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Representation - Lawyers - Charging Orders

. M. Singh Law Professional Corporation v. River Green (Thunder Bay) Inc.

In M. Singh Law Professional Corporation v. River Green (Thunder Bay) Inc. (Ont CA, 2024) the Ontario Court of Appeal considered (and dismissed) an appeal from a dismissal of a motion for a charging order [here under Solicitors Act, s.34]:
[1] The appellant, M. Singh Law Professional Corporation, appeals from the April 17, 2023 order of Fitzpatrick J. dismissing its motion for a charging order under s. 34 of the Solicitors Act, R.S.O. 1990, c. S.15.

[2] Section 34(1) of the Solicitors Act provides that:
Where a solicitor has been employed to prosecute or defend a proceeding in the Superior Court of Justice, the court may, on motion, declare the solicitor to be entitled to a charge on the property recovered or preserved through the instrumentality of the solicitor for the solicitor’s fees, costs, charges and disbursements in the proceeding.
[3] The appellant was retained to act for the respondent after the respondent’s landlord had obtained default judgment against the respondent. The appellant obtained an order setting aside the default judgment and served a statement of defence and counterclaim on behalf of the respondent. Although the appellant then was successful in obtaining an order dismissing the landlord’s claim and noting the landlord in default on the counterclaim, it was unsuccessful in obtaining a default judgment against the landlord that included a provision that the respondent’s property was restored to the power and control of the respondent. The motion judge permitted the appellant to amend his client’s pleading and noted that the landlord would not be able to participate in the defence of the amended counterclaim.

[4] This court in Weenen v. Biadi, 2018 ONCA 288, 141 O.R. (3d) 276, set out the three-part test for entitlement to a charging order under the Solicitors Act: at para. 14. The solicitor must demonstrate, among other things, that the property was “recovered or preserved” through the instrumentality of the solicitor.

[5] As is clear from s. 34 of the Solicitors Act, the order is discretionary in nature.

[6] Here, the motion judge found that the property had already been preserved 18 months earlier by virtue of an order in other proceedings that he was case managing. He exercised his discretion to refuse the request for a charging order. We see no error in his conclusion.

[7] Moreover, the appellant could not succeed in any event. Although the appellant certainly took steps designed to ultimately recover or preserve property, it was unsuccessful in that regard. It did not obtain any order either recovering or preserving any property. In fact, the declaratory relief sought to that effect was refused.
. Foulidis v. Foulidis

In Foulidis v. Foulidis (Ont CA, 2022) the Court of Appeal considered an appeal from a motion court judge's charging order:
[21] The motion judge found that the test for imposing charging orders is set out in Weenen v. Biadi, 2018 ONCA 288, 141 O.R. (3d) 276, at para. 15. She noted that this test must be satisfied whether the charging order is being made pursuant to s. 34(1) of the Solicitors Act or pursuant to the court’s inherent common law and equitable jurisdiction to impose “charging solicitor’s liens”. The motion judge found that Ms. Feldman met her onus of satisfying each of the three parts of the Weenen test, which requires the applicant to demonstrate that:[1]
1. the fund or property is in existence at the time the order is granted (the “existence of the property component”);

2. the property was recovered or preserved through the instrumentality of the lawyer (the “preservation of the property component”); and

3. there must be evidence that the client cannot or will not pay the lawyer’s fees (the “risk of non-payment component”).
[22] With respect to the existence of the property component, the motion judge found that the property was in existence, even though it was registered in George’s name. She also concluded that there is a triable issue about whether the conveyance to George was fraudulent and thus void. She found that this issue would have to be settled at the civil trial, but she was satisfied that “for the purpose of [the] motion […] [George] was not a bona fide third party without notice of the claims”. Since a charging order would be enforceable against someone who has acquired the property and who is not a bona fide purchaser, the order she was making would be enforceable against the Property.

[23] With respect to the preservation of the property component of the Weenen test, the motion judge said, “Although the Property was already in [Lynne’s] name, I find [Ms. Feldman] was instrumental to some extent in preserving the equity in the asset.” The motion judge made this finding after reciting Ms. Feldman’s submissions that she had been successful in obtaining orders that preserved the Property, including an order giving Lynne exclusive possession of the property and requiring George to pay all expenses and services on the property. Ms. Feldman had also successfully resisted efforts by a bank to sell the property.

[24] With respect to the risk of non-payment component of the Weenen test, the motion judge found that “[i]n light of the Counterclaim [in the Civil Action], and the evidence before [her], there is no dispute that [Lynne] is refusing to or will not pay the fees.”

....

[35] I disagree. A solicitor’s charge is “intrinsically declaratory in nature”, operating as judicial confirmation that the solicitor has the proprietary interest of a secured creditor: Thomas Gold Pettinghill LLP v. Ani-Wall Concrete Forming Inc., 2012 ONSC 2182, 349 D.L.R. (4th) 431, at para. 101. A declaration continues to speak after it is made. There is no conceptual obstacle that would prevent a declaration of a charging order from being made pending the realization of a property interest, even if the actual attachment of the security is delayed. The authority therefore makes clear that, in appropriate cases, declarations of charge may be granted in relation to amounts or property that may materialize in the future: Fancy Barristers P.C. v. Morse Shannon LLP, 2017 ONCA 82, 98 C.P.C. (7th) 219, at para. 9; Mpampas v. Steamatic Toronto Inc. (2009), 2009 CanLII 61417 (ON SC), 84 C.P.C. (6th) 85 (Ont. S.C.), at para. 11, aff’d 2010 ONCA 373; Pino v. Van Roon (1998), 28 C.P.C. (4th) 274 (Ont. Gen. Div.), at para. 10.
Most of the balance of the case deals with applying the Weenen and related cases.

. UL Lawyers Professional Corporation v. Notay

In UL Lawyers Professional Corporation v. Notay (Ont CA, 2021) the Court of Appeal approved this test for a solicitor's charging order over fees. The need for a charging order arises where a client changes lawyers but still owes the prior lawyer fees. The charging order requires the new lawyer to respect the old lawyer's fee billing or fee direction:
[2] The application judge identified the three criteria which must be satisfied to obtain a solicitor’s charging order. The solicitor must show:

• the fund or property over which the charging order is sought is in existence at the time the order is sought;

• the property must have been recovered or preserved through the instrumentality of the solicitor; and

• there must be some evidence that the client cannot or will not pay the lawyer’s account: see Bilek v. Salter Estate, 2009 CanLII 58582 (ONSC).
. Peter B. Cozzi Professional Corporation v. Szot

In Peter B. Cozzi Professional Corporation v. Szot (Ont CA, 2020) the Court of Appeal set out the principles governing the granting of a charging order under s. 34(1) of the Solicitors Act:
[51] The appellant sought a charging order under s. 34(1) of the Solicitors Act:
34 (1) Where a solicitor has been employed to prosecute or defend a proceeding in the Superior Court of Justice, the court may, on motion, declare the solicitor to be entitled to a charge on the property recovered or preserved through the instrumentality of the solicitor for the solicitor’s fees, costs, charges and disbursements in the proceeding.
[52] The principles governing the granting of a charging order under s. 34(1) were summarized by this court in Weenan v. Biadi, 2018 ONCA 288, 141 O.R. (3d) 276, at paras. 14-15:
• To obtain a charging order on the monies in issue, the onus is on the solicitor to demonstrate that a charging order is warranted;

• The decision is discretionary. In deciding whether to exercise that discretion, the court must “balance the circumstances and equities of each case and client”; and

• To obtain a charging order, the solicitor must demonstrate that:

i. the fund or property is in existence at the time the order is granted;

ii. the property was “recovered or preserved” through the instrumentality of the solicitor; and

iii. there must be some evidence that the client cannot or will not pay the lawyer’s fees.



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Last modified: 20-03-24
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