Patterson Law v. Yates, 2023 NSSM 54

IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Patterson Law v. Yates , 2023 NSSM 54 Date: 20230929 Claim: No. SCT521176 Registry: Truro Between: Patterson Law Applicant v. Justin Yates and Corina Yates Respondent s Taxation Decision Adjudicator: Julien S. Matte, Adjudicator Heard: August 23, 2023 (via teleconference) Counsel: Paul G. Wadden for the Applicant No appearance for the Respondents By the Court: [ 1 ] This is an application from the law firm of Patterson Palmer for the taxation of the unpaid accounts of the Respondents.

Both parties were present for a preliminary hearing on May 29, 2023 scheduling the hearing for July 10, 2023. Before the scheduled hearing the Applicant requested an adjournment because the primary lawyer who worked on the file was not available. The matter was adjourned to August 23, 2023. The Respondents did not call into the hearing. Notes in the file confirmed that they had been sent the dial-in information. After waiting 15 minutes, the Court asked the Applicant to send an email to the Respondent with the Notice of Hearing.

The Respondents did not attend the hearing. [ 2 ] The Court heard from one witness, who had been one of two lawyers involved on the Respondent’s account (“Junior Counsel”) and who began practicing law in 2018 and now primarily works in the areas of Family Law. The Senior Counsel on the file, was at the time, a prominent member of the Family Law bar with over 30 years of experience and a senior partner with the Applicant

firm until his departure in April 2021. Prior to April 2021, Junior Counsel had played a supporting role, doing research and drafting until she assumed carriage of the file. [ 3 ] The Respondent Justin Yates hired the Applicant firm to secure custody of his child against a claim by the child’s maternal grandmother. The Respondent Corina Yates is Justin Yates’ mother who the Applicant alleges agreed to act as a guarantor.

The Junior Counsel testified that she was not present for the initial retainer discussions with the Respondents but has, on numerous occasions sat in on similar retainer discussions with the then Senior Counsel. The Junior Counsel explained that every retainer in the family law litigation is done on an hourly basis and no other options are provided to the client on contested matters. The Junior Counsel’s rate was $195 per hour in 2020 and $225 per hour in 2021 while the Senior Counsel’s rate was $325 per hour.

The Junior Counsel also testified that the Applicant generally required monetary retainers from its clients, retainers that are intended to be replenished as they run out. [ 4 ] The Junior Counsel described the work for the Respondent as complex on the basis that there was little case law on the rights of grandparents in custody disputes. The Junior Counsel also described her client’s case as strong. Procedurally, the Applicant filed an application, two supporting Affidavits, parenting statement and two briefs for the initial settlement conference.

There was a second settlement conference in June 2021 which was described as dealing with a minor issue. The parties settled and the Respondent retained custody of his child. [ 5 ] The Applicant tendered three invoices for services rendered between December 1, 2020, and June 28 2021. The initial invoice covered services from December 1 2020 to December 30, 2020. The hourly billings charged was $4,864 minus a discount of $964 for a total of $3,900. In addition, the Applicant charged, $389.85 in disbursements, $129.51 in in house charges for copying, long distance and admin fee.

The total was $5,082.27 with taxes included. A $2,000.00 retainer was applied leaving a balance of $3,082.27. [ 6 ] The second invoice covered the period of January 2, 2021 to March 31, 2021. The Applicant’s fee was $10,567 discounted by $3,717 for a net fee of $6,850.00 plus $415.63 in disbursements and $224.08 for in house charges. The total with tax was $8,613.16. [ 7 ] The final invoice covers the period of April 15, 2021 to June 28 2021.

The total fee was $1,182.50 plus $51.63 in disbursements with tax was $1,419.25. [ 8 ] The Applicant also claims interest at the rate of 18% per annum on all outstanding accounts. [ 9 ] As noted above, the Respondent did not participate in the hearing leaving the Court without any specific objections with respect to the Applicant’s invoices. The Law [ 10 ] The principles of taxation are well known but not always easily applied. Regardless of who files a taxation, lawyers have the burden of demonstrating that the invoices taxed are fair and reasonable.

What is fair and reasonable is guided by Rule 3.6 of the Code of Professional Conduct, a rule that mandates that a lawyer cannot charge a fee unless it is fair and reasonable. Further direction is found in the Rule’s Commentary which lists relevant factors. [ 11 ] The factors applicable to this matter are: (

a) the time and effort required and spent; (

b) the difficulty of the matter and the importance of the matter to the client; (

c) whether special skill or service has been required and provided; (

d) the results obtained; … (

h) any relevant agreement between the lawyer and the client;

(

i) the experience and ability of the lawyer; … (

k) the client’s prior consent to the fee. [ 12 ] As recently noted by Adjudicator Pink quoting Adjudicator Richardson ( see MacEwen v.

Davidson , 2023 NSSM 28 at 46) , the reasonableness of a bill can be demonstrated by presenting witnesses and documents relevant to: a. the nature and scope of the initial retainer; b. any written retainer letters or agreements; c. any discussions or agreements (oral or written) regarding payment of fees and disbursements; d. any discussions or estimates (oral or written) as to projected fees, both at the time of the initial retainer and later as the matter progressed; e. affidavit in proof of disbursements; f. time dockets; and g. evidence as to what actually was accomplished by the lawyer. [ 13 ] The Applicant did not tender any direct evidence in support of factors (

b) through (

f) noted above. However, witness testimony and invoices filed spoke to the nature and scope of the retainer and evidence of what was accomplished. [ 14 ] The only evidence of the parties’ retainer agreement was given by the Junior Counsel who testified that although she had not been present when terms of the retainer with the Respondent were discussed, she had witnessed numerous retainer discussions led by the Senior Counsel and was therefore familiar with the typical retainer discussion.

The Junior Counsel also testified that the firm’s policy was that all contested family matters were to be conducted on the billable hour model. [ 15 ] The only documents before the Court were the Applicant’s invoices. The invoices detailed tasks completed on the days noted but did not include any time entries for a particular task or days nor was there generally any indication of which lawyer completed the tasks listed. The invoices only detailed the total fee for the entire period of that invoice.

Findings [ 16 ] Base on the testimony of the Junior Counsel and the invoices tendered which included a Trust Statement showing $2000 paid by the Respondent in trust to the Applicant in December 2021, the Court finds that the Respondent Justin Yates retained the Applicant to formalize custody of his child after the child’s mother had passed, custody that was challenged by the child’s maternal grandmother. [ 17 ] The Court also finds that the Applicant presented the Respondent Justin Yates with only one option for the retainer, namely that the time spent working on the file would be billed by the hour with the Senior Counsel’s time at $325 per hour and the Junior Counsel time at $195. [ 18 ] No written retainer agreement was provided to the Court or any agreement on interest rates to be charged on outstanding accounts. [ 19 ] No witnesses were called to provide firsthand evidence of discussions or agreements.

In particular, no written agreement with respect to the Respondent Corina Yates’ involvement was filed with the Court. [ 20 ] There were no time dockets and no affidavit of disbursements although disbursements were listed on the invoices.

Relevant Factors The time and effort required and spent [ 21 ] In the absence of time entries , i t is nearly impossible for the Court to determine with any precision how much time was spent by each of the lawyers on this matter. In December 2020, using only the Senior Counsel’s rate divided into the total fee equates to 15 hours of work. While 32.5 hours at the Senior Counsel’s rate between January and March 2021 would make up the fee charged on the second invoice.

These calculations are for illustrative purposes only as the total fees charged intermingles the time of both the Senior and Junior Counsels. [ 22 ] However, during the last invoice period, only the Junior Counsel’s time appears which, at that time, was billed at $225 per hour and therefore reflects a total of 5.3 hours of work. The difficulty of the matter and the importance of the matter to the client [ 23 ] The Junior Counsel described the matter as complex but the only complexity cited in support was the opposing party’s status as a grandparent.

The matter did not require a trial to resolve and as noted by the Applicant’s witness, the Respondent had a strong case, presumably because the other party was not a parent of the child. Although the matter may have been out of the norm, it woul not have presented a significant challenge for the Senior Counsel but would have been of significant importance to the Respondent. Whether special skill or service has been required and provided [ 24 ] There is no doubt that a family law specialist was required but it is likely that a junior lawyer could have done the bulk of the work.

Without time entries it is difficult to determine which lawyer involved did most of the work. The results obtained [ 25 ] The Respondent obtained the desired result, custody of his child. Any relevant agreement between the lawyer and the client [ 26 ] Beyond the imputed retainer agreement noted above, there was no other evidence of any further agreements. The experience and ability of the lawyer [ 27 ] The Senior Counsel was lead lawyer on the file from December 2020 to March 2021 and while practicing law, he was recognized as a leader in the family law bar with over 30 years of experience.

The client’s prior consent to the fee [ 28 ] The trust ledger and testimony of the Applicant’s witness confirms a general agreement that fees were to be calculated by applying the lawyers’ rates to the time spent on the matter. No other details could be confirmed. Fair and Reasonable

[ 29 ] There are significant gaps in the evidence needed to support the Applicant’s position. Most notably a lack of written retainer agreement and time entries. The imputed oral agreement is an agreement on a method of calculating fees by multiplying the time spent on tasks by the lawyer’s rate. However, here, the Court is asked to opine on whether the tendered bills are reasonable without knowing one of the two factors needed to calculate the fees charged. [ 30 ] Further the agreement in this matter was not negotiated by the parties, it was imposed by the Applicant.

The Respondent had no choice but to accept the billable hour method if he wished to retain the Applicant. This type of contract is referred to as a contract of adhesion (see H.S. v. Owen , 2016 NSSM 44 at para 32 ) . In Husbands v. Middleton , 2021 NSSM 47 , Adjudicator Slone explained at para 54 that where such contracts exist any ambiguity should be interpreted against the party imposing it: ….. but this contract falls into the category of contracts of adhesion drafted without negotiation by the more powerful party and imposed on a “take it or leave it” basis.

In such cases, the contract is interpreted in favour of the weaker party. [ 31 ] Further still, where a lawyer on a taxation fails to provide a written retainer agreement, any ambiguity is also to be resolved against the lawyer ( See MacEwen v. Davidson , 2023 NSSM 28 at 55) . [ 32 ] The Court’s notes the absence of any evidence showing that the Respondents agreed to the Junior Counsel’s rate increase from $195 in 2020 to $225 in 2021. This represents a 15% increase.

The lack of evidence and resulting ambiguity must be resolved in the Respondents’ favour given the contract of adhesion and absence of a written agreement. For the purpose of calculating a 15% reduction in the Junior Counsel’s rate, the Court imputes 50% of the billings as attributable to the Junior Counsel based on her evidence that she played a supportive role until April 2021. Total billings for the Junior Counsel are therefore $3,425 divided by the $225 rate charged times the original rate of $195 gives the fee of $2,968 representing time billed at $195.

The difference between the two amounts is $456+HST for the April 12, 2021 invoice. Applying a 15% discount to the December 2022 invoice equals $177+HST. [ 33 ] The Court also notes that there was no written agreement tendered showing what the Respondent Corina Yates agreed to. Only the testimony of the Junior Lawyer who was not at the original retainer meeting with the Senior Counsel, and who reported that the Respondent Corina Yates agreed to be a guarantor without any further details or proof.

Without the benefit of a written agreement or testimony from a party present when an agreement was made, the Court finds that there is ambiguity in the evidence that must be resolved in favour of the Respondent Corina Yates. [ 34 ] The Applicant requests that the Court order contractual interest to be paid at 18% pe annum on the outstanding bills. The invoices provided reflect the requested term. Given the printed term on the invoices, the Court acknowledges that the Respondent would have been aware of the possibility of interest charges once the first invoice was received in December 2020.

While it is likely that the topic was raised by the Senior Counsel with the Respondents, it is far from certain. The lack of a written agreement coupled with no direct evidence of what the Respondent was told, leaves the Court, once again, with ambiguity. [ 35 ] Despite the above conclusions and subject to the findings below the Court finds that overall, the Applicant’s invoices are fair and reasonable. [ 36 ] The first and second invoices representing the period of December 2020 through March 2021 exclusive of disbursements and other charges amount to $15,431.

However, the Applicant applied a discount of $4,681, or 30%. Applying the discount reduces the hours charged to 33 from 47.5 at the Senior Counsel’s rate. While the true breakdown of the Junior and Senior Counsels hours is unknown, these calculations show that the hours charged were not excessive having regards to the work completed. The entries made on 90 separate days roughly reflect an average of approximately one half an hour per day billed with most days showing multiple tasks completed.

Although the matter was not complex, it did require the expertise of a family law practitioner, expertise that appears to be reflected in the task entries that show the logical and expected sequence of events that would justify the time spent on the files. [ 37 ] However, because the Court must resolve any ambiguity with respect to the parties’ agreement in favour of the Respondents and given the conclusions above, the Court also finds that: a. The claim against the Respondent Corina Yates is dismissed;

b. The claim for contractual interest is denied; c. The April 12, 2021 invoice is reduced by $93.32 for interest charged and further reduced by $524 to reflect the agreed rate of $195 per hour; and d. The December 20, 2022, invoice is reduced by $203 to reflect the agreed rate of $195 per hour. [ 38 ] Outstanding payment on invoice dated December 31, 2020 is taxed at $3,082.27. Invoice dated April 12, 2021 is taxed at $7,995.84. Invoice dated December 30, 2022 is taxed at $1,216.25. [ 39 ] The total for all invoices taxed is $12,294.36. Julien S. Matte, Adjudicator