Court File and Parties

COURT FILE NO.: 17-73339 DATE: 2018/08/09 ONTARIO SUPERIOR COURT OF JUSTICE

IN THE MATTER OF: THE SOLICITORS ACT – and – IN THE MATTER OF THE APPLICATION OF MICHELLE CONNOLLY, MICHAEL TAYLOR CONNOLLY, by his litigation guardian, MICHELLE CONNOLLY and CONNOLLY OBAGI LLP Joint Applicants

Counsel: Thomas P. Connolly, Counsel for Connolly Obagi LLP, Taylor Connolly, and Michelle Connolly Ashley Bennett, Counsel for Christopher Moore

HEARD: November 15 and December 7, 2017, and April 13, 2018 at Ottawa

RULING on application for approval of contingency fee retainer agreement

CORTHORN J.

Introduction

[1] This is an application for approval of a contingency fee retainer agreement (“CFRA”) in the context of personal injury litigation.

[2] Taylor Connolly was eight years old in 2003 when, as a pedestrian crossing a residential street, he was struck by a car and injured. He will be 23 years old this month. Taylor does not have the capacity to instruct counsel and, therefore, has had a litigation guardian throughout the tort action commenced on his behalf. Taylor’s mother, Michelle Connolly, is his litigation guardian.

[3] The plaintiffs were represented initially by Christopher Moore. From early 2011 to the present, the plaintiffs have been represented by Joseph Obagi of Connolly Obagi. The plaintiffs’ family name and that of Mr. Obagi’s partner in the law firm is a matter of coincidence.

[4] This application for approval of a CFRA was commenced in the summer of 2017. At that time, the plaintiffs expected both the main tort action and related third party claim to proceed to trial in March 2018.

[5] In the fall of 2017, a settlement was reached of the main action. The settlement was approved by the court. As part of the settlement, the plaintiffs received from the defendant an assignment of his rights with respect to the third party claim (for contribution and indemnity). As assignees of that claim, the plaintiffs anticipated proceeding to a trial of the third party claim in March 2018.

[6] In early 2018, a settlement was reached of the third party claim. That settlement was approved by the court.

[7] Once this application for approval of the CFRA presented to the court is determined, the settlement approval motions in the main action and the third party claim shall be continued. The request for approval of the solicitor-client accounts of Mr. Moore and Connolly Obagi, respectively, will be determined at that time.

a) Retainer Agreement

[8] The CFRA for which approval is now sought (“the Agreement”) is based on a letter written by Mr. Moore to Mr. Obagi, at the time of the transfer of the file from the former to the latter (“the Letter”). I say “now sought”, because the CFRA before the court is the second of two such agreements presented for approval.

[9] The Letter, dated March 2011, confirms the substance of a telephone conversation between the two lawyers at the time of transfer of the file. The conversation included a discussion about “the arrangement that has been put into place with respect to the costs with Ms. Connolly.” In the Letter, Mr. Moore sets out his understanding of the arrangement, as follows:

1. You have advised Ms. Connolly that the overall contingency arrangement will be 25% plus costs.
2. That out of the 25% that 10% be allocated to my fees plus any out-of-pocket expenses or disbursements incurred by me. The effect will be that your arrangement will be 15% plus costs.

[10] In her affidavit, filed in support of the application, Michelle acknowledges that she consented to the retainer arrangement described by Mr. Moore. At the time of the transfer of the file from Mr. Moore to Connolly Obagi, Michelle did not sign any retainer agreement.

[11] The Letter also confirms that Connolly Obagi “will likely be taking the steps necessary to have this Contingency Fee Agreement approved by the Court.” In the Letter, Mr. Moore offers to provide assistance, if required, with respect to the application for approval of the CFRA.

[12] Connolly Obagi acknowledge that (a) the Letter accurately reflects the substance of the telephone conversation at the time of the file transfer, and (b) they agreed to take steps to protect Mr. Moore’s account.

[13] It was not until the summer of 2017, in anticipation of both the main action and third party claim proceeding to trial, that Connolly Obagi took steps to have a CFRA approved by the court. At no time prior to 2017 did either Mr. Moore or Connolly Obagi have a signed retainer agreement with Michelle personally and in her capacity as litigation guardian. The Agreement presented for approval at this time is unsigned.

[14] This application was not determined in the fall of 2017, when it was originally before me. It could not be determined at that time because no formal assessment of Taylor’s capacity to manage his financial affairs or of his ability to instruct counsel had been carried out after he turned 18 years of age. The assessment was required for the court to determine whether Taylor is a person under a disability who requires a litigation guardian. That assessment was carried out in early 2018 and the report filed with the court. I am satisfied on the basis of the report that Taylor is a person under a disability.

[15] In summary, the Agreement requires approval because (a) Taylor is a person under a disability, and (b) it calls for Connolly Obagi to be paid a 15 per cent contingency fee plus the costs recovered from the opposing party.

b) Sealing Order

[16] When the application was first before the court, Taylor and Michelle anticipated proceeding to a trial of the main action and of the third party claim. A sealing order was requested on the basis that leaving the application record as part of the public record would mean that it was available for the defendant and third party in the related action to view. Taylor and Michelle were concerned about potential prejudice to them in the pursuit of their claims.

[17] The application record has, to date, been kept separate from the court file that is available to the public.

The Issues

[18] The issues to be determined on this application are:

1. Is the contingency fee retainer agreement presented to the court approved?
2. Are the circumstances of this matter “exceptional”, such that they support payment to Connolly Obagi (as opposed to payment to the client) of the costs recovered from the opposing party or parties?
3. Are the criteria for a sealing order met?

Issue No. 1 − Request for Approval of CFRA

a) The Law

i) Contingency Fee Retainer Agreements Generally

[19] A lawyer acting pursuant to a contingency fee retainer agreement for a person under a disability is required to obtain approval of the court for the retainer agreement (O. Reg. 195/04, s. 5 (“the Regulation”)). The application for approval may be made before the agreement is finalized (s. 5(1)(a)). Or, the request for approval of the agreement may form part of a motion or an application for approval of a settlement (s. 5(1)(b)).

[20] The settlements of the main action and third party claim were reached after this application was commenced. The motions for approval of the settlements reached were made independent of this application. The motions did not include a request for approval of the CFRA, as it relates to either the main action or the third party claim. This application is therefore made pursuant to s. 5(1)(a) of the Regulation (i.e. before the Agreement is finalized with the client).

[21] In paragraph 42 of his decision in Re Cogan, R. Smith J. sets out the factors to be considered by the court when a CFRA is presented for approval ((2007), , 88 O.R. (3d) 38 (S.C.J.)). The factors include:

a) The financial risk assumed by the lawyer, with reference to the likelihood of success, the nature and complexity of the claim, and the expense and risk of pursuing it; b) The results achieved and the amount recovered; c) The expectations of the client; d) Which of the lawyer or the client is to receive an award of costs; and e) Achievement of the social objective of providing access to justice for injured parties, including injured children and parties under disability.

ii) Contingency Fee Plus Costs

[22] Only in “exceptional circumstances” is a lawyer acting pursuant to a CFRA permitted to deliver to the client an account based on the total of (a) the stated percentage of damages and interest recovered, and (b) costs recovered from the opposing party (*Solicitors Act*, R.S.O. 1990, c. S.15, s. 28.1(8)). Otherwise, the solicitor-client account must be based solely on a percentage of damages and interest recovered; costs recovered are paid to the client.

b) Agreement Presented for Approval

[23] The Agreement is a ten-page document on Connolly Obagi letterhead. It is included as an exhibit to an affidavit from Mr. Obagi sworn in October 2017. That affidavit was sworn subsequent to the settlement of the main action, when it was known that the plaintiffs had secured an assignment of the defendant’s rights with respect to the third party claim.

[24] The matter to which the Agreement applies is described as:

[A] potential claim (the “Claim”) for recovery of damages for personal injuries sustained by Michael Taylor Connolly and his mother, Michelle Connolly, as a result of a motor vehicle accident which occurred on November 1, 2003. This retainer includes the prosecution of the Third Party Claim issued by Robert Riopelle as against Michael Connolly.

[25] The Agreement highlights that the client chose a contingency fee basis for the retainer. The first explanation provided with respect to fees is, “If you do not receive any money for the claim, you do not pay us for legal fees.”

[26] The narrative explanation as to how fees will be calculated reflects the wording of the Letter:

The fees payable to CONNOLLY OBAGI LLP are based on a contingency amount equal to 15% of the total amount recovered, plus applicable HST, together with any and all costs recovered. ( Emphasis, as in the original. )

The fees of your previous counsel, namely Christopher A. Moore Professional Corporation, shall be fixed at 10%, plus H.S.T., of any recovery or award of damages secured, plus disbursements incurred.

[27] A sample calculation is included in the Agreement. From the calculation it is clear that “the total amount recovered”, as relates to the 15 per cent and Connolly Obagi’s fees, means the total for damages and interest (i.e. exclusive of costs). The narrative explanation of the calculation could be improved upon.

[28] The Agreement addresses how fees will be charged in the event the client chooses or Connolly Obagi choose to terminate the Agreement. In either event, fees will be charged on an hourly rate basis. The hourly rates chargeable are set out for each potential timekeeper. The hourly rates are identified as “our usual hourly rates” and said to “generally increase annually.”

[29] I mention the discussion of hourly rates because it falls short of the requirements of the Regulation. Nowhere in the Agreement is it stated “that the client has been advised that hourly rates may vary among solicitors and that the client can speak with other solicitors to compare rates” (the Regulation, s. 2, item 3ii). For the following reasons, that oversight is not fatal to the application:

• The Agreement informs the client that she would have the right to have an account, if delivered on a fee-for-service basis, assessed by the court;
• The application was commenced at a time when the plaintiffs were anticipating proceeding to a trial of both the main action and the third party claim;
• The substantive elements of the settlements reached of the main action and of the third party claim have been approved; and
• There is minimal, if any, possibility now that the Agreement will be terminated by either the client or Connolly Obagi.

[30] I turn next to consideration of the overall 25 per cent contingency fee and then to whether the circumstances of this matter are exceptional and support payment to Connolly Obagi of the costs recovered.

i) Contingency Fee of 25 Per Cent

[31] To consider the factors identified in Re Cogan, it is imperative to understand how the accident occurred. The evidence in that regard is as follows:

• Taylor was visiting with and being looked after by his maternal grandparents on the day of the accident. The third party Michael Connolly is Taylor’s grandfather;
• At the time of the accident, Taylor was in his grandfather’s care;
• Taylor darted from the front lawn of his grandparents’ home, without looking, onto the road and into the path of a car driven by the defendant Robert Riopelle;
• The opinion expressed by a number of individuals who investigated the accident, is that Riopelle did not have sufficient time to avoid striking Taylor with his car. The individuals who expressed that opinion include the O.P.P. officer who carried out the Technical Traffic Investigation and two engineers retained on behalf of the defendant;
• The same two engineers also expressed the opinion that the accident was caused by Taylor’s inattentiveness in darting onto the road as he did.

Main Action

[32] The theory that the plaintiffs intended to advance at the trial of the main action is that Riopelle (a) had sufficient time to observe Taylor before he entered the road, (b) ought to have taken evasive action earlier than he did (if he did at all), and (c) was distracted by his dog who was travelling with Riopelle in the cabin of his truck.

[33] Based on those circumstances and theories alone, I am satisfied that the risks involved in the pursuit of the main action were such that the matter is appropriate for a CFRA. The risks, however, are not limited to those associated with the main action.

[34] The risks were enhanced because the defendant advanced a counterclaim against Michelle Connolly. The counterclaim is based on negligent training of Taylor in road safety.

[35] Riopelle pursued a third party claim in which he sought contribution and indemnity from Michael. Riopelle alleged negligence on Michael’s part in failing, amongst other things, to properly supervise and instruct Taylor. The third party defended both the third party claim and the main action.

[36] The trial was scheduled to proceed in March 2018 before a judge and jury for five to eight weeks. Barring a pre-trial resolution of some of the issues, I am all but certain that the trial of the action would have lasted more than five weeks; it could well have lasted more than eight weeks.

[37] The factors that created risk in pursuing the main action also contributed to the complexity of the plaintiffs’ claim. In addition, the pursuit of the action was complex because of the nature of the injuries suffered by Taylor and the fact that he was young when the accident occurred.

[38] Taylor had a Glasgow Coma Scale reading of 4/15 on arrival at CHEO following the accident. Michelle’s evidence is that despite Taylor’s hard work and that of his medical rehabilitation specialists, Taylor remains with cognitive difficulties. With the support of his mother and a private tutor, Taylor is attending Algonquin College. Within the context of a structured environment and the presence of significant supports, Taylor is able to function both on a daily basis and in an academic setting. Taylor will live with disabilities for the rest of his life.

[39] Advancing a claim of this kind at a trial before a judge and jury requires the management of expert evidence in the fields of accident reconstruction, neuropsychology, occupational therapy, life-care planning, and other healthcare and rehabilitation disciplines. The evidence must be presented in a way that allows six lay people and the trial judge to understand it.

[40] As of mid-October 2017, the disbursements incurred by Connolly Obagi ($27,625) and Mr. Moore ($1,865), totaled approximately $29,490. None of those disbursements had been paid by the clients. Mr. Obagi estimates that the disbursements would total in excess of $100,000 if the matter proceeded to trial. I accept Mr. Obagi’s estimate in that regard as reasonable.

[41] As of mid-October 2017, the dockets by the timekeepers at Connolly Obagi represented fees in excess of $110,000. The time docketed by Mr. Moore from March 2004, when he was initially contacted by Michelle, until March 2011, when the file was transferred, amounts to fees totaling $21,210. Both figures are exclusive of HST.

[42] I find that Mr. Moore and Connolly Obagi each assumed financial risk in representing Taylor and Michelle in the main action. That risk was assumed when the likelihood of success was very uncertain.

[43] I find that Michelle fully expected both Mr. Moore and Connolly Obagi to assume the financial risks associated with the pursuit of the claims on her and Taylor’s behalf. Michelle did not provide any monetary retainer to either of Mr. Moore or Connolly Obagi.

[44] This application was commenced and originally returned at a time when neither of the settlements ultimately reached had been negotiated. Taking into consideration only those factors that were known before the settlements were reached, I find that a contingency fee of 25 per cent is reasonable with respect to the main action.

[45] Approval of the contingency fee achieves the relevant social objective: providing access to justice to two individuals who were not in a position to pay for a lawyer to represent them.

[46] If that were not enough (and I find that it is), because of the settlements reached in the intervening period, it is possible to consider additional factors in assessing the proposed 25 per cent contingency fee. For example, I am in a position to consider the results achieved and the amount recovered.

[47] The settlement of the main action includes the following monetary term. The defendant paid to the plaintiffs the sum of $1,143,713, broken down as follows:

Damages and PJI	$ 950,000
Fees	$ 142,500
HST on Fees	$ 18,525
Disbursements (incl. HST)	$ 32,688

[48] The damages and interest paid represent 95 per cent of the $1,000,000 in third party liability limits available to the defendant. I find that the results achieved and amount recovered further support the reasonableness of the 25 per cent contingency fee as it relates to the main action.

Third Party Claim

[49] Had the plaintiffs, as assignees of the defendant, been required to pursue the third party claim, they faced risks similar to those associated with the pursuit of the main action. The complexity of the matter did not change much, if at all, from the pursuit of the main action to the pursuit of the third party claim. The same issues needed to be determined and the same evidence was required on the issues of liability and assessment of damages, the latter because the third party had defended the main action.

[50] I find that there were additional risks to Taylor and Michelle in pursuing the third party claim. First, Taylor had recovered money in the main action from which money an adverse award of costs could be paid. Second, the decision to take an assignment of the defendant’s rights in the third party claim was made by Michelle personally and in her capacity as litigation guardian. There was the potential for a costs award against her, given that the strategic decision to take the assignment was hers.

[51] The settlement of the third party claim includes the following monetary term. The third party paid to the plaintiffs, as assignees of the defendant, the sum of $1,113,025 broken down as follows:

Damages and PJI	$ 950,000
Fees	$ 142,000
HST on Fees	$ 18,525
Disbursements (incl. HST)	$ 2,500

[52] I note that the fees recovered with respect to the third party claim are $500 less than the fees recovered with respect to the main action—yet the HST payable is the same ($18,525). It is not clear where the error has occurred. The discrepancy, if there is any, with respect to fees recovered and HST on fees can be addressed as part of the motion for approval of the proposed solicitor-client accounts in the third party claim.

[53] The damages and interest paid represent 95 per cent of the $1,000,000 in third party liability limits available to the third party. I find, once again, that the results achieved and amount recovered further support the reasonableness of the 25 per cent contingency fee as it relates to the third party claim.

ii) Summary

[54] I find that the overall contingency fee of 25 per cent is reasonable with respect to each of the main action and the third party claim. I turn next to the request for approval of payment to Connolly Obagi of costs recovered from the opposing party in addition to payment of a contingency fee.

Issue No. 2 − Exceptional Circumstances

[55] Connolly Obagi must satisfy the court that “exceptional circumstances” exist in this case to support a solicitor-client account in each of the main action and third party claim based on the total of (a) 15 per cent of the damages and interest recovered, and (b) costs recovered from the opposing party. There is no definition of “exceptional circumstances” in either the Act or the Regulation.

[56] Connolly Obagi rely on the decision of Toscano Roccamo J. in Williams (Litigation Guardian of) v. Bowler in support of their submission on this issue ((2006), , 81 O.R. (3d) 209 (S.C.J.)). Connolly Obagi rely in particular on paragraph 27 of the decision as authority for the proposition that, when interpreting “exceptional circumstances”, the court should not set the threshold “so high as to discourage counsel from accepting retainers in cases of merit, particularly difficult matters, such as this one, which usually require significant investment of time and disbursements through to and including trial and often appeal.”

[57] I agree that paragraph 27 of the decision in Williams includes the quotation set out immediately above. That quotation, however, is a summary of the submissions of counsel in the matter; it is not a conclusion reached or finding made by Toscano Roccamo J.

[58] Connolly Obagi submit that the risks undertaken by them in representing Taylor and Michelle are similar to the risks undertaken by plaintiffs’ counsel in Williams. I disagree.

[59] First, Williams was a complex medical negligence action in which the defendants advanced a causation defence. Second, counsel for the plaintiffs in Williams guaranteed the plaintiffs a structure that would pay out $12,500 per month. Toscano Roccamo J. described that guarantee as the assumption of “a very significant and unusual risk” (para. 31). She also considered that counsel for the plaintiffs had to deal with complications arising from having individual clients who were feuding amongst each other. Neither of those circumstances is present with respect to Taylor and Michelle.

[60] I find that “exceptional circumstances” do not exist with respect to either the main action or the third party claim. Connolly Obagi’s solicitor-client accounts in each of the main action and third party claim shall be considered on the basis of the approval of the overall contingency fee of 25 per cent and the 15/10 set out in the Letter and in the Agreement.

Issue No. 3 − Sealing Order

[61] A sealing order was requested on the basis that Taylor and Michelle would be prejudiced in the pursuit of their claims if the record remains part of the court file to which the public, including the defendant and third party, has access. With both the main action and third party claim now settled, the grounds upon which the applicants rely in support of the request for a sealing order no longer exist.

[62] Pending a final order on the application, the record has been kept and remains separate from the court file to which the public has access. Counsel shall advise the court whether the request for a sealing order is being abandoned or maintained. If the request is being maintained then counsel shall (a) file any additional materials upon which they intend to rely in that regard, and (b) arrange for the hearing of this application to be completed.

Approval of Solicitor-Client Accounts

[63] This application does not include approval of proposed solicitor-client accounts from Mr. Moore and Connolly Obagi. The proposed solicitor-client accounts shall be addressed on the continuation of the two motions made pursuant to r. 7.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 in the related file (Court File Nos. 05-CV-32630 and 05-CV-32630A). I remain seized of those two motions.

[64] During the hearing of this application, a number of submissions were made with respect to how the court should address approval of the solicitor-client accounts to be delivered by each of Mr. Moore and Connolly Obagi. For the sake of efficiency on the continuation of the two settlement approval motions, I shall (a) address those submissions and (b) provide direction to Mr. Moore and Connolly Obagi with respect to additional materials to be filed on the motions.

a) The 15/10 Split

[65] The approval of the 25 per cent contingency fee as reasonable for each of the main action and the third party claim does not automatically lead to approval of accounts totaling 25 per cent of damages and interest recovered pursuant to either settlement. If there was only one law firm involved, that firm would be required to provide the court with its proposed account and evidence in support of the account. The 25 per cent calculation would be only one of the factors considered with respect to the proposed solicitor-client accounts.

[66] It would also be necessary to consider “the expense and risk of pursuing [the claim]” (the first factor identified by R. Smith J. in Re Cogan). It is clear from the decision in Re Cogan that “the expense” includes the fees associated with the work done and the length of time for which those fees remain unpaid. The work done, the associated fees, and length of time unpaid differ from Mr. Moore to Connolly Obagi.

[67] In principle I accept counsel’s agreement to split the contingency 15/10. Requiring each firm to address the expense incurred in relation to their respective agreed upon shares of the contingency fee does not go behind the agreement in that regard.

[68] Both Mr. Moore and Connolly Obagi shall provide the court with evidence of the expense incurred by them respectively in the pursuit of the main action and of the third party claim. Connolly Obagi is no more guaranteed approval of a proposed fee of 15 per cent of damages and interest recovered in each of the main action and third party claim than is Mr. Moore guaranteed 10 per cent of the damages and interest recovered.

[69] In December 2017, Connolly Obagi obtained an interim order in this application. Pursuant to the order, the 15 per cent contingency fee with respect to the third party claim is approved. The interim order was required because of the following circumstances.

[70] The capacity assessment for Taylor had not yet been completed. This application could not be determined pending the outcome of the capacity assessment. Evidence of Taylor`s capacity was required to determine whether he required a litigation guardian and, if so, the issues on this application.

[71] The plaintiffs did not expect to resolve the third party claim through a negotiated settlement. Connolly Obagi were concerned about preparing for and proceeding to a trial of the third party claim without certainty as to the nature of their retainer agreement with Taylor and Michelle.

[72] The interim order provides that “the [Agreement] respecting the future contingency fees payable to Connolly Obagi LLP in respect to advancing the Third Party Action is hereby approved as reasonable”. The interim order does not address the request for approval of payment to Connolly Obagi of costs recovered from the opposing party. The interim order was made without prejudice to further submissions being made (a) following completion of the capacity assessment, and (b) by both Mr. Moore and Connolly Obagi generally with respect to the Agreement.

b) Protection of Mr. Moore’s Accounts

[73] Connolly Obagi submit that the Letter requires them to take steps to protect Mr. Moore’s accounts; it is not a guarantee from Connolly Obagi to Mr. Moore that he will be paid 10 per cent of the damages and interest recovered. I agree.

[74] In March 2011 when the Letter was written, Taylor was 15 years old. Any settlement reached and account delivered required court approval so long as Taylor was a minor or in the event Taylor, as an adult, was found to be a person under a disability. In March 2011 no law firm assuming carriage of the file was in a position to guarantee the originating firm an account of a particular dollar value or based on a specific contingency fee. It was simply not possible in law for them to do so.

[75] I find that by proceeding as they have on this application, Connolly Obagi have taken the steps available to them at law to protect Mr. Moore’s accounts.

c) Two Accounts per Firm

[76] Mr. Moore submits that the approach to be taken in approving the solicitor-client accounts is for the court to consider a single account, from the two firms in combination, based on the total recovered from the two settlements combined. I disagree.

[77] In the normal course, on the motion for approval of the settlement reached in the main action, the proposed solicitor-client accounts of each of Mr. Moore and Connolly Obagi would have been addressed. It was not possible to approve the accounts when the r. 7.08 motion was before the court because (a) a capacity assessment had yet to be conducted of Taylor, and (b) this application was pending. There was, otherwise, no reason why the proposed accounts could not and would not have been considered on the r. 7.08 motion at that time.

[78] I also consider the manner in which the approval of a CFRA was presented to the court over time. For example, the record on this application includes three unsigned CFRAs, each said to be the applicable retainer agreement at one time or another.

[79] The first CFRA presented for approval is included as an exhibit to the affidavit sworn by Mr. Obagi in July 2017 (“the Initial CFRA”). The Initial CFRA is a single-page document and is deficient as relates to the requirements of the Regulation. It was neither signed nor dated, but concludes with “Dated at Ottawa, this ____ day of July, 2017.”

[80] The Initial CFRA identifies the following as the matter for which Connolly Obagi is to be retained:

The undersigned hereby retain the law firm of CONNOLLY OBAGI LLP, and authorize them to act on their behalf in respect of:

recovery of damages for personal injuries sustained as a result of a motor vehicle accident which occurred on November 1, 2003

and to take such actions, proceedings and/or settlement on our behalf and to do such other acts that in your opinion may be necessary for the purpose, and to provide us with advice in respect thereto. ( Emphasis, as in the original .)

[81] In the balance of the document reference is made to “the claim”, “advancing the action”, “the advancement of any claims”, and “our case”. The final paragraph of the document begins with, “CONNOLLY OBAGI LLP accepts to represent us on the understanding that our claim appears to have merit and is recoverable against the proposed defendant(s).” The Initial CFRA makes no reference to the potential for Michael Taylor to be added as a defendant in the action, to the third party claim, or to the potential for an assignment of the defendant’s rights with respect to the third party claim.

[82] Included as an exhibit to Mr. Moore’s affidavit, sworn in July 2017, is a copy of a CFRA that is unsigned and undated (“the Moore CFRA”). This document makes no reference to any date whatsoever. It concludes with “DATED this ___ day of _______” and “All of the above agreed to: DATED this _____ day of _____ 200__.”

[83] In his July 2017 affidavit, Mr. Moore provides some background to the Moore CFRA. He does not identify when the document was prepared. His evidence is that he provided the document to Michelle, but that neither he nor Michelle signed it. Mr. Moore’s evidence is that “to [his] knowledge . . . [the Moore CFRA] was understood to be the basis upon which we would proceed.” The “we” is in reference to Mr. Moore and Michelle.

[84] There is no evidence from Michelle with respect to the Moore CFRA. She neither denies nor confirms that she received a copy of it; nor does she state that it contributed to her understanding of the basis upon which she had retained Mr. Moore. She simply acknowledges, in a general way, that she always understood that the retainer with Mr. Moore was on a contingency fee basis.

[85] The Moore CFRA begins as follows:

1. Scope of Retainer

I, MICHELLE CONNOLY , on my own behalf and on behalf of my infant son, MICHAEL TAYLOR CONNOLLY, hereby retain and employ the law firm of Christopher A. Moore Professional Corporation [firm address], as my solicitors in the above-referenced matter. I hereby authorize them to act on my behalf with respect to this and any other matters that I may request they perform on my behalf. I further authorize them to take such actions and conduct such proceedings against Robert Riopelle, as well as any other parties my counsel may consider necessary or proper for the conduct of such actions on our behalf.

[86] The Moore CFRA includes a sliding scale of contingency fees starting at 20 per cent (for settlement at or before mediation) and ending at 35 per cent (in the event the matter is not resolved until after a notice of appeal, from a decision at trial, has been filed).

[87] It was not until October 2017, after the main action was settled and the plaintiffs secured an assignment of the defendant’s rights in the third party claim, that a CFRA was prepared in which reference is made specifically to the third party claim. As acknowledged by Mr. Obagi in his October 2017 affidavit, the Agreement was prepared (a) in follow up to his initial attendance before me on the application, and (b) because the Initial CFRA could not be approved. There is no evidence from Mr. Obagi that the failure to mention the third party claim in the Initial CFRA was an oversight.

[88] I find that there is nothing in any of the CFRAs before the court, including the Agreement which has been partially approved, that requires the firms to restrict themselves to the delivery of a single solicitor-client account. Nor is there anything with respect to the approval process pursuant to r. 7.08 which, in the circumstances of this case, mandates approval of either a single solicitor-client account from the two firms combined or a single solicitor-account from each of the two firms.

d) Materials for Continuation of r. 7.08 Motions

[89] I am seized of this application, the motions for approval of the settlements reached, and the application to be made for the appointment of Michelle as Taylor’s guardian of property. For the sake of efficiency and cost-effectiveness, it makes sense for Mr. Moore and Connolly Obagi to seek approval of their respective solicitor-client accounts based on:

• The affidavits filed in support of this application (without the necessity of including them in any other record);
• Their respective draft proposed accounts in each of the main action and the third party claim; and
• Any affidavits, delivered or to be delivered in Court File Nos. 05-CV-32630 and 05-CV-32630A, that provide the additional narrative evidence and documents required, if any, upon which the two firms respectively rely in support of their proposed accounts.

[90] I have reviewed the pre-bill for Connolly Obagi included as an exhibit to Mr. Obagi’s October 2017 affidavit in this application. For the following reasons Connolly Obagi shall edit the pre-bill and include a revised pre-bill for the main action in the materials they subsequently file:

• The dockets in the pre-bill include work done on the application in this matter;
• The work with respect to this application is independent of the work done with respect to the main action and/or the third party claim and should be recorded as such;
• The matter to which the pre-bill refers is identified as “MVA – Michael Taylor Connolly – November 1, 2003”. The subject matter of this application is not the personal injury claims arising from the motor vehicle accident; and
• The pre-bill identifies the client as “Michelle Connolly”. The applicants in this matter are Michelle Connolly and Connolly Obagi.

[91] One of the factors to be considered on a motion for approval of a solicitor-client account is the proposed contingency fee against the backdrop of the fees generated on a fee-for-service basis. In that context, I question whether fees associated with this application are properly included in a pre-bill provided in support of a proposed solicitor-client account with respect to the pursuit of the main action and/or the third party claim.

[92] The additional materials to be filed by Connolly Obagi in support of their proposed solicitor-client accounts in the main action and/or the third party claim shall include a revised pre-bill with the time associated with this application eliminated.

Disposition

[93] I order as follows:

1. The contingency fee of 25 per cent is approved with respect to both the main action and the third party claim.
2. The request for approval of payment to Connolly Obagi of costs recovered from the opposing party in the main action and in the third party claim is dismissed.
3. The applicants shall inform the court whether the request for a sealing order is being maintained and, if so, make arrangements for the completion of the hearing of the application.
4. Mr. Moore and Connolly Obagi shall, in Court File Nos. 05-CV-32630 and 05-CV-32630A, make arrangements for the completion of the motions for approval of the settlements reached in each of the main action and the third party claim and, in so doing they: a) May rely on the affidavits filed in support of this application (without the necessity of including them in any other record); b) Shall include in additional materials to be filed, their respective draft proposed accounts in each of the main action and the third party claim; and c) Provide the additional narrative evidence and documents required, if any, upon which they respectively rely in support of their proposed accounts in the additional materials filed on the motions.
5. In the additional materials to be filed on the settlement approval motions in Court File Nos. 05-CV-32630 and 05-CV-32630A, Connolly Obagi shall include a revised pre-bill for the main action that excludes the dockets for the work done on this application.

Costs of the Application

[94] The relief requested in the notice of application does not include a request for costs. In addition to advising the court whether the request for a sealing order is being maintained, counsel shall advise the court whether they wish to make submissions with respect to costs of the application.

Madam Justice Sylvia Corthorn Date: August 9, 2018

COURT FILE NO.: 17-73339 DATE: 2018/08/09 ONTARIO SUPERIOR COURT OF JUSTICE IN THE MATTER OF THE SOLICITORS ACT AND: IN THE MATTER OF THE APPLICATION OF MICHELLE CONNOLLY, MICHAEL TAYLOR CONNOLLY, by his litigation guardian, MICHELLE CONNOLLY and CONNOLLY OBAGI LLP – Joint Applicants

BEFORE: Madam Justice Sylvia Corthorn

COUNSEL: Thomas P. Connolly, Counsel for Connolly Obagi LLP, Taylor Connolly, and Michelle Connolly Ashley Bennett, Counsel for Christopher Moore

HEARD: November 15 and December 7, 2017, and April 13, 2018 at Ottawa

RULING on application for approval of contingency fee retainer agreement

Madam Justice Sylvia Corthorn Released: August 9, 2018