J. 2000 SKQB 420 Q.B.G. A.D. 1997 No. 767 J.C.S. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: darWALL CONSULTANTS INC. and MICHAEL POWER DEFENDANT James Scott for the plaintiff James Morrison for the defendant FIAT D.H. WRIGHT J. October 6, 2000 THE ISSUE [1] Is a solicitor bound by an undertaking to protect an expert witness for its professional fees? [2] The defendant represented several farmers and farming companies in suits brought against the Saskatchewan Crop Insurance Corporation (SCIC). The plaintiff was hired to provide technical evidence as to crop losses and damages the farmers claimed resulted from the actions of SCIC. [3] The proceedings moved slowly. At various times the plaintiff’s officer met with the farmers and the defendant to discuss the case, the evidence and the strategies to be followed. The hope was that the provincial agency might settle before trial. [4] One of the farmers, Greba, paid deposit to the defendant for remittance to the plaintiff as down payment on the latter’s fees. The defendant was employed by the farmers on contingency basis, the understanding being that the clients would pay the defendant’s disbursements in any event. [5] As the case proceeded and the plaintiff devoted more time and resources to the preparation of its reports, it became more and more worried about how it would be paid. The farmers’ prospects were not encouraging. There were serious concerns about how long the action would take and the outcome. [6] This concern led to meeting between the plaintiff’s officer, Hamm, and the defendant on January 25, 1993. That resulted in letter written by Power to darWall dated March 5, 1993. The letter contains the following statements: My client will provide additional funds to complete the balance of the Retainer you require. understand, as per our discussions on February 25, 1993, that you will invoice my office for your fees and disbursements for quantifying the said loss claim and that the Retainer provided will be applied to the total professional fees and disbursements incurred by yourself. In addition, this will confirm that my office will undertake to protect you for your fees and disbursements and to pay interest at the rate of twelve (12%) per cent per annum on the balance due. You indicated that you are prepared to wait until the case is either settled or litigated before payment, provided that interest is added on the invoice at the rate of twelve (12%) per cent per annum. [7] As the plaintiff continued its analysis and the preparation of its reports, it sent periodic statements of account to the defendant. The statements for November 15, 1993; January 25, 1994; July 15, 1995; January 8, 1997 were entered as evidence. Each was directed to the defendant as the client. There was no evidence that the defendant ever objected to his characterization with respect to any of these statements of account. [8] The farmers’ actions did not settle. They proceeded, finally, to trial and on March 5, 1997, all of the claims were dismissed. [9] Power wrote to the plaintiff on March 12, 1997 as follows: This is to advice [sic] that Judgment in regard to Mr. Greba’s claims was handed down on Wednesday, March 5, 1997. Judgment was awarded in favour of the Saskatchewan Crop Insurance Corporation in regard to Township Farms and Mr. Greba’s outstanding crop insurance premiums, with interest. Mr. Greba’s claims, together with the claims of Township, County and Meridian, were all dismissed against S.C.I.C. Both Mr. Greba and myself are very disappointed with the trial judge’s decision. The decision is some 60 pages in length. On the two critical legal issues that we argued, the trial judge disbelieved Mr. Greba’s evidence. We are very disappointed with the result. took this case on contingency fee basis, meaning that in the event was unsuccessful in recovering any monies for Mr. Greba, would not be paid any fees. Mr. Greba was responsible for all of my disbursements. note in regard to your expert report, that you have provided me with invoices as to your fees and disbursements. Since was not successful in obtaining any monies as result of the trial, what is your position in regard to your invoices? look forward to hearing from you. [10] When the plaintiff demanded payment, the defendant rejected the demand, arguing that he had no obligation to pay as the farmers’ actions had not resulted in the recovery of any monies. [11] darWall sued Power on April 22, 1997, claiming professional fees of $37,604.33 and interest as provided for in the March 5, 1993 letter and costs. Power defended. In the course of his statement of defence he said this: 4. The Defendant, Michael Power, further states that at the request of the Plaintiff and upon confirmation of instructions from the parties through Eugene Greba, he agreed that any money provided by the parties to him for payment of the account of the Plaintiff or any monies received on behalf of the parties as result of the successful conclusion of the litigation as between the parties and SCIC would be paid to the Plaintiff by the Defendant as solicitor for the parties. The Defendant further states that at the request of the Plaintiff the Defendant confirmed in letter dated March 5, 1993 that he would protect the Plaintiff for payment of his account in the manner agreed to between the parties and the Plaintiff and as the parties had instructed the Defendant, namely, that any money provided by the parties to the Defendant for payment of the account of the Plaintiff or any monies received by the Defendant on behalf of the parties as result of the successful conclusion of the litigation as between the parties and SCIC would be paid by the Defendant to the Plaintiff. The Defendant further states that the Plaintiff agreed with the said parties that he would defer payment of his account from the parties until the successful conclusion of the litigation with SCIC, provided he received interest on the amount outstanding to the Plaintiff at rate of 12% per annum. The plaintiff commenced its action under the General Rules, but subsequently amended its claim on April 26, 2000 to continue the action under the Simplified Procedure Rules (Part Forty) which it did without objection. MOTION FOR SUMMARY JUDGMENT [12] It then brought this application pursuant to Rule 483 for summary judgment under Part Forty. Both parties filed extensive affidavits in the action. On the return of the motion, the applicant’s counsel objected to certain statements in the affidavit made by the respondent on September 28, 2000. In particular, he objected to the following portions of the affidavit: 5. also recollect Greba advising me and verily believe the same to be true that he had discussions with Hamm about paying $1,000 to get going on report and the balance could be paid from settlement or court judgment, and he’d simply collect interest on the balance until then. 9. My client’s best expectation was 70%. If SCI wished to set precedent, this would have been the ideal file for that purpose.” [Emphasis in original] 10. THAT pre-trial settlement conference was held in September 1996 in regard to Greba and the Companies’ actions against Saskatchewan Crop Insurance Corporation and this resulted in further offer to settle. Greba declined to accept this offer, feeling he might get more if he held out. was later advised by Greba and verily believe the same to be true that Hamm was upset Greba declined to settle at the Pre-Trial Conference. This was later advised by Greba and verily believe the same to be true that Hamm insisted on meeting with Greba and suggested that Greba should get another lawyer to represent him as Hamm was upset with how long it was taking to get the case settled. only learned of Greba and his wife Linda’s discussions with Hamm few weeks before trial. This subject only came up when Greba phoned me quite upset and indicated Hamm wanted an urgent meeting to discuss the progress of the case. meeting was arranged with Greba, his wife Linda, Cal Clark lawyer who was now assisting Greba and myself, and Hamm. Prior to the meeting received letter dated January 8, 1997 from Hamm, copy of which is attached hereto and marked as Exhibit “E” to this my affidavit. meeting was held, between myself, Greba and his wife and Cal Clark to discuss this letter, Hamm could not be present. This is when Greba revealed his discussions with Hamm about getting another lawyer and that Hamm would reduce his invoices to $5,000.00 if this would help Greba settle his case with SCIC. Both myself and Cal Clark, felt this letter indicated Hamm was worried about his account for the expert report work he had done for Greba and the risk to Hamm of not being able to collect if we were not successful at trial. In my discussions with Greba about setting this case he always took into account what he’d have to pay Hamm from any settlement. 11. Greba let me know that he offered Hamm $5,000 to settle his account. Hamm rejected this suggestion and decided he’d pursue me based on my letter of March 5, 1993. In fact Hamm phoned me at home and at my office demanding pay him personally. refused to discuss this with him, but sent him letter dated April 3, 1997 outlining my position. Attached hereto and marked as Exhibit “G” is copy of my April 3, 1997 letter. 15. THAT have expended personal time and money defending myself in this unwarranted action. am well aware of the seriousness of this wrongful allegation and am shocked and surprised at Hamm’s pursuit of this case, in view of facts which believe he is conveniently ignoring to make his case look better. He wrongfully alleges contracted his services and promised to pay for them regardless of the outcome of Greba’s action. He wrongfully alleges that had provided the retainer, consulted him regarding his report, that he wrote his report for me at my request and that agreed to pay interest on his deferred invoices, and that is why he billed my office. This is all contrary to what had been understood and agreed to in my meeting with Hamm and Greba in February, 1993. For this reason believe it is critical that the court have an opportunity to hear both parties in this action on evidence in chief and under cross examination and that it is not an appropriate case under the simplified procedure. Mr. Scott argues that these portions of the affidavit are not evidence, but hearsay and opinion, or relate to matters immaterial to the proceeding. I agree. They are struck. [13] The respondent argues this is not proper case for summary judgment under either the General Rules (Q.B. Rule 129) or Rule 488 (Simplified Procedure). He contends there is conflict in the evidence as to what he agreed to and that he should have full-fledged trial for that purpose. He contends that the trial will not likely occupy more than one day, and that making an order that it proceed as an action under the General Rules will permit the parties to utilize all of the General Rules including any further interim steps. [14] In answer to the applicant’s submissions with respect to the undertaking of March 5, 1993, the respondent refers to certain portions of the examination for discovery of the plaintiff’s officer, Hamm. Hamm was referred to letter of January 8, 1997 the plaintiff sent to Power. He was asked the following questions with respect to that letter: 259 And in the letter you say in the second paragraph, middle of the second paragraph, “Given the amount of time, energy and cash payment of Connie Yuzak, Lloyd Johns, fees, et cetera have invested in this case, must now look to recovery of my investment”? Yes, said that. 260 And dealing with the issue in the last paragraph, saying that, “Given the facts and opinions above” and you have described particulars of the fact that “loss of liability issue resulting in zero, nil recovery of investment for all interested parties, strongly recommend we upgrade the litigation and settle the strategy;” would that be fair? Yeah. It’s written there. 261 Would it be fair to say that you were one of the interested plaintiff parties, sir? In the sense that sensed that my fees were going to be paid out of the proceeds, that was the plan, that was the fee; and therefore, had an interest in the outcome of the process, yes. 262 So you were concerned, sir, that if this matter wasn’t successful, you were concerned that you weren’t going to get paid? Yeah. It was concern. 274 So you knew when you wrote this letter of January, 1997, that your ability to get paid was dependent upon the result of this lawsuit? No. didn’t know, but had concerns that it was. had no idea where Mike was going to get the money to pay me, although suspected he was going to get it from the lawsuit. That was always my understanding. Mr. Scott drew to my attention that there were other portions of the examination for discovery which placed these statements, as he put it, in context. reviewed the questions immediately following Question No. 274 and they are set out below: 275 Just that things went little bit sour in the lawsuit, that he was going to be on the hook? That was concern, yes. 276 That wasn’t concern; that’s what you had indicated your understanding was in February of 1993, sir. Yes, it is. It was fact that he was on the hook. He had contract with me. 277 In the letter of January 8th, 1997, you say, “I must look to the recovery of that investment.” And then you make reference to the issue of “particularly that the loss of the liability issue would result in nil recovery of investment of all interested plaintiff parties.” [15] will deal first with the contention that the applicant’s admissions at discovery confirm the interpretation of the undertaking set out in the statement of defence. [16] With respect, they do not. It is obvious that Hamm recognized that the farmers were intending to fund their costs from settlement or judgment. Power was in the same position. What is also clear is that his disbursements would be paid by his clients regardless of the outcome of the suits. That would include the costs of any experts’ reports commissioned by them or the defendant. [17] The applicant took the steps it decided were necessary to protect what it called its “investment”. The strong concerns expressed to the respondent resulted in the March 5, 1993 undertaking. [18] The Code of Professional Conduct of the Law Society of Saskatchewan, c. XVI, comm. 10 states: The lawyer shall give no undertaking that cannot be fulfilled, shall fulfil every undertaking given, and shall scrupulously honour any trust condition once accepted. Undertakings and trust conditions shall be written or confirmed in writing and shall be absolutely unambiguous in their terms. If the lawyer giving an undertaking does not intend to accept personal responsibility, this should be stated clearly in the undertaking itself. In the absence of such statement, the person to whom the undertaking is given is entitled to expect that the lawyer giving it will honour it personally.... [Emphasis in original] The undertaking given by the respondent on March 5, 1993 is absolutely clear. The addition of the word “protect” puts the question beyond doubt. [19] If more were needed, one need only note that these statements of account were all directed to the respondent without objection.  His inquiry of March 12, 1997 makes it clear also that Power recognized his responsibility and was hoping for some resolution of the matter of the applicant’s account. [20] The only conclusion that can be drawn from the facts is that the respondent guaranteed the payment of the applicant’s account regardless of the outcome of their mutual client’s actions. have sympathy for the respondent but he is presumed to know the canons of the Law Society. great deal of attention has been focussed on solicitors’ undertakings over the past decade as evidenced by the frequent reports of breaches which appear in the reports of the Discipline Committee of the Society. In one sense, an undertaking given to layperson is to be viewed in an even more critical light as that person does not have the training and experience to understand the nuances of legal language. [21] The applicant is entitled to succeed. DISPOSITION [22] The applicant will have payment for the amount of its claim, interest as provided for in the undertaking and costs of the action.
FIAT. An application for summary judgment under Part Forty. In issue was whether a solicitor is bound by an undertaking to protect an expert witness for its professional fees. The defendant solicitor, who represented several farmers and farming companies in suits brought against Saskatchewan Crop Insurance Corporation on a contingency fee basis, confirmed in writing in 1993 that his office would undertake to protect the plaintiff consultants for their fees and disbursements and to pay interest at a rate of 12% per annum. The plaintiff was hired to provide technical evidence as to crop losses and damages the farmers claimed as a result of actions of SCIC. When all of the claims were dismissed at trial, the solicitor rejected the plaintiff's demand for payment arguing he had no obligation to pay as the farmers' actions had not resulted in the recovery of any monies. The plaintiff sued the solicitor in 1997 for professional fees of $37,604.33. The plaintiff objected to certain portions of the defendant's affidavit. HELD: The plaintiff was awarded $37,604.33 plus interest at 12% per annum as provided for in the undertaking, and costs of the action.  1)The plaintiff commenced its action under the general rules but amended its claim without objection to continue under the Simplified Procedure. 2)Portions of the defendant's affidavit were struck as being hearsay and opinion or related to matters immaterial to the proceeding.  3)The applicant's admissions at discovery did not confirm the interpretation of the undertaking set out in the statement of defence. It was obvious the plaintiff's officer recognized the farmers were intending to fund their costs from a settlement or judgment and that disbursements, including the costs of any expert's reports commissioned by them or the defendant, would be paid by his clients regardless of the outcome of the suits. 4)The only conclusion that could be drawn was that defendant guaranteed payment of the applicant's account regardless of the outcome of their mutual client's actions. A solicitor is presumed to know the cannons of the Law Society including c.XVI, comm.10 of the Code of Professional Conduct with respect to undertakings. The solicitor's undertaking in 1993 was absolutely clear. The addition of the word 'protect' put the question beyond doubt. His inquiry in 1997 made it clear the defendant recognized his responsibility and was hoping for some resolution of the applicant's account.