Law Times

Law Times • may 30, 2016 Page 5 www.lawtimesnews.com Small Claims Court can deal with some claims Ruling opens alternative for fee disputes BY YAMRI TADDESE AND ALEX ROBINSON Law Times O rder could be restored at the Ontario Superior Court's overstretched fee assessment office, thanks to a recent decision from the Divisional Court that relieved the court of sole jurisdiction to handle those files. The Divisional Court's rul- ing contradicts another one released by the same court in 2014. Jane Conte Profession- al Corporation v. Josephine Smith shocked the system when it said all lawyer fee disputes must be resolved at the Superior Court. Prior to the 2014 ruling, those matters could be dealt with at the Small Claims Court. A more liberal interpreta- tion of the Solicitors Act, Justice Michael Dambrot's decision in Cozzi v. Heerdegen, says the Small Claims Court has juris- diction to deal with claims aris- ing from simple retainers. Dam- brot says only contingency fee arrangement accounts need be assessed by the Superior Court's assessment office. In Conte, Justice Ian Nor- dheimer pointed to a little- known section of the Solicitors Act, which states all claims for non-payment must go to the Su- perior Court. "Partly because of that deci- sion, a very significant jam was created," says Toronto lawyer Ben Hanuka of Law Works PC. "Everything had to be divert- ed through this narrow pipe [at] the assessment office." In Cozzi, the appellant sought to retrieve $14,933 from a former client for breach of con- tract, which Dambrot awarded. Dambrot ruled the Small Claims Court could consider the claim, saying the Solici- tors Act only intends for "a fee agreement that is out of the or- dinary, such as contingency fee arrangements," to go to the as- sessment office. Dambrot said a simple re- tainer agreement in writing would not fall within that. "The impracticality of re- quiring every written retainer agreement setting out an hourly rate to be assessed has only in- creased," Dambrot wrote in his decision. Over the last two years, cit- ing Conte, Small Claims Court judges have routinely dismissed claims by lawyers looking to re- cover fees. Lawyers say that having to file fee disputes at the Superior Court's assessment office has led to long delays. It can take more than a year just to get a preliminary assessment. At press time, the assessment office said the closest date to schedule a preliminary assessment was June 2017. "I believe this will relieve a lot of the congestion at the assess- ment office because lawyers now have the option of going to the Small Claims Court to collect their accounts on simple fee re- tainers, which most lawyers use," says Michael Deverett, a lawyer with Deverett Law Offices. He says the year-long wait to get a preliminary assessment is just the beginning of what is a long process in the Superior Court. "Then you have to book the actual assessment after that," he says. Jonathan Kleiman, a Toronto corporate law and litigation lawyer, says Conte has made re- trieving fees difficult, as lawyers cannot hire paralegals to do the work for them, as they do not have standing in the Superior Court. As such, paralegals were not even able to retrieve their own fees. "It was completely impracti- cal," Kleiman says. "As soon as people start to figure out it's that difficult for a lawyer to recover their fees after $25,000, it becomes a lot harder for lawyers to operate and it's even worse for paralegals." Kleiman says Cozzi has opened up the chance for law- yers to get paid back what they are owed in fee disputes, as the Superior Court is more costly and time consuming. "It becomes pretty cost pro- hibitive to go after what is a rea- sonably sized bill if you're owed $3,000. That's why we have a Small Claims Court," he says. "The reality is Small Claims Court settles all the time. At least it forces everyone to come together to negotiate. Whereas having to wait forever to go to the Superior Court doesn't make sense on a small bill." Some cannot be bothered to claim fee disputes because of the cumbersome length of the pro- cess and abandon some claims altogether, lawyers say. In an endorsement written early this year, Superior Court Justice Sean Dunphy said the delay required to get an assess- ment hearing is "unacceptably long." But in the same ruling, Dunphy dismissed requests by Toronto intellectual property law firm Gilbert's LLP for an order that two clients pay out- standing bills arising from un- disputed retainers. Essentially, the issue at the centre of the chaos is poorly drafted legislation, according to Hanuka. He says s. 17 of the So- licitors Act could technically be read to suggest that every writ- ten agreement for legal services must get a blessing from the Su- perior Court before a payment can be made. "The problem is that it's almost nonsensical," Hanuka says, adding Dambrot's decision in Cozzi is "the only way forward." After Nordheimer wrote Conte, paralegals like Fredrick Goodman, who went to Small Claims Court to resolve lawyers' fee dispute matters, could no longer do those jobs as paralegals don't have standing at the Superior Court. Speaking from the Small Claims Court recently, Goodman says he's "back in business." "This decision . . . restores our ability to pursue claims for lawyers in the Small Claims Court for unpaid accounts but only insofar as those [accounts] which are not contingency fee arrangements," says Goodman. LT With files from Michael McKier- nan NEWS Check out lawtimesnews.com for insight from our regular online columnists From trade deals to foreign investment, Patrick Gervais keeps you up to date on business issues in Trade Matters Michael Deverett says a recent decision will relieve congestion at the assessment office by allowing lawyers to use Small Claims Court instead. Maximize your clients' intellectual property value Maximizing the commercial value of your clients' intellectual property makes you essential to their businesses. But success relies on your ability to determine which strategies will deliver the most value given the organization's specifi c circumstances. In this new publication, the authors buttress their own considerable knowledge and experience with that of 12 other experts who work with many various facets of intellectual property commercialization. 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