Nathanson, Schachter & Thompson v. Inmet Mining Corp., (2009) 276 B.C.A.C. 62 (CA)

• Judge: Newbury, K. Smith, Kirkpatrick, Frankel and Bauman, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: February 27, 2009
• Jurisdiction: British Columbia
• Citations: (2009), 276 B.C.A.C. 62 (CA);2009 BCCA 385

Nathanson, Schachter v. Inmet Mining (2009), 276 B.C.A.C. 62 (CA);

    468 W.A.C. 62

MLB headnote and full text

Temp. Cite: [2009] B.C.A.C. TBEd. SE.003

Nathanson, Schachter & Thompson (appellant/appellant) v. Inmet Mining Corporation (respondent/respondent)

(CA035179; 2009 BCCA 385)

Indexed As: Nathanson, Schachter & Thompson v. Inmet Mining Corp.

British Columbia Court of Appeal

Newbury, K. Smith, Kirkpatrick, Frankel and Bauman, JJ.A.

September 8, 2009.

Summary:

After the successful prosecution of a damage claim in a 67 day trial (see [2002] B.C.T.C. 61), and the successful defence of an appeal (see 189 B.C.A.C. 251; 309 W.A.C. 251), the law firm retained by the plaintiff delivered to the plaintiff a bill for legal fees of $10 million, with a credit for the amounts paid over the course of the retainer. The plaintiff submitted the bill for review pursuant to the Legal Professions Act.

The District Registrar of the British Columbia Supreme Court, in a decision reported at [2006] B.C.T.C. Uned. A29, certified the fees at $5,248,834.94, being the amount actually paid over the course of the retainer, including a $1,000,000 lump sum payment by the plaintiff at the firm's request to reflect the "extraordinarily successful result" it had achieved. The Registrar was of the view that the amount certified reflected a "substantial, even onerous, premium over the straight-time value of [the firm's] services" and that the firm had been "well, fully and fairly paid" for its efforts. The firm appealed.

The British Columbia Supreme Court, in a decision reported at [2007] B.C.T.C. Uned. 406, dismissed the appeal. The firm appealed.

The British Columbia Court of Appeal, Bauman, J.A., dissenting in the result, dismissed the appeal.

Barristers and Solicitors - Topic 1545

Relationship with client - Duty to client - General - Obligation of loyalty - The British Columbia Court of Appeal stated that a retainer was a contract and the parties were bound by its terms - The terms could be expressly agreed, implied by law, or imposed by statute - Absent an express agreement, the solicitor's fee was to be assessed on the basis of the factors enumerated in s. 71(4) of the Legal Profession Act (i.e., on a "fair fee" or quantum meruit basis) - In the case of a retainer to conduct an action, it was implied that the solicitor would take all steps necessary to bring the action to an end - In other words, such a retainer was an "entire contract" - It followed that, unless the client agreed otherwise, the solicitor was not entitled to any fee under an entire contract until he or she had completed the work - A retainer effectuated a duty of utmost good faith on the solicitor's part - It was overlaid with fiduciary obligations owed by the solicitor to the client - It created a relationship of trust and confidence from which flowed obligations of loyalty and transparency - The obligation of candour required the solicitor to be candid with the client on all matters concerning the retainer, including ensuring that in any transaction between the two from which the solicitor received a benefit, the client was fully informed of the relevant facts and properly advised upon them - The court referred to the practice of sending accounts during the course of retainers and the various types of accounts in use (interim accounts, final accounts, period accounts and work completed accounts) - Interim accounts were merely requests for money to be applied on the final account to be submitted later - The venerable rule that, without the client's agreement, a solicitor had no right to payment of any accounts, interim or final, delivered during the course of a retainer to conduct an action had been confirmed by the court in the modern billing context - See paragraphs 45 to 51.

Barristers and Solicitors - Topic 1548

Relationship with client - Duty to client - General - Fiduciary duty - [See Barristers and Solicitors - Topic 1545 ].

Barristers and Solicitors - Topic 1548

Relationship with client - Duty to client - General - Fiduciary duty - On an appeal from a taxation, a law firm asserted that a finding that it had breached its fiduciary duty to advise its client fully and fairly concerning the terms of the retainer was inappropriate because the client was sophisticated and had come to it with an urgent and serious problem which required prompt and first rate representation - Further, such a finding would imply dishonesty or deceit on the firm's part, which had not been alluded to by the client and was not the case - The British Columbia Court of Appeal rejected the assertions - A breach of fiduciary duty was assessed on an objective standard, not on the basis of the fiduciary's subjective motivations - The fiduciary concept emphasized the broader public policy purpose of preserving the integrity of socially and economically important relations of high trust and confidence, including the solicitor-client relationship - In some circumstances, a finding that a solicitor was in breach of his fiduciary duties might give rise to an implication of dishonesty or deceit, but this was not so in all circumstances - Where the failure to discharge a fiduciary duty was inadvertent, as appeared to be the case here, no such implication was warranted - See paragraphs 71 and 72.

Barristers and Solicitors - Topic 1554

Relationship with client - Duty to client - General - Duty to inform or advise client - [See Barristers and Solicitors - Topic 1545 ].

Barristers and Solicitors - Topic 3003

Compensation - General - Duty to inform client - General - [See Barristers and Solicitors - Topic 1545 and Barristers and Solicitors - Topic 1548 ].

Barristers and Solicitors - Topic 3003

Compensation - General - Duty to inform client - General - A client retained a law firm on an entire contract basis to prosecute a damage claim - No specific terms regarding fees was agreed to - The firm sent periodic "interim" accounts which the client paid - After the successful prosecution of the action and defence of an appeal, the firm delivered a bill for legal fees of $10,000,000, with a credit for the amounts already paid by the client - A Registrar certified the fees at $5,248,834.94, being the amount actually paid during the retainer, including a $1,000,000 lump sum payment at the firm's request to reflect the "extraordinarily successful result" it had achieved - The British Columbia Court of Appeal affirmed the dismissal of an appeal - The firm had a duty to explain to the client that the periodic accounts were provisional "interim" accounts which the client was not obligated to pay, to explain s. 71(4) of the Legal Profession Act and the "fair fee" (i.e, quantum meruit) concept and to advise that it intended to invoke s. 71(4) and charge a fair fee on the completion of its work - The firm failed to discharge its duty of candour - As a result of the firm's silence, the client was ignorant of the legal consequences of its entire contract - The firm's silence induced, or at least endorsed, the client's assumption that the periodic accounts were final for the itemized work - As a result of the misunderstanding, the client altered its position to its detriment - The client lost the opportunity to negotiate other terms of payment and it paid the accounts periodically when it was not obligated to do so - Accordingly, the firm was now estopped from relying on s. 71(4) in support of its claim for a fair fee - See paragraphs 52 to 71.

Barristers and Solicitors - Topic 3006.3

Compensation - General - Entitlement - To reasonable fee - [See Barristers and Solicitors - Topic 1545 and second Barristers and Solicitors - Topic 3003 ].

Barristers and Solicitors - Topic 3048

Compensation - Agreements - General - Whether fees payable before litigation concluded - [See Barristers and Solicitors - Topic 1545 ].

Barristers and Solicitors - Topic 3167

Compensation - Agreements - The retainer - Nature of - [See Barristers and Solicitors - Topic 1545 ].

Barristers and Solicitors - Topic 3203

Compensation - Accounts - Types of accounts distinguished - [See Barristers and Solicitors - Topic 1545 ].

Barristers and Solicitors - Topic 3304

Compensation - Measure of compensation - Quantum meruit - Reasonable charges - [See second Barristers and Solicitors - Topic 3003 ].

Barristers and Solicitors - Topic 3304

Compensation - Measure of compensation - Quantum meruit - Reasonable charges - A law firm appealed a taxation of its bill for legal fees, asserting that the registrar conducted the assessment by determining the size of the "premium" the firm deserved "on top of hourly billings", rather than determining a "fair fee" for the firm's entire services on the basis of the factors set forth in s. 71(4) of the Legal Profession Act - Further, the registrar allowed the concept of hourly rates multiplied by the number of hours to drive his entire analysis - The firm pointed out that hourly rates were not referred to in s. 71(4) and the phrase "time reasonably spent" in s. 71(4)(e) did not comport completely with "the number of billable hours spent multiplied by the lawyer's hourly rate" - The British Columbia Court of Appeal, per Bauman, Frankel and Smith, JJ.A., concluded that the registrar's focus on the hourly rates and premium consideration overtook his analysis and that calculating a "fair fee" required a more holistic approach - See paragraphs 94 to 113 and 115 - Newbury and Kirkpatrick, JJ.A., were of the view that the registrar was entitled to consider the hourly rate in assessing a "fair fee" - Moreover, hourly rates and "premiums" had not been the driving principle of the registrar's assessment - Rather, he paid due attention to the complexity and difficulty of the litigation, the firm's skills, specialized knowledge and responsibility, the character and standing in the profession of the lawyers who were involved on the file, the importance of the matter to the client and the result attained - Further, the registrar did not err in considering as relevant the absence of any risk to the firm that its monthly accounts would not be promptly paid - See paragraphs 74 to 80.

Cases Noticed:

Inmet Mining Corp. v. Homestake Canada Inc., [2002] B.C.T.C. 61; 99 B.C.L.R.(3d) 93; 2002 BCSC 61, affd. (2003), 189 B.C.A.C. 251; 309 W.A.C. 251; 24 B.C.L.R.(4th) 1; 2003 BCCA 610, refd to. [para. 1].

Campney & Murphy v. Arctic Installations (Victoria) Ltd. et al. (1994), 39 B.C.A.C. 173; 64 W.A.C. 173; 86 B.C.L.R.(2d) 226; 109 D.L.R.(4th) 609 (C.A.), affing. [1992] B.C.T.C. Uned. C50; 74 B.C.L.R.(2d) 345 (S.C.), refd to. [para. 2].

Nathanson, Schachter & Thompson v. Sarcee Band of Indians - see Nathanson, Schachter & Thompson v. Whitney et al.

Nathanson, Schachter & Thompson v. Whitney et al., [1994] 6 W.W.R. 213; 43 B.C.A.C. 89; 69 W.A.C. 89; 90 B.C.L.R.(2d) 1 (C.A.), affing. [1993] B.C.T.C. Uned. G25; 84 B.C.L.R.(2d) 379 (S.C.), not folld. [para. 2].

Nathanson, Schachter & Thompson v. Albion Securities Co. et al. (2004), 204 B.C.A.C. 200; 333 W.A.C. 200; 32 B.C.L.R.(4th) 10; 2004 BCCA 515, overruled [para. 2].

Yule v. Saskatoon (1955), 1 D.L.R.(2d) 540; 17 W.W.R.(N.S.) 296 (Sask. C.A.), refd to. [para. 4].

Ladner Downs v. Crowley (1987), 14 B.C.L.R.(2d) 357 (S.C.), refd to. [para. 8].

Owen Bird et al. v. De Cotiis (1999), 22 B.C.T.C. 136 (S.C. Registrar), refd to. [para. 26].

Birnie Sturrock & Co. v. Farrell Estate Ltd. (1993), 36 B.C.A.C. 282; 58 W.A.C. 282; 85 B.C.L.R.(2d) 59 (C.A.), refd to. [para. 27].

R. v. Neil (D.L.), [2002] 3 S.C.R. 631; 294 N.R. 201; 317 A.R. 73; 284 W.A.C. 73; 168 C.C.C.(3d) 321; 218 D.L.R.(4th) 671; 2002 SCC 70, refd to. [para. 28].

Endean v. Canadian Red Cross Society et al., [2000] B.C.T.C. 436; [2000] 8 W.W.R. 294; 78 B.C.L.R.(3d) 28; 2000 BCSC 971, affd. (2000), 147 B.C.A.C. 199; 241 W.A.C. 199; 82 B.C.L.R.(3d) 287; 2000 BCCA 638, refd to. [para. 36].

Diligenti v. McAlpine (1979), 9 B.C.L.R. 153 (C.A.), refd to. [para. 39].

Doig v. Davidson Muir (1998), 106 B.C.A.C. 80; 172 W.A.C. 80; 48 B.C.L.R.(3d) 53; 158 D.L.R.(4th) 1 (C.A.), refd to. [para. 40].

Audet v. Bates, [1998] B.C.T.C. Uned. 621; 18 C.P.C.(4th) 357 (S.C.), refd to. [para. 40].

Underwood, Son & Piper v. Lewis, [1894] 2 Q.B. 306 (C.A.), refd to. [para. 47].

Morrison Voss v. Smith (2007), 243 B.C.A.C. 31; 401 W.A.C. 31; 69 B.C.L.R.(4th) 290; 2007 BCCA 296, refd to. [para. 47].

Tyrrell v. Bank of London (1862), 10 H.L. Cas. 26; 11 E.R. 934, refd to. [para. 48].

3464920 Canada Inc. v. Strother et al., [2007] 2 S.C.R. 177; 363 N.R. 123; 241 B.C.A.C. 108; 399 W.A.C. 108; 2007 SCC 24, refd to. [para. 48].

London Loan & Savings Co. of Canada v. Brickenden, [1933] S.C.R. 257; [1933] 3 D.L.R. 161, refd to. [para. 49].

Architectural Institute of British Columbia v. McAlpine, Roberts & Co., [1982] 5 W.W.R. 470; 138 D.L.R.(3d) 533; 37 B.C.L.R. 332 (C.A.), refd to. [para. 50].

Bull, Housser & Tupper v. Mr. T. International Agencies Ltd. et al. (1999), 126 B.C.A.C. 229; 206 W.A.C. 229; 69 B.C.L.R.(3d) 391; 1999 BCCA 427, refd to. [para. 50].

Ryan v. Moore et al., [2005] 2 S.C.R. 53; 334 N.R. 355; 247 Nfld. & P.E.I.R. 286; 735 A.P.R. 286; 254 D.L.R.(4th) 1; 2005 SCC 38, refd to. [para. 58].

Tradax Export S.A. v. Dorada Compania Naviera S.A.; Ship Lutetian, Re, [1982] 2 Lloyd's Rep. 140 (Q.B. Com. Ct.), refd to. [para. 58].

Bell v. Cessna Aircraft Co. (1983), 149 D.L.R.(3d) 509; 46 B.C.L.R. 145 (C.A.), refd to. [para. 62].

British Columbia v. Worthington (Canada) Inc. et al., [1989] 1 W.W.R. 1; 29 B.C.L.R.(2d) 145 (C.A.), refd to. [para. 62].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 74].

Apotex Inc. v. Bayer Aktiengesellschaft - see Bayer AG v. Apotex Inc.

Bayer AG v. Apotex Inc., [1999] 3 S.C.R. 857, refd to. [para. 74].

Bhatnager v. Minister of Employment and Immigration (Costs), [1991] 3 S.C.R. 317; 130 N.R. 155, refd to. [para. 74].

Montaine, Black & Co. v. Osadchuk, [1985] B.C.J. No. 1906 (C.A.), refd to. [para. 78].

Eberhardt, Caplan, LaCroix & Silverman v. Goode (Trustee of) (1987), 11 B.C.L.R.(2d) 112 (C.A.), refd to. [para. 78].

Christie v. Banyay, [2003] B.C.T.C. 453; 2003 BCSC 453 (Registrar), refd to. [para. 78].

Davis & Co. v. Jiwan et al. (2008), 262 B.C.A.C. 283; 441 W.A.C. 283; 86 B.C.L.R.(4th) 28; 2008 BCCA 494, refd to. [para. 91].

Statutes Noticed:

Legal Profession Act, S.B.C. 1998, c. 9, sect. 71(4) [para. 5].

Authors and Works Noticed:

Canadian Bar Association, Code of Professional Conduct (2006), c. 11 [para. 49].

Cordery's Law Relating to Solicitors (8th Ed. 1988), p. 71 [para. 47].

Friedland, M.L., Prospective and Retrospective Judicial Lawmaking (1974), 24 U.T.L.J. 170, generally [para. 114].

Halsbury's Laws of England (2009) (5th Ed. - Reissue), generally [para. 85]; vol. 66, para. 763 [para. 45].

Law Society of British Columbia, Professional Conduct Handbook, c. 9, rule 7 [para. 49].

Law Society of Upper Canada, Rules of Professional Conduct, rule 2.08(1) [para. 25].

Rotman, Leonard Ian, Fiduciary Law (2005), p. 610 [para. 72].

Counsel:

G.K. MacIntosh, Q.C., and T.A. Dickson, for the appellant;

J.J.L. Hunter, Q.C., and M.S. Oulton, for the respondent.

This appeal was heard at Vancouver, British Columbia, on February 27, 2009, by Newbury, Smith, Kirkpatrick, Frankel and Bauman, JJ.A., of the British Columbia Court of Appeal. On September 8, 2009, the judgment of the Court of Appeal was delivered with the following opinions:

Newbury and K. Smith, JJ.A. (Kirkpatrick, J.A., concurring) - see paragraphs 1 to 73;

Newbury, J.A. (Kirkpatrick, J.A., concurring) - see paragraphs 74 to 80;

Bauman, J.A. - see paragraphs 81 to 112;

Frankel, J.A. - see paragraphs 113 to 114;

K. Smith, J.A. - see paragraph 115.