IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20120515

Docket: S118143

Registry:
Vancouver

Between:

Murray Jamieson

Lawyers

And:

Natalie Moskaleva

Client

Before: The Honourable Mr.
Justice N. Smith

Reasons for Judgment

In
Chambers

[1]            
The law firm of Murray Jamieson (“the firm”) obtained a registrar’s
certificate for unpaid legal fees totalling $32,482.76, including interest and
costs. That amount has now been paid into court as a result of a garnishing
order directed to an investment management firm that held funds for the client,
Natalia Moskaleva.

[2]            
Ms. Moskaleva now applies for an order setting aside the registrar’s
certificate, alleging that she had no notice of the hearing at which it was
granted. The firm, meanwhile, applies for an order for payment out of the
garnished funds.

[3]            
Ms. Moskaleva suffered injuries, including a mild traumatic brain
injury, in a motor vehicle accident, for which she was awarded damages of $1.8
million. She subsequently alleged that her counsel had failed to pursue
additional heads of damage. She retained the firm to challenge his fee and to conduct
a negligence action against him. The legal fees now in issue relate to those
matters. The registrar certified eleven bills issued between March 1, 2011 and
October 2011.

[4]            
The firm was acting pursuant to a retainer agreement dated June 29,
2010, which included a provision that the firm could communicate with and take
instructions from the client’s husband, Mr. Serebrennikov, who says that he
assists his wife with financial and legal matters. Mr. Serebrennikov says in an
affidavit that, prior to the disputed bills, he had paid bills totalling about
$55,000 and that he subsequently paid another $7,000.

[5]            
On November 30, 2011, the firm obtained an appointment for a review of
their bills, pursuant to provisions of the Legal Profession Act, S.B.C.
1998, c. 9. Those provisions permit a lawyer to obtain an appointment to have a
bill reviewed (s. 70(3)). The review is conducted by the registrar, who may
determine the amount allowed for fees and give a certificate for that amount
(s. 73(2)(a)). The certificate may be filed in the registry and enforced as a judgment
of the court (s. 76(3)).

[6]            
The appointment obtained by the firm set a review hearing for January 12,
2012. A prehearing conference was scheduled for December 15, 2011.

[7]            
On December 5, 2011, Ms. Wellburn, the lawyer who had been primarily
responsible for Ms. Moskaleva’s file, sent an email to Mr. Serebrennikov, that
said, in part:

Attached are documents for service on Natalia. Please note
that I have scheduled two hearings for the review of Murray Jamieson’s accounts:
a prehearing conference on December 15 at 9:30 and a review hearing on January 12
at 10.

…

We had a process server go to your
house in Pitt Meadows to serve these documents but no one was home and the
neighbors said that you and Natalia are rarely there. Please let me know if we
should serve Natalia at another address or whether you will accept service on
her behalf by email.

[8]            
Mr. Serebrennikov responded by email about six hours later, stating that
he had never seen the correspondence attached to the email (In his affidavit,
he states that he was unable to open the attachments). However, he went on to
say that he was out of the country and could attend neither the pre-hearing
conference nor the hearing on the scheduled dates. He stated:

Please let me know by sending
e-mail what dates at the end of January or in February 2012 work for you so I
will be able to pick the one of these dates.

[9]            
Ms. Wellburn responded by email the next day, saying she wanted to
proceed with the prehearing conference as scheduled and suggested that Mr. Serebennikov
could attend by telephone if he provided her with a number where he could be
reached. She also said she had been advised by the registry that hearing dates
were available on January 31 and February 1 and 2. She asked him to let her
know promptly if he wished the hearing adjourned to one of those dates.

[10]        
On December 8, Mr. Serebennikov responded with an email stating that
“phone conference is not an option” and he did not agree to have one. He said
he did not have access to relevant documents while he was out of the country.
He asked Ms. Wellburn to adjourn the pre-hearing conference and advise him of
possible dates no earlier than the end of January. He also stated that he had
still been unable to open the attachments to her original email.

[11]        
On December 9, Ms. Wellburn responded that she intended to proceed with
the prehearing conference on December 15. She expressed surprise that Mr. Serebennikov
had been unable to open attachments to the earlier email because she had
previously sent many emails with attachments in the same format to the same
address. She attached additional copies of the documents, including the
appointment for the review.

[12]        
Ms. Wellburn received no response to that email and attended the
prehearing conference, at which the registrar apparently directed that a
further conference be held on January 9.

[13]        
On December 20, 2011, Ms. Wellburn obtained an order for alternate
service, allowing the appointment to be served by regular mail to Ms. Moskaleva’s
home in Pitt Meadows and by email to Mr. Serebennikov at the address to which
she had previously sent material. The order also authorized the client to
attend the prehearing conference by telephone. Copies of the order, the
appointment for the January 12 hearing and the requisition for the January 9
prehearing conference were emailed to Mr. Serebennikov on the same day that the
order was obtained.

[14]        
Ms. Wellburn also sent copies of the documents to another lawyer, Mr. Cowper,
who had acted for Ms. Moskaleva in relation to an appeal of the damages award
and had some earlier involvement in attempting to negotiate a settlement of the
firm’s accounts. The service on Mr. Cowper had apparently been suggested by the
registrar at the December 15 prehearing conference.

[15]        
Mr. Cowper replied on December 21, 2011 that he was not acting in the
matter and had given Mr. Serebennikov other names. However he added that “I
expect an offer that may facilitate all of this going away, but don’t have one”.
That suggests Mr. Cowper was in contact with Mr. Serebennikov at or around that
time, but Mr. Serebennikov’s affidavit makes no reference to him speaking to Mr.
Cowper until January 9, 2012 (which, coincidentally or not, was the date of the
further prehearing conference that Mr. Serebennikov did not attend).

[16]        
The review hearing proceeded as scheduled on January 12 in the absence
of the client or anyone on her behalf, and the certificate was granted. On the
same day Ms. Wellburn sent copies of the certificate to Mr. Serebennikov and to
Mr. Cowper. Mr. Cowper immediately forwarded his copy to Mr. Serebennikov at an
email address different than the one at which Ms. Wellburn had previously
communicated with him. Mr. Serebennikov responded to Mr. Cowper that evening,
stating that he had not received the certificate, asking what it was and asking
if Mr. Cowper was available (presumably, to deal with the matter).

[17]        
The firm proceeded to file the certificate and issue three garnishing
orders. Money was paid into court in response to one of them.

[18]        
On January 25, 2012, the office of Ms. Moskaleva’s current counsel
advised Ms. Wellburn that he had been retained. That correspondence referred to
the action against Ms. Moskaleva’s first lawyer and not to the claim under the
certificate, although Mr. Serebennikov was clearly aware by that date that a
certificate had been issued. An application for payment out of the garnished
funds was filed on March 2, 2012. The client’s application to set aside the
registrar’s certificate was filed on March 5.

[19]        
In his affidavit Mr. Serebennikov says he and his wife were in
California, where he now works. He says he did not receive the order for
alternate service and did not know the matter was proceeding. He says:

Since the end of November 2011, I
had problems with my e-mail account and I realized that my email was
compromised.  I was not able to correctly and systematically read emails. After
trying to fix my email without success I have set the automatic auto reply
informing the recipients that I did not have access to this e-mail account. I
tried to fix this e-mail account as I have many contacts who use it but I was
not successful in getting it functioning so I switched up to an alternative
account.

[20]        
Although Mr. Serebennikov says he was having trouble with his email by
the end of November, his email to Ms. Wellburn on December 5 specifically asked
her to respond to him by email and did not suggest that she do so at a
different address. He does not say when he began using the other email address,
but he clearly did so before January 12 because Mr. Cowper used it to contact
him on that date. There is no evidence that he ever advised Ms. Wellburn to
communicate to him at another address.

[21]        
At the review hearing on January 12, the registrar was entitled to
proceed in the client’s absence because an order for alternate service had been
properly obtained pursuant to Rule 4-4. Rule 4-7 addresses ineffective service
and reads:

(1)        If a
document has been served in accordance with this Part but a person can show
that the document

(a)        did not come to his or her
notice,

(b)        came to his or her notice later
than when it was served, or

(c)        was incomplete or illegible,

the court may set aside an order, extend time, order
an adjournment or make such other order as it considers will further the object
of these Supreme Court Civil Rules.

[22]        
The reference to service “in accordance with this part” indicates that
Rule 4-7 applies to alternate service under Rule 4-4 as well as ordinary
service. In that regard, it incorporates the former Rule 12(11), which dealt
specifically with what was then called substituted service. That rule read:

(11)      Even though a document
has been served in accordance with subrules (4) to (9), a person may show, on
an application to set aside the consequences of default, on an application for
an extension of time or on an application in support of a request for an
adjournment, that the document

(a)        did not come to the person’s
notice, or

(b)        did come to the person’s notice
at a time later than when it was served or effectively served.

[23]        
In Grinnell Supply Sales Co. v. Heger Contracting Ltd, 2001 BCSC
1105, this court said that on an application under the former rule, the onus
was on the applicants to “provide a plausible explanation for their lack of
knowledge” of the proceedings or “that they did not wilfully or deliberately
fail” to respond. Nothing in the language of the new rule suggests that any
different test is to be applied.

[24]        
On the application to set aside the certificate, counsel for the client
also relies on Rules 22-1(2) and (3). Those rules give the court jurisdiction
to proceed with a chambers proceeding in the absence of a party and deal with
the court’s reconsideration of an order made under those circumstances:

(2)        If a party to a
chambers proceeding fails to attend at the hearing of the chambers proceeding,
the court may proceed if, considering the nature of the chambers proceeding, it
considers it will further the object of these Supreme Court Civil Rules to do
so, and may require evidence of service it considers appropriate.

(3)        If
the court makes an order in circumstances referred to in subrule (2), the order
must not be reconsidered unless the court is satisfied that the person failing
to attend was not guilty of wilful delay or default.

[25]        
The reconsideration referred to in Rule 22-1(3) may take place after the
court has proceeded with a chambers proceeding in a party’s absence. The
term “chambers proceeding” is defined in Rule 22-1(1), including subparagraph (d):

(1)        In this rule, "chambers proceeding"
includes the following:

…

(d)        an appeal from, or an
application to confirm, change or set aside, an order, a report, a certificate
or a recommendation of a master, registrar, special referee or other officer of
the court.

[26]        
Although the definition of chambers proceeding includes this application
to set aside the certificate, it does not include the proceeding before the
registrar that the court is being asked to reconsider. However, Rule 23-6(4)(b)
provides the same opportunity for reconsideration by a registrar of a previous
registrar’s decision.

(4)  A registrar may, in respect of any registrar’s hearing,
whether before that registrar or any other registrar,

…

(b) exercise the powers that, under Rule 22-1 (2) and (3),
may be exercised by the court,

[27]        
In Fairburn v. Wolowidnyk, 2010 BCSC 1145, Harris J. (as he then
was) said at para. 27:

The application of this Rule in
circumstances where a certificate of fees has been issued in the absence of a
client was considered by Registrar Sainty in Guy Holeksa Law Corporation v.
Ron’s Backhoe Ltd., 2005 BCSC 1090. The case confirms that a registrar does
have jurisdiction under the Rule to reconsider a certificate even though on
signing the certificate the registrar is functus officio.

[28]        
The authorities establish a three-part test for reconsideration. The
court must be satisfied that there has been no willful default, that the
application for reconsideration was made as soon as reasonably possible and
that there is merit in the applicant’s position both on the original
application and in the underlying proceeding: Strata Plan LMS 597 v. Camsix
et al., 2004 BCSC 961, citing Dasmesh Holdings Ltd. v. MacDonald
(1985), 60 B.C.L.R. 80 (C.A.). In order to constitute "wilful delay"
or "default", a party’s non-attendance must be blameworthy: Anderson
v. Toronto Dominion Bank (1986), 70 B.C.L.R. 267 (C.A.).

[29]        
The client’s application in this case should properly have been made
before the registrar. I say that because of the third branch of the test, which
requires some consideration of the merits of the applicant’s position. On
issues relating to review of lawyer’s fees, the merits of the matter are,
pursuant to the Act, to be considered by the registrar. Although subject to
appeal, the registrar’s findings of fact are entitled to deference: Walker
v. Schober, 2008 BCCA 19 at para. 41. It follows that the registrar must be
presumed to have experience and expertise in these matters and is in a better
position than a judge to decide whether the previous order should be
reconsidered.

[30]        
However, the matter was argued before me and no objection was taken to
my hearing it. It would be unfair to put the parties to the expense of
repeating the argument before the registrar.

[31]        
Section 70(13) provides that the procedure governing assessment of costs
under the Rules also applies to an assessment of a lawyer’s bill. A Supreme
Court judge has inherent jurisdiction, concurrent with a Registrar, to assess
costs, although that concurrent jurisdiction should be exercised sparingly: Buchan
v. Moss Management Inc., 2010 BCCA 393 at paras. 12 and 13. The same
concurrent jurisdiction must exist in relation to a lawyer’s bill. The office
of the registrar is created by s. 13 of the Supreme Court Act, R.S.B.C.
1996, c. 443 to perform delegated duties.

[32]        
I also find it appropriate to deal with the matter because I do not need
to consider the third branch of the test for reconsideration, which is the only
one that requires application of the registrar’s special expertise.

[33]        
Ms. Moskaleva had authorized Mr. Serebennikov to deal with Ms. Wellburn
on her behalf. Mr. Serebennikov knew that Ms. Wellburn had set the review
hearing for January 12. After saying he was not available on that date, he did
not respond to Ms. Wellburn’s offer of alternate dates. Although he
specifically invited Ms. Wellburn to continue communicating with him by email,
he did not tell her about the problems he now says he was experiencing with his
email account at the time. He did not tell her to communicate with him at the
alternate email address, although he clearly was in communication with Mr. Cowper
and receiving emails from him at that address.

[34]        
Mr. Serebennikov was also aware of the prehearing conference on December
15, 2011. That would have been an appropriate occasion to advise the registrar
that he was out of the country, did not have access to records and required an
adjournment of the review hearing. He was given the opportunity to attend the
prehearing conference by telephone but flatly and, in my view, unreasonably
refused to do so.

[35]        
Even after he became aware, almost immediately, that a certificate had
been granted, Mr. Serebennikov made no effort to contact Ms. Wellburn and tell
her he had been unaware of the review hearing. Nor did he instruct Mr. Cowper,
with whom he was in direct communication, to do so on his behalf.

[36]        
In all the circumstances, I find that Mr. Serebennikov knew or should
have known the review hearing was proceeding. He knew the date had been set and
had received no communication from which he could reasonably assume it had been
adjourned. If he did not have actual knowledge that the matter was proceeding,
that was because he deliberately made it difficult for Ms. Wellburn to contact
him. His conduct is more consistent with a deliberate effort to frustrate and
delay the proceeding than with a good faith misunderstanding or lack of
knowledge. His conduct therefore meets the definition of blameworthiness set
out in the authorities.

[37]        
The application to set aside the certificate is therefore dismissed,
with costs. In view of that dismissal, the law firm is entitled to its order
for payment out of the garnished funds.

“N.
Smith J.”