Mary Jane Stephens, Administratrix of the Estate of William R Stephens, Deceased v. Her Majesty the Queen, [1985] 2 CTC 145, 85 DTC 5363

Reed, J:—This is a motion by the defendant requesting that the plaintiff and her solicitors be required to pay into court the sum of $14,001.40, an amount which should have been paid on November 14, 1983 pursuant to an order of the Associate Chief Justice dated November 7, 1983. That order provided for the lifting of certain writs of execution filed against the plaintiff’s property in order that the property might be sold. It ordered that the proceeds of the sale be paid into court after certain payments had been deducted. The payments to be deducted were described in the order as:

A. Real estate commission in the amount of $11,000.

B. To the Plaintiff or her solicitor the sum of $11,655.50 in respect of realty taxes; provided such taxes are paid or adjusted on closing.

C. The amount of $2,200 for the legal costs and disbursements for the sale and negotiations of the above sale to be taxed on a solicitor and his own client basis, Supreme Court scale, pursuant to the Solicitors Act of Ontario.

The text of the order was drafted by the parties at the request of the Associate Chief Justice. Thus, it was endorsed as consented to both with respect to content and form. There is no dispute respecting the $11,000 paid by the plaintiff’s solicitor as real estate commission.

Realty Taxes

The defendant argues that the plaintiff's solicitor improperly deducted $11,655.50 (placed in the solicitor’s trust account) because the taxes to which the payment was supposed to relate all had been paid as and when they were due, and none were outstanding around the closing date of the sale, November 15, 1983. The taxes in question had been paid at trimestrial intervals throughout the years 1980, 1981, 1982 and 1983, the last having been paid September 23, 1983.

The plaintiff's counsel argues that under the terms of the Associate Chief Justice's order of November 7, 1983, $11,655.50 was to be paid for realty taxes regardless of whether those taxes were payable or paid for the purpose of closing the sale. He reads the second phrase of subparagraph B of the order (above) disjunctively. He contends that all that was required was that the taxes had in fact been paid at some time in the past. He argues that this interpretation should be given to subparagraph B because a request for such was part of a settlement proposal made to the defendant by the plaintiff on October 5, 1983. (The proposal was rejected out of hand by the defendant).

These arguments are not credible. In further explanation of the settlement proposal and in anticipation of the motion eventually brought on November 7, 1983 to provide for the sale of the house and payment of the proceeds into court, the solicitor for the plaintiff wrote, on October 25, 1983 to the defendant:

Mrs Stephens has paid, or will pay, real estate taxes on the property in the amount of $11,655.50 in order to complete the sale. I would point out that under the relevant provincial legislation these real estate taxes are a prior claim against the property, prior to executions and mortgage, be they first or otherwise. [Emphasis added].

This letter also claimed that the plaintiff was impecunious. The letter clearly conveys and was intended to convey the impression that there were taxes outstanding which had to be paid in order to close the sale on November 15, 1983. In fact the taxes had all been paid in a regular and periodic way as they became due during the preceding four years.

The whole purpose of the Associate Chief Justice’s order was to lift the writs of execution to allow for the sale of the property, and to provide for the payment of the proceeds thereof into court. It is clear from the text of the order that the taxes to be deducted were those which it was necessary to pay in order to allow the sale to proceed. The provision was not intended to operate as a reimbursement to the plaintiff or her solicitors for realty taxes which had been paid in the normal way over the course of previous years. Accordingly this amount was improperly deducted.

Taxed Legal Costs

The defendant argues that subparagraph C of the November 7 order (supra) was intended to allow the solicitor for the plaintiff a maximum of $2,200 as legal fees subject to a lesser amount being awarded on taxation.

The defendant argues that in any event the plaintiff's solicitor should not be allowed to deduct anything for legal fees from the amount paid into court because these fees were not properly taxed.

On November 29 the defendant wrote to the solicitor for the plaintiff asking for details respecting the amounts deducted from the moneys paid into court. On December 30 the solicitor for the plaintiff responded indicating that his account had been taxed on December 20, 1983 in the amount of $4,345.90 and thus he was entitled to a further $2,000 for legal fees besides the $2,345.90 he had already withheld from the payment into court.

The property in question had been sold for $220,000. The Middlesex Law Association schedule of fees suggests that an appropriate amount to be charged for legal services in the case of a sale of normal complexity of a residential property is three-quarters of one per cent. In the case of the sale of the plaintiff’s property this would have amounted to $1,650. No notice was given to the Crown of the intended taxation. Thus, it had no opportunity to question before the taxing master the reasonableness of the fees claimed. It is a fair inference that the plaintiff, while undoubtedly given notice, would not have had much interest in contesting whatever sum her solicitors might claim. Money not paid in fees would be paid into court in any event. Also, it appears that the plaintiff, at that time, owed the solicitor an outstanding account in excess of $30,000. The defendant claims that because of this failure to give notice the terms of the Associate Chief Justice's Order of November 7, have been violated and the plaintiff’s solicitor should be denied not only the $2,000 more he claims but also the $2,345.90 already deducted.

Counsel for the defendant argues that the $4,345.90 amount cannot be accepted because the taxation was obtained without notice to the Crown. He argues that implicit in the Associate Chief Justice’s order was a requirement that notice be given to the Crown so that it sould attend on the taxation for the purposes of protecting the Crown's interest in the funds.

I cannot read the Associate Chief Justice's order as the defendant requests, but I have no doubt that a maximum amount of $2,200 as fees was intended when consent to form and content of the order was signified by the plaintiff and the defendant. An interpretation which allows for fees awarded on taxation in excess of $2,200 renders the inclusion of the figure $2,200 meaningless. Such an order would simply have read "costs to be determined on taxation", or some similar wording.

As morally reprehensible as the solicitor for the plaintiff's conduct (in not giving notice) might be, I can find no requirement in the order that such notice had to be given. The only requirement is that the taxation proceed in accordance with the Solicitors Act of Ontario. There is no evidence that this was not done. Accordingly the plaintiff’s solicitor is entitled to the maximum of $2,200 as his taxed legal costs.

Interest

This is an appropriate case, as counsel for the defendant suggests, in which the plaintiff and her solicitor be required to pay not only the unpaid sum of $11,801.40 ($11,655.50 plus $145.90) into court, but also interest thereon. In this regard, counsel for the defendant called my attention to the decision of the Federal Court of Appeal dated October 29, 1980 in The Queen v Domestic Converters Corporation et al (Court file No A-245-77). At page 13, Mr Justice Pratte speaking for the Court of Appeal said (English translation):

Under s 40, [of the Federal Court Act] the Court has power to order a judgment to bear or not to bear interest, and in the first case, to set the rate of such interest and the time after the judgment from which it will begin to run. The trial judge accordingly had the power to order the Crown to pay interest at 8 per cent from the date of the judgment liquidating the amount of the damage . . .

This case dealt with an award of interest against the Crown but section 40 of the Federal Court Act pertains to all judgments, not just those against the Crown:

Unless otherwise ordered by the Court a judgment including a judgment against the Crown, bears interest from the time of giving the judgment at the rate prescribed by section 3 of the Interest Act.

Counsel for the plaintiff argued that even if this were so the court was restricted by section 40 to ordering interest no higher than that prescribed by section 3 of the Interest Act, that is five per cent. And in any event that the court had no authority to prescribe interest in a case such as the present where the judgment (order) requiring the payment of money into court was of an interlocutory nature and not a final judgment in the cause. He also argued that comments in the Domestic Converters case applied only to suits under the Crown Liability Act.

The first contention is answered by the comments of the Federal Court of Appeal in the Domestic Converters case set out above. It was indicated that an award of eight per cent interest was entirely possible. The text of section 40 does not set out an upper limit; it merely prescribes a rate for cases in which no rate is set. The second contention places far too restrictive an interpretation on the word judgment as used in section 40. The ordinary meaning of the word is “decision by a judge” (Concise Oxford Dictionary, 6th ed, 1976). Also it is clear from a reading of paragraph 2(h) and section 27 of the Federal Court Act that the word is not used in that Act to only refer to final judgments. The third contention is answered by the text of section 40 which provides for the payment of interest in general terms not merely against the Crown. I adopt as the appropriate rate of interest the bank prime rate which prevailed in November 1983 plus one per cent.

Accordingly, the plaintiff and her solicitor is required to pay into court $11,801.40 together with interest at the rate of 12 per cent from November 15, 1983.

Order accordingly.