Docket: T-227-13
Citation:
2016 FC 1231
Ottawa, Ontario, November 3, 2016
PRESENT: The Honourable Mr. Justice Phelan
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BETWEEN:
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JOANNE SCHNURR
ON HER OWN BEHALF AND AS A REPRESENTATIVE PLAINTIFF
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Plaintiff
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and
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HER MAJESTY THE
QUEEN IN RIGHT OF CANADA
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Defendant
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ORDER AND REASONS
I.
Introduction
[1]
The Plaintiff on her own behalf and as the
Representative Plaintiff has, under R 369 of the Federal Courts Rules, SOR/98-106,
moved for the following:
a) A
solicitor’s lien against any rental refund in favour of any of Darryl Schneider
and Joy Schneider, Thomas Link and Debra Link, Brian Reeve and Sandra Reeve,
Glenn Kitsch, Adolph Kurtz and Louise Kurtz, Murray Forrest and Rose Forrest,
Norman Sens and Jane Sens (hereinafter the “Defaulting 1980 Tenants”) issued by
Her Majesty the Queen in Right of Canada, or its agent, Sakimay First Nations,
as a result of rent being set by this Honourable Court in this action;
b) A
charging order against any refund payable to the Defaulting 1980 Tenants, or
their assignee, by Her Majesty the Queen in Right of Canada, or its agent,
Sakimay First Nations, arising as a result of a decision following the trial of
the within action;
c) A
solicitor’s lien and/or charging order against the leasehold interest of the
Defaulting 1980 Tenants, or their assignee, along with an order that it be
registered at the Indian Land Registry; and
d) An
order for costs against each Defaulting 1980 Tenant, or his/her assignee, in
the sum of $1,350.00, payable forthwith.
[2]
The Plaintiff requests that Class Counsel be
awarded a solicitor’s lien and charging order against any refund of overpayment
of rent for those tenants under a 1980 form of lease [1980 Lease] who are in
default of payment of their share of counsel fees and litigation expenses. These
“defaulting members” are listed in Schedule A to
these Reasons and are the Respondents on this motion.
II.
Background
[3]
The fees and expenses at issue arise from Class
Counsel’s representation of the Class Members in a class action dispute with
the Defendant regarding a substantial increase in rent for Class Members on
their properties at Crooked Lake, Saskatchewan.
Each
defaulting member has a leasehold interest in Sakimay First Nation [Sakimay] reserve
land at Crooked Lake.
[4]
Shesheep Cottage Owners Association [SCOA] and
Grenfell Beach Cottage Owners Association [GBCOA] are unincorporated
associations representing the interests of cottage owners at Crooked Lake
(while the underlying land is leased, all cottages built on the land are owned
by the tenants). SCOA represented the interests of the cottage owners on
Shesheep Indian Reserve No 74A while GBCOA represented such owners in respect
of lands on Sakimay Indian Reserve No 74.
[5]
The Defendant, on behalf of Sakimay, delivered
notices in late 2009/early 2010 to the tenants on these reserve lands,
increasing rent approximately 700% per year.
[6]
As a result, both Associations engaged Kevin J.
Bell of Bell, Kreklewich & Chambers to act as counsel in the forthcoming
rental dispute.
[7]
All tenants subject to the 1980 Lease provided
written authorization in the form of Letters of Direction to the SCOA,
authorizing the directors to include them in negotiations and/or legal
proceedings, authorizing the directors to provide instructions to legal counsel
on their behalf, and agreeing to contribute to the costs of negotiations and/or
litigation incurred by SCOA by paying their pro-rata share.
[8]
There were similar circumstances in respect of a
1991 form of lease [1991 Lease] which resulted in an application by David Piot
in late May 2010 to certify a class action. The result of that application was
the recognition of two classes of tenants: those related to the 1991 Lease for
which Piot was the Representative Plaintiff, and those related to the 1980 Lease
for which Schnurr was the Representative Plaintiff.
[9]
The two Representative Plaintiffs agreed to take
direction from the Associations before taking action or providing instructions
to Class Counsel.
[10]
Ultimately, after an appeal of the initial class
certification order, Justice Mary Gleason (then of this Court) issued a
Certification Order dated January 23, 2013. As in the past, the Certification
Order, Notice of Certification, and Opt Out documents were sent to each cottage
owner pursuant to the Order.
[11]
No 1980 Lease tenants, including any of the
defaulting members, opted out of the class proceedings.
[12]
The Notice of Certification, which is part of
the Certification Order, contained the following information on costs to class
members:
HOW MUCH WILL IT COST ME TO TAKE PART IN
THE CLASS ACTION?
Class Counsel has a retainer agreement with
both Associations respecting fees and disbursements. Class Counsel will be
reimbursed for fees and disbursements whether or not the lawsuit is successful.
Class Counsel’s fees and disbursements will be prorated between the
Associations according to the Class Membership that they represent. As a Class
Member, your [sic] will in turn be charged on a prorated basis by your
Association for the Class Counsel’s fees and disbursements.
The Class action assumes that you are also a
member of one of either the Shesheep or Grenfell Beach Cottage Owner’s
Associations. You have agreed with your Association to pay your Association for
your prorated share of the legal fees and disbursements.
Any legal fees and disbursements paid by
your Association to Mr. Bell covers the common issues of the lawsuit only.
If you have individual issues that are not common to the Class Members,
you will have to make your own financial arrangements with Kevin Bell or legal
counsel of your choice.
[13]
Justice Gleason provided that the counsel fees
and costs of litigation be shared equally between lot holders. This was the
same scheme as the previous certification order of Justice Near, which had been
appealed.
[14]
SCOA allocated the counsel fees and litigation
costs equally between the lot holders, and the total assessment per lot was
$3,075 for the period of December 2009 to Spring 2016. The amount left
outstanding as of the filing of this motion was $58,267.38.
[15]
This Court rendered judgment in September 2016 in
favour of the 1980 Lease class. An appeal of that decision has been taken and
work on this matter on behalf of the 1980 Class Members will continue.
[16]
While some 1980 Class Members claimed that their
default in payment was due to disagreement with the directions given in
conducting the litigation, none have opted out of the class nor have any such
Members sought relief from this Court for an order permitting them to retain
their own counsel.
[17]
Despite not opting out, nor seeking relief as
described above, the defaulting Members have had the benefit of Class Counsel’s
representation in protecting their interests.
[18]
The position of the defaulting Class Members is:
•
that there is no direct contractual relationship
between Class Counsel and the defaulting Class Members, and therefore no
obligation to pay;
•
that the motion is statute barred as being
beyond the two-year limitation period in Saskatchewan; and
•
that there is no basis for awarding costs of
this motion in the amount of $1,350 per defaulting Member.
[19]
It is noteworthy that the defaulting members do
not say that they will pay their share of these expenses to either the
Associations or the Representative Plaintiff.
[20]
It is also relevant to consider that the Defendant
in the class proceeding never attempted to prove that their rent amount was the
“appropriate” rent under the 1980 Lease. Instead,
their defence was to advance a different calculation which would result in “rent” being an amount between what they had been
charging and what the Plaintiff advocated.
The
result thereof is that the Defendant owes some amount of money to the Class Members
regardless of the results of any appeal (the individual amounts are to be
determined).
III.
Analysis
A.
Jurisdiction
[21]
The Respondents have not taken issue with the
Court’s jurisdiction to grant the relief requested except as above.
The
Plaintiff has made detailed arguments.
[22]
With respect, the Plaintiff’s reliance on R 425
as the source of authority for the proposed charging order is not sound. The
Certification Order which speaks to how litigation costs are to be paid does
not constitute an “order for the payment of money”
per R 425. That is not to say that, if necessary, this Court could not make
such an order under its class proceedings jurisdiction. The Court’s judgment on
the class proceeding similarly does not constitute an order for the payment of
specific money; rather, it confirms the method of calculation to be used to
calculate rent and it should result in the payment of a refund judgment.
[23]
However, I conclude that, by virtue of s 66 of
Saskatchewan’s The Legal Profession Act, 1990, SS 1990-91, c L-10.1, and
s 56(1) of the Federal Courts Act, RSC 1985, c F-7, this Court may grant
a solicitor’s lien and/or charging order. Those statutes state:
The Legal Profession Act, 1990
66(1) A member who is employed to
prosecute or defend a proceeding in a court or tribunal may apply to the court
for an order granting the member a lien or charge against any personal property
not in the member’s possession that is recovered or preserved as a result of
the member’s services for the proper fees and expenses of or in relation to the
proceedings, including counsel fees.
(2) On an application pursuant to
subsection (1) or for the enforcement of an order made pursuant to subsection
(1), a judge may make any order that the judge considers appropriate for
payment of the lien or charge out of the property recovered or preserved.
(3) A member has a lien or charge for
the member’s proper fees and expenses in relation to all legal services
performed by the member for a client against any property owned by the client
that is in the member’s possession.
(4) Nothing in subsection (3)
overrides the exceptions to a solicitor’s lien at common law.
(5) On application by a client, the
court may, on any terms and conditions that the court considers appropriate,
order the delivery of any of the client’s property in a member’s possession
that is held pursuant to subsection (3).
Federal Courts
Act
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56 (1) In addition to any writs of execution or other process that are
prescribed by the Rules for enforcement of its judgments or orders, the
Federal Court of Appeal or the Federal Court may issue process against the
person or the property of any party, of the same tenor and effect as those
that may be issued out of any of the superior courts of the province in which
a judgment or an order is to be executed, and if, by the law of that
province, an order of a judge is required for the issue of a process, a judge
of that court may make a similar order with respect to like process to issue
out of that court.
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56 (1) Outre les brefs de saisie-exécution ou
autres moyens de contrainte prescrits par les règles pour l’exécution de ses
jugements ou ordonnances, la Cour d’appel fédérale ou la Cour fédérale peut
délivrer des moyens de contrainte visant la personne ou les biens d’une
partie et ayant la même teneur et le même effet que ceux émanant d’une cour
supérieure de la province dans laquelle le jugement ou l’ordonnance doivent
être exécutés. Si, selon le droit de la province, le moyen de contrainte que
doit délivrer la Cour d’appel fédérale ou la Cour fédérale nécessite
l’ordonnance d’un juge, un de ses juges peut rendre une telle ordonnance.
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[24]
In Weight Watchers International, Inc v Burns
et al, [1976] 1 FC 237, 62 DLR (3d) 374 (TD), Justice Kerr of this Court
concluded that the Court had jurisdiction to order a charge against the payment
of taxable costs in favour of the solicitor for the defendant. The defendant’s
(the solicitor’s client) whereabouts was unknown. Justice Kerr held that the matter
should be dealt with by analogy to the applicable provincial superior court
rules.
[25]
Rule 56 adopts the process of the applicable
superior court and makes that process the Federal Court process. This Rule of
adoption of provincial law as federal law is a frequently used legislative
technique of incorporation by reference.
[26]
Therefore, this Court may issue the same process
and orders in respect of payment of solicitor’s fees and expenses in a Federal
Court matter as would the Court of Queen’s Bench in a provincial matter.
B.
Solicitor-Client Relationship
[27]
There are two points to be made:
•
There is a solicitor-client relationship with
Class Counsel of which the Respondents are a part and a beneficiary.
•
It is not necessary that the Respondents be in a
solicitor-client relationship for the creation of a solicitor’s lien/charging
order.
[28]
The Certification Order confirms the
solicitor-client relationship between counsel and the Representative Plaintiff.
The Representative Plaintiff is the representative of the Class Members, and acts
and instructs on their behalf. As such, Class Counsel owes his or her
professional obligations to all members of the Class. That is sufficient nexus
to create a solicitor-client relationship between these Respondents and Class
Counsel.
[29]
In Fantl v Transamerica Life Canada,
2009 ONCA 377 at para 61, 95 OR (3d) 767, the Court emphasized the potentially “significant and prolonged” obligation of class
counsel in a class action proceeding, stating that “after
certification, class counsel will be in a solicitor-client relationship with
the class members, with all of the responsibilities that entails, extending
until the implementation of a settlement or final disposition of any individual
issues”.
[30]
In the instant case, the role of the
Associations was to simplify administration and to act as a conduit between
Class Members and Class Counsel. In respect of payment of fees, that is
particularly apparent when on February 5, 2013, counsel wrote to the 1980 Lease
Class Members to communicate that counsel did not wish to receive regular
payments through his office because of the costs of accounting for these
payments. That role of administration on behalf of the Class Members was left
to the Associations.
[31]
The role of the Associations in facilitating
administration and assisting the Representative Plaintiff in acting in the
interests of all Class Members, as she was required to do, does not lessen the
existence of the obligations of Class Counsel to all Class Members including
the Respondents, nor does it lessen the Respondents’ obligation to pay Class
Counsel.
[32]
The above is sufficient to answer the issue of a
solicitor-client relationship. However, Class Counsel would, in these
circumstances where the Respondents have benefitted from counsel’s efforts, be
entitled to a lien/charging order in any event.
[33]
In Bolton v Davies, 2014 BCSC 182, 237
ACWS (3d) 1053, a solicitor was granted a charging order against a fund which
was not the property of the solicitor’s client on the basis that the fund had
been recovered for the beneficial interest of the client and another.
[34]
In Budinsky v The Breakers East Inc (1993),
15 OR (3d) 198, 106 DLR (4th) 370 (Ont Ct J (Gen Div)) [Budinsky cited
to DLR], the Ontario Court of Justice (General Division) granted a charging
order under s 34 of the Solicitors Act, RSO 1990, c S15, against
deposits and proceeds on condominium sales. In that case, the applicant
Solicitor had represented a condominium developer against condominium owners
who were seeking rescission of their purchase agreements and the return of
their deposits. The Solicitor was successful, and the Court granted the
charging order and stated that the legislation “does
not limit the property subject to the charge to that of the person who employed
the solicitor” (Budinsky at 379). Similarly, the Saskatchewan
legislation at issue in this case does not seem to place such a limitation.
[35]
In Bloomaert v Dunlop, 24 Sask LR 261,
[1930] 2 DLR 30 at 35 (CA), the Saskatchewan Court of Appeal stated: “Under its provisions, the Court has power, in any
proceedings, to make a charging order in favour of the solicitor employed
against any property recovered or preserved through the solicitor’s
instrumentality, in respect of his taxed costs; and it has been frequently held
that a charge may be granted not only upon the interest in the preserved
property of those by whom the solicitor is employed, but upon the interests of
others interested in the preserved property who get the benefit”.
Although this case was decided under previous (English) legislation, I do not
find that such reasoning is barred under the current legislation.
[36]
In this litigation, the rental refunds and the
creation of the new rental rate were established for the benefit of the Class
Members. I conclude that even if the solicitor-client relationship was with the
Associations, Class Counsel is entitled to payment from these Respondents who
benefitted from his professional services.
[37]
I need not deal with the fact that the
Association is unincorporated other than to note that in such circumstances,
the members of the Association do not enjoy the shield of incorporation.
C.
Statute of Limitations
[38]
The Respondents argue that this matter is
statute barred because the claim for payment is outside the usual two-year
limitation period under Saskatchewan’s The Limitations Act, SS 2004, c L-16-1.
[39]
Even if the Respondents were correct that the
solicitor-client relationship was between the Associations and Class Counsel,
the Respondents have produced no evidence that the Associations have not made
any payments in the last two years, and any payments received would restart the
limitation period. The Respondents have not produced any evidence that they
have made no payments, and in fact some Respondents have made partial payments
even following service of the present Motion Record.
[40]
As noted earlier, the Certification Order is not
itself an order for the payment of money. Therefore, the Plaintiff’s reliance
on the 10-year limitation period in s 7.1 of the The Limitations Act is
not well grounded.
[41]
As noted in Thomas Gold Pettinghill LLP v
Ani-Wall Concrete Forming Inc, 2012 ONSC 2182, 349 DLR (4th) 431, a
solicitor’s lien is not subject to a limitation period. The Ontario provision
is similar to s 15 of Saskatchewan’s The Limitations Act.
[42]
As s 66 of The Legal Professions Act, 1990 incorporates
the common law, this Court has jurisdiction following from s 66 and s 56(1) of
the Federal Courts Act, both in law and equity.
[43]
The limitation on granting a solicitor’s lien is
that of the equitable jurisdiction of the Court to sanction counsel for
unreasonable delay.
There
are no facts on which to engage such equitable jurisdiction against Class
Counsel.
[44]
There is a further factor which influences the
Court. Class Counsel has continued to act for the benefit of the Class and the
Respondents have continued to benefit from those professional services, and yet
they do not want to pay for those services. The Class Members cannot accept the
benefits of such representation without accepting the burdens. Counsel’s
efforts have continued up to the present and therefore each act by counsel for
the benefit of the Class revives any limitation period until the mandate under
the Certification Order is discharged.
[45]
There is no merit to the Respondents’ limitation
argument.
D.
Discretion to Grant Relief
[46]
The Respondents make no argument on the exercise
of the Court’s discretion. Given the facts, there are no good reasons for the
Court not to exercise discretion in favour of the Plaintiff.
[47]
It is unnecessary to look beyond the
Saskatchewan law which is incorporated by reference into the Federal Courts
Act. In Troelstra v Vos, 2005 SKQB 98, 264 Sask R 123, citing Tkach,
Duchin & Bayda v Wood (1992), 88 DLR (4th) 304, 99 Sask R 256 (QB) [Tkach,
Duchin & Bayda cited to DLR], the Court held that ss 66(1) and 66(3) of
The Legal Profession Act, 1990 codified the common law. Therefore, the
solicitor’s lien arises as an inchoate right amenable to enforcement through
such mechanisms as a charging order and includes a lien over the clients’ file.
[48]
However, in Saskatchewan the requirements of a
charging order were described in Tkach, Duchin & Bayda, which sets forth
four requirements at 311:
(1) the
lawyer was employed to prosecute or defend a proceeding in a court or tribunal;
(2) as
a result of the lawyer’s efforts there was personal property recovered or
preserved as a result of those services;
(3) the
personal property recovered or preserved is not in the possession of the
lawyer;
(4) the
proceedings have been concluded and a taxation, if required or necessary, of
the solicitor’s account for fees and expenses in relation to the proceedings
has concluded so that the court might know that the claim is for “the proper
fees and expenses.”
[49]
The first three requirements require little
comment. Counsel prosecuted the litigation, as a result the interest of the
Respondents in their leases was preserved, and the refunds of rent are not in
counsel’s possession.
[50]
The fourth requirement requires some comment.
The trial and judgment on the trial have been concluded, although the
requirement for Class Members to pay counsel was not dependant on the
conclusion of the litigation much less the successful conclusion.
[51]
There has been no suggestion that taxation is
necessary or required. The Respondents have not contended that the fees and
expenses are not “proper”, only that they are
not owing to Class Counsel.
[52]
Given the Respondents’ position on this motion,
the common law requirement for a charging order – that the solicitor is not
likely to be paid – is met.
[53]
The Plaintiff has claimed that substantial amounts
of money have been paid into Court and that there are substantial refunds
forthcoming regardless of the results of an appeal.
Under
these circumstances, a charge on the Respondents’ leasehold interests has not
been shown to be necessary. The Court therefore will not make such a charging
order without prejudice to reapply for a charging order on the leasehold
interests.
[54]
Therefore, I will exercise my discretion to
grant a charging order over the refunds owing to the Respondents individually.
[55]
The Plaintiff shall have its costs in the amount
of $5,000 for this motion, such costs to be paid forthwith shared equally by
the Respondents and such amount to be added to the charging order granted
herein.
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