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Houlden and Morawetz Insolvency Newsletter | Solicitor’s lien

A single judge of the Court of Appeal for Ontario granted leave to appeal to the creditors who claimed a solicitor’s lien and a salvage lien in relation to services rendered or money lent to the bankrupt taxpayer. In doing so, the Court considered s. 193(c) and (e) of the BIA.

Houlden and Morawetz Insolvency Newsletter

By: L.W. Houlden and Geoffrey B. Morawetz

Menzies Lawyers Professional Corp. v. Morton (Trustee of)

The Menzies Lawyers Professional Corporation, and Douglas Menzies personally (collectively, “Menzies”) acted for many years for the bankrupt, Mr. Edwin Morton, in matrimonial proceedings. Menzies postponed their claim for fees on a number of occasions and sought, in this application, to protect their accounts out of Mr. Morton’s estate, having been completely surprised by his bankruptcy. Menzies applied for the recognition of a solicitor’s lien for about $133,000 in respect of their representation of Mr. Morton and a charging order.

Menziesbank Corp. (Menziesbank”) assisted in the implementation of the matrimonial settlement. It claimed a salvage lien for $30,000, the amount it paid to clear two execution creditors’ interests so that the sale of the matrimonial home could close.

The application judge had refused to grant the solicitors a charging order and to grant Menziesbank a salvage lien.

Justice Lauwers commented that there were two issues of law presented by the proposed appeal: Did the application judge make a palpable and overriding error in his apprehension and application of the relevant legal principles in deciding not to:

i. grant a charging order against the estate in favour of Douglas G. Menzies and Menzies Lawyers Professional Corporation, having found the existence of a valid solicitors’ lien?

ii. grant a salvage lien to Menziesbank under section 69 of the BIA?

In the result, Lauwers J.A. found that the criterion of an appeal that is “prima facie meritorious” had been satisfied. Therefore, Lauwers J.A. extended the time for the applicants to file the notice of appeal and granted their application for leave to appeal under s. 193(e) of the BIA.

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