Surrey, 9400 128th St.: Lawyer acting for strata corporation ordered to pay $788.80 to leaky condo owner

Citation: Hammerberg & Co. v. Margitay

Date: 20010921

  2001 BCSC 1312

Docket:

S068402

Registry: New Westminster

IN THE SUPREME COURT OF BRITISH COLUMBIA

RE: THE LEGAL PROFESSION ACT

BETWEEN:

HAMMERBERG & COMPANY

SOLICITORS

AND:

JOHN MARGITAY

CLIENT

 

REASONS FOR DECISION
OF
DISTRICT REGISTRAR SAINTY

 

Counsel for the Solicitors

G.S. Hamilton

Appearing in Person

John Margitay

Date and Place of Hearing/Trial:

September 10, 2001

New Westminster, BC

[1] This was an application brought by Mr. Margitay to review accounts of the Solicitors dated November 7, 2000, December 4, 2000, January 15, 2001, February 21, 2001 and March 27, 2001 in the amounts of $111.42, $1,307.90, $914.63, $2,146.57 and $456.57, respectively (the "Accounts").

[2] This matter is unique in that the Accounts were rendered, not to Margitay, but to "The Owners, Strata Plan NW969" (the "Strata Corporation").

[3] Margitay was the owner of a suite (the "Property") in a condominium development located at 9400 128th Street, Surrey, BC (the "Development"). The matter for which the Accounts were rendered arose in connection with Margitay's non-payment of monies due to the Strata Corporation in connection with a special resolution for building envelope repairs assessed against the Property.

[4] The Solicitors were engaged by the Strata Corporation to collect monies unpaid by several owners of units in the Development, including Margitay. I heard evidence that the Solicitors sent Margitay an initial demand letter for payment of the special levy. When Margitay failed to respond to the demand letter, the Solicitors drafted and filed a Petition to the Court under No. S063739, New Westminster Registry (the "Action") and set it for hearing on January 11, 2001.

[5] Margitay was served with the Notice of Hearing of Petition. He attended on January 11, 2001. Master Bolton adjourned the hearing to January 25, 2001 after submissions from Margitay that the special resolution had not been properly passed at the extraordinary general meeting held to pass the special levy.

[6] On January 25, 2001, Master Tokarek made an Order as follows:

THIS COURT DECLARES that

1. The Certificate of Lien dated September 26, 2000 and registered at the Vancouver/New Westminster Land Title Office on September 27, 2000 under No. BP230429 (the "Lien") charges the lands and premises legally described as:

City of Surrey
P.I.D. 001-600-559
Strata Lot 10 Section 32 Township 2
New Westminster District Strata Plan NW 969

(the "Property")

2. The Lien charges the Property ranking in priority to the interest therein or claims thereto of the Respondent;

3. John Margitay has made default in payment of common expenses due to the Petitioner, and that all monies secured by the Lien are now due and owing to the Petitioner;

4. The amount due and owing to the Petitioner is $15,176.00 as at September 26, 2000, accruing by the sum of $130.02 on the first day of each and every month thereafter, to the last day of redemption herein, together with the Petitioner's taxable costs and disbursements for these proceedings to be assessed at Scale 3 (collectively the "Redemption Amount");

THIS COURT ORDERS THAT

1. Unless the Respondent pays the Redemption Amount into Court to the credit of these proceedings, at the Registry of this Court at New Westminster, British Columbia, or to the Petitioner on or before the expiration of 30 days after the making of this Order, the Property be sold;

2. The Petitioner shall have conduct of the sale of the Property, and following the last day for redemption set in this Order, be at liberty to list the Property for sale and to pay any real estate agent or firm who may arrange a sale of the Property, a commission of not more than 7% of the first $100,000.00 of the gross selling price, and 2.5% on the balance thereof, such commission to be paid from the proceeds of the sale;

3. The sale will be subject to the approval of this Honourable Court unless otherwise agreed by all parties;

4. The Respondent, John Margitay, his agents or any person or persons acting on his behalf, including any tenant or tenants in possession of the Property, upon reasonable notice, and upon expiry of the last day for redemption set in this Order, shall forthwith permit any duly authorized agent on behalf of the Petitioner to inspect, appraise or show to any prospective purchaser of the Property (including the interior of the Property) between the hours of 9:00 a.m. and 7:00 p.m. on any day of the week, and to post signs on the Property noting that same is offered for sale;

5. The Petitioner recover Judgment from the Respondent, John Margitay, in the sum of $15,176.00, together with the Petitioner's taxable costs and disbursements for these proceedings to be assessed at Scale 3;

6. All necessary accounts, directions and inquiries be taken as may be necessary for the purposes aforesaid.

[7] After the Order and negotiations with the Solicitors on behalf of the Strata Corporation, Margitay paid the Strata Corporation the amount of the judgment plus taxable costs and disbursements in the amount of $2,345.62 (a total of $17,911.68). The Strata Corporation then released the certificate of lien it had filed against the Property.

[8] The Solicitors rendered accounts to the Strata Corporation totalling $4,937.09 for all services rendered in connection with the Action. The fees and disbursements, inclusive of taxes, were $4,155.30 and $781.19, respectively.

[9] Section 13(2) of the bylaws of the Strata Corporation provides as follows:

13. PENALTIES

2. The Strata Corporation shall recover from an Owner the legal costs incurred by the Strata Corporation in any action commenced against an Owner for the recovery of any debt, or any action to compel the Owner to do or refrain from doing any act or omission which is in violation of these Bylaws or any Rules & Regulations established pursuant to these Bylaws or any proceedings commenced pursuant to Section 37 or 127 of the Condominium Act, RSBC 1979, Chapter 61, and, without limiting the generality of the foregoing, in all such cases the Owner shall indemnify the Strata Corporation for the full amount of the costs paid or to be paid to the Solicitors for the Strata Corporation in respect of said proceedings or actions, including the Solicitor's fees as presented and accepted by the Strata Corporation.

[10] Margitay sold the Property in or about May 2001. In order to complete the sale, he required the Strata Corporation to provide him with a Certificate of Payment in accordance with s. 115 of the Strata Property Act, SBC 1998, c. 43.

[11] S. 115 of the Strata Property Act provides as follows:

115 (1) Within one week of the request of an owner or purchaser, or a person authorized by an owner or purchaser, the strata corporation must give the person making the request a Certificate of Payment in the prescribed form if

(a) the owner does not owe money to the strata corporation, or

(b)     the owner does owe money but

(i) the money claimed by the strata corporation has been paid into court, or to the strata corporation in trust, under section 114, or

(ii) arrangements satisfactory to the strata corporation have been made to pay the money owing

(2) The certificate is current for the purposes of section 256 for a period of 60 days from the date it is issued.

(3) The strata corporation may charge a fee for the certificate, but the fee must not exceed the amount set out in the regulations.

(4)     In completing the certificate, the strata corporation may include money owing in respect of

(a) the matters set out in section 116, and

(b) fines and the costs of remedying a contravention of a bylaw or rule charged against the owner or fines and costs for which the owner is responsible under section 131.

(5)    A certificate must not include claims of damages against an owner which have not been determined by a court or by arbitration.

[12] The Strata Corporation's agent refused to issue Margitay the Certificate of Payment unless he paid to them the difference between the costs awarded by Master Tokarek (and agreed at $2,345.62) and the $4,937.09 paid by the Strata Corporation to the Solicitors - a total of $2,587.47.

[13] In order to complete the sale, Margitay paid the additional funds on or about July 24, 2001.

[14] Margitay then took out this appointment for review of the Accounts and has asked that I review them under section 70 of the Legal Profession Act, S.B.C., 1998, c. 9.

[15] The Solicitors argue that I have no jurisdiction to review the Accounts. They submit that Margitay had a contract with the Strata Corporation (as set out in the Bylaws) to pay whatever amounts might have been billed by them to the Strata Corporation for services in connection with the Action. The Solicitors also argued that s. 115(4) of the Strata Property Act gives the Strata Corporation the right to recover the legal costs of the Action before issuing a certificate.

[16] The Solicitors rely on the decision of Huddart, J. (as she then was) in Owners, Strata Corporation VR. 873 v. Crumley, Resort Municipality of Whistler, Royal Bank of Canada and Peter's Patio Ltd. (1982), 40 B.C.L.R. 80. In that case, the petitioners were seeking indemnification from owners of units in a strata development for the "legal costs of a proceeding" under s. 37(8) of the Condominium Act, R.S.B.C. 1979, c.61 (the predecessor legislation to the Strata Corporation Act). Huddart, J. stated, at p. 83:

When Mr. Crumley failed to pay a monthly assessment as required by s. 128(8) or (10) [of the Condominium Act] which form part of the by-laws of the strata corporation, he violated the by-laws and became liable to the additional charges provided in s. 127(1). The section provides the remedy and I do not think it requires any order of this court to permit the strata corporation to take advantage of it.

To the credit of the strata corporation and its counsel, upon considering the decision of Legg, J. in T.D. Bank v. Eiboff, [1982] B.C.W.L.D. 1326, the strata corporation sought to give Mr. Crumley an opportunity to challenge the reasonableness of any such charges insofar as they relate to legal bills. Unfortunately for both the strata corporation and Mr. Crumley, the inability of counsel to agree on the interpretation of ss. 37(8) and 127(1) [of the Condominium Act] has substantially increased those charges.

However, I have concluded that this case is not analogous to a mortgage in which two parties contract for an indemnification for costs. The provision for indemnification for "costs incurred" is included in the by-laws of the corporation. The owner purchased the condominium fully aware of the by-laws. There is no provision in them for an accounting or for an opportunity for the owner to challenge the reasonableness of the bill. The bill is rendered to the strata corporation. If the strata corporation considers it to be unreasonable, it can challenge the bill.

[17] The Solicitors urged me to accept the reasoning of Huddart, J. and find that, as Margitay was aware of the provisions of the bylaws of the Strata Corporation when he purchased the Property, he has no right to challenge their accounts under the Legal Profession Act.

[18] Huddart, J. did not refer in her decision to the provisions of the Barristers and Solicitors Act, R.S.B.C. 1979, c. 26, s. 92(2) (applicable to reviews of lawyer's accounts at the time of the decision in Owners, Strata Corporation VR. 873 v. Crumley et al.). That section provided as follows:

(2) The person charged with the bill or by whom payment is to be made may apply to the district registrar or other taxing officer of the Supreme Court for an appointment to tax the bill, and he shall deliver a copy of the appointment to the solicitor at the address shown on the bill.

[19] On June 1, 1988, the Barristers and Solicitors Act was replaced with the Legal Profession Act, S.B.C. 1987, c.25 and was further replaced in 1996 by the Legal Profession Act. R.S.B.C. 1996, c. 255. The current Legal Profession Act, S.B.C. 1998, c. 9 was brought into force effective December 31, 1998. Section 70 of that Act provides as follows:

70 (1)    Subject to subsection (11), the person charged or a person who has agreed to indemnify that person may obtain an appointment to have a bill reviewed before

(a) 12 months after the bill was delivered under section 69, or

(b) 3 months after the bill was paid,

whichever occurs first.

[my emphasis]

[20] Clearly, the current legislation (and which is applicable to this matter), gives Margitay (the "person who has agreed to indemnify" the Strata Corporation), the right to have the account reviewed. In my opinion, the reasoning of Huddart, J. in Owners, Strata Corporation VR. 873 v. Crumley et al. is no longer applicable as the legislation clearly provides for a review even where a person has agreed to an indemnity for legal fees. The section of the Barristers and Solicitors Act applicable at the time Owners, Strata Corporation VR. 873 v. Crumley et al was decided did not provide that right to an indemnifier.

[21] At the hearing, in order to ensure that, were I to decide I could review the Accounts, a further appearance would not be necessary, I heard the evidence of the Solicitors in respect of the Accounts. I also allowed Margitay the opportunity to cross-examine Mr. Hamilton in respect of the work performed by the Solicitors on behalf of the Strata Corporation and heard submissions from both parties as to what fees and disbursements might be reasonable in the circumstances.

[22] I have concluded that Margitay is not prohibited from having the accounts for which he is responsible reviewed by the Registrar and I will therefore proceed now with such review. I must conduct my review of the Accounts keeping in mind the factors set out in s. 71(4) of the Legal Profession Act, S.B.C. 1998, c. 9. That section provides as follows:

71(4) At a review of a lawyer's bill, the registrar must consider all of the circumstances, including

(a) the complexity, difficulty or novelty of the issues involved,

(b) the skill, specialized knowledge and responsibility required of the lawyer,

(c) the lawyer's character and standing in the profession,

(d) the amount involved,

(e) the time reasonably spent,

(f) if there has been an agreement that sets a fee rate that is based on an amount per unit of time spent by the lawyer, whether the rate was reasonable,

(g) the importance of the matter to the client whose bill is being reviewed, and

(h) the result obtained.

(5) The discretion of the registrar under subsection (4) is not limited by the terms of an agreement between the lawyer and the lawyer's client.

[23] Mr. Hamilton testified that the Strata Corporation retained him in or about October 2000 to collect unpaid levies from owners in the Development. Demand letters were sent to several owners and, as stated above, a Petition was filed to commence the proceedings against Margitay when he failed to respond to the demand letter.

[24] Mr. Hamilton's hourly rate at the time he was retained was $200.00 per hour. He was called to the Bar in May 1992 and his primary area of practice is condominium litigation.

[25] Mr. Hamilton reviewed each account rendered to the Strata Corporation and provided testimony with respect to the services performed and disbursements incurred in respect of each account.

[26] This review was different from a "normal" review in that Margitay had no knowledge of the retainer arrangements between the Solicitors and the Strata Corporation and could not dispute those arrangements.

[27] After hearing the evidence, I have concluded that this matter was not particularly difficult or complex. It involved collection of monies due and owing by an owner to a strata corporation. Margitay raised some issues at the first hearing before Master Bolton related to whether the notice of the extraordinary general meeting to consider the special levy was properly constituted and whether the appropriate number of votes was received in favour of the resolution. Some research on this issue was necessary.

[28] At the hearing, I raised the issue of whether time recorded to this file might have also been recorded to other files for which the Strata Corporation retained the Solicitors. As previously stated, Margitay was not the only owner who failed to pay the special levy. Mr. Hamilton did concede that some of the research performed and billed to the Strata Corporation in respect of the Margitay matter would have been of assistance in respect of collecting the special levies from other recalcitrant owners. Mr. Hamilton also noted that one of the other delinquent owners attended the hearings in the Margitay matter. After those hearings, the other owner paid the levy and did not dispute it further.

[29] I was also advised that applications were brought against three other owners. One of those applications went to court. Matters were resolved with two other owners without the need for court applications. Mr. Hamilton admitted that once this Court had determined that the special resolution authorising the special levies had been properly passed, the other owners "went away".

[30] No issue was raised with respect to Mr. Hamilton's skills or his character and standing in the profession.

[31] The amount involved was approximately $15,000.00.

[32] The Solicitors and the Strata corporation agreed that the Accounts would be rendered based on an hourly rate of $200.00 per hour. Margitay did not dispute this. This rate seems reasonable for a lawyer with Mr. Hamilton's experience.

[33] With respect to the time reasonably expended, I reviewed the time sheets provided by Mr. Hamilton. In my opinion, there was some time expended on research and in respect of preparation for the hearing of the Petition that was likely recorded to Margitay's file and which would have been (and in fact was) useful in reaching settlements with other owners who had failed to pay the special levies accrued to them pursuant to the special resolution. In addition, the Solicitors charged a lump sum amount on their first account related to the preparation and forwarding of the demand letter to Margitay. Again, there the time expended on this item would be minimal as, likely, a precedent was used to generate the letter. I did not hear evidence as to whether the Solicitors had agreed with the Strata Corporation to bill a "fixed rate" for this service.

[34] Some of the services were necessary because of the position taken by Margitay. He claimed that the special resolution was not properly passed. The Court ruled that it was. Research into how that special resolution was passed was required. Margitay was granted an adjournment at the date first set for hearing the Petition to prepare documents in support of his argument.

[35] Initially some of the documents were sent to the address of the Property, rather than the address for delivery on Margitay's answer to the petition. The Strata Corporation was charged for the costs of delivering the materials to the incorrect address.

[36] Margitay stated that he tried to pay the amount owing and that he did not argue that the vote was incorrectly taken with respect to the special resolution. Even so, the court applications were necessary because of his actions. There was also some confusion as to whether Margitay attempted to pay the levy in advance of the hearing. I do not think that was the case. I believe Margitay did try to resolve the matter and pay the amount due but not until after the second hearing and Master Tokarek's order.

[37] Some of the time expended and recorded to the file by an articled student was written off - but not the full amount as claimed by Mr. Hamilton during the hearing.

[38] The Solicitors billed the Strata Corporation a total of $3,645.00 in fees for the services rendered. At Mr. Hamilton's hourly rate ($200.00), a total of 18.225 hours of time was billed to the Strata Corporation. In my opinion, this is high in the circumstances. I believe that time was recorded to the Margitay file which could have been recorded to files in connection with the other recalcitrant owners. There was no onus of the Solicitors to separate their time records carefully as the same client (the Strata Corporation) was being billed for the work. In my opinion, fees of $3,000.00 would be reasonable for the work done by the Solicitors for the Strata Corporation in respect of the Margitay matter.

[39] With respect to the disbursements, they are reasonable, with the exception of the delivery costs associated with sending materials to the wrong address. The total billed for "deliveries" was $92.75 (plus GST). I would deduct the sum of $50.00 (plus GST) from the total of the disbursements charged, making total disbursements allowed at $728.29.

[40] I have allowed fees and disbursements (inclusive of taxes) of $4,148.29. Margitay paid the Solicitors $4,937.09. The Solicitors therefore owe Margitay a refund of $788.80, subject to my decision with respect to costs, below.

[41] In respect of costs, s. 72 of the Legal Profession Act provides as follows:

72 (1) Costs of a review of a lawyer's bill must be paid by the following:

(a) the lawyer whose bill is reviewed, if 1/6 or more of the total amount of the bill is subtracted from it;

(b) the person charged, if less than 1/6 of the total amount of the bill is subtracted from it;

(c) a person who applies for a review of a bill and then withdraws the application for a review.

(2) Despite subsection (1), the registrar has the discretion, in special circumstances, to order the payment of costs other than as provided in that subsection.

[42] The amount charged was $4,937.09. One-sixth of that amount is $822.84. The amount I have allowed is $4,148.29. I have therefore reduced the Account by less than one-sixth and must award costs of this review to the Solicitor, subject to a determination of "special circumstances" pursuant to section 72(2) of the Legal Profession Act as set out above.

[43] There is little law on the meaning of the term "special circumstances" in s. 72(2). In Boe v. Waters, (1998), 24 C.P.C. (4th) 252 (B.C.S.C.) Master Horn (as Registrar) found that "special circumstances" existed where the solicitor made a formal offer to settle to the client pursuant to the Rules of Court and which was not accepted by the client. In Shafer v. Berge & Co. (1991), 7 C.P.C. (3d) 43 (B.C.S.C.), Paris, J. on an appeal under s. 72 of the Legal Profession Act awarded no costs to either party after an appeal of a registrar's decision in a review of a bill of costs. In the last paragraph of his judgment he stated:

I confess I was somewhat bemused to learn that after the half-day hearing before the registrar Mr. Berge submitted a bill of costs for his appearance for approximately $1,200.00. In effect the parties represented themselves. Disbursements could not have been large. As I have said, it is best that this matter comes to an end without further taxation. I think there are "special circumstances" and that it is "just" under s. 72 that all parties bear their own costs.

[44] In this particular matter, as I have reduced the Account by less than one-sixth, absent "special circumstances", the Solicitors are entitled to costs. Both parties represented themselves in these proceedings. The Solicitors argued, initially, that Margitay had no right to review their accounts based on the reasoning of Huddart, J. in Owners, Strata Corporation VR. 873 v. Crumley et al (supra). They failed, however, to consider the provisions of the Legal Profession Act, S.B.C. 1998, c. 9(or its predecessor, the Barristers and Solicitors Act, R.S.B.C. 1979, c. 26) and their application to the case before Huddart, J. or the case before me. Mr. Hamilton, when questioned, could not direct me to the wording of the applicable provisions at the time of Huddart, J.'s decision in Owners, Strata Corporation VR. 873 v. Crumley et al.

[45] Had the Solicitors understood the legislation, they may have been prepared to discuss a settlement with Margitay in respect of this matter. Instead, they were entrenched in their position and unprepared to compromise.

[46] Accordingly I find that there are "special circumstances". I would therefore award no costs to either party in respect of this review.

[47] The Solicitors should immediately provide the sum of $788.80 to Margitay.

"District Registrar K. Sainty"

Coquitlam, 1145 Heffley Cr.: Lawyer requests leaky condo complex be removed from Leaky Rotten Condo List

Dr. James H. Balderson

B.Ed., M.Ed., Ph.D., Q.S.

COLCO: Coalition of Leaky Condo Owners

...

Telephone 604-739-4190   Fax 604-739-4109

www.myleakycondo.com

Email: jamesbalderson@myleakycondo.com

 

2001.09.11

 

Thomas G. Andison

THOMAS G. ANDISON LAW CORPORATION

410-1333 West Broadway

Vancouver, B.C., Canada V6H 4C1

 

VIA FAX TO: 604-734-5182 

 

Dear Sir:

 

RE: Strata Plan LMS 2817 – 1145 Heffley, Coquitlam, B.C.

 

We have your letter requesting that 1145 Heffley be removed from the Leaky Rotten Condo List.

 

We have media reports of the concerns recently expressed by some of the owners.

 

We are reviewing the information available about the building.

 

We will take all the available information into account prior to releasing Leaky Rotten Condo List #8.

 

We would be pleased to meet with your clients to review the information and discuss our opinion about the building.

 

Please advise if your clients would like to meet with us.

 

Yours truly,

 

 

 

Dr. James Balderson, Ph.D.

 

 

 

 

 

 

 

Coquitlam, 1145 Heffley Cr.: James Balderson exposes what Marion Lochhead did not reveal

 

TO:       The Editor, Letters-to- the-editor, The Vancouver Sun

 FAX 604-605-2522

 E-mail: sunletters@pacpress.southam.ca

 

FROM:     James Balderson, COLCO: Coalition of Leaky Condo Owners

             TEL 604-739-4190  FAX 604-739-4109

 E-mail: jamesbalderson@myleakycondo.com

 

RE:       Thin edge of sanity

People whose lives have been turned upside down by leaky condos detail their fight for justice, while owners of non-leaking condos also have a beef

           

Marion Lochhead’s letter (Thin edge of sanity, September 4, 2001) complaining about the Leaky Rotten Condo List distributed by the Coalition of Leaky Condo Owners illustrates why the List was created.

 

The List documents the extent of the leaky rotten condo fiasco.  It is based on information from multiple sources.  Efforts are made to update the list and to correct any errors.  COLCO agrees that accuracy is important.

 

Lochhead registered her complaint by telephone with me on August 29, 10 months after List #7 was released.  She has not made “repeated requests” to have the building at 1145 Heffley Cr. in Coquitlam removed from the List.

 

Although Lochhead claims to be an owner in the building, she fails to mention that she is a licensed realtor; that she is the listing agent for properties in the building; that she is the wife of one of the developers of the building; and that she does not live in the building.

 

Furthermore, Lochhead fails to mention that 306-1145 Heffley was sold by the developers in November 1996 for $123,900 and has a current asking price of $114,900.  Thus, the original owners of this “investment” will have lost approximately $4,000 per year, if not more, since purchase, once negotiation and sales commission is taken into account.  

 

We believe that the building continues to be a high-risk condo complex, despite efforts by the current owners to overcome design and construction inadequacies by re-coating the new building, caulking windows and adding rain gutters.

 

The owners of leaky rotten condos would never have purchased them if the developers and their agents, licensed and unlicensed, had provided full disclosure about faulty buildings.

 

The List helps purchasers find their way through this mess, whether they want to buy into a leaker or whether they want to buy a condo building that has been fully repaired.

 

We agree with Marion Lochhead that owners should ensure their listing with COLCO is accurate and up-to-date.

    

List #8 is being prepared now for release in October.

 

Information can be sent to COLCO at www.myleakycondo.com or by fax to 604-739-4109.

 

COLCO continues to seek 100% compensation for the cost to repair leaky rotten condos.

 

James Balderson, Vancouver

on behalf of

COLCO: COALITION OF LEAKY CONDO OWNERS