IN THE SUPREME
COURT OF BRITISH COLUMBIA
Citation: | FitzGibbon v. Ma, |
| 2011 BCSC 1854 |
Date: 20111102
Docket: M084574
Registry: Vancouver
Between:
Olga Terri FitzGibbon
Plaintiff
And
Jingli Ma, Tsze Kwong Kendy Wong and
Transportaction Lease Systems Inc.
Defendants
Before: The Honourable Madam Justice Gropper
Oral Reasons for
Judgment
In Chambers
In Person | O.T. FitzGibbon |
Counsel for
| M. R. Chandler |
Counsel for Ronald Piters | C. Bolan |
Place and | Vancouver, B.C. |
Place and | Vancouver, B.C. |
[1]
THE COURT: This is an application by the law firm of Hammerberg Altman
Beaton & Maglio LLP (the law firm) for the following orders:
1.
The court grant
the law firm a charge against the settlement proceeds paid out to Mr. Piters
in trust for Ms. FitzGibbon for fees, taxes and disbursements;
2.
Ms. FitzGibbon
and Mr. Piters be held jointly and severally liable for the amount to be
assessed; and
3.
The matter be
remitted to the registrar for taxation, including a determination of interest
and the amount of fees owing.
Background
[2]
On February 18,
2008, Ms. FitzGibbon retained the law firm, specifically David Maglio, to
represent her in a personal injury action in respect of a motor vehicle
accident which occurred on March 14, 2007. Ms. FitzGibbon signed a
contingency agreement with the law firm which included a clause that the fees
would be a sum equal to one-third of all the amounts recovered on behalf of Ms. FitzGibbon
upon settlement or judgment. The agreement also provided that disbursements must
be paid within 30 days of the law firm rendering a bill and that any unpaid
amounts would accrue interest at a rate of 1.5% per month.
[3]
In January 2009, Ms. FitzGibbon
was involved in a second motor vehicle accident, a single vehicle accident in
icy conditions. The law firm declined to be retained in respect of the second
accident. Ms. FitzGibbon was of the view that the firm should represent
her in both actions.
[4]
On March 14, 2009,
after negotiation between the law firm and ICBC, ICBC made an offer to settle
with Ms. FitzGibbon based on two options:
1.
an offer to settle
the accident of March 14, 2007 for $27,500 all inclusive, new money, with Part
7 coverage to be left open for six months in relation to the January 11, 2009
accident; or
2.
an offer to settle
both accidents for $30,500, all inclusive.
[5]
The law firm sent Ms. FitzGibbon
a letter dated March 17, 2009, reviewing her position. They suggested that she
give serious consideration to the offer and, if necessary, seek a second
opinion. The law firm did not make a recommendation that she take either offer.
[6]
Ms. FitzGibbon
sent an e-mail to Mr. Maglio on March 22, 2009, and a letter April 6,
2009, outlining some concerns she had regarding the manner in which her file
was being handled. She expressed that there had been some critical errors made and
questioned legal fees given her lack of "satisfaction with the law firms
services. She advised that she would be protesting the fees and disbursements
on the basis of not accounting for time spent on the file and that she would be
contacting another lawyer.
[7]
On April 14, 2009,
the law firm advised Ms. FitzGibbon by letter that due to her lack of
confidence in it, Mr. Maglio would be withdrawing as her solicitor and
enclosed a notice of intention to withdraw. Ms. FitzGibbon objected to the
notice. The law firm confirmed that it would not change its position.
[8]
On April 28, 2009,
Mr. Maglio sent a notice of withdrawal to Ms. FitzGibbon and the
other participants on the file.
[9]
On June 5, 2009,
Ronald Piters wrote to the law firm and asked that it forward materials to his
office. He inquired as to what amount would be required to protect its fees. The
law firm responded that it would transfer the file on Mr. Piters’
undertaking to protect the account. The law firm also provided its disbursement
account in the sum of $2,737.12 and requested payment. Despite several subsequent
attempts by Mr. Maglio to contact him, Mr. Piters did not communicate
with the law firm.
[10]
On September 1,
2010, counsel for ICBC advised the law firm that Ms. FitzGibbon’s file had
been settled in the amount of $24,500 plus disbursements, which were between
$3,000 and $3,800. The law firm understood that the monies had not been paid
out to Ms. FitzGibbon, but made further attempts to contact Mr. Piters
without success. On December 29, 2010, Mr. Piters advised the law
firm by email that he was not involved in any dispute the law firm had with Ms. FitzGibbon
about the payment of fees.
[11]
On January 4,
2011, the law firm learned that the settlement funds had been paid out to Ms. FitzGibbon
by Mr. Piters.
[12]
Shortly before the
hearing of this application, Ms. FitzGibbon provided a cheque to the law
firm in the amount of $2,737.12. This was the amount of the disbursements in
June 2009. She did not add interest to the payment.
Legal Profession Act:
[13]
Sections 78
and 79 of the Legal Profession Act, S.B.C. 1998, c. 9 provide:
Change of lawyer
78 (1) If a client changes lawyers or begins acting on
his or her own behalf, the client or the new lawyer may apply to the court for
an order directing that the client’s former lawyer deliver the client’s records
to another lawyer nominated by the client or to the client, as the case may be.
…
Lawyer’s right to costs out of property recovered
79 (1) A lawyer who is retained to prosecute or defend
a proceeding in a court or before a tribunal has a charge against any property
that is recovered or preserved as a result of the proceeding for the proper
fees, charges and disbursements of or in relation to the proceeding, including
counsel fees.
…
(6) All acts done
and conveyances made to defeat, or that operate or tend to defeat, the charge
are void against the charge, unless made to a bona fide purchaser for value
without notice.
(7) A
proceeding for the purpose of realizing or enforcing a charge arising under
this section may not be taken until after application has been made to the
appropriate court for directions.
Position of the parties
The law firm
[14]
The law firm
argues that the court should grant it a solicitors lien as it satisfies all
three parts of the test to be applied as outlined in Chouinard v. I.C.B.C.
et al, 2002 BCSC 655 at para.10:
1.
the solicitor was
retained on the matter;
2.
the solicitor will
not be paid unless a lien is granted; and
3.
the property was
recovered or preserved as a result of the solicitor’s work in the proceeding.
[15]
The law firm
argues that Mr. Maglio was retained in the matter on February 18, 2008,
when he and Ms. FitzGibbon entered into the contingency agreement. It
asserts that it has proven that it will not be paid unless a lien is granted. It
refers to Ms. FitzGibbon’s letters of March 22 and April 6, 2009, which
challenged the fees and disbursements that would be owing if Ms. FitzGibbon
accepted one of the offers made by ICBC.
[16]
Finally, the
settlement monies recovered, the law firm asserts, were as a result of Mr. Maglio’s
work in the proceeding. Were it not for the work performed by Mr. Maglio, Ms. FitzGibbon
would not have been offered alternatives by ICBC in March 2009. Mr. Maglio
commenced legal proceedings, he set a trial date, commissioned medical/legal
reports and provided relevant clinical records to ICBC and defence counsel. Mr. Maglio’s
efforts and his negotiations with ICBC resulted in ICBC making the offers it
did in March 2009.
[17]
The law firm says
that the eventual settlement for $24,500, plus disbursements, was less than the
offer which Mr. Maglio had elicited in March 2009.
[18]
The law firm also
points to the conduct of Mr. Piters. He was provided with the law firm’s
disbursements and accounting of time on June 9, 2009. Mr. Piters did not
undertake to protect the disbursements nor acknowledge the law firm’s
entitlement to fees. He made no effort to communicate with Mr. Maglio
regarding the file materials and did not respond to inquiries by the law firm. The
law firm says he was aware that there were outstanding disbursements and an
issue over fees.
[19]
The law firm says
that despite attempts to contact him, Mr. Piters did not contact it until
December 29, 2010, when he said that he was not involved in any disputes
regarding fees and disbursements and suggested that the law firm deal directly
with Ms. FitzGibbon. The law firm learned subsequently that the funds had
been paid out to Ms. FitzGibbon.
[20]
The law firm argues
that it can be inferred that Mr. Piters and Ms. FitzGibbon recovered
the disbursements from ICBC which had been incurred by the law firm. It asserts
that Ms. FitzGibbon and Mr. Piters extracted recovery of
disbursements which neither had actually incurred and which they knew were
outstanding to the law firm. The law firm argues further that Mr. Piters’
conduct in settling Ms. FitzGibbon’s file was such that the law firm was
deprived of its charge and rendered it unable to collect its fees and
disbursements.
[21]
As a result of Mr. Piters’
conduct, the law firm argues that Mr. Piters is jointly and severally
liable, along with Ms. FitzGibbon, in respect of fees and disbursements.
Mr. Piters
[22]
Mr. Piters
asserts that because the law firm refused to be retained on the second accident
it put Ms. FitzGibbon in a position where ICBC, as a condition of its
offers, required a release from both accidents. Mr. Maglio could only
advise Ms. FitzGibbon about the offer as it related to the first accident,
but not the second. Ms. FitzGibbon had no one to advise her in respect of
the second accident. The amount which ICBC was offering in respect of the tort
claim for the motor vehicle accident in January 2009 is not known.
[23]
Mr. Piters
argues that Ms. FitzGibbon expressed concern about Mr. Maglio
negotiating with ICBC regarding the second accident without agreeing to
represent her. It meant that Ms. FitzGibbon could not make an informed
decision. Furthermore, Mr. Maglio’s response to her concerns was to
terminate the lawyer/client relationship. He withdrew on April 14, 2009, in
spite of Ms. FitzGibbon’s request that he continue to represent her. Mr. Piters
argues that it was legitimate for Ms. FitzGibbon to raise her concerns and
the law firm did not have a good reason to terminate the relationship.
[24]
Even if it did, Mr. Piters
argues, the contingency agreement does not provide for what happens if the law
firm withdraws from the file. It only refers to circumstances where the law
firm recommends an offer to a client who refuses the offer and the
lawyer/client relationship continues.
[25]
Mr. Piters
relies on the decision of Morrison Voss v. Smith, 2007 BCCA 296, in support of his position that
having terminated the agreement and withdrawing from the file without a good
reason, the law firm ended its agreement with Ms. FitzGibbon and no fees
are payable to it.
[26]
Mr. Piters also
submits that a charging order against him is not in accordance with the relief
under s. 79 of the Legal Profession Act. He refers to s. 78 of
the Legal Profession Act, which says that where records of a law
firm are delivered to a subsequent law firm the court can order a lien on the
file, conditional on the payment of an account or the giving of security for
the payment of lawyer’s fees. If there is a charge it must be made by court
order under s. 78.
[27]
Section 79, he
says, refers to a charge against property recovered. Mr. Piters argues that
this does not include a charge against an award of damages or a settlement
amount. Further, the court must give directions in accordance with s. 79(7),
which the law firm has not sought in this case.
[28]
Mr. Piters
asserts that he ought not to be jointly and severally liable for the money
which the law firm did not know whether or not they could collect. He says that
he made no undertaking to protect the law firm’s account despite Mr. Maglio
asking him to do so. The law firm has not established a prima facie
case, he says, that it will not be able to recover fees and disbursements from
their client, Ms. FitzGibbon.
[29]
With regard to
disbursements Mr. Piters says there is no evidence that he retained money
for disbursements which he did not incur.
Ms. FitzGibbon
[30]
Ms. FitzGibbon
aligns herself with the position of Mr. Piters. She also asserts that Mr. Maglio
did not properly assess the matter of liability for the accident in January
2009. He did not pursue an investigation of it despite Ms. FitzGibbon’s
clear recollection of the events, including a description of an unidentified
driver which she says forced her off the road. She also says she has witnesses
to the second accident.
[31]
Ms. FitzGibbon
reiterates that she did not wish to terminate the legal services agreement with
Mr. Maglio. He did so, which required her to obtain new counsel. She says
that when Mr. Maglio terminated his services he terminated the contingency
agreement and any rights that arise from it.
[32]
Ms. FitzGibbon
points out that she had not received a bill from Mr. Maglio for his legal
fees or a demand letter from him or his law firm. She has only received a time
record and a list of disbursements as of June 9, 2009.
[33]
On October 24,
2011, Ms. FitzGibbon provided a cheque to the law firm in respect of the
bill for disbursements without interest. She maintains that because the
agreement was terminated, the provision regarding interest on unpaid
disbursements is no longer applicable.
Decision
[34]
In N.H. v. K.W.;
Re Bankruptcy of N.H., 2004 BCSC 463, Madam Justice Baker clarified that
there are two types of liens available to a solicitor in British Columbia. At
paragraphs 45 to 49, she stated:
[45] The
common law has long recognized two methods of securing a lawyers right to be
paid for the work he or she has done on behalf of a client. Both have generally
been referred to as solicitors liens, although that nomenclature has proved
to be troubling.
[46] The
first type of lien the courts have recognized is a possessory lien over the
documents and papers in the lawyers possession relating to the matter in which
the lawyer has been retained …
…
[48] …
It is a different type of lien than that recognized by s. 79 of the Legal
Profession Act …
[49] …
rights created by s. 79 of the Legal Profession Act … are
unrelated to possession of files or documents …
[35]
In Cliffs Over
Maple Bay (Re), 2011
BCCA 346, Madam Justice Newbury, dissenting, reviewed the jurisprudence regarding solicitor’s liens. The majority
disagreed with her result, but not with her summary of the law at paragraphs 22
to 26. After reviewing s. 79(1), (2) and (6) of the Legal Profession
Act she stated:
[22] …
This provision codifies the common law solicitors lien. (In fact, the
solicitors lien, not being dependent on the solicitors being in possession of
the property at issue, is not technically a lien but a claim to the
equitable interference of the court … Thus it is also referred to as a charging
order …)
[23] The
purpose of the lien, which should not be confused with the lien on documents
belonging to the solicitor’s client, was described by Esson J.A. for this court
in Wilson, King & Co. v. Lyall …:
… The
object of s. 100 [of the then Barristers and Solicitors Act] is to
give the lawyer an extraordinary privilege of a lien in order to protect him
against the unfair result of having by his efforts preserved assets for the
benefit of all, and of getting no benefit from those efforts. [At 519.]
[24] Like
its common law predecessor, the statutory lien or charging order is
discretionary in the sense that it does not arise as a matter of right upon the
satisfaction of the stated prerequisites. Rather, the court must be persuaded
it would be just and proper to grant the privilege of a lien …
[25] Before
exercising its discretion, the court must be satisfied that the solicitor
recovered or preserved property as a result of the proceeding in which his or
her fees and disbursements arise. The property against which the charge arises
or attaches must be the property so recovered or preserved. ...
[26] If
this condition is met, the lien is generally said to attach to the preserved or
recovered property itself and not only to the client’s interest therein …
Thus
the lien generally takes priority over other liens attaching to the property …
At least in British Columbia, the priority does yield to a statutory lien that
is expressly given priority over all other liens, charges and interests …
[Underlining
in original.] [Citations omitted.]
[36]
I find that the
law firm has satisfied the test outlined in Chouinard.
[37]
It was clearly
retained on the file on February 18, 2008.
[38]
It has shown that
it will not be paid unless the charge is granted. Ms. FitzGibbon was aware
that there would be fees and disbursements owing. Her letters of March and April
2009 specifically raised and challenged the amounts. She did not pay anything
until October 24, 2011, a week in advance of this hearing, and then only
disbursements with no interest.
[39]
The law firm has
also demonstrated that the settlement was recovered or preserved as a result of
its work. Mr. Maglio’s conduct of the file resulted in ICBC making the
alternative offers which it did in 2009. The offer which Ms. FitzGibbon
accepted was lower than either alternative.
[40]
Finally, I find
that it is just and proper to grant a charging order in this case.
[41]
I do not accept Mr. Piters
argument that an award for damages or a settlement is not property under
s. 79(1). In Jenik v. Fearn (1995),16 B.C.L.R. (3d) 22 (S.C.) and Chouinard,
the courts dealt with the imposition of a solicitor’s lien under s. 79
arising out of contingency agreements where the property involved was money
from a settlement of a personal injury claim arising from a motor vehicle
accident. In each case, the court accepted that property referred to in
s. 79 included money from a settlement of a personal injury claim.
[42]
I further reject Mr. Piters
argument that the law firms act of terminating its relationship with Ms. FitzGibbon
without good reason, if that is what in fact took place, results in no fees
being payable in accordance with Morrison Voss. The court in Morrison Voss was
considering an appeal from a registrar who had allowed the client’s former
solicitors fees for services rendered. It is in that context that the court
considered the terms of the contingency agreement and whether or not the former
firm withdrew for good reason. Those issues are not before me. The law firm
seeks an order that this matter be remitted to the registrar for taxation,
including a determination of the amount of interest and the amount of fees
owing.
[43]
In support of his
position, Mr. Piters also cited Merchant Law Group v. McLeod & Co.,
2005 ABQB 875. In this case, the court reviewed the
law in Alberta regarding solicitor’s liens extensively from paragraphs 12 to
42. I do not intend to refer to that discussion because I agree with the law
firm’s view that the case is distinguishable. I come to this conclusion for
three reasons. Firstly, it does not deal with s. 79 of the Legal
Profession Act. Secondly, it describes three types of liens, where there
are only two types of solicitor’s liens in British Columbia: at paras. 9
to 11. Finally, it determines that a former lawyer must obtain the charging
order from the court before there is a payment of the funds to the
client: at paras. 37 to 40. This is not the case in British Columbia, as
is evidenced by both Jenik and Chouinard.
[44]
I grant the law
firm a charge against the settlement proceeds paid out to Mr. Piters in
trust for Ms. FitzGibbon’s taxes and disbursements. Because the funds have
been paid out, the charge is against Ms. FitzGibbon for fees, taxes and
disbursements.
[45]
The next question
is whether Mr. Piters is jointly and severally liable under s. 79(6)
of the Legal Profession Act. I agree with the law firm that Mr. Piters’
action in paying out the proceeds of the ICBC offer operated to defeat the law
firm’s charge. As part of the offer which Ms. FitzGibbon accepted from
ICBC she was reimbursed for disbursements that she had not paid. There is no
evidence that Mr. Piters paid some or all of the disbursements out to Ms. FitzGibbon.
Without such evidence I cannot conclude that Mr. Piters did not recover
and retain money for disbursements which he did not incur.
[46]
I find that Mr. Piters
engaged in acts done and conveyances made to defeat, or that operate or tend
to defeat, the charge. In accordance with s. 79 (6), I find that those
acts and conveyances are void against the charge. Ms. FitzGibbon and Mr. Piters
are, therefore, jointly and severally liable for the amount to be assessed.
[47]
The matter is
remitted to the registrar for taxation, including a determination of the amount
of interest and the amount of fees owing.
[48]
There remains then
the matter of costs. The law firm is entitled to its costs of this application.
Gropper, J.