[A previous version of this article erroneously stated the Braich family homestead was located on Mission’s waterfront. The family’s waterfront property is separate from the family’s homestead.]
A former estate lawyer for the Braich Family Estate was awarded hundreds of thousands in interest over unpaid legal fees in B.C. Supreme Court on Nov. 27.
The estate of Herman Jr. Braich, who is now deceased and represented through his brothers, Kenny and Bobby Braich, owes to $676,000 to the family’s former estate lawyer for legal work dating from December 2004 to October 2010, a B.C. Supreme Court registrar ruled. The initial debt was $267,000, but continued non-payment at eight per cent interest since 2006 has more than doubled the bill.
“The clients … chose to let interest charges accrue rather than obtain financing to simply pay the outstanding accounts,” the court ruled on Nov. 27.
The Braich brothers were recently in a dispute with the District of Mission over the designation of almost 300 acres along the Fraser River as a comprehensive planning area – 87 acres of which is owned by the family.
The brothers had been working on a deal to sell their land to the Martini Development Group, but the deal fell through when the developers learned the district’s designation would require a two-year study and would delay development-permit approvals.
The Braich counsel’s main objections were over the interest owed to the law firm, which accrued when their brother – who died in 2012 – was the family estate’s executor and trustee. Their counsel argued it was Herman Jr.’s belief the interest would be waived upon payment of the primary debt.
The law firm, Fasken Martineau DuMoulin, was hired by Herman Braich Jr. in 1988, after he became the executor and trustee of the estate.
Carphin, a lawyer with the firm, worked extensively on the family’s estate for over 20 years, which included the asset sales of the Herman Sawmill for $15 million in the 1990s, and matters relating to the family’s large homestead, which is now listed for sale at $13.9 million.
During the six years in question, Carphin fought off numerous legal challenges – many of which involved difficult inter-family disputes – including applications to remove Herman Jr. as a trustee, property-ownership challenges, and litigation which proceeded to court in 2008.
By October 2003, the estate’s remaining assets had been distributed to their respective beneficiaries, primarily through advances on future inheritances. This provided enough liquidity to pay the firm’s legal bills up to that point.
The estate’s only remaining asset was the family’s homestead.
That same month, Carphin and his firm were again retained by Herman Jr. to keep providing legal services for the estate with the expectation of payment upon the sale of the homestead.
Carphin retired in early 2006, but agreed to continue to work on the estate through a split arrangement with Fasken. He would provide services, and they would bill the family – but now with interest.
“All of our accounts to you are due and payable upon receipt. If our accounts are not paid within 30 days of their date, interest is charged from the date of the account on the outstanding balance at the rate of 8%, compounded annually, until paid,” the terms said.
Herman Jr. signed the retainer in March 2006 to confirm these terms. Carphin said he relied on the agreement when he decided to continue to work on behalf of the estate.
From September 2003 to October 2010, 16 account statements were sent from Fasken to Herman Jr., “who did not at any time question or dispute the amounts billed.”
But the estate’s counsel argued that prior to the retainer, the firm did not require Herman Jr. to pay the legal fees on a timely basis, and did not charge interest.
For instance, some legal bills from 1999 were not paid until 2002 and did not include interest. They also point to the previous arrangement regarding the sale of the homestead property.
The Braich lawyers argued that Carphin and the firm had a duty to advise Herman Jr. to seek outside legal advice before signing the letter, and they did not calculate, confirm or advise him on the amount of interest they were claiming before his death in 2012.
The family’s counsel claims their brother was unduly influenced to sign the agreement.
The court dismissed the claim as it was made in the closing submissions, and Carphin was not given an opportunity to defend against a “very serious” allegation.
Bobby Braich testified that Herman Jr. told him about the interest provision in the retainer, but that his brother wasn’t worried because he believed it would be waived upon payment on the primary debt of $267,000.
Carphin’s counsel objected to that claim, calling it hearsay.
A letter sent from Carphin to Bobby in 2012, when the compounded interest totalled over $450,000, advised that if the primary debt was paid soon, he may be able to convince the firm to significantly reduce the interest, but that his “influence at Faskens diminishes the longer I’m away.”
The court found no concrete evidence of any agreement to abandon the interest charges, and that Bobby’s testimony “overwhelmingly indicates” knowledge of the interest charges set out in the 2006 terms.
“Herman Jr. may have hoped that Faskens would waive or reduce the interest charges,” the court found. “[The 2012 letter] can be seen as nothing more than a willingness to provide a longstanding client with a financial accommodation if the matter could be resolved soon.”
In 2015, the firm assigned to Carphin all its rights, title and interest in the amounts recoverable on the bills.
Carphin elected to waive his right to compounded interest and only collect simple interest for the purposes of the hearing, which the court saw as a “fair and reasonable rate in the circumstances of this case.”
“There was no realistic prospect of timely payment of the accounts. Mr. Carphin carried on providing legal services on the disputes while carrying the client’s unpaid fees. This was an admirable act of loyalty by Mr. Carphin to Herman Jr.”