Clatney v. Quinn Thiele Mineault Grodski LLP, 2016 ONCA 377

In special circumstances, the Court of Appeal has jurisdiction to reopen contingency fee agreements that have been paid and order an assessment to be conducted to ensure public confidence in the administration of justice.

Released May 19, 2016 | Full Decision [CanLII]

In March 2008, the appellant was seriously injured in a motor vehicle accident. In January 2009, the appellant retained one of the respondent law firms to represent him in his tort and accident benefits claims, entering into a contingency retainer agreement with a provision stating that, if the appellant terminated the retainer prior to the resolution of his claim, he would pay the firm all fees, disbursements and charges for services rendered by it to the date of termination. In November 2012, the appellant terminated the first respondent law firm’s retainer and hired the second respondent law firm. The appellant entered into a contingency fee agreement with the second firm that provided for payment of fees equal to 30% of damages recovered, plus disbursements incurred, plus HST.

This claim was settled in July 2013 for $800,000, which included an amount that for Family Law Act (“FLA”) claims advanced by the appellant’s wife and two sons. Under a court order, the settlement monies that then remained, approximately $655,000, were held under a charging order pending resolution of the accounts of the first respondent law firm for fees rendered and disbursements incurred in representing the appellant in the initial stages of his tort action. In November 2013, $70,000 of that $655,000 was paid into court on behalf of the appellant’s sons. On December 3, 2013, an order was issued on consent that provided for the release of the remaining monies, approximately $585,000. The consent order specified payment to the two respondent law firms in full satisfaction of their fees and disbursements, with the remainder to the appellant, which allocated approximately $274,000 to the appellant and $310,000 to the respondents in total. In November 2014, the appellant brought an application for an order to have the respondents’ accounts assessed pursuant to the Solicitors Act. The application judge dismissed the application on the basis that in light of the consent order, he lacked jurisdiction to hear the matter. The appellant appealed.

The Court of Appeal allowed the appeal. It found that the application judge erred in finding that he lacked jurisdiction. The appellant requested that the application judge set the consent order aside, thus removing any collateral attack concerns. The application judge should have considered this request and his failure to do so constituted an error in law. Tsaoussis (Litigation Guardian of) v. Baetz (1998), 41 O.R. (3d) 257, illustrated two ways by which an individual who would be able to set an order aside: 1) a party can move in the original proceedings under r. 59.06(2)(a) in cases of “fraud or facts arising or discovered after [the order] was made”; 2) the party can bring a separate action to set aside the order. In this case, setting aside the consent order was found to be necessary to achieve justice between the appellant and the respondents due to the desperate financial issues of the appellant.

The Court of Appeal further ordered that the respondents’ accounts be assessed. The courts have inherent jurisdiction as well as jurisdiction under the Solicitors Act to order lawyers’ accounts to be assessed. This is important in the face of public interest and in maintaining public confidence in the administration of justice. Although the amounts agreed upon in the contingency fee agreements had already been paid, the Court reopened the agreements and ordered an assessment pursuant to s. 25 of the Solicitors Act, which allows, in special circumstances, for the agreement to be reopened and order the costs, fees, charges and disbursements to be assessed. The courts may also order the whole or any part of the amount received by the solicitor to be repaid by him or her on such terms and conditions as to the court seems just. “Special circumstances” are those in which the importance of protecting the interests of the client and/or public confidence in the administration of justice, demand an assessment. The Court of Appeal found that this case encompasses such special circumstances. At the time the appellant entered into the contingency agreement, he was vulnerable due to being permanently impaired by the brain injury he suffered in the car accident and was under intense financial pressure. The appellant did not have independent legal advice.

He expressed his dissatisfaction with the legal services rendered by both firms and terminated his retainer with the first respondent law firm. Furthermore, the second respondent law firm’s representation of the appellant included conduct that; 1) contributed to the need for the first respondent law firm to obtain the Charging Order, 2) resulted in an order that reflected no effort on the second respondent law firm’s part to represent the appellant’s interests by ensuring that the Charging Order affected him only to the extent necessary, 3) misled the appellant by providing erroneous legal advice and 4) exerted pressure on the appellant to settle – all of which put the appellant in a position in which he had little choice but to enter into the contingency fee agreements.

 

Read the full decision on CanLII
Einav Shlomovitz
Written by

Einav practices exclusively in civil litigation. Her practice focuses on motor vehicle accident, accident benefits, occupier’s liability, slip/trip and falls, dog bites, medical malpractice, solicitor negligence, class action, employment and sexual assault claims.

During her free time, Einav takes improv and Spanish lessons. She enjoys being active, traveling, and spending time with family and friends.