2005 BCSC 147 Valley First Credit Union v. Bright et al

Before: Master Hyslop

Reasons for Judgment

Counsel for the Respondent, Bank of Montreal	R.J. Smith
Mark Edward Bright appeared on his own behalf and on behalf of Brenda Joyce Bright
Date and Place of Trial/Hearing:	January 25, 2005
	Vernon, B.C.

[1] This hearing is pursuant to Part 8 of the Legal Profession Act [SBC 1998] c.9 (“LPA”) to review the account of Lang Michener LLP’s (the “law firm”), rendered to their client, Bank of Montreal (the “bank”). The account is for legal fees, disbursements and taxes incurred between August 27, 2003 to and including August 24, 2004. The total amount of the account is $10,259.97, broken down as follows:

Legal fees:	$6,976.50
Disbursements:	$2,135.79
Taxes:	$1,147.68

[2] The law firm’s client, the bank, is entitled to be indemnified for their account from the law firm pursuant to the terms of a mortgage between Mark Edward Bright and Brenda Joyce Bright as mortgagors, and the bank as mortgagee. (See Granville Savings and Mortgage Corp. v. Ireland, [1994] B.C.J. No. 2591). A condition for the bank releasing its mortgage was that sufficient money would be set aside to pay the bank’s legal expenses, to be held in trust and released by agreement or upon a review of the law firm’s account pursuant to the LPA.

[3] Mark Edward Bright and Brenda Joyce Bright were not prepared to approve this account, requiring the law firm to take out an appointment for a review of its account. Counsel for the bank submits that the bank incurred this account protecting its mortgage.

Background:

[4] The Brights were owners of three pieces of real property on which they granted first mortgages to Valley First Credit Union (“Valley First”). The bank had a second mortgage on one of the pieces of property. There were subsequent charge holders to the bank on these properties. Valley First commenced a foreclosure proceeding, joining the bank and others as respondents. Valley First obtained an order nisi with a sixth-month redemption period. Subsequently, the bank sought and obtained an order for sale, which was resisted by the Brights. The law firm retained local counsel for that hearing. At the time of the bank’s application for conduct of sale, the Brights were attempting to sell some of the mortgaged properties in a non-arm’s length transaction. This sale did not complete.

[5] Valley First made the bank’s counsel aware that it was their opinion they were entitled to consolidation with respect to its three mortgages. Counsel for the bank was of the view that if Valley First’s mortgages were consolidated, this would leave the bank unable to realize anything from their security.

[6] Counsel for the Brights brought an application for a vesting order on the property on which the bank held its mortgage. This required Ms. Smith, counsel for the bank, to research the doctrine of consolidation and apportionment and prepare extensive argument in opposition to the proposed distribution of the sale proceeds. Ms. Smith concluded that the issues before the court were very complicated, making it difficult to instruct an agent, and that her client was best represented with her attendance. Initially, the application was to be heard in Vernon, where all other applications had been heard, but eventually this application was adjourned to Kelowna. This required Ms. Smith to rebook airline tickets, losing money on the first ticket. Despite waiting all day in court in Kelowna, the matter was adjourned due to lack of court time. This application was never heard. Counsel for the Brights, Valley First and the bank continued to communicate regarding this and other issues. The Brights were eventually able to sell the property on which the bank’s mortgage was registered. This was the second proposed purchaser that the Brights proposed. This sale was not without its difficulties. This sale took some time to complete as there were conditions to the sale that had to be resolved, needing the bank’s involvement. This added to the time spent by the law firm on behalf of the bank.

[7] The Brights and their counsel received a copy of the bill and the pre-bill, the latter of which shows details of the work done by the law firm. These are respectively exhibits A and B to the affidavit of R. Jennifer Smith. The Brights had legal counsel throughout this foreclosure proceeding; their counsel remains on record.

Evidence:

[8] For this hearing, Ms. Smith, on behalf of the law firm, swore on January 11, 2005 an affidavit reciting the history of this foreclosure proceeding and the issues as they related to the legal services provided to the bank. Ms. Smith gave evidence that her hourly rate charged to this file when she started to act for the bank in this proceeding was $190.00 per hour, and increased to $210.00 per hour upon reaching her six-year call.

[9] Mr. Bright cross-examined Ms. Smith. Mr. Bright emphasised the history of this foreclosure proceeding and focused on what occurred in the proceedings and not the law firm’s account. I pressed Mr. Bright to focus on the details of the account. Mr. Bright was of the view that, except for the consolidation and apportionment issue, this was an ordinary foreclosure.

Decision:

[10] This foreclosure proceeding had some attributes of a usual foreclosure. The unusual issue was consolidation and apportionment, and the sales that the Brights found for their property. These events required the bank’s counsel to be involved in order to protect the bank’s security. A review of the law firm’s account details (exhibit B) shows time was expended doing just that. The details of the account show communication between Brights’ counsel, Valley First’s counsel and the bank’s counsel. In addition, the account details (exhibit B) display the use of what appeared to be legal assistant’s time in providing administrative tasks for the bank. None of these legal services or disbursements were questioned by Mr. Bright.

[11] I am not suggesting that the Brights should not have found purchasers for their real estate, as their interest was to obtain the best possible purchase price. Despite the bank’s order for sale, the bank was prepared to consider offers brought by the Brights, but the law firm was required to view these offers with the bank’s security in mind.

[12] I conclude that the fees, charges and disbursements were all reasonably necessary and proper to advance the interests of the bank. In coming to this conclusion, I have considered s. 71(4) of the LPA.

Costs:

[13] As to the costs of this hearing, counsel for the bank seeks a lump sum award which I view as appropriate. I fix that amount at $950.00, for disbursements $473.18 (airfare for Ms. Smith to travel to this hearing, and the cost of the appointment of $52.00) for a total of $1,475.18.

[14] The amount due by Mark Edward Bright and Brenda Joyce Bright is $10,259.90, with costs in the amount of $1,475.18.

[15] Section 73(3) of the LPA requires me to add to the certified amount an amount for interest. I received no calculations from either Mr. Bright or counsel for the bank, and will leave it to the bank to make a further submission in writing, if the bank seeks interest.

”Master H. Hyslop”

Citation:	*Valley First Credit Union v. Bright et al,*
	2005 BCSC 147