Michael Ford (post until Oct. 31/19)
Corporate

Paralegals cannot register and discharge liens

A recent decision in small claims court makes it clear that paralegals must leave lien work to lawyers, says Toronto business lawyer Joel Berkovitz.

“This case is significant because it recognizes that paralegals cannot and should not register or discharge condo liens,” says Berkovitz, a lawyer with Shibley Righton LLP.

The case began when the plaintiff missed an assessment notice from her condominium corporation and failed to pay by the deadline, he tells AdvocateDaily.com. The corporation then registered a lien against her property and charged her for the legal fees.

The plaintiff, a paralegal herself, knew that registering and discharging a lien falls outside of a paralegal’s authorized area of practice and that the condo management company couldn't then collect legal fees for the work, explains Berkovitz.

The condo owner paid the entire amount, then launched the small claims action to recoup the legal fees.

Berkovitz says there was a separate investigation by the Law Society of Upper Canada, which found that the work was outside of the paralegal’s licence.

The judge in small claims court also ruled that the condo corporation's paralegal was acting outside of her scope of authority. In his decision, he wrote “the paralegal was engaged in unauthorized practice, and that preparing and placing liens on property is properly the work of lawyer licensees.”

The question before him, however, was whether the condo corporation could collect fees for those “unauthorized” services.

“On its face, [the Solicitors Act ] prohibits someone who is not a solicitor from recovering legal costs. However, on closer reading, the section appears to be restricted to situations where a person who is not a solicitor represents a party in 'any action or proceeding,'” wrote the judge. 

Since discharging liens is neither an action nor a proceeding under the law, the judge dismissed the claim. Usually when that happens, the defendant is entitled to costs, but in this case, the judge decided against it.

He wrote that it was “in the public interest to prevent unauthorized practice, and to discourage [the defendant] from continuing its practice of using paralegals for work they are not authorized to do. [The plaintiff] obviously put time and effort into this and did so at her own expense. Her efforts should have some recognition.”

He awarded her $500.

“While the award doesn’t come close to covering the actual time she expended on this case, it is symbolically significant,” says Berkovitz. “The judge said that while she didn’t win the case, she was entitled to some cost for it.”

He says the case means that the practice in some larger management companies to have in-house paralegals do lien registration work must now stop.

Berkovitz suspects that paralegals can continue to issue the notices that are sent out 10 days in advance of registering a lien. Since the case didn’t address notices, he says paralegals can continue to send them out and charge for the work.

“It’s a reasonable presumption from the case that they can continue to send out notices since this is an administrative task — unless there is some finding in the future that says sending a Notice of Lien is part of the lien registration process. If that happens, the entire lien process must be handled by lawyers,” says Berkovitz.

As for the question that remained surrounding whether liens should be viewed as an “action or proceeding,” the judge wrote: “I regard this as something of a legislative oversight, and one in need of remediation. That however is a matter that must be dealt with by the Legislative Assembly of Ontario.

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