BETWEEN:	) )
Robert Steen and Robert Steen as executor of the estate of Gwendoline Cuttance Steen Applicant – and – Gibsons LLP and Gibson & MacLaren LLP Respondents	) ) ) ) ) ) ) ) ))	Miriam Vale Peters, for the Applicants
		John Parr Telfer, for the Respondents
	)
	)
	))	HEARD: April 9-10, 27-29 and May 1, 2015 (at Ottawa)

 

 

REASONS FOR DECISION

 

HACKLAND J.

 

Overview

[1]               This is an assessment of solicitor and client accounts rendered by the law firm Gibsons LLP (hereinafter “Gibsons” or “the law firm”) for the provision of legal services to the applicant Robert Steen in his capacity as executor of the estate of his late mother Gwendoline Cuttance Steen who died on December 10, 2005.  There are 20 accounts or invoices, the first dated January 31, 2006 and the last dated April 24, 2009.  They total $192,567.99.

[2]               The late Mrs. Steen (the testator) had three children, the applicant Robert Steen and his two brothers Bruce and Douglas to whom she left the residue of her estate in three equal shares.  As explained in these reasons, Robert became embroiled in a dispute with his brothers over the administration of the estate which led to very expensive litigation in which Robert was initially unsuccessful, had costs awarded against him personally and which led him to terminate the services of the law firm.

[3]               Solicitor and client assessments are normally conducted by Assessment Officers.  However, the Superior Court has a discretionary jurisdiction to order an assessment to be heard by a judge in cases raising legal issues such as alleged lack of competence, which may be outside the experience or expertise of an Assessment Officer, see Woods v. Chamberland (1991) 1991 CanLII 7186 (ON SC), 6 O.R. (3d) 419.  The law firm in this case obtained an order from Warkentin J. dated April 23, 2013 that this matter be heard by a judge.  Her Honour observed “[t]he principal allegations will be duplication of effort and want of care and skill of the solicitor with carriage of the file.”

[4]               The principal argument advanced by the client in this proceeding is that he was wrongly advised to commence a legal action to resolve several outstanding estate issues and to pursue a motion at the inception of the proceeding to have funds and investments held in joint accounts in the possession of his brothers paid over to the estate for administration under the will.  The client argues that the lawsuit, and in particular the motion, was ill advised and unlikely to succeed and was of no value to him or to the estate.  The law firm’s position is that when they were unable to secure the brothers’ agreement to settle the estate, it was reasonable for them to advise their client Robert Steen to sue his brothers as a way of having the estate issues resolved.

Preliminary Issues

[5]               Counsel for the law firm objected to the admissibility of an expert’s report tendered on behalf of the client.  The basis for the objection was not the contents of the report nor the expert’s qualifications.  Indeed the report was comprehensive and helpful and was written by an acknowledged expert in estate litigation.  The basis for the objection was the expert’s lack of independence.  It was argued that the expert lacked independence because he had provided advice to the client (Robert Steen) earlier in this proceeding at a time when the expert’s law firm had been retained by the client. Mr. Steen subsequently changed counsel and is no longer represented by the law firm with whom the expert practices.

[6]               I upheld this objection and ruled the expert’s report inadmissible.  The evidence discloses that the expert practised with the law firm which previously represented Mr. Steen in this proceeding. As counsel he maintained independent financial arrangements from the firm, nonetheless he actually provided advice to Mr. Steen on the issues before the Court while assisting another solicitor in the firm.

[7]               I hold that a lawyer who has provided legal advice to a client cannot thereafter be accepted in the same proceeding as an expert witness.  The lawyer-client relationship gives rise to ongoing obligations of confidentiality and loyalty which continue even after the termination of the relationship.  These obligations are inconsistent with an expert’s duty of impartiality and create at least an appearance of bias in favour of the former client.  In some cases, these considerations may be treated as matters going to weight rather than admissibility.  However, in this case, the expert counselled Mr. Steen on the very issues currently before the Court in this assessment.

[8]               Counsel for the client also raised the objection that arguments amounting in substance to claims of negligence should not be permitted in this assessment hearing on the basis that (1) claims for negligence have long since become statute barred and (2) at an earlier case conference before Warkentin J. the client’s former solicitor advised that negligence was not being alleged.  I do not accept this argument.  As noted previously, Warkentin J. ordered this assessment to be heard by a judge rather than an assessment officer because a central issue was whether the solicitors had acted with skill and competence in the representation of the client.  The skill and competence exhibited by the solicitors is an important consideration on a quantum meruit assessment such as this.

Facts and Discussion

[9]               In the interest of narrowing the issues, I begin by making several findings of fact.  Having listened to the evidence of the solicitors from the Gibson firm who worked on this file, I accept that the docketed services were actually performed.  Any erroneous entries are absolutely minimal and the firm was in the habit of reducing the accounts somewhat to allow for this type of error.  It is unreasonable to expect an explanation for every last docket entry for services performed nine years ago.  There have been long delays bringing this assessment to court and I attribute the delays to the client who has changed solicitors frequently.  I also find that the docketing practices and hourly billing rates charged by the firm to have been fair and reasonable.

[10]           I do not accept the client’s argument that the occasional joint involvement in the litigation of Mr. Gibson as supervising counsel, and Mr. Dutrizac as junior counsel, was and duplication of services and therefore unnecessary.  In matters of complexity, as this litigation was, there will necessarily be some client meetings and some court related attendances (such as the mediation and argument of the motion) where both junior and senior counsel need to attend.  Most of the actual work on the litigation aspect of this matter was done by Mr. Dutrizac, a lawyer then in his second year of practice, at a much lower hourly rate than Mr. Gibson would have charged had he performed all the services personally.    

[11]           I find that there is no justification for any disallowance of the accounts rendered by Mr. McCowell, the solicitor in the law firm’s office who initially handled the estate administration.  He rendered four accounts covering the period when the firm was initially retained in late December 2005 through to October 23, 2006, which total $10,000.  These accounts were paid by the client.  Mr. Steen had no criticisms of Mr. McCowell’s services except for an inordinate delay of about six months when nothing was done on the file due to certain internal difficulties experienced by the firm.

[12]           Of the 20 accounts rendered, the client paid all of them except for the last one, being an account dated April 24, 2009 in the sum of $11,349.24 which covered the period January 21, 2009 to March 26, 2009.  At the opening of evidence on this assessment counsel for the law firm advised that his client waived his claim for this account.  In addition, there was an agreed upon credit to the client in the sum of $2893.  Accordingly, excluding the invoices rendered by the firm under Mr. McCowell’s name referred to above and the agreed upon credit, The law firm rendered 15 invoices (dated between June 28, 2007 and January 22, 2009) with fees totaling $146,632 plus disbursements and HST.

[13]           The problems in the administration of this estate arose from the manner in which the testator chose to deal with her assets and from the unwillingness of the three brothers to act reasonably to co-operate to resolve the problems.

[14]           The testator decided that she would transfer the bulk of her property to her three sons equally by way of inter vivos gifts so that upon her death she would have only a small estate that would not require probate and any taxes and professional fees would be minimal.  To this end she established joint bank accounts and put other assets in joint ownership with each of her three sons.  The sons agreed to her plan and she furnished the sons with a statement each year outlining her various joint transfers.  She drew up a family agreement, apparently without legal assistance, which the three sons signed.  It recited that upon her death the sons agreed to equalize the assets transferred to them as of the date of the testator’s death after paying their one-third shares of any estate taxes and professional fees.  She then had a will drawn wherein she left the residue of her estate to her three sons equally (and she appointed Robert as executor).  During her lifetime the sons could withdraw money from the joint accounts they held with their mother but these would be deemed as loans and had to be credited back in the equalization exercise to be performed upon her death.

[15]           Unfortunately, a testator who structures her estate plan in this manner risks a dispute over the issue of whether the assets held in the joint accounts are valid inter vivos gifts when the assets are transferred into joint ownership or, on the other hand, are these resulting trusts wherein the beneficial title only accrues to the transferee upon her death.  In the latter situation the jointly held assets pass as part of the testator’s estate and are subject to estate taxes and in some cases could require probate.  Properly characterizing these jointly held property arrangements can be a difficult legal exercise and has led to much litigation, particularly in cases where the estate beneficiaries are different persons than the holders of the joint accounts.  The relevant principles are discussed by the Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17 (CanLII).  As Rothstein J. explained the proper approach is to attempt to ascertain the testator’s intention at the time the joint account is created or the property is transferred to joint ownership.  The court is entitled to consider all relevant evidence including the testator’s actions after the joint accounts were created.

[16]           In the present case one might have thought that it would not have been a major issue as to whether the joint accounts which each of the three sons held were inter vivos gifts or part of the testator’s estate because either way the jointly held property was to be shared equally by the three sons.  The equalization should have been an accounting exercise.  The only real difference was that if the joint accounts were deemed part of the estate, there would be the likelihood of increased estate taxes, possibly probate fees and perhaps somewhat higher legal fees and executor’s compensation, all things the testator put a great deal of time and effort into trying to avoid.

[17]           After being retained by Mr. Steen to act for the estate, the law firm quickly formed the opinion that the joint accounts were estate assets, not validinter vivos gifts. No second opinion was sought at that time.  However, at the hearing of this assessment an expert report was provided on behalf of the law firm by a solicitor specializing in estate matters.  He focused on the presumption of resulting trust that arises upon a parent’s gratuitous transfer to an adult child, certain of the wording in the family agreement prepared by the testator and the equalization scheme that was triggered by her death.  He concluded that the jointly held property were resulting trusts and therefore part of the testator’s estate.  However, I do not accept that it was necessary or required by law that all of the joint property in the hands of the three brothers be paid over to the executor in order to administer the estate.  A proper accounting exercise would have addressed these issues.

[18]           This court has not tried the issue of inter vivos gift versus resulting trust and so I am not in a position to make a finding in that regard.  I would simply recognize that this was a complicating issue arising in this estate, which the law firm had to work with. 

[19]           By the time of her death the testator had already distributed (by transfers to joint accounts) the sum of $376,515 to Bruce; $296,263 to Robert; and $224,836 to Douglas. Her property held in her own name amounted to approximately $100,000.

[20]           In reviewing the correspondence between the law firm and the solicitors for the other two brothers, directed to resolving the accounting issues, it was accepted by both sides that there needed to be an equalization of the jointly held property whether or not this property was an asset of the estate.  For settlement purposes both parties accepted the concept that the equalization would be done as an accounting exercise in which agreement would be reached as to the estate taxes, estate legal fees and executor’s compensation, with each brother paying their one-third share of such costs.  Then each brother would make any necessary payment to adjust between themselves so that the joint assets received by each would be equal.  Likewise the residue of the estate (the $100,000) would be paid out in 3 equal shares to the brothers.

[21]           There was no evidence led to explain the tax issues arising in this estate.  It would seem however that the accountants were able to calculate the capital gains tax owing by the estate based on any deemed capital dispositions arising when the testator transferred property into the joint accounts.  The estate tax liability as calculated by the estate accountants was not disputed by the brothers.  Probate was not sought or required.

[22]           Unfortunately the law firm and the solicitors for the brothers had a great deal of difficulty resolving the accounting and equalization issues.  There appeared to be mistrust and animosity between Robert Steen and his brothers arising from perceptions that Robert had not respected his mother’s wishes concerning her funeral arrangements and one of the brothers was initially rude and uncooperative with Mr. McCowel in his efforts to administer the estate.  However, ultimately and very significantly, after difficult and protracted negotiations between the law firm and the solicitors for the brothers, the only unresolved issues prior to the commencement of litigation were the amount of executor’s compensation and estate legal fees. 

[23]           Just before the litigation was commenced, apparently out of frustration, Mr. Steen’s brothers Bruce and Douglas made a unilateral settlement offer, accompanied by payment by certified cheque of the amount owed to cover their respective one-third shares of what they accepted as the legitimate estate expenses and to adjust the net recovery as between the three brothers.  This is explained in paragraphs 9 and 10 of the defendants’ Statement of Issues filed on the mediation:

9.         Acting in accordance with the 2002 Agreement (The Family Agreement), and after it became clear that Robert had no intention of doing so by insisting that the joint accounts held by the Defendants be returned to the estate, Doug and Bruce sent a letter to Robert on May 16, 2007 in which they calculated the value of the estate, calculated the value of a one third share (including the value of their relevant joint holdings at the date of Gwendoline Steen’s death) and added ten thousand dollars as an administrator’s fee to Robert and reasonable portion of Robert’s legal fees.  They then made equalization payments as follows (a full accounting and the covering let6ter for same is found at Tab 1 of this Brief);

 

(a)        Bruce made payment to Robert in the amount of $23,824.00;

 

(b)        Doug made payment to Robert in the amount of $31,584.52; and

           

            (c)        Bruce made payment to Doug in the amount of $60,667.09.

 

10.      Although payment was made to Robert, these monies were in the form of a conditional offer, the main condition being that Robert complete the administration of the estate and end the matter once and for all.  That condition was clearly not met, in that the within action was then commenced by Robert.  The conditional offer is therefore withdrawn and the Defendants expect to be repaid the monies they paid in accordance with the offer.

 

[24]            Why then was the equalization exercise not simply carried out between the brothers as the testator had intended?  Why did Robert Steen and the law firm adopt the position that the two brothers needed to pay over the full amounts of the jointly held accounts to the estate?  This question was pursued in the subsequent litigation by counsel for the brothers.  Robert Steen admitted in cross-examination that he wanted more executor’s compensation than was being offered.  He sought $30,000 and the brothers had offered $10,000.  The relevant passage from the April 4, 2008 cross-examination of Robert Steen on his affidavit is as following:

Q.        Yes.  So based on these numbers, the only thing that we don’t agree on is the executor’s compensation and legal fees subsequent to that time.  Is that fair?

 

A.        I think that is fair, yes, but as you know, that’s not the manner in which we would have done these calculations, and that does not correspond to how we did the calculations one month prior to the date of this letter from my brothers.

 

Q.        Since May 16, 2007 have you provided an accounting for the estate?

 

A.        I believe I have not. 

 

          

[25]           I find that Mr. Steen and the law firm declined to resolve the dispute between the executor and his two brothers over the amount of executor’s fees to be charged by Robert Steen, the amount in dispute being only $20,000.  The perceived need to have the jointly held property paid over to the estate was to have an estate of roughly $1.0 million rather than the $100,000 of assets which had been in the testators name at the time of her death.  The executor believed that this would leverage a claim for increased executor’s compensation and legal fees.  I accept Robert Steen’s evidence that he was given to understand by the law firm that he was eligible to recover executor’s compensation in the range of 6% of $1.0 million assuming the joint property in the brothers’ hands was paid over to and recognized as assets of the estate.  Presumably recovery of state legal fees would also be greater.  I find that these misconceptions were based on poor or unclear legal advice to Mr. Steen as executor.  These misconceptions can be seen in the firm’s negotiation letters and were confirmed in Mr. Gibson’s evidence.  It was poor advice to the executor to suggest that the amount of executor’s compensation would be 6% of all the testator’s property because the seize of the estate is only one of several relevant considerations in establishing executor’s compensation.

[26]           To commence a lawsuit in the circumstances of this case over a difference of opinion involving a claim for an additional $20,000 in executor’s compensation and for additional legal fees, was extremely unwise, for the following reasons:

(1)               Executor’s compensation (and estate legal fees) can be and in the absence of agreement is normally fixed by the court in a passing of accounts.  The costs of passing accounts is normally recognized as a proper expense of the estate.

(2)               The brothers paid the adjustments they believed owing.  They used the accounting information supplied by the estate accountants.  Any lawsuit could benefit Mr. Steen only (not the beneficiaries).  He was accordingly not acting in the interests of the estate in pursuing the litigation.

(3)               The outcome of a trial of the inter vivos gift versus resulting trust issue was uncertain at best.  If the joint accounts were resulting trusts for the estate, the testator’s estate plan would be entirely frustrated.

(4)               The passing of accounts procedure is the usual and appropriate forum for the resolution of all estate issues between the parties particularly those relating to executor’s compensation and estate legal fees.

(5)               The costs of a lawsuit would foreseeably far exceed the amount in dispute here and the costs of same would quite possibly be borne by the executor personally. 

[27]           In my view, to counsel a lawsuit in the circumstances was ill advised.  In their evidence both Mr. Gibson and Mr. Dutrizac were unable to satisfactorily explain why this course was followed, other than to please the client.  They did not attempt to dissuade him.  They did not seriously consider passing the accounts.  There is no letter of opinion to the client warning of the risks, as there surely should have been.

[28]           The documentation in the law firm’s file and Mr. Steen’s evidence from his cross-examination provides some insight into his state of mind prior to and after he received the unilateral settlement payment from his brothers and the lawsuit was commenced.  Robert Steen sent:

•      (e-mail to Mr. Gibson, April 11, 2007) “Regarding dealing with my brothers and their lawyer, Quaglia, I continue to resent their attitude that they are in an equal position with me vis-à-vis negotiation.  There is to be no negotiation.  As sole executor, I must and will fulfill her wishes as stated in her will and elsewhere.”

•      (letter to Mr. Gibson, May 21, 2007) “In the letter, my brothers claim to have done the calculations themselves so as to make the equalizations of my mother’s estate.  The audacity of them.  As if they should be the ones to perform this role, especially after them insisting, some time ago, that I have a C.A. firm do the accounting of the estate.”

•      (e-mail to Mr. Gibson, June 21, 2007) “I begin by saying that I continue to be very suspicious of my brothers and think that, because they have been informed that I am not adamant about litigating the matter, they are yet again delaying any serious progress in resolving the estate in a manner satisfactory to me.  They have repeatedly stalled or ignored our attempts to settle the issue.  I DO NOT trust them. … I need prompt, meaningful action now from my brothers to get this resolved to my satisfaction now. … My brothers lawyer has to know that:

-         we have the calculations on the evaluation of the estate done, not them;

-         since my brothers repeatedly ignored or stalled our attempts to settle the estate since Feb. 2006, they should pay all legal fees incurred by both parties since March 2006;

-         My compensation is to be 6% of the estate value.

[29]              The law firm’s file clearly illustrates the challenges that Mr. Dutrizac encountered in managing Mr. Steen’s expectations and reluctance to negotiate or compromise.  Mr. Steen was reluctant to comply with his disclosure obligations in some instances and insisted on making an issue of one joint account held by this brother Bruce which he was well aware had nothing to do with his late mother’s estate.  He was warned by counsel that including this account in the lawsuit could involve personal liability for costs.  Mr. Dutrizac’s note to file dated December 13, 2007 states: “Robert is very unstable.  Very upset.  We need to get him in to see Dr. Ely.”

[30]           On April 22, 2008 Mr. Gibson received a letter from the solicitor who had drawn the testator’s will on January 17, 2003, stating:

The concept behind the “joint” aspect had been to minimize “probate” fees in the administration of the Estate, as the three brothers would simply need to sit down and figure out “who owed who” and then make the necessary payments accordingly to square-up so that, in the end, each brother would receive an equal amount from his mother/her estate.

 

I understand that all three brothers have agreed as to their mother’s intention, as stated above, at this point.  Personally, I don’t see the necessity to bring all monies into the Estate, per se, thus incurring additional fees, unless someone does not agree with the equalization rationale (which I understand is not the case), or will not make the necessary payment(s) to effect equalization.

 

[31]           The position taken by Mr. Steen’s brothers was concisely set out in their mediation brief delivered after the lawsuit was commenced:

1.         From the Defendants’ perspective, the estate has already been equally distributed and the issue that is stalling the administration of the estate is the Plaintiff’s inflated view of what he should receive as an administration fee.

 

2.         From time of the death of the parties’ mother, Gwendoline Steen, Robert Steen (“Robert”) has unnecessarily complicated the administration of the estate, for reasons unknown, and has driven up the legal costs of this matter far beyond what they should have been for such a simple matter.  Although the Plaintiff purports to rely on the agreement between the parties, executed in November and December of 2002 (“the 2002 Agreement” – at Tab 3 of the Plaintiff’s Mediation Brief), he has consistently ignored his mother’s wishes and this agreement.

 

[32]           At the mediation held in Ottawa on August 23, 2007 a tentative agreement was reached to resolve the entire matter.  This was contingent on the brothers’ counsel receiving instructions from one of the brothers who was not attending.  Most unfortunately Mr. Gibson was advised by fax on August 28, 2007 from the brothers’ counsel “[t]his is to advise that our clients are unwilling to sign the Interim Agreement that was drafted at that time.”  Robert. Steen testified in the present hearing that while he did attend the mediation, he was unaware that any tentative agreement had been reached or indeed that an offer had been made and was rushed out of the meeting before it was over. 

[33]           Mr. Steen also asserted that Mr. Gibson received a settlement offer that was never communicated to him.  There is not a shred of evidence to support this allegation yet Mr. Steen stubbornly insisted that such an offer existed.  I find as a fact there was no offer made to Mr. Gibson that was not communicated to him.  I also reject Mr. Steen’s evidence pertaining to the mediation.  I find that he did authorize his counsel to make an offer or commit to a tentative agreement but it was understood that the brothers’ counsel would require their clients’ approval, which unfortunately was declined.

[34]           In response to continuing pressure to get on with the litigation, Mr. Gibson and Mr. Dutrizac recommended to the client bringing a motion before the Court under Rule 45.02 of the Rules of Civil Procedure to compel Douglas and Bruce Steen to pay into court or to the executor, all of the property they received through the joint accounts upon their mother’s death.  The rationale for this course of action was not satisfactorily explained to the court in this assessment hearing.  In my opinion, this course of action was ill advised and unlikely to succeed.  The issue of inter vivos gifts versus resulting trusts had yet to be resolved.  The motion would not resolve that issue.  There were multiple accounts in the brothers’ hands some of which had been mixed with personal funds.  The testator’s scheme had in fact resulted in the distribution of these assets prior to her death.  The remaining issues were of an accounting nature.  It was readily foreseeable that a court would not view the balance of convenience as favouring this kind of interlocutory order.  Strangely, the motion contemplated the brothers’ joint accounts being paid into court but not Robert Steen’s money from his joint accounts.

[35]           Further, keeping in mind that (as Mr. Steen admitted in cross-examination on his affidavit filed on the motion) the principal if not the only issue in dispute was a $20,000 difference of opinion as to the amount of executor’s compensation, it was readily foreseeable that the costs of such a motion would far exceed this sum.  Moreover, the case law strongly suggests that if unsuccessful the executor would bear the costs personally.

[36]           Mr. Steen testified that the risks and the economics of proceeding with this motion were not made clear to him.  Moreover, he was not aware that he could be personally liable for his brothers’ costs if the motion failed – he believed the costs would be borne by the estate.  I accept Mr. Steen’s evidence in this regard.  Mr. Dutrizac acknowledged not being aware of the risk of the executor being personally liable should the motion fail and concedes he did not warn Mr. Steen of this.  The law firm’s file does not disclose any letter or memorandum of opinion sent to Mr. Steen advising the economics or the risks of the motion.  I found no indication in the law firm’s file of any research being done concerning the motion so as to evaluate the risks of proceeding in that fashion.  Further, much of Mr. Steen’s evidence on cross-examination was unhelpful to his cause and yet I see no evidence that withdrawal of the motion was considered.

[37]           Mr. Steen’s motion was heard by Kershman J. on August 5, 2008.  His Honour’s subsequent endorsement dated August 12, 2008 was reported at2008 CanLII 40975 (ON SC), 2008 CanLII 40975.  His Honour saw little merit in the motion and dismissed it.  An appeal of his ruling was not pursued and I am bound by his findings.  I also respectfully agree with them.  Kershman J. found essentially that there were no specific fund or funds in existence as required by Rule 45 and the balance of convenience was against paying the funds in to court given that the testator had already distributed them before her death.  The court was aware that the real dispute concerned executor’s fees and estate legal fees.

 

[38]           On March 10, 2009 Kershman J. rendered his costs ruling.  He awarded the brothers partial indemnity costs fixed in the sum of $32,000, payable by Robert Steen personally.  Mr. Steen testified that he was shocked by the outcome and particularly the award of costs against him personally.  I accept that evidence.  The costs outline provided to Kershman J. by Mr. Dutrizac on Mr. Steen’s behalf stated that the full indemnity costs of the motion incurred by the estate were $73,375.38 inclusive of disbursements and GST.

[39]           The services of the law firm were terminated by Robert Steen in late March 2009.

[40]           The law is well settled that on a solicitor and client assessment the court may consider a demonstrated want of skill and competence on the part of the solicitor as a basis for reducing the account, see Re Solicitor, 1970 CanLII 488 (ON SC), [1971] 1 O.R. 138.

[41]           In the present case, the client has satisfied me on the balance of probabilities that he received very poor legal advice on how to address certain accounting problems which arose in the administration of this estate.  I am satisfied that the only real issue dividing the parties when the client was advised to proceed with a lawsuit was a dispute about the quantum of executor’s compensation and the amount of estate legal fees.  Tax liability and other accounting issues were essentially resolved and the brothers had paid over their share of these liabilities.

[42]           This law firm never wrote opinion letters or memoranda or other communications to their client discussing the risks or the economics of the proposed litigation or the alternative courses of action such as passing the estate’s accounts before the court and having the court fix the executor’s legal fees and legal costs.

[43]           The motion on which legal fees of over $73,000 were incurred was ill advised, unlikely to succeed and was, I find, of no value to the client.  Although Mr. Steen was obviously a very challenging client whose preferences were to pursue litigation rather than compromise or negotiate and who had serious personal issues of his own and concerning his brothers, this, in itself, is not unusual.  He had the right to take the actions he did but there was a significant professional onus on the law firm to counsel their client on the risks, the financial implications and the alternative courses of action together with their analysis and recommendations.  The evidence satisfies me that this did not happen.  I note parenthetically that the brothers’ final offer could have been accepted subject to a judge fixing the executor’s compensation and estate fees under the estate rules.

[44]           I am not persuaded that the law firm’s time in preparing the action (rather than the motion) was of no value to the client.  While a passing of accounts would have been the preferable course, the court would ultimately have had the jurisdiction in an ordinary action to decide the substantive issue as to the proper characterization of the joint accounts, see Brian Schnurr, Estate Litigation, 2nd ed. vol. 3 at page 26-15.  The action led to a mediation in which the matter was nearly settled and it provided some pressure which seemed to facilitate the negotiations carried on by Mr. Gibson which, it seems, resulted in near settlement.

[45]           In summary, for the reasons set out above, I direct the law firm to repay to Robert Steen the amount of $73,000 representing fees and disbursements paid to the law firm for the motion before Justice Kershman.   There have been lengthy delays on the clients’ part in pursuing this assessment.  Accordingly, this sum will bear interest at the applicable court rate from April 9, 2014 being one year prior to the date of the hearing herein.  The balances of the law firm’s accounts totalling $108,325 are approved.

[46]           I request written costs submissions from any party seeking costs within 30 days of the release of these reasons.

 

 

      

 

Mr. Justice Charles T. Hackland

 

Released: August 18, 2015