Steinke et al. v. Hajduk Gibbs LLP, (2014) 581 A.R. 91 (QB)

• Judge: Wakeling, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: October 30, 2013
• Citations: (2014), 581 A.R. 91 (QB);2014 ABQB 34

Steinke v. Hajduk Gibbs LLP (2014), 581 A.R. 91 (QB)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. JA.123

Lawrence Steinke and Steinke & Company Realty Ltd. (respondents/applicants) v. Hajduk Gibbs LLP (appellant/respondent)

(1203-15858; 1203-15859; 2014 ABQB 34)

Indexed As: Steinke et al. v. Hajduk Gibbs LLP

Alberta Court of Queen's Bench

Judicial District of Edmonton

Wakeling, J.

January 17, 2014.

Summary:

A law firm billed clients for services rendered on an hourly rate as provided for in the retainer agreement. The agreement clearly warned the client that "the time necessarily spent on the file would be the only relevant factor in determining a reasonable fee to charge the client" and that on any review of the bills the only relevant consideration would be "the necessity of the time expended". On reviewing the accounts, a Reviewing Officer reduced the two accounts by 19% and 29% respectively, without explanation. The law firm appealed. The clients cross-appealed, arguing that the Officer's reduction of one account was too little.

The Alberta Court of Queen's Bench allowed the appeal and dismissed the cross-appeal. Rather than remitting the matter for review by another Reviewing Officer, the court held if the proper principles of reviewing legal accounts had been applied, the only possible result would have been that the clients had to pay the contested accounts in their entirety. There was no reason to reduce the billed amounts.

Barristers and Solicitors - Topic 3241

Compensation - Taxation or assessment of accounts - General - The Alberta Court of Queen's Bench set out the following general principles to be applied when reviewing an account submitted by a lawyer to a client: "The first principle governing the review of an account submitted by a lawyer to a client directs the Court of Queen's Bench to review, if asked by the client or the lawyer, the amounts a lawyer has charged a client for legal services the client retained the lawyer to perform. The Court of Queen's Bench has an inherent and statutory jurisdiction to discharge this important function. ... The second principle is based on the fact that a lawyer who is a member of The Law Society of Alberta cannot charge a client more than a 'fair and reasonable' amount. ... The third principle is that a court must hold the lawyer and the client to promises made in a retainer agreement ... regarding amounts a lawyer may charge and a client must pay for legal services in the absence of a compelling reason not to. ... The fourth principle is that a court taxing a lawyer's charges to a client must act in a principled manner. ... The fifth principle is that unless there is a contrary provision in the retainer agreement, a client must pay for a legal service which increases the likelihood the purpose of the retainer agreement will be achieved. ... The sixth principle, generally speaking, is that a client is not responsible for the cost associated with unnecessary steps. ... This means that if a contested step is adjudged to increase the likelihood that the purpose of the retainer will be attained, it may still be a step for which the client cannot be held responsible if it is adjudged to be unnecessary. An unnecessary step is one for which the value derived from the step is much less than the cost of completing it. ... The seventh principle is that a client who instructs a lawyer to take a step which increases the likelihood the objective of the retainer will be achieved but will not likely present a benefit which justifies the cost or does not increase the likelihood of success is responsible for the fees associated with this extraordinary service. ... The eighth principle directs a court 'to ensure that those who are obliged to pay for legal services are treated reasonably, taking into account all the circumstances'. ... The ninth principle requires the client who contests his or her lawyer's charges at the outset of the hearing to particularize his or her complaint. A client who has not agreed to a formula which determines the amount a lawyer may charge and is thus obliged to pay a reasonable amount for legal services, in accordance with r. 10.2(1) of the Alberta Rules of Court, must state that the amount charged is unreasonable and why. A client who has agreed to a formula which determines the amount a lawyer may charge, as is the case in these appeals, must explain the basis of her objection. Does she take the position that the lawyer seeks compensation for services which did not increase the likelihood the subject of the retainer would be achieved? Does she claim that a service was unnecessary even though it increased the likelihood the object of the retainer would be met? Or does she claim that the charges violate the eighth principle - that the lawyer's charges are exorbitant so that it can be said the lawyer has taken advantage of the client. ... The tenth principle is that the lawyer bears the burden of persuading the review officer that the amount charged is appropriate." - See paragraphs 47 to 73.

Barristers and Solicitors - Topic 3252

Compensation - Taxation or assessment of accounts - Where hourly rate agreed upon - A law firm billed clients for services rendered on an hourly rate as provided for in the retainer agreement - The agreement clearly warned the client that "the time necessarily spent on the file would be the only relevant factor in determining a reasonable fee to charge the client" and that on any review of the bills the only relevant consideration would be "the necessity of the time expended" - On reviewing the accounts, a Reviewing Officer reduced the two accounts by 19% and 29% respectively, without explanation - The Alberta Court of Queen's Bench allowed the law firm's appeal - The court stated that "The review officer's decision contravenes several of the principles governing the review of accounts submitted by a lawyer to a client. She, for no compelling reason, failed to apply the terms of the retainer agreement and relieved the clients of their obligations to pay a fee based on time spent by the firm lawyers who worked on the file. The review officer never asked if any time spent on these files failed to increase the likelihood the purpose of the retainer agreements would be achieved or was unnecessary, in that the cost of performing a service exceeded the benefit associated with it. Nor did she ask if the law firm's charges were exorbitant so that it could be said that the law firm took advantage of its clients" - Rather than remitting the matter for review by another Reviewing Officer, the court held if the proper principles of reviewing legal accounts had been applied, the only possible result would have been that the clients had to pay the contested accounts in their entirety - There was no reason to reduce the billed amounts - See paragraphs 42 to 103.

Cases Noticed:

Burnet, Duckworth & Palmer v. Opron Construction Co. (1985), 64 A.R. 235 (Q.B.), refd to. [para. 15, footnote 3].

Caplink Financial Corp. v. Petra Corp. et al., [2013] A.R. Uned. 379; 2013 ABQB 309, refd to. [para. 17].

McLennan Ross v. Keen Industries Ltd. (1988), 86 A.R. 311 (C.A.), refd to. [para. 42].

Bhatnager v. Minister of Employment and Immigration (Costs), [1991] 3 S.C.R. 317; 130 N.R. 155, refd to. [para. 42].

McLennan Ross v. Keen Industries Ltd. (1987), 83 A.R. 322 (C.A.), refd to. [para. 42].

Repchuk v. Silverberg (2013), 563 A.R. 245; 2013 ABQB 305, refd to. [para. 42].

Fraser Milner Casgrain LLP v. Kristof Financial Inc. et al. (2012), 541 A.R. 245; 2012 ABQB 359, refd to. [para. 42].

Carter v. Blake (1982), 41 A.R. 418 (N.W.T.C.A.), refd to. [para. 42].

Alberta (Treasury Branches) v. 1401057 Alberta Ltd., [2014] A.R. TBEd. JA.061; 2013 ABQB 748, refd to. [para. 46].

Griffin v. Spanier, [1947] 1 W.W.R. 489 (Sask. K.B.), refd to. [para. 46, footnote 6].

Donald Hunt Ltd. v. Greenberg (1955), 1 D.L.R.(2d) 27 (Man. C.A.), refd to. [para. 46, footnote 6].

Hudson v. Slade (1862), 176 E.R. 174 (Q.B.), refd to. [para. 46, footnote 6].

Walmesly v. Booth (1739), 26 E.R. 412 (Ch.), refd to. [para. 47].

Harrison v. Tew, [1990] 2 A.C. 523 (H.L.), refd to. [para. 47].

Aerosmith, Ex parte (1806), 33 E.R. 241 (Ch.), refd to. [para. 47].

Uxbridge (Earl), Ex parte (1801), 31 E.R. 1126 (Ch.), refd to. [para. 47].

Knock v. Owen (1904), 35 S.C.R. 168, refd to. [para. 50, footnote 9].

Braithwaite, Boyle and Associates et al., Re (1995), 171 A.R. 76 (Q.B.), refd to. [para. 51, footnote 11].

Ostopchuk v. Merchant Law Group, [1998] A.J. No. 439 (Q.B.), refd to. [para. 51, footnote 11].

Edney v. Ambrose, [1999] A.J. No. 925 (Q.B.), refd to. [para. 51, footnote 11].

Morrison v. Pantony (Rod) Professional Corp. (2008), 429 A.R. 259; 421 W.A.C. 259 (C.A.), refd to. [para. 51, footnote 11].

McDonald Crawford v. Morrow (2004), 348 A.R. 118; 321 W.A.C. 118 (C.A.), refd to. [para. 51, footnote 11].

Canada Life Casualty Insurance Co. v. Pahl (1997), 207 A.R. 65 (Q.B.), refd to. [para. 51, footnote 11].

Fraser & Co. v. Holden (1988), 29 B.C.L.R.(2d) 31 (C.A.), refd to. [para. 51, footnote 11].

Gaglardi v. Gaglardi, [1983] 4 W.W.R. 752 (B.C.S.C.), refd to. [para. 51, footnote 11].

Solicitors, Re (1915), 7 W.W.R. 1019 (Man. C.A.), refd to. [para. 51, footnote 11].

Lindsay v. Stewart, MacKeen and Covert (1988), 82 N.S.R.(2d) 203; 207 A.P.R. 203; 47 D.L.R.(4th) 126 (C.A.), refd to. [para. 51, footnote 11].

Turner v. Hand (1859), 54 E.R. 222 (Ch.), refd to. [para. 51, footnote 11].

Stedman v. Collett (1854), 51 E.R. 1171 (Ch.), refd to. [para. 51, footnote 11].

Yule v. Saskatoon (City) (1955), 17 W.W.R.(N.S.) 296 (Sask. C.A.), refd to. [para. 51].

Ship Kestrel, Re (1867), 16 L.T.R. 72 (Admir. Ct.), refd to. [para. 52].

Francis v. Francis and Dickerson, [1955] 3 All E.R. 836, refd to. [para. 52, footnote 12].

Wainoco Oil & Gas Ltd. v. Solick and Solick (1987), 77 A.R. 20 (Q.B.), refd to. [para. 53, footnote 13].

Bell v. Fraser Milner Casgrain LLP, [2003] A.R. Uned. 703; 24 Alta. L.R.(4th) 98 (Q.B.), refd to. [para. 55, footnote 15].

Cooper v. England, [1994] 7 W.W.R. 345 (N.W.T. Sup. Ct.), refd to. [para. 59, footnote 17].

Black & Co. v. Law Society of Alberta, [1989] 1 S.C.R. 591; 93 N.R. 266; 96 A.R. 352, refd to. [para. 62].

Merchant Law Group v. O'Brien, [1999] A.J. No. 349 (Q.B.), refd to. [para. 63, footnote 19].

Toulany v. McInnes, Cooper & Robertson (1989), 92 N.S.R.(2d) 91; 237 A.P.R. 91; 57 D.L.R.(4th) 649 (C.A.), refd to. [para. 63, footnote 19].

Coughlin v. Mutual of Omaha Insurance Co. (1992), 96 D.L.R.(4th) 551 (Ont. Gen. Div.), refd to. [para. 63, footnote 19].

R. v. G.D.B., [2000] 1 S.C.R. 520; 253 N.R. 201; 261 A.R. 1; 225 W.A.C. 1, refd to. [para. 63, footnote 19].

Credit Foncier Trust Co. v. Hornigold (1984), 59 A.R. 103; 45 Alta. L.R.(2d) 341 (Q.B.), refd to. [para. 63].

Goodwin v. Storrar, [1947] 1 K.B. 457, refd to. [para. 64].

Magee v. Board of Education (Roman Catholic Separate) of Ottawa (City) (1962), 32 D.L.R.(2d) 162 (Ont. H.C.), refd to. [para. 64].

Hanson v. McCormick, [1989] 2 Alta. Unreported D. 304 (C.A.), refd to. [para. 64].

Brown, Re (1867), L.R. 4 Eq. 464 (Ch.), refd to. [para. 64].

Iron et al. v. Saskatchewan (Minister of the Environment and Public Safety) et al., [1993] 6 W.W.R. 1; 109 Sask.R. 49; 42 W.A.C. 49 (C.A.), refd to. [para. 65].

Peddle v. Toller (1830), 162 E.R. 1160, refd to. [para. 66].

Lewis Estates Communities Inc. et al. v. Brownlee LLP, [2013] A.R. Uned. 572; 2013 ABQB 508, refd to. [para. 66].

Newman v. Payne (1820), 29 E.R. 930 (Ch.), refd to. [para. 66].

Webb, Re, [1894] 1 Ch. 73 (C.A.), refd to. [para. 67].

Solicitors, Re (1921), 20 O.W.N. 84 (H.C.), refd to. [para. 67].

Attorneys, Re (1876), 26 U.C.C.P. 495, refd to. [para. 67].

Whitmore, Re (1844), 50 E.R. 56 (Ch.), refd to. [para. 68].

Shreem Holdings Inc. v. Barr Picard (2013), 560 A.R. 272; 2013 ABQB 257, refd to. [para. 71].

Holmes Greenslade v. Starcom International Optics Corp., [1997] B.C.T.C. Uned. H42; 14 C.P.C.(4th) 388 (S.C.), refd to. [para. 72].

McAllister v. Cleary (1999), 213 N.B.R.(2d) 156; 545 A.P.R. 156; 33 C.P.C.(4th) 328 (C.A.), refd to. [para. 76, footnote 22].

Rath & Co. v. Sweetgrass First Nation (2013), 559 A.R. 12; 2013 ABQB 165, refd to. [para. 76, footnote 22].

Sandstrom & Scott and United Chemicals Ltd., Re, [1989] 5 W.W.R. 690; 74 Sask.R. 59 (C.A.), refd to. [para. 87].

Panther Petroleum Ltd. v. Code Hunter, [2002] A.R. Uned. 232; 2002 ABQB 158, refd to. [para. 88].

MacDonald & Freund v. Chernetski (1987), 81 A.R. 142 (Q.B.), refd to. [para. 101].

Locke, Lane, Nicholson & Sheppard, Re, [1942] 1 W.W.R. 96 (B.C.S.C.), refd to. [para. 101].

Veitch v. Noble and Inkster (1956), 20 W.W.R.(N.S.) 382 (Man. C.A.), refd to. [para. 101].

Solicitors, Re (1965), 54 W.W.R.(N.S.) 687 (Man. Q.B.), refd to. [para. 101].

Attorneys, Re (1876), 26 U.C.C.P. 405, refd to. [para. 101].

Authors and Works Noticed:

Abel-Smith, Brian, and Stevens, Robert, Lawyers and the Courts: A Sociological Study of the English Legal System 1750-1965 (1967), p. 412 [para. 47, footnote 7].

Cameron, James, The Principles of the Law of Costs (1901), p. 222 [para. 64].

Dodek, Adam M., and Hoskins, Jeffrey G., Canadian Legal Practice, A Guide for the 21st Century (2013 Looseleaf, Release 24), pp. 3.6 [para. 50, footnote 9]; 40.48 [para. 51].

Holdsworth, William Searle, A History of English Law (1924), vol. 6, p. 434 [para. 46, footnote 6].

Jones, David Phillip, and de Villars, Anne S., Principles of Administrative Law (5th Ed. 2009), p. 369 [para. 76, footnote 22].

Megarry, Robert, A Second Miscellany-at-Law (1973), p. 22 [para. 47, footnote 7].

Pulling, Alexander, The Order of the Coif (1884), pp. 34, 39, 40 [para. 47, footnote 7].

Snell's Equity (31st Ed. 2005), pp. 261 to 262 [para. 65].

Wakeling, The Oral Component of Appellant Work (1979), 5 Dalhousie L.J. 584, p. 601 [para. 15, footnote 3].

Counsel:

Aaron Peterkin (Hajduk Gibbs LLP), for the appellant;

Robert D. Gillespie (Robert D. Gillispie Law Office), for the respondents.

This appeal and cross-appeal were heard on October 30, 2013, before Wakeling, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on January 17, 2014.