Definition of "client" under the Solicitors Act does not include former client

Today’s decision in Chrusz v. Cheadle LLP, 2010 ONCA 553 gives guidance as to who is and who is not a “client” under the Solicitors Act. The Court holds:

[19]           The Appellants must first establish that the Settlement Agreement is an agreement to which the Act applies insofar as it pertains to Cheadle. To this end, the Appellants rely on the language in the concluding phrase of the definition of a “client” in section 15 of the Act, which in its entirety is defined as a “person who, as principal, or on behalf of another person, retains or employs or is about to retain or employ a solicitor, and a person who is or may be liable to pay the bill of a solicitor for any services”.  The Appellants argue that, under section 15 of the Act, a client includes a person whose relationship with a solicitor is being terminated on the ground that such person is “liable to pay the bill of a solicitor for any services”.  From this conclusion, they argue that the Settlement Agreement is an agreement to which sections 17 to 33 of the Act apply.

[20]           The Appellants then argue that section 28 of the Act as it read at the time of execution of the Settlement Agreement rendered that Agreement unenforceable:

Nothing in sections 16 to 33 gives validity to a purchase by a solicitor of the interest or any part of the interest of his or her client in any action or other contentious proceeding to be brought or maintained, or gives validity to an agreement by which a solicitor retained or employed to prosecute an action or proceeding stipulates for payment only in the event of success in the action or proceeding, or where the amount to be paid to him or her is a percentage of the amount or value of the property recovered or preserved or otherwise determinable by such amount or value or dependent upon the result of the action or proceeding. 

[21]           The respondents submit that the Appellants are not entitled to raise this argument for the first time on this appeal. While there would appear to be considerable force to this argument, it is unnecessary to address this issue in view of the determination on the merits below.

[22]           In our view, the arrangements pertaining to Cheadle do not constitute the Settlement Agreement an agreement that is subject to the provisions of the Act. 

[23]           If the Legislature had intended to extend the definition of a client to persons who have terminated a retainer, they could easily have done so within the structure of the definition of a client in section 15 by referring to persons who retain or employ, have retained or employed, or are about to retain or employ, a solicitor. The absence of language speaking to the previous engagement of a solicitor is significant. The concluding phrase in the definition cannot be relied upon to remedy the absence of any direct language on this issue, particularly given the fact that it also addresses an important and quite different circumstance of a guarantor.