St. Jean et al. v. Armstrong et al.

Pothier (by his Litigation Guardian Pothier) v. Royal & Sun Alliance Insurance Company of Canada

[Indexed as: St. Jean v. Armstrong]

Ontario Reports

Court of Appeal for Ontario

MacFarland, van Rensburg and Huscroft JJ.A.

February 21, 2017

136 O.R. (3d) 257 | 2017 ONCA 145

Case Summary

Professions — Barristers and solicitors — Fees — Contingency fee agreement providing that solicitor would receive one-third of client's recovery if he obtained settlement of tort claim and accident benefits claim — Both claims settled — Motion judge not erring in considering fee claims for tort action and accident benefits action separately and reducing fee for action benefits claim on basis that that claim did not entail same level of risk and complexity as tort claim.

The infant plaintiff suffered a traumatic brain injury in a motor vehicle accident. The solicitor was retained to act in relation to both tort and accident benefits claims. He and the client entered into a contingency fee agreement which provided that, if the solicitor obtained a settlement of the claims, he would receive one-third of the client's recovery plus GST and disbursements. A settlement was obtained. On a motion for approval of the infant settlement, the motion judge reduced the fees on the accident benefits claim and did not award GST/HST. The solicitor appealed.

Held, the appeal should be allowed in part.

The motion judge did not err in considering the fee claims for the tort action and the accident benefits action separately, or in reducing the fee for the latter claim on the basis that the accident benefits claim did not entail the same level of risk and complexity as the tort claim.

The motion judge erred in not awarding GST/HST.

Cases Referred To

• Adler (Litigation guardian of) v. State Farm Mutual Automobile Insurance Co., 92 O.R. (3d) 266
• Henricks-Hunter (Litigation guardian of) v. 814888 Ontario Inc. (c.o.b. Phoenix Concert Theatre), 2012 ONCA 496, 294 O.A.C. 333
• Raphael Partners v. Lam, 61 O.R. (3d) 417

APPEAL

From the judgment of Del Frate J. of the Superior Court of Justice dated May 4, 2015 for an award of fees.

Counsel:

Geoffrey Adair, Q.C., and Kathleen Erin Cullin, for appellant Cindy St. Jean.

No one appearing for respondents.

Reasons for Decision

[1] Endorsement BY THE COURT: This is an appeal by the solicitors who represented the plaintiffs in two proceedings in the Superior Court which ultimately led to a motion for approval of the infant settlement reached in both of those proceedings.

[2] It is not, as the title of proceedings would indicate, an appeal by those plaintiffs.

[3] There are no responding parties to this appeal. The plaintiffs do not oppose this appeal nor do the respondents. The Children's Lawyer was served with the appeal materials but takes no position on the appeal.

[4] The solicitors appeal the motion judge's decision to reduce their fee on the accident benefits claim, and to not award them GST/HST (which they claim at a "pro-rated" rate of 8 per cent) in addition to the amount claimed for fees. They also appeal the motion judge's refusal to grant a sealing order and his failure to refer their fees to an assessment officer.

[5] At the outset of argument, Mr. Adair, on behalf of the solicitors, abandoned the appeal in relation to the sealing order and did not make any argument in relation to the assessment point.

Facts

[6] The facts of the motor vehicle accident giving rise to this matter are set out in paras. 2 and 3 of the reasons of the motion judge. The infant plaintiff suffered a traumatic brain injury and has permanent sequelae as a result of the accident.

[7] Mr. Wallbridge was retained shortly after the accident to act in relation to the tort and accident benefits claims. In July 2006, about two years post-accident, Mr. Pothier signed a contingency fee agreement ("CFA"). The relevant part of that document provides:

Assuming we obtain a settlement on your behalf, we will charge one third of your recovery, plus GST and disbursements.

Settlement Amounts

[8] Both actions ultimately settled before trial in the amounts set out as follows:

Tort Action

• Damages: $550,000.00
• Costs including HST: $110,000.00
• Disbursements: $84,510.00
• Total: $744,510.00

Accident Benefits Claim

• Total Amount: $850,000.00
• Costs: $125,000.00
• Total: $975,000.00

[9] The global settlement, inclusive of costs, was $1,719,510. In accordance with the CFA, counsel sought fees in the amount of $466,000 plus GST/HST of $37,280 plus disbursements of $84,510, for a total of $587,790.

Motion Judge's Decision

[10] The motion judge requested and received further information "to substantiate the claim for one third of the AB Claim". He met with counsel twice and ultimately held a hearing on December 18, 2014.

[11] He reviewed the jurisprudence in relation to CFAs and particularly in relation to those involving claims both in tort and for accident benefits. In particular, he noted Raphael Partners v. Lam, 61 O.R. (3d) 417, as well as Henricks-Hunter (Litigation guardian of) v. 814888 Ontario Inc. (c.o.b. Phoenix Concert Theatre), 2012 ONCA 496, among others. He also noted Justice Wilkins' decision in Adler (Litigation guardian of) v. State Farm Mutual Automobile Insurance Co., 92 O.R. (3d) 266, which as he noted "highlighted the difference between a CFA requiring court approval in a tort claim and an AB claim".

[12] The motion judge approved the CFA in relation to the tort claim and approved the agreement in relation to that claim. He allowed fees in the sum of $183,333 but made the amount inclusive of HST. This amount reflected one-third of the $550,000 amount allocated for damages.

[13] He then reduced the amount sought for legal fees in relation to the AB claim from $280,500 to $170,000 again, such figure to be inclusive of HST. There was no issue in relation to the disbursements which were allowed as claimed.

Motion Judge's Analysis

[14] In his reasons, in paras. 25-40, the motion judge considered the nature of each of the distinct claims made.

[15] He pointed out the difficulty he had in relation to the reconstructed "docket" entries.

[16] He accepted the distinction in the jurisprudence between tort and accident benefit claims and contrasted the risk assumed by the firm in the tort claim compared to the relative lack of risk on the AB claim.

[17] There was a serious risk that there could be no recovery on the tort claim but no such risk existed in relation to the AB claim -- it wasn't a question of "if", but rather "how much" would be recovered with the limits prescribed by the legislation.

Court of Appeal's Analysis

[18] In his able argument, Mr. Adair emphasized the excellent result achieved by counsel in having achieved an overall settlement in excess of $1.7 million. He stressed the "high risk" nature of the tort claim, the length of time counsel's firm carried the case (some eight years before settlement was reached) and the high disbursements carried by the firm. None of this was lost on the motion judge. But while there was risk in the tort claim, there was little risk in the AB claim. Adam was covered under the policy, and while there were some differences over the amount to be paid for attendant care benefits, payments were made and the claim was ultimately settled after pleadings.

[19] Counsel also pointed out that the sum of $275,000 had been paid in accident benefits, in addition to the $850,000 lump sum of the settlement amount. No fees were charged in relation to these moneys and he says the lawyer is entitled to something for that.

[20] We do not agree. First, until argument on this appeal, the lawyers never claimed any fees in relation to this amount. Second, it was not part of any "settlement" on which the CFA was based.

[21] The initial agreement was that the plaintiffs would pay a percentage based on the "settlement amount" -- not on any and all amounts they received.

Separate Consideration of Claims

[22] We are not persuaded that the motion judge made any errors in his consideration of these claims. We agree with his conclusion that the AB claim did not entail the sort of risk and complexity that the tort claim did.

[23] Nor do we agree that he erred in considering the tort and AB claims distinctly. Before the motion judge, counsel took that approach and sought to be paid on that basis of one-third of the $550,000 allotted to the damages in the tort claim and one-third of the $850,000 for the AB claim.

[24] In our view, it was not an error for the motion judge to consider the fee claims for the tort action and the AB action separately. The claims were different with different risks associated with each of them.

[25] We do not agree with the submission that the motion judge ought to have simply looked at the "big picture" and considered the claimed amount for fees of $466,000 in relation to the total amount of the settlement for damages which was $1,400,000 in both claims.

[26] In our view, it was appropriate for him to treat these matters as he did and particularly so when it was the way counsel presented it to him.

[27] Every case must be considered on its own particular facts and we are satisfied the motion judge carefully considered the issues raised in relation to this settlement and we would not interfere with his overall conclusion.

GST/HST Issue

[28] That said, an issue does arise in relation to the GST/HST. The CFA does clearly say that the lawyers were to be paid one-third of any settlement plus GST and disbursements. The motion judge fixed the fees (which were percentage calculations) inclusive of HST. He approved the CFA in relation to the tort claim and accordingly the GST/HST on those fees ought to have been paid to the lawyers in addition to the fee amount. The GST/HST at the pro-rated rate of 8 per cent, on fees of $183,333, is $14,666.64.

[29] Similarly, in our view, although he reduced the fee on the AB claim to $170,000, the lawyers should have the GST/HST of $13,600.

[30] When the lawyers raised this issue with the motion judge after the release of his reasons and asked that he amend this finding, the motion judge considered that he was functus at that point and, accordingly, the issue was left for this court.

Disposition

[31] In the result, the judgment is amended in accordance with these reasons. In all other respects, the appeal is dismissed.

Appeal allowed in part.

End of Document