H.S. Applicant (Client) - v. -, 2016 NSSM 44

Claim No: SCCH No. 450965 IN THE SMALL CLAIMS COURT OF NOVA SCOTIA AND IN THE MATTER OF A TAXATION Cite as: H.S. v. Owen, 2016 NSSM 44 BETWEEN: H.S. Applicant (Client) - and - G. MICHAEL OWEN Respondent (Lawyer) TAXATION DECISION BEFORE Eric K. Slone, Adjudicator Hearings held at Halifax , Nova Scotia on May 31, 2016, June 6, 2013 and June 13, 2016 Decision rendered on July 11, 2016 Decision on costs rendered August 26, 2016 APPEARANCES For the Applicant Brian Bailey

Counsel For the Respondent Tanya Nicholson Counsel BY THE COURT: 1 . This is a taxation of an account between G. Michael Owen (hereafter “the lawyer”) and his former client, H.S. (hereafter “the client”). The taxation was initiated on behalf of the client by her new lawyer, Brian Bailey. 2 . I have anonymized the client’s name as there is sensitive information involved, as there so often is in taxations involving bills rendered in connection with family law proceedings. 3 .

The background facts are that the client was fairly recently separated from her husband when, in June 2014, she decided to get a lawyer and proceed with a divorce. She was living in a matrimonial home with her teenaged son. Her husband was out of the home, though there was no court order to that effect. The client was unemployed and totally dependent upon her husband for money, which she was receiving voluntarily from him, though sporadically.

The husband spent much of his time working out of the country, which made him a bit more elusive in several respects, both in terms of serving him with documents and getting a handle on his income. 4 . Based on her testimony and my own observations, I would characterize the client (as at June 2014) as insecure, naive (in terms of legal matters) and frightened. She also had some health problems, which were not elaborated upon at the hearing, but which may have included some mental health issues, and which made her even more vulnerable. 5 . She also reported to Mr.

Owen that there was a history of mental and physical violence and intimidation in the marriage. 6 . According to the client’s version of events, she had spoken briefly to a lawyer some time before, and (by June 2014) intended to seek out two or three free consultations and choose a lawyer to start divorce proceedings. The first of the lawyers that she arranged to meet with was Mr. Owen. 7 . Mr. Owen is a very experienced lawyer, having qualified for the Nova Scotia bar in 1978. According to his estimate, more than half of his practice is in family law. 8 .

Both parties agree that a meeting was scheduled for June 25, 2014, and that they did get together at Mr. Owen’s office. Their versions of what occurred on that day are curiously at odds. I say “curiously” because the question of which one is right about that meeting is somewhat beside the point, presenting a question of fact (and credibility) that barely, if at all, impacts on the outcome. 9 . Briefly, the client’s version is that she had a fairly short meeting, at which Mr. Owen placed in front of her his standard Retainer Agreement, which he asked her to sign.

She says that she was not prepared to sign at that time, because she wanted to think it over and possibly see another lawyer before deciding on representation. She took a copy of the Retainer Agreement with her. Although she believed that the first meeting was free, at the end he asked for her credit card, which she handed over, believing that he was going to

charge her card for the meeting. She did not know how much was going to be charged. She says that when she got home, she became nervous about the credit card charge and called Visa to find out what amount had been charged. She was told that it was $4,000.00, which was the amount that Mr. Owen had told her would be required as a retainer. She says that she was shocked and worried that this might not be refundable. She says that a day or two later, Mr. Owen called her to come and meet with him again in his office.

She went, not knowing what would happen but thinking that perhaps he would agree to refund the money, or at least most of it. In the end, rather than talking about refunds she was persuaded to proceed with retaining Mr. Owen, and provided him with much more information that he would need to start representing her. She could not recall when that second meeting was, but believes it was just a few days later. 10 . Mr. Owen ’ s version of the events is that the meeting on June 25, 2014 started at about 2:30 p.m. and lasted for approximately 90 minutes.

He says that she signed the Retainer Agreement, and handed over her credit card for the express purpose of providing the $4,000.00 retainer that he wanted before starting to work on her case. He says that he gave her an unsigned copy of the Retainer Agreement to take home with her, which explains why she had a (mostly) unsigned copy in her possession. He testified that there was no second meeting, and that there had never been an agreement to provide a complimentary first meeting.

He says that she left the first meeting knowing that she had retained him, and that he gave her homework in the sense that she had to start filling out the financial statements that would eventually be needed for the court proceedings against her husband. Whose version is accepted? 11 . The only reason to resolve this question would be to find one party more credible than the other, in some general sense. I am not sure that it matters much, given that there is no real issue of credibility that anything turns on. However, the parties seemed to think it was important. 12 .

I will begin by observing that the client was very convincing and appeared sincere in her recollection that the events happened the way she described. She did not appear to have any obvious motive for making up a story that could possibly be checked against other evidence, although she might be accused of simply trying to make Mr. Owen look bad. The client was also in a better position to remember, given that this was the only instance of her having retained a lawyer in that time frame, and the memory would be more vivid. 13 . On the other hand, Mr.

Owen cannot be expected to have as vivid a recollection of this client meeting, given that it was one of many that he likely had as part of his busy practice. In his testimony, particularly about the initial client meeting, he routinely testified that he “would have done” such and such, which use of the subjunctive tense is a powerful “tell” that the witness is reconstructing events out of inherent probabilities rather than actual memories. 14 . On the other hand, Mr. Owen could have conceded that there were two meetings, without changing much, given that the client eventually signed his Retainer Agreement. 15 .

There is an inherent improbability to the client’s version of events, that counts against her version. I find it hard to believe that Mr. Owen would have charged her credit card for $4,000.00 unless he believed he was being retained. It is also hard to believe that the client could have seriously believed that this might be a non-refundable fee, but I allow for the possibility that she was that naive. Also, Mr. Owen’s time records do not show any later meeting.

There is no reason why he would not have recorded it, since there would have been no reason to suspect (at that time) that there would be any significance to a second meeting. 16 . In all, I find that it is more probable than not, that there was only one meeting, and were it necessary to fall on one side of the line rather than the other, I would have to say that the client is mistaken in her recollection. I am not saying that she was lying; in fact, I sensed that she was speaking with conviction, but her version of the events is simply too difficult to believe and is at odds with the inherent probabilities.

After the retainer

17 . After this meeting (or meetings) the stories essentially align. Mr. Owen proceeded to prepare a divorce petition and an interim application for a number of items of relief, including interim possession of the matrimonial home, interim child and spousal support. 18 . The interim application in the Family Division of the Supreme Court was eventually scheduled for an hour on April 16, 2015, which is about ten months after Mr. Owen was retained. The date was arranged when the documents were filed in mid-December - roughly six months after Mr. Owen was retained.

The initial date for the interim hearing was late in February, but was soon thereafter adjourned because the client ’ s husband was going to be out of the country. Mr. Owen cannot be blamed in any sense for that delay. 19 . A verbal agreement was reached in the courthouse just minutes before the hearing, between the parties and their lawyers, and was read into the record. The last thing Mr.

Owen did of any consequence was to draft an order reflecting what he believed to be the agreement, which order has never been agreed to in form by opposing counsel, who had objections to it, and which remains (to this day, more than a year later) unissued. It is unclear to me whether the husband is adhering to the essential terms of the order. The client ’ s evidence was that, at least initially, he did not make all of the required payments, but no one advised me how things currently stand. 20 . Along the way, Mr. Owen issued a number of bills which total $21,360.79, including fees, disbursements and HST.

The fee portion ($17,520.00) was based entirely on Mr. Owen ’ s quoted rate of $300.00 per hour - a straight mathematical calculation. Just more than $3,000.00 of that money is still claimed to be owing. 21 . The client’s contention is that the total bill was not reasonable. She says that the charges were out of proportion to what was done and achieved on her behalf, and she wants a refund of some of what she has paid. Her counsel, Mr. Bailey, suggests that this was a “ garden variety ” matrimonial case that should have cost the client (perhaps) $8,000.00. Ms.

Nicholson supports the bill, suggesting that there were complexities involved with the case and asserting that Mr. Owen achieved everything the client was looking for, and was only prevented from achieving more because the client terminated his services. Taxation principles 22 . The principles governing the taxation of lawyers ’ accounts are not controversial, although different people may apply them differently, such as by giving more weight to one principle as opposed to another.

These principles derive from a number of sources, including the Nova Scotia Civil Procedure Rules, the Code of Professional Conduct of the Nova Scotia Barristers Society, and the common law both in Nova Scotia and elsewhere in Canada. I would distill those principles to the following non-exhaustive and occasionally redundant list: a. A lawyer’s fees must be fair and reasonable. This is an overriding principle. b. The onus of proving reasonableness rests with the lawyer, regardless of who initiates the taxation. c.

The fairness and reasonableness of an account must be assessed in light of all of the relevant circumstances, including (as set out in Civil Procedure Rule 77.13): i. counsel's efforts to secure speed and avoid expense for the client; ii. the nature, importance, and urgency of the case; iii. the circumstances of the person who is to pay counsel, or of the fund out of which counsel is to be paid;

iv. the general conduct and expense of the proceeding; v. the skill, labour, and responsibility involved; vi. counsel's terms of retention, including an authorized contingency agreement, terms for payment by hourly rate, and terms forvalue billing. d. The taxation may disallow fees charged for proceedings taken that were unnecessary (such as by overcaution or merelyerror); e. Fees may be disallowed if, objectively speaking, too much time was spent on any particular step, or overall, which reflectspoorly on the lawyer’s skill; f.

The results achieved may be considered, but in some instances may be totally irrelevant; g. The client’s ability to pay may be relevant; h. The client’s expectations may carry some weight, for example where the lawyer’s fees significantly exceed an estimategiven; i. The degree of skill demonstrated may, in some cases, be important, though the lawyer may not have had to exercise all ofhis or her skills to achieve the result. Applying these principles 23. I do not propose to go through every bill in detail and try to attach value to a particular meeting or other docket entry.

This isnot the approach usually adopted in taxations. In Singleton & Associates v. Mathieson, 2005 NSSM 4 , Chief Adjudicator Gilesput it thusly: [27] Very often, the taxation of solicitor/client accounts dissolves into an exercise in which attempts are made to reconcile individualtime charges while each individual service is assessed retrospectively from the perspective of whether or not it was necessary orunnecessary.

As inviting as such an approach might be to some, especially to clients against whom claims are being made by formersolicitors, the more accepted role of the taxing officer is to gauge what was reasonable, all things considered, at the time the ClaimantSolicitor was undertaking its services to the Defendant Client. 24. I am also not in any position to find that any of the hours were incorrectly stated. For the most part the client cannot knowwhat time Mr. Owen was spending except for those few occasions when the time entry was for a meeting with her.

Even at that, Ibelieve the client’s ability to recollect the time spent at these meetings is inherently unreliable, and it is merely self-serving for her tosuggest that the meetings were not as lengthy as Mr. Owen recorded. But that is not the point here. I believe the account should beviewed more holistically. 25. There are several things that concern me about this retainer, which I will discuss in no particular order of importance.

26 . I start with the finding that, regrettably in this case, Mr. Owen fell short in his duty “to secure speed and avoid expense for the client” to use the language of Civil Procedure Rule 77.13 (i). The client presented herself to Mr. Owen as someone with very few financial resources who was in need of some immediate relief, including interim possession of the matrimonial home (to exclude her husband from entering without permission) and a guaranteed source of income. Her husband was voluntarily supplying money, but not reliably.

She wanted a divorce, eventually, and may even have attributed outsized importance to the idea of a divorce, but that was not what she needed urgently. Viewed objectively, the time (10 months) it took to bring the situation to a head, get the matter before a court (or into a serious negotiation) and the result (an unissued order) do not represent a particularly good result for all of the time spent and money billed. Mr.

Owen argues that the result was as good as it gets, in the sense that the client received all she was asking for, but it ought to have been obvious to him that his client’s arguments for what she was seeking (on an interim basis) were basically indisputable. Her claims to spousal and child support, and interim possession of the matrimonial home, were virtually unanswerable. Objectively, taking as long as it did to arrive at a resolution was not a great result. 27 . My assessment is that Mr.

Owen took an inordinately long time to get completed financial statements signed and filed, which statements he knows (as an experienced matrimonial lawyer) are the essential currency to get the client into court and begin to force the issue with the other side. The client’s financial circumstances were not that complex; indeed, her statement of income was a pro-forma “nil” statement, as she had no income. As for the statements of expenses and property, Mr. Owen spent what I would consider an inordinate amount of time pulling that information together.

The statement of property did not even attempt to place values on many items, but marked them as “subject to appraisal.” I also find that he spent an inordinate amount of time on the client’s affidavit, which (for interim purposes) ought to have been relatively easy to formulate. I have a hard time accepting his argument that much of the time spent was with a view to preparing himself for the eventual trial, given that so few divorces go to trial and the real imperative was to get some interim relief. 28 . The general pace of the file was fairly slow, with the result that Mr.

Owen repeatedly spent time reviewing the file to bring himself up to speed. Given that it was Mr. Owen, rather than the client, who dictated the pace, this additional time spent was not productive. 29 . Mr. Owen’s billing practice - a mechanical multiplication of hours docketed times hourly rate - is seriously falling out of favour in the modern context. I appreciate that he is not the only lawyer doing this, but it is problematic. Hourly billing has been identified as a potential existential threat to the legal profession, and branded as an impediment to justice for the average person.

The billable hour is problematic because it lends a form of quasi-legitimacy to the notion that the application of an hourly rate times the hours spent reflects the value of the work done, from the client’s perspective, when (in fact) it may have little correlation to value. Lawyers may believe they are selling their time, and are fond of saying so, but very few (if any) clients are interested in buying time. They are buying expertise and the prospect of a legal result. 30 .

This is why, in so many instances of taxations that come before this court, we observe lawyers already having reduced the hours spent in a particular billing period, often without an explicit explanation on the bill, but (upon probing) with the simple explanation that “it seemed like too much.” Many lawyers recognize that, at times, they may have been too much of a perfectionist or fussed unnecessarily over a particular step, and do not try to hold the client responsible for that excess.

It has often been observed that this practice, of reducing a bill where it seems excessive (i.e. not reasonable), is “in the best traditions of the Bar.” 31 . Here, there is not a single instance of Mr. Owen giving consideration to the question of whether or not the fee being charged was appropriate. Every one of his bills was a mechanical, mathematical exercise. 32 . The fact that the client signed the Retainer Agreement which specified the hourly rate and hourly billing, is only a partial answer. Such agreements are common, and one of the commonalities is that they are heavily weighted in the lawyers’ favour.

It is an unequal relationship. Vulnerable clients will often sign whatever is put before them, because they feel that they have no choice. Clients rarely seek independent advice as to the fairness of the agreement they are contemplating signing. These retainer agreements are essentially contracts of adhesion. In the end, the principle of reasonableness will trump any provision in a retainer agreement. 33 . Mr. Owen also seemed to give no consideration to the client’s ability to pay. He knew that she had very little money, and that she would have to put it all on her credit card.

Nowhere did he appear to contemplate adding a claim for suit money to the items of relief he was seeking, which might have provided her with a source of money to fund the litigation other than her credit card.

34 .

Although he may be justified in saying that the client knew his rates and could have opted for someone less expensive, or less experienced, still he had a duty to take into account the financial resources available and - to some extent - prioritized his work to achieve the maximum “bang for the buck.” He could have easily predicted that, with his billing practice, the client would run her credit card up to the limit and find herself with crushing debt and unable to pay his further bills, with the further inevitable result that he would stop work because he wasn’t getting paid, and probably never get to finish the job. 35 .

This is precisely what happened. Mr. Owen stopped work because he wasn’t getting paid. That point in time - trying to get the interim order issued - was arguably the most critical point in the entire retainer. With all due respect, refusing to do any further work at this point (and exercising a lien on the file) were in the worst traditions of the Bar. I appreciate that he might answer that the client instructed him to stop work, but in that case he ought to have considered offering to finish getting the order issued without further running up her bill.

I am not suggesting that he was obliged to work for nothing, rather that he should have recognized that he had already been paid to get the order done. 36 . Some of the other provisions of the Retainer Agreement were a little harsh, and were not properly explained to the client. I am most concerned with his practice of charging 4% as a “bank charge” on every credit card advance. While it is well known that merchants pay a fee to use credit card services, there was no evidence that Mr. Owen actually paid as much as 4%.

It is a matter of public record that in late 2014, the credit card companies reduced merchant fees in a voluntary agreement with the Government of Canada, to a maximum of 1.5%. (Even that amount is high enough to have sparked a war between Visa and Walmart!) I have difficulty believing that 4% was the actual cost to Mr. Owen, or to the firm with whom he was sharing space and who administered the credit card charges for him. Added to the interest the client would be paying on her card, this added up to a lot of extra expense beyond the actual legal fees. Mr.

Owen does not appear to have considered the true cost of his services to the client. 37 . I also have a problem with some of the other charges. His Retainer Agreement asks for (and he proceeded to charge) 40 cents per page of photocopying, 60 cents per page of faxes or email scanning, plus a $55.00 “administrative charge” and a $4.50 “environmental charge,” neither of which is explained. 38 . Were this a party and party taxation, none of this would be chargeable to an opposing party other than 10 cents per page for photocopying. It has long been recognized that charges of the magnitude set out in Mr.

Owen’s agreement are a historical anomaly, harking back to a time when these technologies were new and expensive. They bear no relationship to the actual cost to a modern law office. For example, it costs nothing to fax or scan a document, and the administrative time to do so is simply part of the lawyer’s overhead. As for photocopying, the actual cost to a lawyer with any decent copying facility is pennies a page. Commercial enterprises make a healthy profit selling photocopying serves at 10 cents per page. 39 .

As a matter of contract, the client may have agreed to these charges, but they are not reasonable and do not represent actual costs. In fact, such charges amount to a separate profit centre for the lawyer, which was unlikely to have been explained to the client. A naive client would not know to question these charges. Mr. Bailey did not specifically complain about these amounts, which may well be common in the legal community, but I do not propose just to let them pass. They are not reasonable, in my opinion, and should be reduced. The Accounts 40 .

Looking at the accounts, the following were the fees and disbursements charged (I will apply HST separately): date fees disbursements and other charges HST on disbursements July 22, 2014 $990.00 $219.50 $8.93

September 8, 2014 $1,500.00 $0.00 $0.00 October 22, 2014 $2,850.00 $0.00 $0.00 January 12, 2015 $2,580.00 $566.93 $14.44 February 18, 2015 $5,610.00 $201.93 $9.00 April 22, 2015 $3,990.00 $191.10 $0.96 $17,520.00 $1,179.46 $33.33 41 . About $400.00 of the “other charges” were bank fees for the client’s use of the credit card. 42 . HST on the fees would have added an extra $2,628.00 for a total billing (by my reckoning) of $21,360.79. 43 . It is my understanding that the client has paid $18,160.23 leaving a balance of $3,200.56 outstanding. Assessing a proper amount 44 . As everyone knows, this is not a science.

Mr. Owen’s billing reflects that he docketed some 58 hours of time. Assuming an average day where 6 hours of productive work may be docketed, this represents almost two full weeks of work. This was an inefficient use of his time, given the work accomplished. I do appreciate that it can be time consuming to review emails, especially long ones which occasionally were sent by the client. I also appreciate that this client was not well organized with her documents and had a poor grasp of her financial situation, so a bit more time may inevitably have been spent.

I also acknowledge that he had a small amount of un-billed time - less than an hour - still on his books. 45 . In light of all of my previous comments, I do not believe that Mr. Owen can justify more than 35 hours of billable time. That would amount to fees of $10,500.00, which I find to be the reasonable fees in this case. 46 . I am reducing the disbursements from $1,179.46 to $850.00, in light of my disapproval of the bank fees and photocopying and other fees. The non-taxable disbursements would be $283.05 for filing the divorce, and $64.10 for the motion for interim relief.

That leaves $502.85 in taxable disbursements. 47 . This results in the following: fees $10,500.00 HST on fees $1,575.00 disbursements and other charges $850.00 HST on disbursements $75.43

TOTAL ALLOWED $13,000.43 48 . The bill is taxed at $13,000.43, which I will round down to $13,000.00. The client - who has paid $18,160.23, is accordingly entitled to a refund from Mr. Owen in the amount of $5,160.23. 49 . I will hear from the parties via email about the costs of the taxation proceeding, after which I will issue the certificate of taxation. Eric K. Slone, Adjudicator ADDENDUM ON COSTS August 26, 2016 1. On July 11, 2016, I issued a decision in a taxation of an account between G. Michael Owen (“the lawyer”) and his former client, H.S. (“the client”).

The lawyer had charged the client in excess of $21,000.00 for his work representing her in a matrimonial dispute. She had paid a substantial portion but not all of the bill. I taxed his bill at $13,000.00, resulting in a refund from Mr. Owen in the amount of $5,160.23. 2. I understand that the refund has occurred. What remains is the question of costs of the taxation hearing. 3. The hearing took place over parts of three evenings on May 31, 2016, June 6, 2013 and June 13, 2016. 4.

Counsel for the client seeks costs in the amount of $1,427.00, which is made up of $1,250.00 for fees, $99.70 to initiate the taxation, and $78.00 for 120 photocopies of the client’s file at the Prothonotary’s office. 5. All parties are aware of Practice Memorandum no. 10 which allows $0.10 per page of photocopying. Ms. Nicholson suggests that the claim for copies be limited to that. On this point, I believe she misconceives the claim. Her client, Mr. Owen, claimed a lien on the file for what he believed were outstanding fees. The client hired new counsel, Mr.

Bailey, to represent her in the ongoing matrimonial dispute. The client had some of her file documents, but Mr. Bailey was forced to have someone attend at the court office and pay the going rate of $0.65 per page to copy the file. In this instance, he is only trying to recover an outlay that was the direct cause of Mr. Owen claiming a lien on the file. Memorandum 10, even if it had been in effect at the relevant time, would have no application. 6. On the larger question of costs, Ms. Nicholson suggests that both sides should bear their own costs as the client was only partially successful in the taxation.

She produced a Without Prejudice letter from Mr. Bailey where, some weeks prior to the hearing, he had offered to accept $9,000.00 as a refund to avoid the taxation. She also points to the fact that I rejected the client’s allegation that Mr. Owen had taken a $4,000.00 retainer without authorization, which (if found) would have been a serious ethical violation. 7. What I did say in my decision was that I found this allegation improbable but that the client seemed sincere and was more than likely confused about the sequence of events.

I allowed (and allow) for the fact that she was under tremendous stress given the particulars of her marital situation.

8. I did not consider the question of the retainer to be central to the taxation, because everyone agreed that the client did retain Mr. Owen, and the central question was the appropriateness or reasonableness of his account, given the work done and the results achieved. There is no significance to Mr. Bailey’s settlement position. Under the principles that guide the awarding of costs, a settlement offer that - if accepted - might have avoided the hearing, can result in enhanced costs. The fact that Mr. Bailey did not “beat his settlement offer” is irrelevant. 9. I note that Mr.

Owen did not apparently make any offer to settle, which might have influenced the matter in his favour on those same principles. 10. While costs are in my discretion, I must avoid sentimentality or any other purely emotional factor and apply legal principles. Simply put, the client was substantially successful on this taxation, and would almost certainly not have been successful without the assistance of Mr. Bailey. She will bear a cost for her counsel’s service, which party and party costs are intended to indemnify, in part. Success for this client is not measured only in money.

My decision likely vindicated her sense that she had not been treated fairly by Mr. Owen. Equally, given her circumstances this was not a small amount of money for her. 11. I did not keep track of the total hours for the hearing, but it was probably in the range of seven hours. Had the matter been held during the day, it would have taken at least a full day in court, or possibly a bit more. 12. Mr. Bailey referred to Tariff A under the Civil Procedure Rules, and suggests that this provides some guidance. I believe that Tariff C - which deals with the costs of applications - is the better analogy.

An application in court taking between ½ day and a full day would presumptively attract costs of $2,000.00, more or less. 13. While Tariff A or C might have dictated a greater amount than Mr. Bailey suggests, I believe he implicitly recognizes that the costs awarded should be proportional to the issue at stake. 14. Given all of this, I find Mr. Bailey ’ s suggestion of $1,250.00 to be fair and proportionate to the issue. 15. As such, I am prepared to award the costs, as asked, in the total amount of $1,427.00. Eric K. Slone, Adjudicator