Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20221011 DOCKET: C70413

van Rensburg, Pardu and Copeland JJ.A.

BETWEEN

Joseph Andre Boudreau and Suzanne Boudreau Applicants (Appellants)

and

Lavery, de Billy LLP, Low Murchison Radnoff LLP Respondents

Counsel: Pierre Champagne, for the appellants Loïc Berdnikoff, for the respondent Lavery, de Billy Gary G. Boyd, for the respondent Low Murchison Radnoff LLP

Heard: September 21, 2022 by videoconference

On appeal from the order of Justice K. Phillips of the Superior Court of Justice, dated January 26, 2022.

Reasons for Decision

[1] The appellants brought an application for an interpretation of the retainer agreement between them and the respondents, pursuant to the Solicitors Act, R.S.O. 1990, c. S.15, in the context of seeking an assessment of the respondents’ accounts. The appellants took the position, maintained on appeal, that the retainer agreement was contingency fee-based, with all legal fees capped at one-third of any favourable settlement or judgment. The respondents took the position, maintained on appeal, that the retainer agreement was “pay-as-you-go”, based on hourly rates, with the possibility to bill a premium fee depending on the result of the litigation.

[2] In oral reasons given the day the application was argued, the application judge held that the retainer agreement between the appellants and the respondents was a “pay-as-you-go” agreement, with a reduced hourly rate, rather than a contingency fee agreement. He held that the agreement provided that the respondents could bill a premium fee in the event of a sufficiently favourable result. He held that only the amount of any premium to be billed was capped by a formula related to the amount of a favourable result. There was no cap on hourly fees. The appellants appeal from that decision.

[3] As this appeal turns on the interpretation of a contract, the standard of review is that set out in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 50-55. To succeed, the appellants must establish either a palpable and overriding error of fact or an extricable error of law.

[4] The appellants submit that the application judge erred by considering only the wording of the retainer agreement, and not the surrounding circumstances, in assessing the intention of the parties to the retainer agreement. We disagree.

[5] The application judge applied the correct legal principles in relation to interpretation of contracts, referring to the decision of the Supreme Court of Canada in Sattva. He also recognized that because a solicitor-client relationship imposes fiduciary duties on a lawyer, solicitor-client retainers are contracts that carry particular duties for lawyers to communicate clearly so that the client understands the terms of the retainer. If there is any ambiguity in a solicitor-client retainer, it is to be construed against the drafter – that is, the lawyer.

[6] In his reasons, the application judge considered both the wording of the agreement and the surrounding circumstances. He first considered the wording of the retainer agreement, which he found to be “readily understood and unambiguous.” He then considered the context by assessing whether the meaning of the agreement based on a plain reading made commercial sense. The appellants argue that in so doing, the application judge relied on his own personal knowledge and experience in relation to retainer agreements. We disagree. The application judge was simply assessing whether the nature of the bargain that emerged from a plain reading of the contract was in line with commercial reality.

[7] The appellants’ submissions rely heavily on evidence from Mr. Boudreau to the effect that he understood the retainer to be a contingency fee agreement, and outlining the history of the drafting of the retainer agreement. The appellants submit that the application judge did not consider this evidence of the circumstances surrounding the formation of the retainer. We are not persuaded that the application judge failed to consider this context. Putting to one side possible concerns about the parol evidence rule with respect to some of Mr. Boudreau’s evidence, we emphasize the caution expressed by the Supreme Court in Sattva (at para. 57) that, although the surrounding circumstances are to be considered in interpreting a contract, “they must never be allowed to overwhelm the words of that agreement”.

[8] The appellants also submit that the application judge failed to consider the retainer agreement as a whole because he did not expressly address the example contained in the retainer agreement illustrating how a premium would be calculated.

[9] We do not accept this submission. The application judge quoted almost the entire retainer agreement in his reasons, including the example of how a premium would be calculated. There is nothing in his reasons that suggests he did not consider the retainer agreement as a whole.

[10] We would not interfere with the application judge’s findings that the retainer agreement was readily understandable and unambiguous, and that it was not a contingency fee agreement. Rather, it was a “pay-as-you-go” agreement, based on hourly rates, with the possibility for the law firm to bill a premium in the event of a favourable result. The agreement clearly referred to an hourly rate. It also clearly explained that in return for a reduction in the hourly rate, the retainer agreement provided for the law firm to charge a premium in the event of a “favourable” award. The meaning of “favourable” was defined in the retainer agreement, and the method of calculating the premium was clearly explained.

[11] We see no error in the conclusion of the application judge that the retainer agreement created a cap on the amount of a premium that could be billed depending on the amount recovered, but that it did not cap the fees that would be charged based on the prescribed hourly rate. The language of the retainer agreement is clear that only the amount of any premium would be reduced, if the total amount of billings with a premium and disbursements exceeded one third of the amount of a favourable award. That is, the retainer agreement capped only the amount of a premium that could be charged, and not fees based on the prescribed hourly rates. Indeed, there is no reference in the retainer agreement to hourly fees being capped in any manner.

[12] We note as well, as did the trial judge, that the terms of the retainer agreement required that the appellants pay accounts as they were furnished. Indeed, it specified that accounts would be sent every two months or quarterly, and were expected to be paid within 30 days. Throughout the retainer, the respondents regularly sent accounts to the appellants which listed charges for time spent by lawyers billed at hourly rates. These accounts were paid by the appellants on an ongoing basis.

[13] The appeal is dismissed. The appellants shall pay costs of the appeal to the respondent Low Murchison Radnoff LLP in the amount of $13,000, inclusive of disbursements and applicable taxes.

“K. van Rensburg J.A.”

“G. Pardu J.A.”

“J. Copeland J.A.”