Miller, Canfield, Paddock and Stone, LLP v. BDO Dunwoody LLP

Ontario Reports

Court of Appeal for Ontario,

Laskin, Hourigan and D.M. Brown JJ.A.

April 21, 2016

129 O.R. (3d) 542 | 2016 ONCA 281

Case Summary

Contracts — Breach — Repudiation — Contingency fee retainer agreement providing that client had right to cancel law firm's services and that it would then be liable to pay value of all services to date — Client taking position that law firm's refusal to pay cost of retaining outside appeal counsel amounted to repudiation of retainer agreement and directing law firm to take no further steps on its behalf — Client cancelling law firm's services within meaning of termination provision in agreement when it accepted law firm's repudiation of agreement — Client responsible for payment in accordance with terms of agreement.

A contingency fee retainer agreement between the parties provided that the law firm agreed to act in any and all proceedings that the client intended to commence against certain defendants and that the client had the right to cancel the law firm's services, in which case it would be responsible for paying the value of all services to date. The client took the position that the law firm's refusal to accept responsibility for outside appeal counsel's fees amounted to a repudiation of the retainer agreement. The client accepted the repudiation and directed the law firm to take no further steps on its behalf. The law firm rendered an invoice for the value of services rendered to the date of termination of the retainer agreement. The motion judge dismissed the law firm's action for the payment of those fees. The law firm appealed.

Held, the appeal should be allowed.

When the client accepted the law firm's repudiation of the retainer agreement and told it to take no further steps, the client cancelled the law firm's services within the meaning of the agreement's termination provision, and thereupon became responsible to pay the law firm the value of all services performed to date in accordance with the terms of the retainer agreement.

Authorities referred to

McCamus, John D., The Law of Contracts, 2nd ed. (Toronto: Irwin Law, 2012)

APPEAL from the judgment of Hebner J., [2015] O.J. No. 5641, 2015 ONSC 4806 (S.C.J.) dismissing an action for a payment of fees.

Myron W. Shulgan, for appellant.

James P. Thomson, for respondent.

Endorsement

[1] Endorsement BY THE COURT: -- The appellant law firm, Miller, Canfield, Paddock and Stone LLP, appeals from the judgment of Hebner J. dismissing its action against its client, BDO Dunwoody, for the payment of fees under the parties' April 30, 2007 contingency fee retainer agreement. Under the retainer [page543] agreement, the law firm agreed to act on behalf of BDO "in any and all proceedings" BDO intended to commence against certain defendants. The retainer agreement contained a provision entitled "Termination of Legal Services", which provided that the client, BDO, had the "right, with or without cause, to cancel" the law firm's services. In that event, BDO agreed it would be "responsible to protect and pay the value of all services to date", and the retainer agreement specified how the value of services would be calculated.

[2] A dispute arose between the parties about whether the law firm should pay the cost of retaining outside counsel to appeal a decision in the proceeding BDO commenced. BDO took the position that the law firm's refusal to accept responsibility for appeal counsel's fees amounted to a repudiation of the retainer agreement. On June 19, 2012, BDO wrote the law firm to advise that BDO accepted the repudiation and directed the law firm not to take any further steps on behalf of BDO.

[3] On April 15, 2014, the law firm rendered an invoice to BDO in the amount of $427,891.57 for the value of the services rendered to the date of termination of the retainer agreement. There is no dispute that the invoice accurately calculated the value of those services in accordance with the terms of the retainer agreement.

[4] BDO brought a summary judgment motion to dismiss the law firm's action to collect its fees. The law firm brought a cross-motion for judgment in the amount of the invoice.

[5] The motion judge held that the law firm had breached the retainer agreement and the breach amounted to a repudiation of the agreement, but BDO's acceptance of the repudiation did not amount to a cancellation of services by it.

[6] Assuming, without deciding, that the law firm's refusal to pay the fees of outside appeal counsel amounted to a repudiation of the retainer agreement, in our view the motion judge did not apply the proper principle of law to her interpretation of that contract. A repudiatory breach of a contract does not, in itself, bring an end to a contract. Rather, it confers upon the innocent party, such as BDO, the right of election to treat the contract at an end. As a general rule, the party not at fault must make the election and communicate its decision to terminate the contract to the repudiating party: John D. McCamus, The Law of Contracts, 2nd ed. (Toronto: Irwin Law, 2012), at p. 641.

[7] When BDO accepted the law firm's repudiation of the retainer agreement and told it to take no further steps in the proceeding, BDO cancelled the law firm's services within [page544] the meaning of the agreement's termination provision. In accordance with the terms of the retainer agreement, BDO thereupon became responsible to pay the law firm the value of all services performed to date calculated in accordance with the retainer agreement.

[8] Accordingly, we grant the appeal and set aside the dismissal of the law firm's action. We grant judgment in favour of the law firm in the amount of $427,891.57, together with pre-judgment interest.

[9] We award the law firm its costs of the appeal fixed in the amount of $10,000, inclusive of disbursements and HST, and its costs of the motion below in the amount of $20,000, plus disbursements and HST.

Appeal allowed.

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