Fee agreements with a party under disability
By Natalia Angelini
The Herricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre) decision of The Court of Appeal for Ontario, released last week, is an appeal from an order fixing the fees the appellant law firm could charge to a client under disability.
The action stemmed from tragic events, whereby the client fell from a catwalk while attending a concert at the premises of the defendant. She sustained personal injuries, including a severe traumatic brain injury. The Office of the Public Guardian and Trustee (PGT) was appointed the client’s Guardian of Property. The PGT entered into a contingency fee agreement (CFA) with the appellant in respect of the litigation.
The action was settled at mediation, and the fees were fixed at the approval motion. The payment that would have been made to the appellant under the CFA was significantly greater than the amount ultimately ordered by the motion’s judge.
The matter went before the Court of Appeal. The Court of Appeal helpfully noted that when a lawyer seeks to enter into an enforceable CFA with a party under disability, the lawyer shall: (a) apply for approval of the CFA before it is finalized; or (b) include the CFA as part of the approval motion/application or a consent judgment under Rule 7.08.
I like that this gives counsel a choice to have the CFA approved at the outset, which would diffuse any issue of fairness being raised at the end of the day.
As in this case the CFA was to be assessed on the approval motion pursuant to Section 24 of the Solicitors Act, the Court of Appeal appropriately cited its decision in Raphael Partners v. Lam as setting out a two-step process where enforcement of a CFA is sought, being: (1) the fairness of the agreement is assessed as of the date it was entered into; and (2) the reasonableness of the agreement is assessed as of the date of the hearing. A CFA can only be declared void, or be cancelled or disregarded, where the court determines it is unfair or unreasonable.
The court went on to succinctly cite the tests for fairness and reasonableness, and conduct an analysis in respect of the case at hand. It allowed the appeal and found that the motion judge erred in failing to consider whether the CFA should be enforced, and by proceeding directly to the determination of the amount of fees (time spent and hourly rates) without regard to the CFA.
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