Legal Blog

Retainer #2

     When does the limitation period start to run for the services a lawyer has performed: from the date that the retainer ends or from the date that is 30 days after the lawyer has rendered the account for the services? This question was answered, sort of, in Cosentino v. S. Cosentino Leasing Ltd., 2010 CarswellOnt 2745, 261 O.A.C. 131 (Div. Ct.)

Bad Facts

     Uncle’s corporation retained nephew to defend it in a civil suit. Nephew agreed to act for uncle’s corporation at a reduced rate and achieved a good result. Before nephew billed uncle’s corporation for his services, uncle died. Out of respect for his uncle and his family, nephew held off sending his bill. Ultimately, nephew sent an account for $9,600.

     The retainer had ended in 1999. Nephew did not submit his bill until 2002. Uncle’s corporation did not pay and nephew sued for his fees in Small Claims Court in 2008. If the cause of action arose in 1999, the action was statute barred. If the cause of action arose in 2002, the action was in time.

     The deputy judge agreed that nephew’s fees were reasonable, but dismissed the action because the action was statute barred. Nephew appealed to a single judge of the Divisional Court.

Argument

     Section 2(1) of the Solicitors Act stipulates that a lawyer cannot sue upon an account until 30 days have elapsed from the date the lawyer rendered the account. Nephew argued that his cause of action did not arise until 30 days after he rendered his account. The judge made short shrift of that argument. He stated, “That subsection simply erects a procedural hurdle before the solicitor can sue. It does not say that the solicitor has no cause of action until he or she renders a bill and 30 days have elapsed. The cause of action arises, as is the case in any other situation, when the work has been completed. If it were otherwise, the solicitor could indefinitely postpone the running of the limitation period by the simple device of not sending a bill.”

     Nephew also argued that a solicitor could not indefinitely postpone the running of the limitation period because a client had the right under the Solicitors Act to require the lawyer to render an account. The judge noted that the right of a client to require a lawyer to deliver an account does not change the date that a cause of action arises.

     Accordingly, the judge dismissed the lawyer’s appeal.

Effect

     The case dealt with the old Limitations Act, under which a limitation period starts running when a cause of action arises. The judge specifically stated that he did not decide whether the result would be the same under the Limitations Act, 2002, under which a limitations period starts to run when a claim is discovered – hence our “sort of” qualifier in the first paragraph.

     For what it is worth, we expect that the result will be the same and that a court will decide that a claim arises when the retainer is over. The Saskatchewan Queens Bench did exactly that in Stockman v. Hopkins, 2011 CarswellSask 278. Accordingly, if a lawyer is suing on an account or commencing an assessment application, we suggest that it would be prudent for the lawyer to do so within two years from the date that the retainer ends.