Calles v. Yormak, 2023 ONSC 1248

COURT FILE NO.: CV-22-632 DATE: 2023-02-21 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

FRANCISCO CALLES Applicant – and – STEVEN YORMAK, YORMAK & ASSOCIATES Respondent

Counsel: Alfonso E. Campos Reales, Counsel for the Applicant Steven R. Yormak, Counsel for the Respondent

HEARD: February 1, 2023

THOMAS, RSJ. :

[1] Francisco Calles, (“the applicant”), commenced an application to void a contingency fee agreement, (“CFRA”), entered into with Yormak & Associates, (“the respondent law firm”), and to have this Court order the return of fees paid, while either fixing the fees or ordering an assessment.

[2] Steven Yormak, (“the respondent”), countered with a motion to strike a portion of the materials filed on behalf of the applicant as irrelevant, scandalous and prejudicial.

[3] The respondent also brought a counter-application demanding the work product, accounts and correspondence of Lerners LLP, the firm now representing the applicant on the grounds that only then could his fees properly be assessed.

[4] The record uploaded into CaseLines consists of 54 index entries and 852 pages of materials.

[5] The fees in dispute were generated while the respondent acted for the applicant in pursuing CPP disability benefits and WSIB benefits from April 2019 until December 2021.

[6] The applicant has received little from the benefits received. The fees, disbursements and HST in dispute amount to less than $90,000. While I have a number of options in the path forward with these issues, I am determined, with these reasons, to end this dispute as the time and expense cannot be justified for the parties or the Court.

[7] Before moving on to the unfortunate history of this solicitor/client relationship, I need to comment upon the tone of these proceedings. Mr. Campo Reales, counsel for the applicant, argued that the respondent operated a predatory law practice and that he was guilty of misappropriation of the applicant’s monies, as well as being deceitful in the context of the respondent materials.

[8] For his part, the respondent suggested that this was a “witch hunt” orchestrated by Lerners LLP in an attempt to cover the fact that they made mistakes in the further prosecution of the applicant’s claim for benefits after he retained that firm in late 2021. It is my intention to step away from the hyperbole and determine all applications based on the evidentiary record before me.

The Record

[9] The applicant’s materials consist of his own affidavit and an affidavit from an assistant at his counsel’s office. Those affidavits attach the important correspondence and lawyer’s accounts germane to his application. Supplementary materials for the applicant include decisions from Florida between the respondent and his son, where it is alleged the respondent is owed consulting fees and allegations that the respondent practiced law while unlicensed (the material sought to be expunged).

[10] The respondent chose not to cross-examine on any affidavits, and therefore I am left with the sworn statements of the applicant that he did not understand the CRFA, and never anticipated that he would be billed for future benefits.

[11] The respondent has provided the affidavits of two assistants, neither of whom were working for the respondent law firm at the time the CFRA was signed. It became clear from the cross-examinations that their knowledge of the content of their affidavits was limited to the fact that the respondent dictated the contents and they believed him. They have no independent knowledge of the content, nor did they attempt to independently verify any of the information.

[12] The cross-examinations on those affidavits became an exercise in futility. The respondent interjected continually in the questions posed by Mr. Campos Reales. His responses were demeaning, evasive and confrontational.

[13] In arguing the application before me, the respondent continually embarked upon a narrative that included his 40 years of practice, his undisputed knowledge in the area of disability benefits, and the temerity of someone disputing his accounts and work product. In sum, the respondent’s position is captured by the content of the affidavits dictated by Stephen Yormak, his answers in cross-examination, and his arguments on the hearing of the application; all of which are unsworn.

Background

[14] On October 25, 2018, the applicant was involved in a motor vehicle accident while he was working for Elgin Construction Company. He was a labourer at the time and had been for 13 years. He was in his mid-thirties. His education did not exceed grade 11. The accident left him with a disability and he could not work.

[15] On April 1, 2019, the applicant, after his first attempts at obtaining benefits were unsuccessful, went to the office of Yormak & Associates in London. Upon his attendance, the applicant met with a respondent law firm staff member who discussed with him the CFRA, which he signed the same day. The applicant did not meet with Steven Yormak. It is clear from the record that the respondent, Steven Yormak, lives in the United States and operates his practice in Ontario remotely.

[16] The terms of the CFRA are important to this decision, and I set them out below under each of the 15 paragraphs. The applicant initialled that he understood and agreed. He then signed the agreement with his witness. Presumably, the respondent’s signature was applied subsequently.

YORMAK & ASSOCIATES 495 Richmond Street, Suite 420 London, ON N6A 5A9

FEE AGREEMENT AND TERMS OF ENGAGEMENT

1. You agree to retain the services of Yormak & Associates and any expert, consultant or other representative deemed appropriate and/or necessary by Yormak & Associates to pursue my disability and personal injury claims (WSIB/CPP/Insurer). The law firm is not paid on an hourly basis unless the firm elects to do so pursuant to the terms in paragraph 11 herein. I understand and agree to the above Yes [ √ ] No [ ] “FC”

2. I understand that I am responsible at all times to immediately reimburse or pay the firm for any disbursements incurred on my behalf, which include, but not limited to photocopying, postage, long distance telephone, medical records and reports. I understand and agree to the above Yes [ √ ] No [ ] “FC”

3. Client understands and agrees that in the event a psychological report is required client will pay this ($800.00) upon funds being paid from WSIB, CPP, Insurer or any other source. I understand and agree to the above Yes [ √ ] No [ ] “FC”

4. The law firm will attempt to estimate fees based on the results, which varies in each case. I understand and agree to the above Yes [ √ ] No [ ] “FC”

5. In the event the law firm obtains any benefits on my behalf, or I am awarded any benefits as a result of the firm’s work, I understand that my fees will be 10% (plus HST and disbursements) of past and future benefits (based on projected life expectancy to Statistics Canada, or Statutory maximum benefits i.e. age 65, which ever [ sic ] is applicable), or in the event there are no or limited future benefits fees will be 30% (plus HST and any unpaid disbursements). These fees are in addition to the initial advance as referred to in paragraph 8 below. In the event there is no successful result, I understand there will be no further fees beyond the initial advance. It is understood and agreed any fees based on future benefits for life when applicable are based on actuarial life expectancies. I understand and agree to the above Yes [ √ ] No [ ] “FC”

6. It is understood and agreed that in the case of a claim against an insurer (Long Term and Short Term) the fees shall be 33% of the total entitlement/judgment plus HST. I understand and agree to the above Yes [ √ ] No [ ] “FC”

7. It is agreed that in the event benefits obtained for the client are directed to the insurer then in that case further fees will be paid to the firm from NEL, interest and any retroactive payments fees agreed to be paid pursuant to paragraph 4. I understand and agree to the above Yes [ √ ] No [ ] “FC”

8. In the event professional services are provided to maintain benefits the client is already in receipt of (ie. WSIB/Insurer/ODSP or any other) and there are no funds from which to retire or credit against fees the firm may render accounts which may be paid by the client on a monthly basis from benefits they are receiving. I understand and agree to the above Yes [ √ ] No [ ] “FC”

9. I understand that I am required to pay a minimum advance immediately of $3,390 for fees/HST. Presuming services have been rendered, this advance is non-refundable. If the firm is not successful in any way, the $3,390 will be the total amount of fees/HST payable to the firm. Fees are not calculated on an hourly basis, unless otherwise provided for as in paragraph 11 herein. I understand that I may apply to the Superior Court of Justice for a determination of whether the contingent fee is fair and reasonable. I understand and agree to the above Yes [ √ ] No [ ] “FC”

10. In the event, the law firm is successful, I understand that I agree to pay directly from any WSIB/CPP or other proceeds, all amounts owed to the firm for fees (HST) and disbursements, including any disbursements (See paragraph 2). I understand that if an offer is made, I have the right to decide whether to settle my clam [ sic ]. I understand funds received from CPP/WSIB will be released upon payment of all legal accounts at that time. I agree to have the law firm pick up any WSIB/CPP cheques payable to me. I understand and agree to the above Yes [ √ ] No [ ] “FC”

11. It is understood that all “benefits” obtained are for any of my ‘dependants’ benefits which arise from successful application/appeals including CPP children’s benefits. I understand and agree to the above Yes [ √ ] No [ ] “FC”

12. I have read over a sample billing by the law firm in other successful cases and understand the way fees are calculated based upon the benefits payable to me. I am aware that the expenditure of time by Yormak & Associates on my behalf may continue following the hearing in order to ensure my receipt of proper and appropriate benefits. I understand and agree to the above Yes [ √ ] No [ ] “FC”

11.[ sic ] I understand that other solicitors and representatives may have other basis for payment of fees which may be greater or lesser than this firm’s fee basis for similar claims. I understand I have the right to consult with and retain another lawyer. I understand and agree to the above Yes [ √ ] No [ ] “FC”

12.[ sic ] In the event the client terminates the retainer for any reason, or the retainer is terminated prior to a result being obtained or ascertainable, the law firm may elect to render its account on an hourly basis, being $550.00 per hour for Steven R. Yormak and $450.00 for Norm Shruiff. All time spent upon my file may be billed to me including but not limited to review of my file, telephone calls, meetings, hearings, preparation and research. I understand any court work or hearings involve substantial investment of time by the law firm. I understand and agree to the above Yes [ √ ] No [ ] “FC”

13. [ sic ]The law firm requires my cooperation and assistance at all times in order to properly serve me. I understand if my cooperation is not forthcoming, it will make the firm’s task of assisting me more difficult if not impossible. I undertake to cooperate and assist the cooperate and assist the law firm and the staff at all times, failing which the retainer may be terminated. I understand and agree to the above Yes [ √ ] No [ ] “FC”

14. [ sic ]It is further agreed that should I decide or instruct Yormak & Associates to advise anyone including WSIB or any insurer, to do anything which would reduce my total benefits for any reason I agree to pay Yormak & Associates on the basis of the total his/her benefits Yormak & Associates would have been made available to me. I understand and agree to the above Yes [ √ ] No [ ] “FC”

15. [ sic ] I understand most communication will be through and with the staff who will communicate to Mr. Yormak or Mr. Shruiff when appropriate unless Mr. Yormak or Mr. Shruiff feels there is urgency and/or the matter requires his direct contact prior to or after hearings. I understand and agree to the above Yes [ √ ] No [ ] “FC”

[17] The applicant’s sworn affidavit states that he did not understand that he would be paying fees based on a percentage of future benefits he might not receive, nor did he understand that the affect of the agreement would be to have the law firm retain almost all of the benefits he received.

[18] The affidavit of the Yormak & Associates employee, Cynthia Dann, suggests that the applicant fully understood the agreement, but again, she was not there nor was the respondent, Steven Yormak.

[19] The applicant’s affidavit maintains that he and his partner personally met with the respondent only once in February, 2020. It was a brief meeting and it was arranged as the applicant was concerned that his file was not getting any attention. The applicant states that in the two years he was a client of the respondent law firm he spoke to the respondent for a total of 20 minutes.

[20] The applicant’s CPPD application was denied on April 7, 2020 and a request for reconsideration was denied in October, 2020. An appeal hearing was held in August, 2021 which amounted to a 30 minute teleconference in which the applicant participated. The applicant’s evidence is that the respondent spoke to him by telephone for about 10 minutes just before the hearing commenced. To his credit, the respondent was successful in his representation and retroactive CPPD benefits were paid and an ongoing pension established.

[21] I will set out below the three accounts rendered by the respondent law firm.

[22] As part of the original retainer, the applicant had to pay $3,000. and $390. in HST as an advance on the work to be done. An account for these monies was dated on the same date as the CFRA was signed. It is set out below.

April 1, 2019 Invoice #2078

RE: WSIB / CPP / INSURANCE TO: PROFESSIONAL SERVICES RENDERED including meeting with client, initial review of file and documents, obtaining medical records, obtaining medical reports, correspondence with Workplace Safety & Insurance Board, correspondence with Canada Pension Plan Disability, preparation of all claims and appeals and forwarding all documents to WSIB and CPP and/or insurer, to attendance at meetings and preparation therein, to attendance at hearing appeals and preparation therein, to meeting with you, to review of applicable law and WSIB Operational Policies, to telephone contact with WSIB Operations, to scheduling appeal dates, to review of all medical reports and medical records and forwarding same to WSIB/CPP/Insurer, to all other tasks carried out on your behalf not specifically set out herein.

Fees on Account: $3,000.00 HST (13%) $ 390.00 Total $3,390.00 Less: Credited to Account $3,390.00 Balance Owing NIL

THIS IS OUR ACCOUNT HEREIN.

[23] The narrative description set out in the account would appear to encompass some of the work described in later accounts as well. The next account was rendered after the respondent received, on August 28, 2019, $9,299.60 from WSIB for the applicant’s bi-weekly loss of earnings. It was not until February 6, 2020 that the respondent provided the applicant with the remainder of the WSIB payment, $6,147.04. The respondent’s account being 30% of the August 28, 2019 payment plus HST.

September 10, 2019 Invoice #2175

RE: WSIB / CPP / INSURANCE TO: PROFESSIONAL SERVICES RENDERED including meeting with client, initial review of file and documents, obtaining medical records, obtaining medical reports, correspondence with Workplace Safety & Insurance Board, correspondence with Canada Pension Plan Disability, preparation of all claims and appeals and forwarding all documents to WSIB and CPP and/or insurer, to attendance at meetings and preparation therein, to attendance at hearing appeals and preparation therein, to meeting with you, to review of applicable law and WSIB Operational Policies, to telephone contact with WSIB Operations, to scheduling appeal dates, to review of all medical reports and medical records and forwarding same to WSIB/CPP/Insurer, to all other tasks carried out on your behalf not specifically set out herein.

Fees on Account: $2,789.88 HST (13%) $ 362.68 Total $3,152.56 Less: Credited to Account $3,152.56 Balance Owing NIL

THIS IS OUR ACCOUNT HEREIN.

[24] As a result of the successful CPPD appeal, the applicant received $62,286.06 in retroactive CPPD benefits which he turned over to the respondent law firm as requested. He was informed that he would receive none of those monies and the respondent’s account of October 5, 2021 is set out below.

October 5, 2021 Invoice #2561

RE: CPP / WSIB / INSURANCE TO: PROFESSIONAL SERVICES RENDERED including meeting with client, initial review of file and documents, obtaining medical records, obtaining medical reports, correspondence with Workplace Safety & Insurance Board, correspondence with Canada Pension Plan Disability, preparation of all claims and appeals and forwarding all documents to WSIB and CPP and/or insurer, to attendance at meetings and preparation therein, to attendance at hearing appeals and preparation therein, to meeting with you, to review of applicable law and WSIB Operational Policies, to telephone contact with WSIB Operations, to scheduling appeal dates, to review of all medical reports and medical records and forwarding same to WSIB/CPP/Insurer, to all other tasks carried out on your behalf not specifically set out herein.

Fees on Account: $54,412.44 HST (13%) $ 7,073.62 Total $61,486.06 Less: Credited to Account $61,486.06 Balance Owing NIL

THIS IS OUR ACCOUNT HEREIN.

[25] Also provided at that time is a statement stating the applicant still owed fees of $26,575.56 based on amounts he could receive over 36.5 years.

CPP Benefits Summary Francisco Calles

I. Retroactive CPP Benefits $ 62,286.06 II. Ongoing Benefits a) Contributor (with PI) $1,600. x 12 x 36.5 $700,800.00 b) Children @ 260/month $260/mth/child (3) x 12 x 5 $ 46,800.00 $809,866.06

Fees (10%) - $80,988.00 Fees Paid - $54,412.44 Outstanding Fees - $26,575.56

October 5, 2021

[26] As to the CPPD benefits, the respondent maintains they will be paid until the applicant attains the age of 65 without compromise. The applicant’s material suggests that they could be subject to reduction or elimination at any time. He is only 38 and he hopes he can return to some form of employment.

[27] After the applicant terminated his relationship with the respondent law firm, the respondent exercised the right to its claims pursuant to paragraph 12 of the CFRA and rendered yet another account for its work on the WSIB portion of the file. The May 31, 2022 account is set out below.

May 31, 2022 Invoice #2635

RE: WSIB / GLOBAL BENEFITS / LABOUR INTERNATIONAL TO: PROFESSIONAL SERVICES RENDERED including meeting with client, initial review of file and documents, reviewing extensive medical records, to obtaining further more specific records and medical reports, to advancing WSIB claims and appeals, to reviewing and obtaining documents and information re: other benefits including Global Benefits and Labour International benefits, to reviewing collective bargaining agreement (CBA), to correspondence with doctors and client treating medical team including physiotherapist and psychologist, to filing WSIB appeals, to forwarding all documents to WSIB, to telephone contact with WSIB Case Manager confirming further and ongoing loss of earning benefits (LOE) past and ongoing, to review of applicable law and WSIB Operational Policies, to extensive review of all medical records including and in addition to medical file received from Lerners & Associates, to all other tasks carried out on your behalf not specifically set out herein.

Fees On Account: Fees @ $550/hour (pursuant to para. 12 of retainer)

• premium for exceptional result*** $31,200.00 hst (13%) 4,032.73

TOTAL FEES/HST BALANCE OWING For WSIB/Global/Labour Int’l $35,232.73

*WSIB Benefits obtained in appeal total = $743,459 (see attached) Retainer 10% = $74,345 fees

**CPP Benefits in appeal total = $809,886.06 (see attached) Retainer 10% = $80,988 fees

***TOTAL Benefits WSIB/CPP appeals = $1,553,345.60 NOTE: TOTAL FEES (WSIB/CPP/Insurer) reduced By 45% (forty-five percent) from $155,335.00 Client credited with CP fees/hst paid to date of $54,412.44.

RE: FRANCISCO CALLES

INTERIM WSIB BENEFITS SUMMARY I. Non-Economic Loss (NEL) $9,299.60 II. Loss of Earnings (LOE) a) Retroactive FLOE less CPP from April 8, 2019 ($3,000 - $1,250 = $1,750) $1,750 x 32 months (to December 2021) = $56,000.00 b) Future LOE i) Full LOE (Medical/Work Transition) $3,000 x 24 months = $72,000.00 ii) Partial LOE (@min. wage FT) $3,000 less $1,600 = $1,400 $1,400 x 12 months x 34 years = $571,200.00 III. Pension (5%) $ 34,960.00 TOTAL WSIB BENEFITS (based on PLOE) $743,459.60

[28] That account suggests that a premium was charged for exceptional results (no premium is mentioned in para. 12). It goes on to suggest that the respondent had obtained $1,553,345.60 in benefits for the applicant, despite the fact that only $71,585.66 had actually been recovered.

[29] This final account was rendered, along with a second affidavit from Fran Rowe, a respondent law firm employee, just prior to the cross-examinations of the respondent’s employees. Interestingly, the Rowe affidavit of September 23, 2022 and the respondent’s factum state that the total of all work done by the respondent was 159.5 hours. While the Rowe affidavit of December 12, 2022 attaches the last account and documents described as time dockets now totalling 197.1 hours. In argument, the respondent interestingly stated that the first sworn statement of 159.5 hours was just a “bald statement” of the hours spent.

[30] Importantly I accept that, but for the WSIB benefits paid in August, 2019 in the amount of $9,299.60, no further WSIB benefits have been paid to the applicant. This is consistent with documentation filed and the decision rendered by the WSIB case manager. That decision being that the applicant would not receive WSIB benefits subsequent to April 8, 2019.

[31] The respondent maintains that ongoing benefits would have been paid if he still had the file and was able to pursue the tax documents (Option C documents) that WSIB was seeking. I have no evidence that that is true.

[32] In the final analysis, the following amounts have been received and the following accounts rendered.

Received $ 9,299.60 WSIB bi-weekly earnings loss $62,286.06 Retroactive CPPD benefits $71,585.66

Accounts (Inclusive of HST) April 1/19 $ 3,390.00 September 10/19 $ 3,152.56 October 5/21 $ 61,486.06 $ 26,575.56 (outstanding) May 31/22 -$ 35,232.73 $129,836.91

Positions of the Parties

[33] The applicant maintains that the CFRA should be voided as it offends the terms of the Solicitor’s Act and the accounts claimed are unfair and unreasonable. It is argued that the amounts retained by the respondent should be remitted to him and the accounts either assessed by a Superior Court Judge or fixed by me. In addition, the counter-application seeking the Lerners LLP material must be dismissed as it is without procedural foundation, is irrelevant to the issues at hand, and seeks privileged documents.

The Respondent

[34] The respondent has early on in this dispute been prepared to step away from the CFRA and have the accounts assessed under the Solicitor’s Act by an assessment officer (those being the October, 2021 and the May, 2022 accounts). In fact, upon rendering the last account, the respondent served a notice of assessment to do just that.

[35] The respondent seeks to strike out the portion of the applicant materials that details the Florida litigation with his son. In addition, the counter-application demands the materials from Lerners LLP I have mentioned previously.

The Motion to Strike

[36] The inclusion of the references to the Florida litigation ( Yormak v. Yormak, 2021 WL786071), while minimally relevant to the issue of the respondent collecting fees and his conduct in the legal context, it is far more likely to cause prejudice and distract the Court from the issue at hand. That litigation adds nothing to the body of evidence available to me in determining the effects of the CFRA and the appropriate fees to be paid by the applicant.

[37] As a result, the portion of paragraph 5 of the affidavit of the applicant, sworn November 7, 2022, that references the Florida litigation is struck as is the case copy appended to the affidavit. In addition, the affidavit of Katherine Creighton, sworn January 16, 2023 and which describes the difficulty encountered in “noting up” that decision is also struck.

[38] In taking this step, I reply upon r. 25.11 of the Rules of Civil Procedure. This result is less than the relief sought originally by the respondent.

The Counter-Application

[39] The respondent has brought a “counter-application” seeking what amounts to the entire file of Lerners LLP regarding that firm’s past and present representation of the applicant. The specific relief requested is set out below.

COUNTER APPLICATION :

1. The counter applicant/Respondent makes application for an Order that Client and Lerners: (a) Provide copies of all documentation in connection with Lerners for Francisco Calles, including but not limited to all work both prior to Mr. Calles retaining the Respondent and after termination of the retainer with the Respondent, the work to include both personal injury and worker compensation and disability work; (b) A copy of all accounts rendered to the Client by Lerners; (c) Time records kept during the course(s) of Lerners solicitor client retainer(s); (d) Copy of any and all retainer agreements between the Client and Lerners, and any other correspondence relating to their retainer; (e) Copy of the entire Workplace & Safety Insurance Board (“WSIB”) file referred to as “access” relating to the Client including and particularly including a copy of the WSIB file after termination of services with the Respondent. (f) Copy of any and all communication (emails, correspondence, text, notation memos of telephone calls) with any insurer relating to Francisco Calles injuries and potential benefits therein, including but not limited to WSIB, and Canada Pension/Service Canada (“CPP”); (g) Copies of any letters, and/or notes or memos to file documenting any oral or other discussions relating to the issue of fees relating to the Respondent and the Client; and fees relating to Lerners and the Client both prior to and after Respondent retainer with the Client; (h) Such further and other relief as counsel may advise and this Honourable Court permits.

[40] The respondent’s factum suggests that these are “relevant documents and records in the possession of the respective parties and their solicitors as part of due disclosure of evidence for an orderly and fair hearing of the issues at assessment.”

[41] I am uncertain what the quoted phrase above means, and I have no idea why the privileged file contents from the applicant’s present counsel would be disclosed in the assessment of the respondent accounts.

[42] The second problem the respondent faces is that this is privileged material as between the applicant and his present counsel. The respondent’s factum suggests that an assessment of a solicitor’s bill, which is premised on the inappropriate conduct of a solicitor, amounts to a waiver of privilege so that the solicitor is able to defend her/his reputation.

[43] The respondent’s factum references cases that consider this principle. The cases do not support the respondent’s argument. The authorities provided support the principle that the solicitor being assessed should be able to disclose communications between the solicitor and the assessing client (*Mathews, Dinsdale & Clark LLP v. 1772887 Ontario Limited*, 2021 ONSC 2563). In no way do the cases suggest that privileged material between the client and their new counsel should be disclosed as a result of some kind of “implied” waiver of privilege.

[44] The third problem facing this counter-application is that it presumes I will defer the matter for an assessment. I have no intention of prolonging this dispute beyond this decision.

[45] There is no merit to this “counter-application”. It amounts to a “fishing expedition” in retaliation for the application before me. The issues before me relate to the work product and fees charged by the respondent, not those of Lerners LLP. The counter-application is dismissed.

Setting Aside the CFRA

[46] It is important for me to recognize that prior to the commencement of this application, the respondent was prepared to set aside the CFRA and have Steven Yormak’s accounts assessed by an assessment officer. It is also important for me to recognize that the respondent refused to provide file materials supporting the work undertaken until the applicant agreed to an assessment, while at the same time, demanding the file of Lerners LLP as considered above.

[47] Counsel for the applicant was not content with this proposal. The applicant’s position is that the CFRA should be voided; the fees paid refunded, and the accounts assessed by a Superior Court Judge or fixed by me on this application. For the reasons set out below, I come to the conclusion that the position of the applicant is the appropriate route to determine this litigation.

The CFRA

[48] Despite the respondent’s position that the CFRA can be set aside in favour of a quantum meruit assessment, I find it important to examine the CFRA as part of my consideration of this solicitor/client relationship.

[49] The legitimacy of any CRFA is governed by the terms of the Solicitor’s Act, R.S.O. 1990, c S. 15 and the Regulations thereunder. Those relevant to this decision are set out below.

Solicitors Act, RSO 1990, c S.15

Determination of disputes under the agreement

23 No action shall be brought upon any such agreement, but every question respecting the validity or effect of it may be examined and determined, and it may be enforced or set aside without action on the application of any person who is a party to the agreement or who is or is alleged to be liable to pay or who is or claims to be entitled to be paid the costs, fees, charges or disbursements, in respect of which the agreement is made, by the court, not being the Small Claims Court, in which the business or any part of it was done or a judge thereof, or, if the business was not done in any court, by the Superior Court of Justice.

Enforcement of agreement

24 Upon any such application, if it appears to the court that the agreement is in all respects fair and reasonable between the parties, it may be enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit, but, if the terms of the agreement are deemed by the court not to be fair and reasonable, the agreement may be declared void, and the court may order it to be cancelled and may direct the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein to be assessed in the ordinary manner.

Reopening of agreement

25 Where the amount agreed under any such agreement has been paid by or on behalf of the client or by any person chargeable with or entitled to pay it, the Superior Court of Justice may, upon the application of the person who has paid it if it appears to the court that the special circumstances of the case require the agreement to be reopened, reopen it and order the costs, fees, charges and disbursements to be assessed, and may also order the whole or any part of the amount received by the solicitor to be repaid by him or her on such terms and conditions as to the court seems just.

Contingency fee agreements 28.1 (1) A solicitor may enter into a contingency fee agreement with a client in accordance with this section.

Maximum amount of contingency fee (5) If a contingency fee agreement involves a percentage of the amount or of the value of the property recovered in an action or proceeding, the amount to be paid to the solicitor shall not be more than the maximum percentage, if any, prescribed by regulation of the amount or of the value of the property recovered in the action or proceeding, how ever the amount or property is recovered.

Greater maximum amount where approved (6) Despite subsection (5), a solicitor may enter into a contingency fee agreement where the amount paid to the solicitor is more than the maximum percentage prescribed by regulation of the amount or of the value of the property recovered in the action or proceeding, if, upon joint application of the solicitor and his or her client whose application is to be brought within 90 days after the agreement is executed, the agreement is approved by the Superior Court of Justice.

Signing and dating contingency fee agreement

1. (1) For the purposes of section 28.1 of the Act, in addition to being in writing, a contingency fee agreement, (a) shall be entitled “Contingency Fee Retainer Agreement”; (b) shall be dated; and (c) shall be signed by the client and the solicitor with each of their signatures being verified by a witness. (2) The solicitor shall provide an executed copy of the contingency fee agreement to the client and shall retain a copy of the agreement.

Contents of contingency fee agreements, general

2. A solicitor who is a party to a contingency fee agreement shall ensure that the agreement includes the following:

   1. The name, address and telephone number of the solicitor and of the client.
   2. A statement of the basic type and nature of the matter in respect of which the solicitor is providing services to the client.
   3. A statement that indicates, i. that the client and the solicitor have discussed options for retaining the solicitor other than by way of a contingency fee agreement, including retaining the solicitor by way of an hourly-rate retainer, ii. 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, iii. that the client has chosen to retain the solicitor by way of a contingency fee agreement, and iv. that the client understands that all usual protections and controls on retainers between a solicitor and client, as defined by the Law Society of Ontario and the common law, apply to the contingency fee agreement.
   4. A statement that explains the contingency upon which the fee is to be paid to the solicitor.
   5. A statement that sets out the method by which the fee is to be determined and, if the method of determination is as a percentage of the amount recovered, a statement that explains that for the purpose of calculating the fee the amount of recovery excludes any amount awarded or agreed to that is separately specified as being in respect of costs and disbursements.
   6. A simple example that shows how the contingency fee is calculated.
   7. A statement that outlines how the contingency fee is calculated, if recovery is by way of a structured settlement.
   8. A statement that informs the client of their right to ask the Superior Court of Justice to review and approve of the solicitor’s bill and that includes the applicable timelines for asking for the review.
   9. A statement that outlines when and how the client or the solicitor may terminate the contingency fee agreement, the consequences of the termination for each of them and the manner in which the solicitor’s fee is to be determined in the event that the agreement is terminated.
   10. A statement that informs the client that the client retains the right to make all critical decisions regarding the conduct of the matter.

Contingency fee not to exceed damages

7. Despite any terms in a contingency fee agreement, a solicitor for a plaintiff shall not recover more in fees under the agreement than the plaintiff recovers as damages or receives by way of settlement.

[50] It has been held that the terms of a CFRA must strictly comply with the terms of the Solicitor’s Act and the Regulations. In *Edwards v. Camp Kennebec (Frontenac) (1979) Inc.*, 2016 ONSC 2501, Justice Faieta voided a CFRA for two relatively minor deficiencies and said the following at paras. 29 and 30:

[29] While some may view this conclusion as a harsh result, even though these requirements have existed for more than a decade, there is nothing in the Act or O. Reg. 195/04 that permits this court to waive compliance with these requirements. Where the Legislature has intended to allow the requirements for a CFA to be waived by the Court, it has expressly given such authority.

[30] Further, the above regulatory requirements are for the benefit and protection of the public and, accordingly, public policy does not support relieving against a finding that the Agreement is void in these circumstances.

[51] In this matter, the CFRA must be voided for the following deficiencies in the mandatory content as directed by the Regulation:

1. The CFRA does not provide the proper and mandatory title (s. 1(1)(a)).
2. The CFRA was not executed as required with the necessary witnesses (s. 1(1)(c)).
3. The applicant did not receive a copy of the CFRA until two years after it was signed (s. 11(2)).
4. The CFRA does not adequately explain the option of retaining the solicitor on an hourly rate (s. 2(3)(i)).
5. The CFRA fails to provide the solicitor’s telephone number (s. 2(1)).
6. The CFRA fails to provide a statement that the protections provided by the Law Society of Ontario apply to the CFRA (s. 2(3)(iv)).
7. The CFRA fails to advise the timeline for a review of the solicitor’s account (s. 2(8)).
8. The CFRA fails to advise how it can be terminated (s. 2(9)).
9. The CFRA fails to fully explain that the applicant maintains the right to make all critical decisions (s. 2(10)).

[52] Both the Solicitor’s Act and the Regulation authorize a CFRA on the basis of a percentage of an amount “recovered” subject to the above-mentioned regulated requirements.

[53] The applicant suggests that “recovery” must be given its ordinary meaning and cannot mean future benefits that have not been received and may never be received, even if the respondent has reduced the percentage to 10 percent.

[54] The Solicitor’s Act contains no definition of “property recovered” per s. 28.1(5), nor is there any case law interpreting the phrasing in that section. There is older case law interpreting a provision in a previous iteration of the Solicitors Act regarding charges and liens, which defines “property recovered” as “having already been recovered or already preserved by virtue of the solicitor’s efforts… [but not] property to be recovered or preserved.”

[55] CPP and WSIB are considered collateral benefits, and a satisfactory answer may come to this question from British Columbia case law. Courts in British Columbia have determined that whether collateral benefits are included on a contingency fee will be determined by the description of the retainer in the contract, and after assessing the work done by the solicitor. If the retainer contemplated the solicitor securing collateral benefits, and the solicitor’s work did indeed contribute to those being secured or elevated, then they should be included. Those authorities are considered below.

Helpful Ontario Cases

[56] *George v. Hassanali* (1987), 5 A.C.W.S. (3d) 195 (Ont. Sup. Ct.), considered s. 35a of the previous iteration of the Solicitors Act, R.S.O. 1980, c. 478, which dealt with a charge on the “property recovered or preserved” through the instrumentality of the solicitor claiming the lien.

[57] Master Clark defined “property recovered or preserved” as “having already been recovered or already preserved by virtue of the solicitor’s efforts. The section does not speak of property to be recovered or preserved.”: Hassanali, at para. 9.

[58] Considering the same section in *Sutton v. Toronto (City)* (1988), 23 A.C.W.S. (3d) 981 (Ont. Dist. Ct.) Mandel J. held that “property recovered or preserved” does not arise “unless the property is recovered or preserved… [and in] an action where moneys are claimed, judgment for such money must be recovered to come within such phrase ... The lien is on the judgment and not the action and judgment must be recovered for the lien to be granted ...”: at paras. 2-4.

British Columbia

[59] There are several cases in British Columbia that consider the term “amount recovered” in relation to collateral benefits.

[60] A collateral benefit is a gain or advantage that flows to the plaintiff and is connected to the defendant’s breach. This connection may exist either because there is a “but for” causal link between the breach and the receipt of the benefit or because the benefit was intended to provide the plaintiff with an indemnity for the type of loss caused by the breach: *IBM Canada Limited v. Waterman*, 2013 SCC 70, at para 15. CPP benefits are considered to be collateral benefits (see *Canadian Pacific Ltd. v. Gill*), and WSIB benefits would also fall under the IBM Canada definition.

[61] In *O'Neill v. Kay* (1998), 53 B.C.L.R. (3d) 242 (B.C. S.C.), Grist J. considered a similar provision in British Columbia to the Ontario Solicitors Act, s. 28.1, in the context of collateral benefits:

10. Section 87(3) of the *Legal Profession Act*, R.S.B.C. 1996, c. 255 empowers the benchers to make rules establishing limits to what a member may charge and to regulate the form and content of a contingency fee agreement. The benchers have established the maximum entitlement to a fee under such an agreement, in the case of a motor vehicle personal injury or wrongful death claim, at 331/3 percent of the amount recovered. The “amount recovered” is not specifically defined and the meaning is not always as clear as might first appear. In cases where the insurance corporation's obligation to reimburse falls under first party coverage and that obligation is tempered by the insurer's ability to deduct sums received from collateral sources, payment toward the judgment will fall short of the judgment sum. In many cases ... the solicitor may have been instructed to secure the collateral benefits, and may, under general principles, be deserving of a fee. The decision as to whether such payments are to be included in the “amount recovered” will be determined by the description of the retainer in the contract, and after assessing the work done by the solicitor. Should the client retain the solicitor to pursue collateral sources for compensation for the injuries sustained, and should the lawyer be instrumental in securing this compensation, then the sums received from the collateral sources ought to be included in assessment of the “amount recovered”. Any dispute on this score would be subject to an action on, or taxation of, the solicitor's bill. (I include both forms of court determination as I recognize there is some difference of opinion as to whether a taxation of the solicitor's bill would be appropriate in the circumstances.) [Underlines added.]

11. I do not find anything in the Act or the Law Society Rules which directly regulates the form or content of the agreement and would necessarily require the solicitor and his or her client to contract in terms of “amount recovered”, beyond stipulation that the maximum remuneration to which the solicitor may become entitled under the agreement is not to be more than 331/3 percent of “amount recovered”. …

[62] *Carroll v. Bush*, where Master Powers also confirmed that collateral benefits (in this case, CPP benefits) can be included in a contingency fee agreement.

[20] Mr. Bush argues that the contingency fee agreement should only be based on the actual benefits received at the time of the settlement. He further says that although this amount was $15,320 the subsequent overpayment claimed by National Life was $4,890.60 leaving a balance of $10,429.40. Mr. Bush argues that the contingency fee should be calculated on that at 25%. However, this fails to recognize that the real benefit of the services was the increase in the benefits by $766 per month. The CPP benefits would have been deducted no matter what amount they were. The benefit received was in convincing National that the benefits should be increased from $1,128 gross of CPP to $1,878 gross of CPP.

[63] In Carroll, Master Powers was considering a bill of $9,208. where the solicitor Carroll pursued an insurer for disability benefits. Carroll’s work was docketed at 33 hours and he sought to include a percentage for future benefits. It is important that the benefits were only available for 5 years as per the contract. The Master considered reducing the percentage to one-quarter of 30 percent to account for contingencies, but in the end reduced the hourly rate instead.

[64] It is possible to see the British Columbia cases, particularly Carroll, as condoning a CFRA, which includes future benefit amounts “recovered”. There is, however, no Ontario case authorizing the practice. It is also important to remember that Carroll considered a small account for 33 hours and a defined future benefit limited to 5 years. I am unable to accept that the Solicitor’s Act for this Province condones accounts for contingent sums based on “actuarial life expectancies” over the next 34 years as amounts or property “recovered”.

[65] Having come to this conclusion, I find this another reason for voiding the CFRA.

Determining an Appropriate Fee

[66] Section 24 of the Solicitor’s Act, set out above, also allows for the voiding of the CFRA if the terms are not “fair and reasonable” and empowers the Court on application to cancel the agreement and have the fees “assessed in the ordinary manner”.

[67] Section 25 of the Act considers the circumstances where the fees have already been paid and allows in special circumstances for the agreement to be “reopened” and the fees assessed. It also allows the Court to order any amount received by the solicitor to be “repaid by him or her on such terms and conditions as to the Court seems just”.

[68] The phrase “special circumstances” alluded to in s. 25 of the Solicitor’s Act was considered by Justice Sheard in *Novosel v. Campisi*, 2022 ONSC 3300. I have set out below paras. 38, 39, 40, 41, 44, 46, 47 and 48 of Novosel:

[38] The “special circumstances” referenced in s. 25 should be construed broadly “to include any circumstances in which the ‘importance of protecting the interests of the client and/or public confidence in the administration of justice, demand an assessment’”: *Hodge v. Neinstein*, 2017 ONCA 494, at para. 137.

[39] Non-compliance with the Act could amount to special circumstances: Hodge, at para. 138.

[40] While the court has a broad discretion to determine whether special circumstances exist, “ordering an assessment after payment will be the exception rather than the rule”: *Clatney v. Quinn Thiele Mineault Grodzki LLP*, 2016 ONCA 377, at para. 84.

[41] “[S]pecial circumstances will tend to either undermine the presumption that an account was accepted as proper and reasonable…or show that the account was excessive or unwarranted.” The authorities support that “[S]pecial circumstances are those in which the importance of protecting the interests of the client and/or public confidence in the administration of justice, demand an assessment”: Clatney, at paras. 85, 86.

[44] Where enforcement of a contingency fee agreement is sought, the court follows a two-part process: first, the court must determine the fairness of the agreement as of the date it was entered into and, secondly, it must assess the reasonableness of the agreement as at the date of the hearing. Such an agreement may be declared void or cancelled if the court determines that it is either unfair or unreasonable: *Henricks-Hunter v. 81488 Ontario Inc. (Phoenix Concert Theatre)*, 2012 ONCA 496, at para. 13.

[46] To evaluate whether the fees charged by a lawyer are reasonable, the court should consider the complexity of the matter, the results achieved and the risk assumed by the lawyer, including the risk of non-payment “where there is a real risk of an adverse finding on liability”: Raphael, at para 50.

[47] S. 24 of the Act provides that if it appears to the court that special circumstances exist, an order may be made to reopen the agreement and for the repayment of the whole or part of the amount paid to the solicitor.

[48] If a contingency fee agreement is found void or unenforceable, fees should be assessed in the ordinary manner and reasonable compensation awarded on a quantum meruit basis: see, *Lima v Kwinter*, at para 33; *Hodge v. Neinstein*, at para 135; and Clatney v. Quinn, at paras. 77- 79.

[69] For reasons described above and considered below, where the respondent’s fees are fixed, I find the CFRA to be unfair to the applicant at the time it was signed, and unreasonable as of the date of this application. I recognize that this finding may seem unnecessary, considering my earlier description of the offending portions of the agreement, but nonetheless, I find this exercise important in coming to my conclusion, and in doing so, attempting to protect the interests of the applicant and maintaining public confidence in the administration of justice.

[70] Sheard J., in Novosel, found in the absence of agreement he did not have the authority to fix the fees on a quantum meruit basis and ordered an assessment. (*Novosel*, para. 67).

[71] With respect, I prefer the approach adopted by C.J. Brown J. in *Zarabi-Majd v. Levitt LLP*, 2021 ONSC 135. In Zarabi-Majd, the Court considered the appropriateness of a contingency fee agreement as it applied to counsel’s work in obtaining a fair settlement from the Toronto Police Service for an employee on a medical leave for PTSD. The application before Justice Brown appears to take the same form as this matter before me.

[72] Justice Brown considered the options for an unenforceable CFRA in paras. 37-41:

[37] The respondent has already acknowledged that the contingency fee agreement was not to be enforced and consented to a referral of the matter to the assessment officer for an assessment or the award of reasonable fees on a quantum meruit basis by the court.

[38] The primary remedy for an unenforceable contingency fee agreement is referral of the fees to be assessed in the ordinary manner by an assessment officer: Solicitor’s Act, RSO 1990, c. S.15 s. 24; *Cozzi v Polsinelli et al*, 2019 ONSC 417 at para. 26; *Tsiboulskii v Monro* at paras 22-25.

[39] While the applicant submits that the remedy for an unenforceable contingency fee agreement is a declaration that no legal fees be payable at all or disgorgement of fees already paid, relying on the case of *Hodge v Neinstein*, 2015 ONSC 7345, the issue of remedy for an unenforceable contingency fee agreement was not before the court in that case and the comments relied upon by the applicant in her submissions were made in obiter.

[40] In that case, it was determined that if a contingency fee agreement were unenforceable, there were at least two ways for a law firm still to be paid. Malloy J. stated as follows: Undoubtedly, Neinstein & Associates did work for these clients that resulted in the clients receiving proceeds of settlements or litigation awards. If the contingency fee agreements are unenforceable, it does not necessarily follow that Neinstein & Associates would be disentitled to recover any fees. There are at least two possible ways of accomplishing this. One would be for Neinstein & Associates to be entitled to a fee based on a quantum meruit basis. This could be raised as a defence or counterclaim by Neinstein & Associates, and assessments could be directed. Such claims would need to be disposed of individually. However, that is not an impediment to certifying a common issue for the plaintiff’s claim. A second alternative would be to permit Neinstein & Associates to retain the fee portion based on the percentage of damages, but not anything attributable to costs. This has the advantage of simplicity, but involves a complicating factor when it was Neinstein & Associates itself who determined what portion of an all-in settlement was attributable to costs and what was for damages. Also, it may not be fair compensation for the lawyer in all cases, particularly where the percentage fee taken was low in relation to the amount of total costs taken. However, in either event, once the agreement is determined to be unenforceable, the onus would be on the solicitor to show some other basis for compensation: Hodge v Neinstein, supra at paras. 8, 81.

[41] It is the position of the applicant that payment of fees would only apply where a settlement was achieved, which did not occur here.

[73] Justice Brown went on to fix the compensation as described in paras. 44-49:

[44] As regards a referral for assessment, in my view, this alternative will result in more expenses being incurred unnecessarily.

[45] The more reasonable resolution, in all of the circumstances, is to have the court fix fees on a quantum meruit basis, based on the statements of account and evidence.

[46] In assessing reasonable solicitors’ fees, the following factors may be considered: the degree of risk assumed by the solicitors, the amount of time spent and their hourly rates, the risk of non-payment by a client where there is a real risk of an adverse finding on liability, the results achieved and monetary value of the claim, the importance of the matter to the client, the solicitor’s demonstrated skill and competence, and the client’s ability to pay and expectations as to the amount of the fee.: *Raphael Partners v Lam*, [2002] O.J. No. 3605 at para 50; *Cogan, Re*, [2007] O. J. No. 4539; *Laushway Law Office v Simpson*, 2015 ONSC 4155 at paras 129-130, 135-137.

[47] The matter was clearly of importance to the applicant. Due to the jurisdictional barrier regarding commencing a civil claim, the respondent took a significant risk in representing her. As a result, the only means of resolution was via settlement, and it was for that reason that the respondent was retained. The respondents were well-skilled, had a significant reputation and were recognized in the area of employment and labour law. Considerable time and cost were expended in pursuing and obtaining the settlement offer. The result achieved was a reasonable, even significant, settlement offer. The applicant had the ability to pay. I am satisfied that she expected that she would have to pay for the work completed on her behalf, based on the affidavit and documentary evidence.

[48] The respondent ultimately offered to settle this matter on a quantum meruit basis of $52,960.25 plus HST for fees and $10,277.73 plus HST for disbursements, for a total of $72,458.85 plus PJI. I find payment on a quantum meruit basis to be a reasonable resolution. I have carefully reviewed the fees and disbursements as set forth in the accounts before the court and find them to be fair and reasonable. As for the fees, there is no appreciable duplication of fees by various counsel. I have carefully reviewed the fees charged for the statement of claim and note that the itemized dockets referred to amendments made pursuant to the instructions of the applicant or based on comments made by her after review of the draft statement of claim.

[49] I order that the applicant pay forthwith to the respondent fees in the amount of $52,960.25 plus HST on a quantum meruit basis and disbursements in the amount of $11,613.83 inclusive of HST.

Conclusion

[74] I will not refer this matter for an assessment. An assessment hearing based on the submissions of counsel and the obvious acrimony exhibited would take days. Despite my rulings above, I find that an assessment officer would likely be drawn into issues beyond his/her jurisdiction even when attempting to assess fees on a quantum meruit basis. (*Lawrynowicz v. Marino*, 2016 ONSC 2065, paras. 97-111).

[75] At this time, the pressure on the Superior Court does not allow for multiple days to be spent by a Superior Court Judge assessing these fees. It is not in the interest of the administration of justice. Perhaps, most importantly, this motor vehicle accident happened in 2018. For the benefit of all parties, I cannot allow further fees to be incurred and more months to go by before a decision.

[76] I have the necessary evidence before me to assess these accounts and fix the appropriate fees. I have the communications between CPPD and WSIB and the applicant and counsel. I have the results achieved as of the date this application was heard. I have the time dockets of the respondent.

[77] Counsel was successful in obtaining CPPD benefits for the applicant and for obtaining a bi-weekly benefit from WSIB, but only to April 8, 2019. The total sums paid as of the date of the solicitor’s accounts being rendered were $71,587.66.

[78] There is no doubt that this matter was important to the applicant. He was disabled and needed this income stream.

[79] Despite the comments of the respondent, the work done was not particularly complex nor based on the sworn testimony of the applicant, did the respondent devote much attention to moving the matter forward to resolution.

[80] The risk to the respondent was minimal, since consistent with the respondent’s own evidence, the applicant paid for disbursements up front and did much of the “leg work” himself. The only risk therefore being the potential loss of fees.

[81] The applicant makes it clear that despite the CFRA, he had no expectation that the solicitor’s fees would consume almost all of the sums recovered.

[82] The respondent made it clear that he had over 40 years of experience in pursuing disability benefits. As such, I do not find his suggested hourly rate of $550. per hour unreasonable.

[83] I have reviewed in detail the time dockets attached to the affidavit of the respondent law firm employee, Fran Rowe. I have reviewed in detail the narrative of the work done that makes up part of each of the accounts. As mentioned previously, I have affidavit evidence that the respondent spent either 159.5 or 197.1 hours working on this file.

[84] Even when considering the lower number and basing it on a 50 hour work week, it would mean this solicitor spent in excess of three solid weeks attending to the applicant’s file. I find that excessive and indefensible based on the work done and the result achieved. I am reducing the number of appropriate billable hours to 100 for all work across all billed accounts.

[85] Set out below is my determination of the appropriate fees as against the monies received and retained.

Fees – 100 hours @ $550./hour: $55,000.00 Appliable HST: $ 7,150.00 $62,150.00

Amounts received from CCPD & WSIB: $71,587.66 Remitted to Calles: - $ 6,147.04 Retained by Yormak: $65,440.62 Initial retainer: $ 3,000.00 Total: $68,440.62

[86] The fees and HST is therefore fixed by me at $62,150. The respondents Steven Yormak and Yormak & Associates will remit to the applicant Francisco Calles the sum of $6,290.62.

[87] There are no further sums owed by the applicant to the respondent.

Costs

[88] I will receive written submissions on costs. All written submissions limited to 3 pages excluding any bill of costs. The applicant’s submissions to be received within 30 days of the release of these reasons. The respondent’s submissions 20 days thereafter and reply 10 days after that.

[89] If I do not receive submissions on the schedule noted above, there will be no order as to costs.

“Regional Senior Justice B.G. Thomas” Regional Senior Justice B. G. Thomas Released: February 21, 2023.