discussed. [ 159 ] The Court does not agree that the recommendation to bring the motion was a professional fault.

It was an option that might have given rise to some or all of the benefits that were anticipated. [ 160 ] In a dynamic situation such as the conflict brewing between Mrs Palnick and her opposing counsel, there was a chance that it could help in some way the furtherance of the goal of obtaining compensation for professional costs. [ 161 ] The obligation of the attorney is one of means, not of result. In litigation, there can be no guarantee of a favourable outcome of any given procedure and it is always possible to surmise, after the fact, that a different approach may have given better results.

But, it is hard to prove such an hypothesis. [ 162 ] The real issue is that, as an expenditure of legal resources, it ended up having no measurable benefit, but, apart from the fees incurred, no negative impact as well. It is a matter to be determined by the Court’s arbitration of a fair fee rather than a finding of professional fault. [ 163 ] The case for moral damages is not made adequately: the motion was finalised at a time when Mrs Palnick was involved in some serious health challenges.

No causal relationship has been demonstrated between Mrs Palnick’s health and the alleged fault. [ 164 ] Because the principal action was allowed only for a small amount, because of a major reduction of fees, costs would normally be in favour of the defendant Judith Palnick. But since the cross-demand based on professional fault was not allowed, costs should be compensated, so that each party pays its own costs.

Expert fees for the report and testimony [ 165 ] Costs on the dismissal of the action in respect of the minor son will be for his benefit. [ 166 ] When a court hears experts from another jurisdiction, it has to be prepared to recognise the fees charged at the going rates in the witness’ home jurisdiction, in this case the fee is based on hourly rates, including that of the senior attorney who testified, Ellen Reisman, at $ 860 per hour (DH-1, D). [ 167 ] At the hearing, Tutino, Edwards, Joseph did not take issue with Mrs Reisman’s opinion of the law of California.

It’s position was limited to argument on the application of Quebec rules of conflict of laws, on which the expert witness was not asked to state any view. [ 168 ] It would have been better preferable if Tutino, Edwards, Joseph had, prior to trial, accepted the report in lieu of testimony, thereby avoiding the expert’s travel time, and time to prepare and deliver her testimony.

FOR THESE REASONS, THE COURT : GRANTS the plaintiff’s action in part against the Defendant Judith Palnick CONDEMNS the Defendant Judith Palnick to pay Plaintiff the sum of $ 3,753.26 together with interest at the legal rate and the additional indemnity of

article 1619 of the Civil Code of Quebec, calculated from June 23, 2010; DISMISSES the Cross-Demand of Judith Palnick; THE WHOLE with each party paying its costs; DISMISSES the Plaintiff’s action against Judith Palnick in her capacity as tutor of her minor son, Harrison Palnick Cohen; WITH COSTS , including expert fees and disbursements for the preparation of the expert’s report, preparation and attendance at trial, including travel costs. __________________________________ DAVID L. CAMERON, J.C.Q.

Me Nadine Afif TUTINO EDWARDS JOSEPH Attorney for the Plaintiff Me Caroline Tremblay GILBERT SIMARD TREMBLAY Attorney for Cross Defendant Me Pierre-- Yves Trudel ARCHAMBAULT ADEL TRUDEL, s.n.d. Attorney for the Defendant Dates of hearing: December 12, 13 & 14, 2012; January 11 & 24, 2013.