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BARRISTERS AND SOLICITORS - Compensation - Solicitor’s lien - Statutory charging orders

Friday, July 03, 2020 @ 5:50 AM  

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Appeal by the plaintiff mortgagee from decisions of a chambers judge granting a conditional, and later a final, charging order to secure payment of legal fees owed to a law firm, BDP, against the property held by the mortgagor, BDP’s client. The mortgagor defaulted on the mortgages. The appellant argued BDP did not satisfactorily demonstrate, before the granting of the conditional order, that its fees would not be or were unlikely to be paid unless the charging order was granted and the chambers judge thus had no jurisdiction to grant the conditional or the final order.

HELD: Appeal dismissed. Rule 10.4(2) should be interpreted in the factual and relevant context in which an unpaid law firm was likely to seek a charging order to secure its unpaid fees, including where its client became insolvent. To interpret Rule 10.4(2) to require an applicant to have all its ducks in a row in relation to alternative collection attempts prior to bringing an application for a charging order would, in a practical sense, defeat the purpose of the order to give the lawyer security for its unpaid fees on an asset preserved by the legal work done that generated those very fees. The appellant advanced no legislative purpose to support interpreting the requirement that BDP establish it was not likely to otherwise be paid as a mandatory prerequisite to a charging order, nor offered any counterpoint to the observation that such an interpretation would result in rare success on an application for such order. The purpose of Rule 10.4(2) would be best met by permitting the Rule 10.4(2)(a) requirement to be established at the time of bringing the application for a charging order, or within a reasonable time subsequently. As a result, the chambers judge was correct in finding that he had jurisdiction to grant the order sought, although for somewhat different reasons than those relied upon by him. While the chambers judge improperly applied Rule 10.4(5) to consider whether unfairness would arise from refusing the order, rather than from granting it, the only reasonable inference that could be drawn from his finding that it would be unfair to BDP not to grant the order was the reverse, that it would also not be unfair to the appellant to grant the order. The record supported this conclusion. The chambers judge made no palpable and overriding errors of fact in concluding that BDP made satisfactory, or any, efforts to collect its fees from the client after the granting of the conditional charging order. The charging order gave BDP’s debt priority over the appellant’s subsequently registered new mortgage.

Paragon Capital Corp. v. Starke Dominion Ltd., [2020] A.J. No. 618, Alberta Court of Appeal, M.B. Bielby, J. Antonio and K.P. Feehan JJ.A., May 28, 2020. Digest No. TLD-June292020009