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BARRISTERS AND SOLICITORS - Contingency agreements - Statutory charging order

Friday, July 17, 2020 @ 6:28 AM  


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Appeal by the applicant lawyer from the dismissal of his claim to the proceeds of the respondent client’s insurance policy. The client had a $100,000 after-the-event legal protection insurance policy. The appellant claimed the proceeds of the policy for disbursements incurred representing him in a motor vehicle personal injury action. The parties’ contingency fee agreement provided that the client agreed to pay all disbursements, regardless of the success of his claim, and he assigned the proceeds from his litigation protection insurance to the appellant as security for those disbursements. The application judge found the appellant was not entitled to the proceeds under the parties’ contingency fee agreement as the client was a person under disability represented by a litigation guardian and the agreement had not received court approval. She refused the appellant’s subsequent motion for a charging order over the insurance proceeds to secure his fees and disbursements as an impermissible collateral attack and in any event found the appellant failed to meet the test for a charging order. She found the appellant simply sold the client the insurance policy as an insurance intermediary and the proceeds of the policy were not the fruits of the litigation because the client recovered nothing in the litigation.

HELD: Appeal dismissed. The application judge did not err in finding the contingency fee agreement to be unenforceable. In addition to lacking the required court approval, based on the findings of the application judge, the contingency fee agreement was not fair, reasonable and in the client’s best interests. The application judge did not err in dismissing the motion for a charging order. It was fully open to her to find the appellant failed to meet the test for a charging order. There was no error in the application judge’s findings that there was no property recovered or preserved in the proceeding given the client recovered nothing in the litigation.

Peter B. Cozzi Professional Corp. v. Szot, [2020] O.J. No. 2700, Ontario Court of Appeal, E.E. Gillese, D.M. Brown and M. Jamal JJ.A., June 17, 2020. Digest No. TLD-July132020009