Court File and Parties
COURT FILE NO.: 1850/16CP
DATE: 2021-11-25
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: The Estate of Hugh Cullaton deceased, by his Executrix, Karen Cullaton, Plaintiff
AND:
MDG Newmarket Inc., holding itself out as Ontario Energy Group and Ontario Energy Solutions and Home Trust Company, Defendants
BEFORE: Justice R. Raikes
COUNSEL: Sarah Bowden and Jean-Marc Metrailler - Counsel, for Foreman & Associates
Martin Diegel - Counsel, for John Robinson
HEARD: October 22, 2021
ENDORSEMENT
[1] John Robinson is a paralegal. He represents approximately 32 consumers who entered into rental agreements for HVAC equipment with the defendant MDG (also known as Ontario Energy Group or OEG). He was engaged by those individuals to commence Small Claims Court actions on their behalf.
[2] The defendants brought motions to stay those actions pending the outcome of the certification motion in this class proceeding. Mr. Robinson and his clients consented to that order. The representative plaintiff took no position on the motions.
[3] The certification motion decision was released November 6, 2019. The usual notice to the class to provide notice of certification and the option to opt out of the class action was deferred while class counsel continued settlement negotiations with defence counsel. Those negotiations were assisted by an independent mediator. Mr. Robinson was not part of those negotiations.
[4] A settlement of this action was achieved. That settlement was subject to court approval. No one objected to the settlement. Approximately 125 individuals opted out of the class including eight of Mr. Robinson’s clients. The settlement was approved. Those that did not opt out are bound by the settlement and will presumably take up the benefits of the settlement in due course.
[5] Mr. Robinson brings a motion seeking an order that class counsel pay him an amount determined by the court to be fair to compensate him for his time and efforts which he claims assisted in the advancement of the class action and its ultimate resolution.
[6] It is undisputed that there is no agreement, written or oral, between Mr. Robinson and class counsel. It is also undisputed that no representations were made by class counsel to Mr. Robinson that he would be paid or receive anything from class counsel. Communication between Mr. Robinson and class counsel’s firms was brief and non-specific. Class counsel investigated, litigated, negotiated, and prosecuted this action on their own with no input or assistance from Mr. Robinson. They undertook the full financial risk of this action and had full responsibility for all aspects of it.
[7] In his materials, Mr. Robinson refers to his numerous media interviews and communications with the Ministry all of which were intended to keep up public scrutiny and pressure on the defendants. There is no suggestion that his efforts in that regard were done at the request or urging of class counsel. Rather, Mr. Robinson was looking out for those who had retained him and any other similarly situated consumers. The alleged misdeeds of the defendants are an industry wide problem.
[8] Mr. Robinson contends that he should receive payment from class counsel’s fees as a matter of equity because his efforts provided a benefit to the class by putting pressure on the defendants to settle. Mr. Diegel submits that it would be naïve to think that the many individual actions advanced by Mr. Robinson and his media efforts did not influence the defendants’ willingness to settle. There is, however, no evidence that the defendants negotiated differently or at all because of Mr. Robinson’s activities.
[9] Mr. Diegel submitted that payment is justified on the basis of quantum meruit. In Fridman, Restitution, 4th ed., at p.10, Professor Fridman outlined the distinction between contractual and restitutionary quantum meruit:
That contract stems from agreement, involving some voluntary act by each of the parties is the vital feature distinguishing contract from restitution. The underlying principle of restitution is not that of promise or agreement: it is the idea of unjust enrichment at another's expense.
A complication or confusion arises from the fact that there is a contractual quantum meruit, as well as restitutionary quantum meruit. In some circumstances, for example, where there is a contract between the parties but they have not agreed upon a price for goods or services to be delivered or rendered by one party to the other, the court must award money to the unpaid party on the basis of a reasonable amount for the goods or services. This is a liability that arises from a truly contractual relationship, and the situation between the parties is founded upon the concept of contract as it has been expounded earlier. Where no contract exists between the parties, or such contract as there is cannot be recognized or enforced, the courts have allowed a deserving party to recover something on a quantum meruit basis, which is not the same as what might have been recovered if there had been a valid, enforceable contract upon which the successful party could have sued. The distinction between these cases, as between contract and quasi-contract, lies in the idea that there has to be an agreement, between the parties, and such agreement must be in the form of an enforceable contract, to which the law will give effect.
[10] Later at pp. 669-670, he wrote:
In some situations an aggrieved party can properly claim not damages at large for breach of contract but a sum representing the value of services rendered or goods delivered to the other party. Such an action is an action on a quantum meruit (where services are rendered) or quantum valebant (where goods have been sold and delivered). It may be brought: (a) where no precise sum has been fixed by the parties for the remuneration of the plaintiff; or (b) where the original contract has been replaced impliedly by another one, and the action is being brought on the substituted, not the original contract. Such quantum meruit claims, which are genuinely contractual in nature, must be distinguished from other such claims which were quasi-contractual, but now are regarded as founded on unjust enrichment or restitution. In these latter instances, for example, where the original contract was unenforceable under the Statute of Frauds, abandoned by the parties, void, or frustrated, the plaintiff’s claim is based upon other legal foundations than contract. That being so it follows that: (1) liability does not depend upon agreement, but on the principles of unjust enrichment or restitution; and (2) the remoteness of damage rules applicable to contract cases have no application. Nor will the measurement of the amount payable to the plaintiff depend upon normal contractual rules. What the court will award the plaintiff will depend upon what is just, equitable, and reasonable, having regard to all the circumstances.
[11] A restitutionary claim based on quantum meruit is not dependent on an explicit mutual agreement to compensate for services rendered; rather, it is sufficient if the services were furnished at the request of, or with the encouragement or acquiescence, of the opposing party: Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2007 ONCA 324, at para. 99. Such a claim is a discrete cause of action separate and apart from claims grounded in contract or tort: Consulate Ventures Inc., para. 95.
[12] As indicated, there is no contract between Mr. Robinson and class counsel and never was. This is not a case where there was an agreement, but no price was set for the work Mr. Robinson was to do. Likewise, this not a case where the parties agreed to work together on the understanding Mr. Robinson would be paid but learned later that the agreement contravened the solicitor-client retainer provisions of the Class Proceedings Act, 1992. Further, there is no evidence that Mr. Robinson had any contact or communications with the representative plaintiff, Hugh Cullaton or his Executrix.
[13] Thus, there is no basis in fact for a contractual quantum meruit claim by Mr. Robinson.
[14] I turn next to whether such a claim is made out on the basis of unjust enrichment or restitution.
[15] The evidence filed demonstrates that Mr. Robinson’s efforts were, at all material times, done for the benefit of his clients, the public at large, and perhaps to attract additional clients to his practice. At no time did class counsel encourage his efforts nor were they even aware of those efforts. To the extent they saw anything through the media, they stood on the same footing as any other member of the public. It is not the case that they saw Mr. Robinson toiling for their benefit and waited to reap the rewards of his efforts. To the contrary, class counsel’s singular focus was to advance the class proceeding to a successful resolution. Nothing done or omitted to be done by them was in any way tied to or influenced by Mr. Robinson.
[16] This is a case where Mr. Robinson and class counsel were pursuing justice for those they felt had been injured by the defendants’ actions but they were doing so in entirely unrelated ways and independent of one another. By way of analogy, Mr. Robinson and class counsel were driving different vehicles toward the same destination completely independent and without regard for the other’s actions. No request was made of Mr. Robinson by class counsel. No encouragement for his efforts was offered. No acquiescence occurred. He was entitled to act for his clients as he saw fit and class counsel quite properly ignored his actions.
[17] Did the class benefit from Mr. Robinson’s efforts? That is entirely a matter of speculation. Did class counsel benefit from his efforts? The answer is the same.
[18] Mr. Diegel asks me to infer that Mr. Robinson’s work was such a nuisance or posed such a threat that it caused the defendants to negotiate or to negotiate more fervently to the benefit of class counsel. There is simply no evidence of that.
[19] Mr. Diegel submitted that there is no provision in the Class Proceedings Act, 1992 permitting payment of an honorarium to the representative plaintiff but courts have allowed same. He asks that I consider Mr. Robinson’s request on the same footing. I disagree. An honorarium is ordinarily paid by the class from settlement proceeds or judgment, not by counsel from their fees. Second, Mr. Robinson is a complete stranger to this class proceeding. Third, I am not satisfied that anything done by him benefitted the class or class counsel.
[20] Class counsel have advanced other arguments for rejecting Mr. Robinson’s claims including the provisions of the Class Proceedings Act, 1992, the rules governing the practice of licenced paralegals, and public policy concerns. I need not address those arguments.
[21] There is no contractual and no equitable or restitutionary basis for the claim made by Mr. Robinson. His motion is dismissed.
[22] If the parties to the motion cannot agree on costs, they may make written submissions not exceeding 3 pages within 15 days hereof.
Justice R. Raikes
Date: November 25, 2021