Spark Power Corp v Peacock Linder Halt & Mack LLP, 2022 ABKB 853

Court of King’s Bench of Alberta Citation: Spark Power Corp v Peacock Linder Halt & Mack LLP, 2022 ABKB 853 Date: 20221216 Docket: 2001 10156 Registry: Calgary Between: Spark Power Corp Applicant (Respondent in the within Application) - and - Peacock Linder Halt & Mack LLP Respondent (Applicant in the within Application) _______________________________________________________ Reasons for Decision of the Honourable Justice M. Kraus _______________________________________________________ Introduction [ 1 ] This Application arises out of a Review of a Retainer Agreement/Lawyer’s Charges and a reference from the Review Officer to the Court to determine issues relating to the

interpretation of the Retainer. At the time of the hearing, the Application was to determine which accounts fall within the review period, whether the accounts under Review are interim or final accounts, and whether the Review should continue given the existence of an overlapping negligence action.

Background [ 2 ] Spark Power Corp (“Spark”) retained Peacock Linder Halt & Mack LLP (“PLHM”) to provide legal services to them between May 16, 2019 and approximately August 13, 2020, when the solicitor client relationship broke down. [ 3 ] During the course of the retainer agreement, PLHM rendered 9 accounts in the sum of $382,230.84. PLHM acknowledges that $278,719.52 was paid and that they also hold a retainer of $15,000. Therefore, PLHM claims an additional $88,511.32 from Spark. [ 4 ] The 9 accounts rendered by PLHM range in dates from June 10, 2019 to August 13, 2020.

Each account was delivered by PLHM to Spark either on the same day it was rendered or a few days later. [ 5 ] On August 7, 2020, Spark filed an Appointment for Review of a Retainer Agreement/Lawyer’s Charges with PLHM. The Appointment was served on November 3, 2020. The returnable date before the Review Officer was November 25, 2020. [ 6 ] The Review commenced as scheduled on November 25, 2020 but was adjourned when the Review Officer referred the

interpretation of the retainer to a Justice of the Court of Queen’s Bench (now Court of King’s Bench) under Rule 10.18 of the Alberta Rules of Court, Alta Reg 124/2010 . On May 18, 2021, Justice Devlin ordered that the

interpretation of the retainer, along with some further issues concerning the Review, go to a Special Chambers Application. [ 7 ] This Special Chambers Application was heard on May 11, 2022. After the hearing of the Application but before release of this decision, two important and relevant decisions were released. [ 8 ] In O’Chiese First Nation v DLA Piper (Canada) LLP , 2022 ABCA 197 [ O’Chiese ], released on May 27, 2022, the Court of Appeal interpreted the application of Ministerial Order 27/2020 to the one-year review period under Rule 10.10(2).

Then, in Rath & Company v Sturgeon Lake Cree Nation , 2022 ABQB 556 , leave to appeal to CA refused, 2022 ABCA 373 [ Rath and Company ], released on August 18, 2022, the Court of Queen’s Bench allowed the appeal from the decision of Master Prowse (now Applications Judge Prowse) in Rath and Company Barristers & Solicitors v Sturgeon Lake Cree Nation , 2019 ABQB 556 with respect to the

interpretation of Rule 10.10(2) and whether or not the one year review period in Rule 10.10(2) includes the service of the Appointment for Review of a Retainer Agreement/Lawyer’s Charges. [ 9 ] Counsel were provided an opportunity to make additional submissions about both of these decisions and did so. With respect to O’Chiese , written submissions were received from Spark on June 14, 2022 and from PLHM on June 15, 2022. With respect to Rath and Company , written submissions were received from Spark on September 2, 2022 and from PLHM on September 9, 2022. There were no further oral submissions.

Issues [ 10 ] The issues to be determined in this Application are as follows: 1. What is the effect of Ministerial Order 27/2020 on the one-year review period in Rule 10.10(2)? 2. What accounts fall into the one-year review period under Rule 10.10(2)? 3. Should there be a stay of the Review pending the resolution of Spark’s negligence action against PLHM and a partner at PLHM? [ 11 ] As a result of my decision with respect to these three issues, as explained below, the issue of whether the accounts are interim, or final does not have to be determined. Analysis 1.

What is the effect of Ministerial Order 27/2020 on Rule 10.10(2)? [ 12 ] Rule 10.10(2) sets out a one-year review period for obtaining an Appointment for Review of a Retainer Agreement/Lawyer’s Charges. That Rule reads as follows: A lawyer’s charges may not be reviewed whether at the request of the lawyer or the client, if one year has passed after the date on which the account was sent to the client. [ 13 ] Ministerial Order 27/2020 was enacted by the Minister of Justice on March 17, 2020 as a response to the COVID 19 pandemic.

The Ministerial Order suspended statutory limitation periods, including those in the Rules of Court , for 75 days from March 17, 2020 to June 1, 2020. [ 14 ] In O’Chiese , our Court of Appeal interpreted the application of the 75-day suspension to the review period set out in Rule 10.10(2): Given the extraordinary context in which the Ministerial Order issued, its limited applicability period at the outset of the pandemic, and interpreting its words purposively, and with fair, generous and liberal meaning, we find that

Part 1 of MO 27/2020 intended to capture the time limit set out in Rule 10.10(2) and treat it as a “limitation period”, triggering the 75-day reprieve. As

Part 1 provides: “Limitation periods are suspended in the enactments under Appendix A from March 17, 2020 to June 1, 2020” (emphasis added). We therefore read

Part 1 of the Ministerial Order as a suspension of all time limits set out in the included enactments and which would in this instance, include the “one year” time limit set out in Rule 10.10(2), effectively extending it an extra 75 days... (at para 13). [ 15 ] Both counsel agree that this is the current state of the law in the Province of Alberta and that the one-year limitation under Rule 10.10(2) was extended by 75 days. According to the

Interpretation Act , RSA 2000, c I-8 , s 22(7), if something is to be done within a time after, from, of, or before a specified day, then it does not include that day: see Bloomer v Workers Compensation Board , 2020 ABCA 334 at para 46 . This means that the limitation for reviewing the earliest account, dated June 10, 2019, was extended by 75 days from June 10, 2020 to August 24, 2020.

As mentioned, the Appointment was filed on August 7, 2020. [ 16 ] Accordingly, the Appointment for Review of Retainer Agreement/Lawyer’s Charges for all 9 accounts was filed within the one-year review period under Rule 10.10(2), as extended by Ministerial Order 27/2020. 2. What accounts fall into the review period under Rule 10.10(2)? [ 17 ] The parties disagree about the

interpretation of Rule 10.10(2) and, specifically, whether an Appointment for Review of Retainer Agreement/Lawyer’s Charges must be filed within the one-year period set out in the Rule or if the Appointment must be both filed and served within that time period. [ 18 ] Spark takes the position that the Appointment must be filed within one year of the account being sent to the client and served in accordance with Rule 10.13(4). In taking this position, Spark relies upon Justice Johnston’s decision in Rath and Company , in which Justice Johnston engaged in a purposive and contextual analysis of Rule 10.10(2).

Justice Johnstone held that the express words of Rule 10.10(2), when examined in their entire context, make it clear that an Appointment must be filed but not served within the prescribed period in Rule 10.10(2): at para 58. [ 19 ] In response, PLHM takes the position that the Appointment for Review of Retainer Agreement/Lawyer’s Charges must be filed and served within one year of sending the account to the client. PLHM relies on the decision of Applications Judge Prowse in Rath and Company Barristers & Solicitors v Sturgeon Lake Cree Nation , 2019 ABQB 949 .

In that decision, Applications Judge Prowse held that Rule 10.10(2) requires the Appointment to be filed and served within the prescribed period based on the policy considerations behind Rule 10.10(2), which are to give clients a fair opportunity to challenge a retainer, put lawyers on notice that a client has concerns, encourage clients to voice their concerns close to the date they arise, allow lawyers to anticipate uncollectable receivables within a reasonable period of time, and allow lawyers to have finality of accounts (at para 16; see also Rath and Company at para 37 and West v Logie Family Law , 2018 ABCA 255 at para 22 ). [ 20 ] After the release of Justice Johnston’s decision in Rath and Company , which granted the appeal of Applications Judge’s Prowse’s decision, PLHM argued that I am not bound by Justice Johnston’s decision and should instead follow Applications Judge Prowse’s decision because of the unique facts in this matter. [ 21 ] Relying on Application Judge Prowse’s decision, PLHM originally argued that Spark could not review accounts #1-5 (dated June 10, 2019; July 12, 2019; August 9, 2019; September 27, 2019; and October 31, 2019), because the Appointment was served more than one year after the accounts were rendered and provided to Spark.

According to PLHM, only accounts #6-9 (dated April 9, 2020; July 10, 2020; and August 13, 2020) could be reviewed. [ 22 ] After the release of O’Chiese , PLHM modified its position to reflect the extension set out in Ministerial Order 27/2020 and argued that only accounts #1-3 are outside the prescribed one-year period under Rule 10.10(2), because the Appointment was not served within 12 months plus 75 days of those accounts being provided to the client. [ 23 ] I fully endorse the reasoning of Justice Johnston in Rath and Company .

In my view, Rule 10.10(2) must be interpreted in a purposive and contextual manner and harmoniously with the other Rules, including Rule 10.13(4). That Rule states that service of an Appointment for Review of Retainer Agreement/Lawyer’s Charges must be made 10 or more days before the date for Review (or within any period specified by the Review Officer). [ 24 ] By contrast, Rule 10.10(2) only provides that a lawyer’s charges may not be reviewed if one year has passed after the date on which the account was sent to the client.

It does not set out a specific requirement for service, and, as Justice Johnston points out, other Rules under

Part 10 specify requirements to file and serve when both steps are required: Rath and Company at para 46 . In my view, it does not make sense to read a service requirement into Rule 10.10(2) when Rule 10.13(4) sets out an express time limit for service: see Ruth Sullivan, The Construction of Statutes, 7th ed (Toronto: LexisNexis Canada, 2022) at 8.09. [ 25 ] Spark filed its Appointment on August 7, 2020, and waited until November 3, 2020 to serve the Appointment on PLHM.

In Rath and Company , Justice Johnston acknowledged the concern that a party should not be allowed to lie in the weeds and wait a lengthy period of time to serve an Appointment, because this undermines the public policy reasons behind Rule 10.10(2), including a lawyer’s interest in timely resolution of a Review: at para 41.

However, as Justice Johnston explains, Rule 10.13(4) prescribes the time period for serving an Appointment, and any issues with timing can be managed by the Review Officer under the numerous powers granted to the Review Officer by the Rules of Court: Rath and Company at paras 44, 47 . [ 26 ] Following Justice Johnston, I conclude that when Rules 10.10(2) and 10.13(4) are read together, Rule 10.13(4) sets the requirement for when an Appointment must be served, whereas Rule 10.10(2) sets the requirement for when an Appointment must be filed.

In my view, the policy considerations underlying Rule 10.10(2) are still met when the Appointment is served under Rule 10.13(4) within a reasonable time after the Appointment is filed. [ 27 ] In this case, the timing of the service of the Appointment by Spark complied with the requirements of Rule 10.13(4). As such, in conjunction with Ministerial Order 27/2020, the Appointment for all 9 accounts was filed within the 12-month review period under

Rule 10.10(2) and served more than 10 days prior to the Appointment in compliance with Rule 10.13(4). [28] The parties made submissions about whether Spark would be entitled to apply for an extension if any of the Accounts felloutside of the review period. However, in the circumstances, Spark does not require an extension of time under Rule 13.5, and thereforeit is not necessary to consider this issue. [29] Further, the issue of whether the PLHM accounts were interim or final accounts was a live issue when this SpecialApplication was argued on May 11, 2022.

It was a live issue because, if the accounts were interim, the review period would arguably notcommence until the final account was rendered, whereas if each account was final, the review period would arguably commence aftereach account was rendered. However, with the release of the O’Chiese and Rath and Company decisions after this matter was heard inSpecial Chambers, and my finding that all 9 accounts fall into the prescribed review period under Rule 10.10(2), the issue of whether theaccounts were interim or final accounts does not have to be decided in this Application. 3.

Should there be a stay of the Review pending the resolution of the negligenceaction? [30] On May 17, 2021, Spark filed a Statement of Claim alleging negligence against PLHM and an individual partner at the firm.One of the claims for relief in the Statement of Claim is reimbursement of all amounts paid by Spark to PLHM under the retaineragreement. [31] Even though Spark initiated the Review process prior to the Statement of Claim, Spark now seeks a stay of the Review untilthe negligence action is resolved.

Spark argues that there are exceptional circumstances in this case such that the Court may stay theReview under Rule 1.4(2)(h): Rap Designs Inc v Dean, 2010 ABQB 751 at paras 17-19, citing McCabe v Westlock Roman CatholicSeparate School District No 110, 1999 ABQB 666.

Spark points to the serious allegations and the significant amount of money at stakein the negligence action. [32] Spark argues further that the negligence action will likely subsume and ultimately determine the issues that must bedetermined during the Review, either in whole or in part, and therefore a stay of the Review will avoid a multiplicity of proceedings.Spark relies upon Conway, Baxter, Wilson LLP v 1179 Hunt Club Inc, 2019 ONSC 1056, in which the Court stayed a lawyer-initiatedReview pending the determination of a related negligence action. [33] In response, PLHM argues that there are no exceptional circumstances to stay the Review.

PLHM relies on Cadieux vBarrick Poulsen LLP, (ONSC) at para 14, in which the Court upheld the discretion of the Assessment Officer tocomplete the Assessment even when there was a negligence action against the law firm. [34] PLHM also relies on an unpublished decision of Applications Judge Farrington in Peacock Linder Halt & Mack LLP vEmbassy Bosa Inc (July 19, 2019), Calgary 1801-08625 (ABQB).

In that case, the client sought a stay until the negligence actionagainst the lawyers was completed, but Applications Judge Farrington found that, if there was a stay, there would be little incentive forthe Plaintiff to move the negligence action forward as it would want to delay payment of legal fees.

PLHM argues that Conway can bedistinguished because it was a lawyer-initiated review, whereas in this matter Spark initiated the Review. [35] In HML Contracting Ltd v Pinder, 2022 ABCA 185 at para 18 [HML], our Court of Appeal reiterated that the test for a stayis the usual tripartite test set out in RJR-MacDonald Inc v Canada (AG), (SCC), [1994] 1 SCR 311.

The Applicantmust show that there is an arguable issue, that it will suffer irreparable harm if the stay is not granted, and that the balance ofconvenience between the parties favours granting a stay: ibid; see also Attila Dogan Construction and Installation Co v AMECAmericas Ltd, 2015 ABCA 406 at para 33 [Attila].

If the test is not made out, the Court retains a residual discretion to grant a stay whenthe interests of justice so require: HML at para 19; Attila at para 33. [36] In Alberta v AUPE (1984), 1984 ABCA 130 , 53 AR 277 [AUPE], the Court of Appeal set out the test for staying aproceeding when there is an overlapping proceeding, which is a slight variation on the standard RJR-MacDonald test: see also Hamm vCanada (AG), 2021 ABCA 329 at para 11.

According to the Court in AUPE, the Applicant must show that the questions in the actionsare substantially similar, that a continuance of the action sought to be stayed would be oppressive or vexatious to the Applicant orotherwise abuse the powers of the Court, and that the stay would not cause an injustice to the Respondent. [37] Spark argues the Application based on the normal three-part test or, more specifically, the residual discretion to issue a stayeven when that test is not met.

However, in my view, it is more appropriate to assess these arguments in light of the test in AUPE, whichbetter reflects the circumstances of this Application and the substance of Spark’s arguments. [38] Under the first branch of the test, there is some overlap between the Review and the negligence action, insofar as they bothconcern the Accounts rendered by PLHM. However, there is not a complete duplication. As both parties identify, the Review is todetermine whether Spark’s Accounts were reasonable, relying on the expertise of the Review Officer.

By contrast, the negligence actiondeals with broader allegations against PLHM for the legal services it provided to Spark, with the repayment of the Accounts plead as aform of relief. There may be some duplication, although it would be a small part of the negligence action. [39] With respect to the second part of the test, I do not find that it would be oppressive or vexatious to Spark or an abuse ofprocess for the Review to proceed. PLHM’s insurers can pay any judgment in the negligence action.

Spark did not raise any other formof prejudice that it would suffer from proceeding with the Review. [40] Spark argues the Review should be stayed to avoid a multiplicity of proceedings. However, holding the Review now mayhelp resolve the negligence action in a timely way. The Review Officer has expertise in determining the reasonableness of accounts andcan do so efficiently. As well, the Review will crystalize the allowed quantum of the accounts and the quantum assessed at the Reviewmay be of assistance at the trial in the negligence action.

[ 41 ] Finally, Spark has not satisfied me that the stay would not cause an injustice to PLHM. In my view, if a stay of the Review is granted, there is a risk that PLHM will have to wait years for the negligence action to be resolved before the Review is completed. In all the circumstances, I conclude there should be no stay of the Review. [ 42 ] To be clear, I make no Order with respect to whether or not an Order or Judgment arising from the Review should be stayed.

If Spark wishes to apply for a stay of enforcement of an Order or Judgment obtained from the Review, as conceded by PLHM, Spark may apply for a stay of enforcement of the Order or Judgment. Conclusion [ 43 ] The Application by PLHM to limit the number of accounts to be reviewed is dismissed. All 9 accounts were filed within the one-year review period under Rule 10.10(2) and were served more than 10 days prior to the Review date under Rule 10.13(4).

Therefore, all 9 accounts may be reviewed by the Review Officer. [ 44 ] The Application by PLHM that the Review process continue notwithstanding that Spark has commenced an action in negligence against PLHM and a partner at PLHM is granted. [ 45 ] The parties had mixed success in this Application. Spark was successful in having all 9 accounts included in the Review. PLHM was successful in having the Review process continue without a stay. [ 46 ] Ordinarily, when there is mixed success, each party would bear their own costs.

However, there may be some relevant considerations relating to costs that I have not been informed of. If the parties cannot reach an agreement about costs, either party may contact me within 60 days to

schedule a procedure to address costs. Heard on the 11 th day of May 2022. Additional written submissions received on June 14, June 15, September 2, and September 9, 2022. Dated at the City of Calgary, Alberta this 16 th day of December, 2022. M. Kraus J.C.K.B.A. Appearances: DLA Piper LLP Craig Brusnyk for the Respondent in the within Application Rose LLP David J. Wachowich, K.C. and Joree R. Nelson for the Applicant in the within Application