Phillips Legal Professional Corporation - v. -, 2013 SKPC 002

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Date: January 4, 2013 Citation: 2013 SKPC 002 File: File #292/10 Location: Regina, Saskatchewan _____________________________________________________________________________ Between: Phillips Legal Professional Corporation - and - Sharon Lynette Holm Mr. Brad Tilling/Mr. Mervin C. Phillips For the Plaintiff C. Mervin Ozirny For the Defendant _____________________________________________________________________________ JUDGMENT D.G.

BOGDASAVICH, J _____________________________________________________________________________ CLAIM AND COUNTERCLAIM [ 1 ] The plaintiff, Phillips Legal Professional Corporation, was retained to provide legal services to the defendant in a matrimonial matter. Nearly 21 months after acquiring the plaintiff’s services the defendant changed solicitors and the plaintiff rendered a final account for legal services of $24,349.04. The account, dated December 01, 2009, shows that was the balance owing after credit was given for payment of an “Interim Account” of $3,000.00 and a “Courtesy Discount” of $25,095.00.

Legal fees are shown as $21,500.00 before taxes and disbursements. In short the account indicates total legal fees of $49,595.00 before the discount. It also shows that the plaintiff provided 141.70 hours of legal services. The plaintiff claims judgment in the amount of $20,000.00.

[ 2 ] The defendant had paid the Interim Account and refused to pay the final bill alleging that “the vast majority of the services provided by the plaintiff were unnecessary, redundant, duplicitous, needless and were absolutely of no value to the defendant”. The defendant filed a counterclaim in the amount of $14,642.75 respecting transportation, hotel and other expenses which were incurred by her unnecessarily. At trial this amount was reduced to $12,469.38. THE EVIDENCE [ 3 ] The Court heard testimony from witnesses in a six day trial. Below is a

summary of the evidence in the order in which the witnesses appeared. Mervin C. Phillips [ 4 ] Mr. Mervin C. Phillips testified on behalf of the plaintiff corporation. He was admitted to the Saskatchewan Bar in 1981. He stated that he had acted for the defendant’s father over a period of years and was retained by the defendant on February 21, 2008, with respect to her family law problems. Mr.

Phillips further testified that no retainer agreement was entered into, nor were any funds taken on deposit or even requested, as he knew the defendant could not afford to do so. [ 5 ] At the time of the defendant’s first attendance at the plaintiff’s office on February 21, 2008, a Petition for Divorce was prepared by the plaintiff. As well, a letter was prepared by Mr. Phillips advising the defendant’s husband that his firm had been retained by the defendant to act on her behalf (Exhibit P-1, Tab 83 and Tab 12). [ 6 ] Mr.

Phillips testified that at the time he was retained he was aware of the fact that the defendant was on stress leave from her job as a teacher and receiving disability benefits. She was suffering from two different health problems which he considered to be significant. In order to obtain medical reports he had the defendant sign authorizations in June 2008 and again in October 2008 (Exhibit P-1, Tab 11 and Tab 5). He made arrangements for the defendant to see a specialist in Surrey, British Columbia.

The purpose of obtaining these medical reports was to aid in the defendant’s claim for spousal support. [ 7 ] In support of the plaintiff’s claim Mr. Phillips gave extensive testimony as to the legal services provided to the defendant until she changed solicitors effective November 13, 2009. His exhaustive review of these services is set out in the final account he sent to the defendant dated December 1, 2009, and in the over 100 documents filed with the Court and contained in Exhibit P-1. Mr.

Phillips referred the Court to the numerous medical reports received and reviewed, the Financial Statements and Property Statements prepared (although never filed in Queen’s Bench), and a Trial Separation Agreement never signed but provided to the first lawyers acting for the defendant’s husband (Exhibit P-1, Tab 77). Testimony was also given as to the work done on the file by the plaintiff’s paralegals. [ 8 ] Counsel for the defendant conducted a lengthy cross-examination of Mr. Phillips. He reviewed with Mr. Phillips numerous items in the plaintiff’s final account. Mr.

Phillips was examined as to how he calculated and allotted time spent on the file on many of the attendances listed. As well, Mr. Phillips was cross-examined with respect to the plaintiff’s “Interim Account” for $4,118.92 dated October 31, 2008, and why there was no breakdown of the services rendered. Mr. Wayne Rusnak, Q.C. [ 9 ] The defendant’s first witness was Mr. Wayne Rusnak, Q.C., a Yorkton lawyer. He was qualified as an expert witness to give opinion evidence. [ 10 ] Mr. Rusnak testified that a significant portion of his practice is in the Family Law area.

In the last ten years he has been involved in over two hundred family law cases. [ 11 ] Mr. Rusnak stated that on a client’s first visit he explains what his hourly rate will be and how he charges. He sends out interim billings in those cases where he does not want his client to experience a financial surprise. He describes such a “surprise” as when the client has been led to believe the bill will be for $5,000.00 and when the bill arrives it is for $7,500.00. [ 12 ] Mr. Rusnak testified that he received the defendant’s file from a Regina lawyer, Mr. Brad Hunter.

The file contained all pleadings from the Queen’s Bench file which included the Petition and other documents. He also reviewed the Pre-Trial Brief of both parties and the judgment dated October 27, 2011. The Court was subsequently advised the divorce was finalized November 4, 2011. [ 13 ] Mr. Rusnak opined that the defendant’s legal file represented a “basic” divorce that was “not complicated”. When asked by counsel for the defendant to rate the divorce on a scale of 1 to 5 with 1 representing a simple file and 5 a very complicated file, Mr. Rusnak stated he would rate this between a 1 and a 2. [ 14 ] Mr.

Rusnak stated that in his opinion the legal fee to a client on the defendant’s file would be between $6,000.00 and $10,000.00 from “beginning to end”.

[ 15 ] Mr. Rusnak further stated that with respect to the issue of “degree of responsibility” of a lawyer performing legal services for the defendant, the only complex issue he saw was whether certain real property would be exempt from the division of the matrimonial property. With respect to the “legal skills required” on this file, he testified that in his firm he may have had an articling student “cut their teeth” on the file or assigned a junior lawyer with moderate supervision. [ 16 ] Mr.

Rusnak noted that there was nothing on the court file between the filing of the Petition on February 22, 2008 and November 4, 2009. No application had been made to the Court for child support. A Notice to Disclose had been filed by Mr. Holm’s counsel October 21, 2009, which would require a response by the defendant’s counsel with respect to what he described as “basic things”, namely, a financial statement, a property statement, three years of salary history, and pension entitlements. [ 17 ] Mr. Rusnak stated that to process a divorce such as the defendant’s he would expect at least ten office attendances.

When told that the defendant was required to attend at the plaintiff’s office thirty one times, he replied he did not know why that number of attendances would be required. [ 18 ] Mr. Rusnak gave significant evidence with respect to what a client should be told at the first meeting with a lawyer respecting fees. He stated that not only should the hourly rate be made abundantly clear to the client, but an expectation as to what the total cost would likely be should be discussed, and what would cause variations.

When told by the defendant’s counsel that the total charge before the plaintiff’s “discount” was for 141.7 hours at $350.00 per hour totaling a fee of $49,595.00, Mr. Rusnak felt that was totally unreasonable. Further, he stated even 70 hours would be unreasonable for a file of this nature. He stated: “there was no way a client would agree up front to pay for 70 hours of work on such a file”. [ 19 ] Mr. Rusnak was then asked to place a dollar value on various legal services that would be provided on such a file.

He replied by stating that the Petition for Divorce would have a legal services value between $700.00 and $1,000.00, a Financial Statement a legal services value of $350.00, and that the value of legal services in preparing the Property Statement would be approximately $700.00. After reviewing the court file and Mr. Hunter’s file he would value Mr. Hunter’s work at between $7,000.00 and $8,000.00. While he had not seen the plaintiff’s file he would value the preliminary work done on similar files at between $2,300.00 and $3,000.00. [ 20 ] In cross-examination Mr.

Rusnak did concede that the defendant’s health issues would justify time spent by the plaintiff as would the issue of one of the defendant’s children being only 15 at the time of her first visit to the plaintiff’s office on February 21, 2008. Mr. Hunter’s file disclosed no work with respect to child support issues. (There was no application to court made by the plaintiff with respect to child support during the time legal services were being provided to the defendant.) [ 21 ] When asked questions in cross-examination with respect to “time recording” on a file, Mr.

Rusnak unequivocally stated that a lawyer cannot justify billing a client for twenty hours of research when most lawyers would do that work off “the top of their head”. Mr. Brad Hunter, Q.C. [ 22 ] The defendant then called Mr. Brad Hunter, Q.C. He was called to the bar in 1981 and testified that 80% to 90% of his practice involves family law files. He would open 50 to 100 files a year. His hourly rate was $375.00 an hour. [ 23 ] Mr. Hunter first met with the defendant in early November 2009.

He was made aware of certain health issues of the defendant but immediately made a decision not to pursue these health issues in the divorce. Mr. Hunter testified that the defendant was of the belief that the health issues being raised in the divorce had only occurred because Mr. Phillips had talked her into it. He further stated that even if the defendant could pursue her health issues successfully, it was not going to affect the “quantum issue” in the divorce. [ 24 ] Upon being retained, his firm immediately searched the Court of Queen’s Bench file and discovered that only the Petition existed on the file.

Neither the Financial Statement form nor the Property Statement form had been placed on the Queen’s Bench file and the defendant only had in her possession handwritten documents with respect to those matters. Mr. Hunter concluded that very little progress had been made in the divorce and in fact the defendant had been served with a Notice to Disclose by her husband’s solicitors. These solicitors advised Mr. Hunter that it was their belief the defendant was “stalling” on the file. [ 25 ] Mr.

Hunter testified that the defendant’s divorce was “not a complicated case” and it was brought to a conclusion without a trial. He stated the only issues were financial and these were ultimately resolved. [ 26 ] Mr. Hunter rendered the defendant two bills of account that totaled approximately $7,000.00 in fees. [ 27 ] When asked whether he had ever received any medical reports with respect to the medical issues, he replied he had obtained none as he could see “no reason to go down that route”. [ 28 ] In cross-examination Mr. Hunter was asked about the “depression” issue of the defendant.

He replied that most clients involved in a divorce case are depressed and suffer anxiety. Furthermore, the defendant was back to work during the time he represented her. He was aware she had been previously on disability. Sharon Holm [ 29 ] The defendant, Sharon Holm, testified that she is a teacher and at all relevant times to this action lived in Esterhazy. She

attended at the plaintiff’s office on February 21, 2008, to seek a divorce from her husband whom she married in January 1988. [ 30 ] The couple had three children, the youngest of which was born in September 1992. She testified that the marriage had broken down and that she decided she would seek a divorce. [ 31 ] Her father arranged the meeting with the plaintiff on February 21, 2008. She stated that at that time her mental state was “shaken” and that she had a number of health problems. She was advised by Mr.

Phillips that as one of her health issues could be attributed to her husband that she could get compensation from him as a result. His opinion made her interested in pursuing the claim as she felt her husband “needed to pay”. [ 32 ] The defendant testified that Mr. Phillips seemed to spend about 80% of the time at her attendances on her health issues. However, by the end of 2008, after seeing a specialist at that time with respect to the health issue attributed to her husband, she had been advised it was nothing more than an inconvenience and clearly not a debilitating disease.

She stated that on at least two occasions she advised Mr. Phillips not to pursue any claim for compensation respecting her health issues. [ 33 ] The defendant testified that she was not advised of what her legal expenses might be by either Mr. Phillips or her father. No discussion occurred with respect to an hourly rate or what the plaintiff’s billing procedure would be. She had no indication at all what the total bill would be. It was not until “probably the middle of 2009 or shortly thereafter” that she was advised of the hourly rate of Mr. Phillips. Furthermore, Mr.

Phillips indicated to her that she would receive a “discount”. [ 34 ] When the issue of her account was discussed in August 2008, she was advised by the plaintiff to seek money from her father as the firm required $5,000.00 at that time. The defendant testified that she had previously asked for an account, she believes, on four occasions. She specifically recalls asking Diane Phillips, an employee of the plaintiff, on two occasions (see Exhibit P-1, Tab 79, a memo from Diane Phillips to Merv Phillips dated August 8, 2008). Mr.

Phillips had told her a number of times not to worry about the account but she testified “I was worried”. [ 35 ] The defendant received her first bill dated November 6, 2008 (Exhibit P-2 ). It was for $3,000.00 plus disbursements. She was not sure how it was delivered but she believed it was by mail although the bill itself says “Delivered Via Hand”. She testified that the bill was never explained to her and she believed that it covered all fees for legal services rendered to her up to October 31, 2008. She testified: “I thought I was paid in full”. A second document was also delivered at that time.

It indicated the plaintiff had provided a total of 49.8 hours of legal services. [ 36 ] The issue of fees arose for the last time in October 2009. The defendant had received the following email October 28, 2009 at 2:21 p.m.: “As discussed, we enclose our ‘sample’ account for your review and comment. Regards, Merv”. Attached to the email was a letter addressed to the defendant dated October 28, 2009, together with a 10 page sample account (Exhibit P-1, Tab 47). Ms.

Holm stated that when she reviewed that account she then multiplied the total hours claimed by the plaintiff on the file, namely 136.2 hours by $300.00 per hour and saw that her sample account was for $40,860.00. She testified she thought this was a “ridiculous amount” as little progress had been made in her divorce. As she was already thinking of changing lawyers because nothing was being done, this moved her to action. As well she said ,“he kept on wanting me to see doctors” and when I reviewed the medical reports and discussed them with Mr.

Phillips, he advised me that the medical reports were not acceptable and that we need to do more. She then decided to retain Mr. Hunter. [ 37 ] The defendant testified that her father had passed away in March 2009. This, combined with the breakdown of her marriage, put her in a very frail and vulnerable condition. The plaintiff led her to believe that she would get a large settlement and that her husband would be left with nothing. She testified the plaintiff was failing to deliver on this promise.

The defendant outlined in considerable detail the many medical appointments she had with various doctors and specialists in Saskatchewan and British Columbia and her numerous attendances to the plaintiff’s office. She had made two visits to Surrey, British Columbia to see a psychiatrist. The first was in June 2008 and the second on July 6, 2009. The medical report from that later visit (Exhibit P-1, Tab 98) indicated that her “major depression” was “in partial remission”.

Under the recommended treatment plan that medical report also stated: “I also recommended this patient to resolve the issues surrounding her divorce as soon as possible”. The defendant testified that she was very frustrated by the lack of progress being made on her file. At her numerous attendances to the plaintiff’s office she would only spend approximately 30% of her time with Mr. Phillips and the rest of the time with paralegals and support staff. She was constantly being called in from her home, 2 ½ hours from Regina, to provide authorizations and to review documents.

Numerous emails were exchanged with respect to requests being made of her to attend medical appointments, to arrange attendances at the plaintiff’s office, and to attend meetings with her husband and his lawyer. [ 38 ] The defendant’s lengthy testimony with respect to all these meetings does not need to be reviewed in this judgment. Notwithstanding, two of the meetings are significant. First, on September 11, 2009, she attended at the plaintiff’s office with her sister Judy Gilmour. Her sister had accompanied her because she wanted “a second set of ears”.

She had wanted to discuss why no progress was being made on the file when again her health issues took front and centre stage at the meeting. Ms. Holm testified that she advised Mr. Phillips that as the doctors’ reports were not supporting her claim with respect to one of her health issues that it should be abandoned. She stated that Mr. Phillips did not listen to her. She felt awful when she left the office because there was “no way he was going to drop the issue”. The second meeting was on October 23, 2009, when she was accompanied by her brother-in-law Bill Gilmour.

The purpose of the meeting was to try to get progress on the divorce file. During the course of the meeting when her brother-in-law raised a number of questions with Mr. Phillips, the two men got rather agitated and Mr. Phillips rose, leaned over the table, and yelled at Mr. Gilmour. Ms. Holm’s stated that she became fearful, could not take it anymore, and wanted to run. [ 39 ] The defendant’s counsel led her through her counterclaim and outlined the expenses she had incurred which in her opinion

were unnecessary. [ 40 ] In cross-examination the defendant was shown a document she and her husband had signed on June 6, 2010, wherein she agreed she would make no claim for spousal support. The defendant explained that document as simply her change of mind with respect to claiming spousal support. She was also shown an email she had sent to one of the plaintiff’s paralegals on October 21, 2009, in which she stated: “I want Merv to get as nasty as he can. If I only knew that Kelvin would be made accountable and have to pay through the nose to me I would rest easier! He is making the worst come out of me.

But there are no guarantees in life. Is there a better than good chance that I will come out ahead in this?” (Exhibit P-1, Tab 49) Judy Gilmour [ 41 ] Judy Gilmour testified that she is the sister of the defendant and accompanied her to the plaintiff’s office September 11, 2009, for a meeting with Mr. Phillips. She did so to support her sister but also because she is a nurse with 31 years of experience and in her current position does medical research. At the meeting there was considerable discussion respecting one of her sister’s health issues. Mr.

Phillips advised that a specialist’s report was not satisfactory and that they would need further medical reports. She believed Mr. Phillips was “beating a dead horse” with respect to this particular health issue and that there was no purpose in pursuing it further. (Two medical reports are set out in Exhibit P-1, Tabs 94 and 96.) Ms. Gilmour stated that at the end of the meeting she left with the impression that the divorce could not proceed until more medical reports were received. When the defendant said she wished to move on with the divorce Mr. Phillips replied that “due diligence” had to be done.

Bill Gilmour [ 42 ] Mr. Bill Gilmour testified that he is the brother-in-law of the defendant and that he attended a meeting with Mr. Phillips and her on October 23, 2009. He attended for the purpose of providing support to the defendant whom he felt was being intimidated at the meetings with the plaintiff. The meeting lasted 50 to 55 minutes and approximately 30 to 35 minutes was spent discussing the health issues of the defendant and their legal implications. He testified that during the course of the meeting the discussion between himself and Mr. Phillips had become heated and that at one point Mr.

Phillips came out of his chair and said: “You are accusing me of not doing my job”. Wanda Moore [ 43 ] The plaintiff called Wanda Moore as a witness. She testified that she was employed as a paralegal by the plaintiff from July 2008 until June 2010. She gave evidence respecting office protocol when meeting with female clients. [ 44 ] Ms. Moore arranged the meeting with the defendant on September 11, 2009, which was also attended by the defendant’s sister. The purpose of the meeting was to update the defendant on the file and particularly on the psychiatrist’s report of July 6, 2009 (Exhibit P-1, Tab 98).

She also attended the October 23, 2009 meeting and did indicate that the meeting got a little heated and she requested all parties to calm down. She specifically denied that Mr. Phillips had come out of his chair although he had raised his voice a little. [ 45 ] In cross-examination Ms. Moore did acknowledge that Mr. Gilmour expressed dissatisfaction with the progress that was being made in the defendant’s divorce and began asking questions. She stated that the defendant was very quiet throughout the meeting.

Joanne Colledge [ 46 ] Joanne Colledge testified that she was currently an articling student in Regina but had worked for the plaintiff law firm as a paralegal. She testified that she had only met the defendant in person three to four times. She had spoken to her on the phone three or four times and there were a number of emails exchanged between herself and the defendant as well. She also testified as to office protocol respecting meetings with female clients.

In cross-examination she testified that she did not consider the defendant to be fragile and certainly no more so than anyone in similar situations respecting matrimonial disputes. Leanne Phillips [ 47 ] Leanne Phillips testified she is a lawyer with the plaintiff law firm but that she had been performing paralegal and secretarial work in prior years and was employed in the plaintiff’s office in the summer of 2008. She had a very limited involvement in the defendant’s file.

Mervin C. Phillips [ 48 ] Mr. Phillips retook the witness stand and gave further detailed testimony with respect to his legal services. He reviewed numerous letters, documents and emails set out in the 109 tabs to Exhibit P-1. He also reviewed the final account sent to the defendant December 1, 2009, which indicates a balance owing to the plaintiff of $24,349.04. The account notes that there was a $3,000.00 credit and a courtesy discount of $25,095.00. [ 49 ] Mr.

Phillips testified with respect to each of the allegations contained in the Dispute Note and gave evidence as to how he met the “standard of care” required of him in performing his legal services for the defendant. He testified that a retainer was not taken from the defendant because of her “emergent needs”. Further, because she was on disability at that time it “triggered” issues respecting spousal maintenance. [ 50 ] Mr. Phillips also outlined the mediation that the parties had entered into with a mediator provided by the Saskatchewan Teachers Federation.

He also reviewed the “four way meetings” with the defendant’s husband and his lawyer. [ 51 ] Mr. Phillips believed that progress was being made and accordingly a Trial Separation Agreement was prepared and approved by the defendant and then forwarded to Mr. Holm’s solicitors (Exhibit P-1, Tab 77). [ 52 ] With respect to the issue of the defendant’s knowledge of his hourly rate, Mr. Phillips testified that he had previously done work for the defendant’s father and that they understood that his rate was $350.00 an hour.

His firm had received $5,000.00 in trust at the end of October 2008 which was applied to the Interim Account. Furthermore, there was a discussion approximately November 13, 2008, with respect to an additional $6,000.00 being required. The matter was not pursued and then the defendant’s father became aware of his terminal illness in January 2009, and passed away several months thereafter. Nothing further was done with respect to the matter of funds. [ 53 ] With respect to the October 23, 2009 meeting with the defendant and Bill Gilmour, Mr.

Phillips testified that he advised them that they could be at the Pre-Trial Conference stage in about four weeks time. [ 54 ] Mr. Phillips also testified that the value of the assets of the defendant and her husband were considerably greater than set out in their sworn Property Statements. While Mr.

Holm had valued the assets of the couple at $325,000.00 (Exhibit P-1, Tab 87) and the defendant in her Property Statement valued the couple’s assets at $406,721.01 (Exhibit P-1, Tab 92), the defendant’s statement should have included benefits from her father’s estate which would have given the couple’s assets value at between three quarters of a million and one million dollars. When questioned in cross-examination respecting the fact that the Property Statement was sworn by the defendant in the plaintiff’s office on November 4, 2009, Mr.

Phillips explained that the document had been prepared by support staff and was not correct. The discussion with respect to the value of the couple’s assets arose out of a reference to those factors a taxing officer should consider when determining a lawyer’s account. Both counsel agreed that the value of a client’s property was a significant factor in determining the degree of responsibility being discharged by the lawyer for the client. [ 55 ] Mr. Ozirny conducted a further extensive cross-examination of Mr. Phillips. Many issues were reviewed.

Of significance, he asked why the “time slips” respecting each item in the final account had not been produced so the defendant could check the accuracy of the account. Mr. Phillips undertook to produce them but subsequently advised the Court they could not be found and had likely been destroyed when the firm had moved to an electronic timekeeping system. Ms. Sharon Holm [ 56 ] The defendant was also recalled to give further testimony.

She again stated that when she looked at the Interim Account of October 31, 2008, she concluded the $3,000.00 fee had included all services provided from February 21, 2008 until the date of the bill. She believed she was “paid in full up to October 28, 2008, the date of the last entry on the

summary of services attached to the bill”. She also testified again that the first time she was told of the plaintiff’s hourly rate was in “the middle of 2009 or shortly after that”. Finally, she submitted a new calculation of her damages reducing her claim from $14,642.75 to $12,469.38 (Exhibit D-10). ANALYSIS The Claim [ 57 ] The defendant terminated her relationship with the plaintiff effective November 13, 2009. On December 1, 2009, the plaintiff directed its account (Exhibit P-1) to the defendant. The account provided a detailed itemization of all legal services provided and is nearly 11 pages in length.

Of significance, the account notes that the total hours spent on the file by the plaintiff was 141.7. Further, the account had been reduced by the $3,000.00 the defendant had paid respecting the Interim Account rendered October 31, 2008. A further discount, characterized as a “Courtesy Discount” of $25,095.00, had been given to the defendant. The plaintiff also charged for

disbursements and taxes in the amount of $699.04. The “Balance Due” was $24,349.04. Mr. Phillips in his initial testimony had simplyfiled his book of exhibits including the account, with a description of the legal services and took the position that he had established aprima facie case claim for $20,000.00. This is the usual practice followed in matters involving lawyers collecting fees in Small ClaimsCourt. The Court then hears the defendant’s reasons for not paying the account.

Section 73.1(1) of The Legal Profession Act, 1990,gives jurisdiction to the trial judge to assess the account. That

section provides as follows: s. 73.1(1)Where, in an action pursuant to The Small Claims Act, 1997 respecting a bill of fees and disbursements with respect to servicesperformed by a member, an issue arises respecting the amount of the bill and no application has been made pursuant to

section 67, thejudge, notwithstanding

section 67, has jurisdiction to determine the amount of the bill. [58] The factors a trial judge should take into account respecting taxation of accounts were set by the Saskatchewan Court ofAppeal in Re: Sandstrom and Scott and United Chemicals Ltd. (1989), (SK CA), 74 Sask. R. 59. These factors are: 1. The time and effort expended by the solicitor; 2. The complexity and importance of the matter; 3. The amount of responsibility assumed by the solicitor; 4. The skill required for the matter; 5. The degree and competence that is demonstrated by the solicitor; 6.

The charges of other solicitors of the same standing at the bar; 7. The amount of money involved; 8. The importance of the transaction to the client; 9. The results obtained; and 10. The ability of the client to pay. [59] In determining a fair and reasonable fee for the plaintiff, I consider that the $350.00 per hour charge (before his discount) ofMr. Phillips was reasonable as that is within the range of what other solicitors charge. As well, it is evident that Mr. Phillips spentconsiderable time and effort on the file. However, the hourly fee is subject to the caveat given by Mr.

Wayne Rusnak, Q.C. that alawyer is not entitled to charge 20 hours for a legal service that another solicitor of the same standing at the bar could do “off the top ofhis head”. [60] In this matter I have concluded that the most significant of the factors listed above are the results obtained and thecomplexity and importance of the matter. Both Mr. Rusnak and Mr. Hunter considered the matter to be routine and not complicated. Mr.

Rusnak, when asked to rate the file as to complexity and the skill required, on a scale of 1 to 5, with 1 being the simplest and 5 beingthe most difficult, replied that the file was somewhere between a 1 and a 2. He would have an articling student in his office “cut theirteeth” on the file or “give it to a junior lawyer with minimum supervision”. Mr. Rusnak placed a value on the work done by the plaintiffat somewhere between $2,300.00 and $3,000.00 and that in his office a “range of fees” for such a file would be between $6,000.00 and$10,000.00 in total. However, Mr. Rusnak did not have Mr.

Phillips’ file to examine and on Mr. Hunter’s file, which he was inpossession of, there were no issues respecting spousal or child support. Furthermore, it must be remembered Mr. Phillips was giveninstructions on a number of occasions to be “nasty” to the defendant’s husband. As noted in paragraph 40, in an email to the plaintiff’soffice dated October 21, 2009, the defendant stated: “I want Merv to get as nasty as he can. If I only knew that Kelvin would be madeaccountable and have to pay through the nose to me I would rest easier”.

However, a lawyer has a duty to give a client a frank andhonest assessment of the case as Mr. Hunter did when he took over the defendant’s file. [61] I am satisfied that this file was more difficult than either Mr. Hunter or Mr. Rusnak believed it to be. The plaintiff didconduct negotiations with counsel for the defendant’s husband and had to prepare for and attend a number of “four way meetings” in anattempt to settle issues in dispute between the defendant and her husband. However, “the results obtained” were abysmal. The plaintiffhad made little progress on the file.

As noted above, a lawyer has an obligation to be frank with a client and as the defendant’s accountmounted the plaintiff had an obligation to fully disclose to her that her position was costing her considerable money. Mr. Phillips shouldhave provided her some idea of what the final fee would be. When the defendant received the plaintiff’s statement of account datedDecember 1, 2009, she had already paid $3,000.00 in fees and the plaintiff was giving her a $25,095.00 “discount”, but she still owedover $24,000.00 on a file that had not yet reached the Pre-Trial Conference stage. Notwithstanding the evidence of Mr.

Rusnak set outin paragraph 19 above that the work of the plaintiff only had a value of $2,300.00 to $3,000.00, I have concluded on a review of all thosefactors set out by the Court of Appeal that the value to the defendant of the legal services provided by the plaintiff should be set at$10,000.00. As the defendant paid Mr. Hunter approximately $7,000.00 her divorce would cost the defendant a total of $17,000.00. Theplaintiff has already received payment of $3,000.00 in legal fees. After disbursements and taxes were deducted from the $5,000.00

deposit by the defendant’s father, the defendant still has a credit of $881.08 as the plaintiff has abandoned its claim for interest. Accordingly, the sum of $3,881.08 should be deducted from the $10,000.00, leaving a balance owing by the defendant of $6,118.92. Tothat I would add disbursements (plus the tax) of $699.04. The defendant owes the plaintiff the sum of $6,817.96 for legal servicesprovided rather than the $20,000.00 claimed. The Counterclaim [62] A review of the Dispute Note and counterclaim filed by the defendant will reveal no specifically pleaded basis of liability.

However, the allegations contained in the Dispute Note and counterclaim could support, if proven, three possible bases for liability,namely, negligence, breach of contract, and breach of fiduciary duty. [63] I have concluded that the defendant, with respect to her counterclaim, has failed to establish negligence on the part of theplaintiff. The evidence falls short of any breach of the standard of care required of Mr. Phillips or the plaintiff law firm. As stated byMr. Justice Klebuc of the Saskatchewan Court of Queen’s Bench (as he then was) in Hatch v. Cooper, [2001] S.J.

No. 670: “a lawyerneed exercise only a reasonable standard in order to avoid liability” (paragraph 38). [64] In every contract to provide services there is an implied term that the work must be performed in a good and proper manner. Ihave concluded that the defendant has failed to prove, on a balance of probabilities, that the services performed by the plaintiff were notcarried out with the degree of care and skill required.

The plaintiff has no liability to the defendant for breach of contract. [65] The final basis for liability on the part of the plaintiff is to be found in the law of restitution as it relates to fiduciary duty. Anaction for breach of fiduciary duty is much broader in scope than a claim in negligence or a claim in contract respecting a breach of theimplied term of good and proper service. [66] The facts of this case raise the issue of whether “overbilling” of a client by a lawyer constitutes a breach of the fiduciary dutyowed to the client.

I am unable to find any Canadian case law that has considered that possibility, but there is no reason in theory as towhy “overbilling” cannot form the basis of liability. [67] American courts have recognized a possible action for breach of fiduciary duty where overbilling has occurred. In K-JPlumbing et al v. Quarles & Brady et al, 2012 Ariz. Unpub. LEXIS 250, the Arizona Court of Appeal held that “overbilling provides anappropriate foundation for a cause of action for breach of fiduciary duty” (para. 47). The Court relied upon the California Court ofAppeal case of Bird, Marella, Boxer & Wolpert et al v.

Superior Court et al, 106 Cal. App. 4th 419, as “implicitly recognizing a cause ofaction for overbilling” although the Rules of Professional Conduct for lawyers were also a basis for the fiduciary requirement in thatcase. The California Court stated “an attorney owes the client a fiduciary duty of the very highest character” and that “this fiduciary dutyrequires fee agreements and billings” to be “fair, reasonable and fully explained to the client” (pages 429-30). [68] The Code of Professional Conduct for Saskatchewan lawyers,

Chapter 11 respecting “Fees”, states a lawyer shall not “chargeor accept any fee that is not fully disclosed, fair and reasonable”. [69] The issue in the California case was not the “quality of service” but rather the “unnecessary quantity” of the services, which isthe issue raised by the defendant’s counsel in this case. [70] There are two further American cases which have briefly considered this issue. In Galpern v. De Vos & Co., 2011 U.S.

Dist.LEXIS 117095, the United States District Court For The Eastern District of New York stated that “overbilling may also create a cause ofaction for breach of fiduciary duty”. The Court cited the case of U.S. Ice Cream Corp. v. Bizar, 240 A.D. 2d 654, as authority for thestatement. This latter case was a motion to dismiss a complaint for failure to state a cause of action. [71] A fiduciary is a person who undertakes to act in the interest of another. The solicitor/client relationship has long beenrecognized in law as being of a fiduciary character (See: The Law of Restitution by Peter D. Maddaugh and John D.

McCamus -Looseleaf Edition - Canada Law Book paragraph #27-200 at page 27-3). [72] When retained, a lawyer undertakes to act for the exclusive benefit of a client. The obligation is a unilateral one. A client in adivorce proceeding is often vulnerable and the degree of vulnerability is an important factor when considering whether there has been abreach of fiduciary duty. Mr. Justice Sopinka in International Corona Resources Ltd. v.

Lac Minerals Ltd., (SCC),[1989] 2 SCR 574 at page 599 stated: “The one feature ... which is considered to be indispensable to the existence of the relationship ...is that of dependency or vulnerability”. While Mr. Justice Sopinka’s comments were being considered with respect to the creation orexistence of a fiduciary relationship, I am satisfied that the more vulnerable the client, the more readily the fiduciary duty can bebreached. The defendant in this case was particularly vulnerable. She was on leave from work as a teacher and receiving disabilityincome when she first met with the plaintiff February 21, 2008.

Mr. Phillips recognized her vulnerability and immediately concludedher depression and other problems could be an important factor in claiming spousal support. He sent the defendant to British Columbiaon two occasions to see a psychiatrist because of the “emergent nature” of the issue and because the “wait times” in Saskatchewan to seea psychiatrist were simply too long in his opinion. Because the defendant was very vulnerable, Mr. Phillips was in an extraordinaryposition to influence and dominate her. She testified she trusted Mr.

Phillips absolutely and followed his every instruction. [73] As stated above, when a lawyer undertakes to act for a client he or she must act in the exclusive interests of that client. Whena lawyer puts his/her own monetary interest ahead of that of his/her client there is a breach of the fiduciary duty. If liability does arise

the claimant is entitled, amongst a range of remedies, to equitable compensation for any “injury” caused. [ 74 ] I am satisfied that the plaintiff put its own monetary interest ahead of that of the defendant in the following manner. [ 75 ] First, Mr. Phillips acted in his firm’s monetary self interest by not expressly advising the defendant herself on February 21, 2008 when he was retained, or in a reasonable time thereafter, of his hourly fee, his billing procedure, and some range of what his total bill might be.

I am satisfied that the defendant, if she had been advised by the plaintiff that the fee could be in the $50,000.00 range before even reaching a Pre-Trial Conference stage, would have quickly retained another law firm and discharged the plaintiff. The plaintiff’s failure to ensure that the defendant understood what her fee might be is compounded by the confusing Interim Account of October 28, 2008. The defendant testified that she believed that all the plaintiff’s legal services from February 21, 2008 to October 28, 2008 were included in the $3,000.00 fee (paragraph 35 above).

The bill stated: “TO OUR PROFESSIONAL SERVICES RENDERED on your behalf; to all personal & telephone attendances; to all correspondence; to attendances for Mediation, to court attendances; etc., to all matters not included above...” and ended with “Balance Due Now Nil”. In reality, had she carefully reviewed the “Summary of Services Rendered” with the Interim Account, she would have determined that the plaintiff had logged 49.8 hours as of October 28, 2008.

If she had then known the hourly rate she could have multiplied those hours by either $300.00 per hour or $350.00 per hour and discovered that her account as of that date was not $3,000.00 as stated but in fact either $14,940.00 or $17,430.00 (Exhibit P-2).

Failure to advise the defendant of its hourly fee and its billing procedure together with a very confusing Interim Account sent over eight months after being retained, constituted a breach of the fiduciary duty owed by the plaintiff to the defendant. [ 76 ] In reaching the above conclusion I accept the defendant’s evidence that she did not know the plaintiff’s hourly rate until advised by the plaintiff in “probably the middle of 2009 or shortly thereafter” and that she had to request a statement of account on four occasions (paragraph 34 above) before the Interim Account was finally delivered at the end of October or early November 2008.

In her testimony she was direct, straightforward, and responsive, sometimes giving answers that were not in her best interest. She was a very credible witness. In contrast Mr. Phillips was often evasive and non-responsive. [ 77 ] Second, the plaintiff also acted in its monetary self interest by “rounding up” the time spent on telephone and other attendances. On the evidence presented by the defendant respecting the plaintiff’s account and her exhaustive testimony with respect to telephone attendances (Exhibit D-3) and start and end times of meetings and other conferences, I find as a fact that Mr.

Phillips was simply guessing at the time actually spent on some of these attendances and that his time charges were always in his favour rather than that of the defendant. This constitutes acting in one’s own monetary self interest and I am satisfied that the plaintiff is in breach of its fiduciary duty as a result thereof.

While many lawyers may have a “minimum time charge” in that each billable hour is divided into 10 segments of six minutes each (shown as “.1” representing six minutes or “.3” representing 18 minutes, etc. on an account) and a minimum time charge is “.1” representing six minutes even when an attendance lasts only two minutes, what the plaintiff was doing here was something more than that and not acceptable. I am satisfied that the practice followed on some occasions amounted to putting the plaintiff’s monetary self interest ahead of the client.

This constituted a breach of the fiduciary duty owed the defendant. [ 78 ] Third, the plaintiff acted in its own monetary self interest and not in the interests of the defendant when Mr. Phillips engaged in unnecessary work on this file and required the defendant to attend at his office in Regina on numerous occasions. I have already reviewed the evidence with respect to the expected number of attendances on such a file to be in the neighbourhood of 10 rather than the 31 occasions the defendant attended at the plaintiff’s office. While I have found that this file was more complicated than indicated by Mr.

Hunter or Mr. Rusnak and that the client wanted to pursue her husband for financial accountability, nevertheless Mr. Phillips had an obligation to minimize her “480 kilometres round trip” for each of the 31 office attendances. I accept the defendant’s evidence that Mr. Phillips spent unnecessary time on her health issues and continued to do so even after she requested him to stop (paragraph 32 above).

As well, I am satisfied that the plaintiff performed unnecessary services on a number of occasions when alternate means of accommodating authorizations and meeting for the purposes of reporting were available. [ 79 ] As a result of the above noted examples of the plaintiff acting in its own monetary self interest and not in the best interests of the client, I am satisfied the defendant has proved on a balance of probabilities there has been a breach of the fiduciary duty owed to the defendant by the plaintiff. [ 80 ] The courts have recognized a wide range of remedies as available to a trial judge for breach of fiduciary duty including equitable compensation for the “injury” suffered.

I am satisfied such compensation falls within the statutory jurisdiction given to this Court. The word “damages” in subsection 3(1) of The Small Claims Act, 1997 , includes not only “common law damages” but “equitable damages” or what is sometimes referred to as equitable compensation. Certainly equitable remedies are contemplated by the Act as subsection 3(1)(

c) lists “specific performance” as an available remedy. The Act should be given a wide

interpretation and judges of this Court frequently give equitable remedies based on doctrines such as quantum meruit and unjust enrichment. [ 81 ] The defendant has been compensated for unnecessary legal services performed by the plaintiff by the reduction in the plaintiff’s claim for fees from $20,000.00 to $10,000.00 as set out in paragraph [61]. Her counterclaim, however, is for expenses incurred unnecessarily. She testified in support of those expenses (Exhibit D-10) but I am not satisfied that the defendant is entitled to the further amount she claims, namely, $12,469.38.

A significant amount of her expenses were occasioned by a legitimate need for attendances either at the plaintiff’s offices or for the purposes of obtaining initial medical reports. It was her choice to retain a lawyer in Regina rather than someone closer to her home. Nevertheless, I do believe the plaintiff is entitled to damages respecting expenses incurred in travelling to some of her later medical appointments.

There were also some unnecessary attendances at the plaintiff’s office such as her trip for photos to be taken of a skin irritation that turned out to be “poison ivy” in July 2009 (see the medical report Exhibit P- 1, Tab 94). I would fix her entitlement for expenses somewhat arbitrarily at $2,000.00.

CONCLUSION [ 82 ] The plaintiff is entitled to a judgment in the amount of $6,817.96 with respect to its claim. The defendant is entitled to $2,000.00 in damages with respect to her counterclaim. The amount of the counterclaim is set off against the amount of the claim. Accordingly, the plaintiff is entitled to judgment in the amount of $4,817.96. As a result of the limited success of both the plaintiff and defendant I am not prepared to award costs to either party. Similarly, I am not prepared to award pre-judgment interest on the judgment or counterclaim. D.G. Bogdasavich, J