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BARRISTERS AND SOLICITORS - Compensation - Contingency agreements

Wednesday, February 27, 2019 @ 8:11 AM  


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Appeal by the plaintiffs from an order finding their solicitors, Stockwoods, were entitled to payment under the terms of a settlement. In 2006, the plaintiffs sued Canada for millions of dollars based upon the principal plaintiff's detention and torture in Syria. In 2008, they approached Stockwoods to act on their behalf pursuant to a contingency fee agreement. The plaintiffs' original lawyers had also been retained on a contingency fee basis. Stockwoods took carriage of the action in 2009. Stockwoods had two other clients advancing similar claims against Canada under similar contingency fee agreements. All three actions were settled in 2017. The settlement provided for payment to the plaintiffs of a specified amount as damages, and a separate specified amount for legal costs. Stockwoods brought a motion for an order approving the settlement and payment of legal fees under the terms of the contingency fee agreement. The plaintiffs contested the right of Stockwoods to claim, under the terms of the contingency fee agreement, a portion of the amounts paid by Canada for their legal costs. The settlement was approved with a separate motion brought by Stockwoods to enforce the contingency fee agreement. The motion judge held that the relevant provisions in the contingency fee agreement were valid and binding on the plaintiffs. Stockwoods was entitled to a portion of the amount paid to the plaintiffs as legal fees as part of the contingency fee agreement due to exceptional circumstances. The plaintiffs appealed.

HELD: Appeal dismissed. Nothing in s. 28.1(8) of the Solicitors Act precluded Stockwoods from proceeding by way of motion within the existing action rather than requiring a formal application. The enforceability of the contingency fee agreement was properly viewed as part of the motion for the approval of the settlement and the contingency fee agreement. No prejudice flowed from the way Stockwoods proceeded. The motion judge did not err in her interpretation of the contingency fee agreement. The language of the agreement was free of any ambiguity or uncertainty, expressly stating that the fee included a portion of the amount paid by Canada for legal costs, and that the plaintiffs were required to support an application for approval of any settlement. The plaintiffs were advised of the fee ramifications associated with Canada's offer to settle. As the motion judge found, there were no indications of duress, mistake or unconscionability. The interpretation favoured by the motion judge promoted the effective operation of the client and solicitor relationship in cases where the retainer involved a contingency fee agreement. The motion judge's reasons and the surrounding circumstances of the litigation justified the finding of exceptional circumstances in support of the payment.

Almalki v. Canada (Attorney General), [2019] O.J. No. 202, Ontario Court of Appeal, D.H. Doherty, B. Miller and D. Paciocco JJ.A., January 17, 2019. Digest No. TLD-February252019007