Wednesday, September 17, 2014

Solicitors' liens and charging orders

Mauldin v. Cassels Brock & Blackwell LLP, 2014 ONCA 641:

[33]       Hryniak submits that McCarthys has a charge on the funds held in court pursuant to s. 34(1) of the Solicitor's Act:

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.

[34]       Hryniak submits that it was only by virtue of McCarthys' efforts on the contested motion before Doherty J.A. that he was able to mortgage his home and post the funds with the Accountant. Counsel characterizes these actions as "instrumental" in preserving the funds.

[35]       Generally, courts have been predisposed to exercise their discretion in favour of charging orders. In Taylor v. Taylor (2002), 60 O.R. (3d) 138, this court explained why, at para. 29:

Historically, courts have exercised their discretion liberally in favour of charging orders, which are said to benefit both the lawyer and the client, since they encourage lawyers to represent clients who are unable to pay as their cases progress.


[39]       Second, an order under s. 34(1) is discretionary. In The Law of Costs, loose-leaf (Rel. August 2010), 2d ed. (Toronto: Canada Law Book, 1998), Mark M. Orkin discusses this aspect of s. 34(1) at p. 3-99:

As appears from the wording of s. 34 the order is discretionary.  A court will determine firstly whether the property was subject to a solicitor's lien, that is, whether it was preserved through the instrumentality of the solicitor, and then whether in the circumstances of the case a lien should attach.  In exercising its discretion a court should balance the equities. [Citations omitted.]

See also: Taylor v. Taylor, at para. 34.

[40]       In Foley v. Davis (1996), 93 O.A.C. 114 (Ont. C.A.), at para. 2, this court also noted the discretionary nature of s. 34 (1):

We have considered s. 34 of the Solicitors Act, and cases cited to us by the appellant. We can find no per se rule that, absent improper conduct, the solicitor is always entitled to a charge in first priority on funds "salvaged" by the efforts of the solicitor. In our view, while the solicitor will be entitled to a first charge on such funds in the normal course, the court retains a discretion to order otherwise.

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