Reasons for Judgment

Court File No.: CV-24-1545 (London)
Date: 2025-06-06
Ontario Superior Court of Justice

Between:
Aylmer Meat Packers Inc. and Richard Walter Clare
Applicants
– and –
Harrison Pensa LLP
Respondent

Applicant Counsel: M. Davis and H. Abramsky
Respondent Counsel: J. Vigmond and B. Cameron
Heard: October 31, 2024

Justice: Jacqueline A. Horvat

Overview

[1] At issue in these applications is the interpretation of a contingency fee retainer agreement (the “Agreement”) made between Aylmer Meat Packers Inc. (“Aylmer”) and Richard Walter Clare (collectively, the “Client”), and their former law firm, Harrison Pensa LLP (“HP”). The parties agree that the Agreement is valid and enforceable. The parties disagree on the interpretation of the Agreement and HP’s entitlement to a contingency fee on a judgment that the Client obtained on appeal following the retainer of new lawyers.

[2] For the reasons that follow, I find that when the Agreement is interpreted by reference to the entirety of the Agreement in its ordinary and grammatical sense, the clear and unambiguous interpretation is that HP is not entitled to a contingency fee on the judgment obtained by the Client on appeal. Under the Agreement, HP is entitled to a contingency fee on the damages recovered prior to or at trial only. HP is also not entitled to compensation pursuant to the equitable remedy of quantum meruit.

Background

[3] Aylmer is an Ontario abattoir and meat processing company. Richard Walter Clare is its principal.

[4] HP is a limited liability partnership and full-service law firm.

[5] Since 2003 or so, Ian Wallace of HP acted as the Client’s lawyer. Mr. Wallace had always been retained by the Client on an hourly-rate and time-spent basis.

[6] In August 2003, officials from the Ontario Ministry of Agriculture, Food and Rural Affairs took control of Aylmer’s abattoir based on allegations that Aylmer was operating in breach of the Dead Animal Disposal Act, RSO 1990, c D.3. After 19 months, control of the abattoir was returned to Aylmer; however, the province was negligent in its occupation, and Aylmer suffered damages as a result.

The Action

[7] In 2004, Aylmer commenced an action against the Province of Ontario (“Ontario”) and the Attorney General of Canada (“Canada”) for damages in negligence, trespass, and conversion related to the loss of Aylmer’s business, among other relief (the “Action”).

[8] HP was not the law firm that initially acted for Aylmer and commenced the Action. The original law firm that represented Aylmer was retained by Aylmer on an hourly-rate and time-spent basis.

The Retainer of HP

[9] In or about May 2013, Mr. Clare expressed to Mr. Wallace his concerns about the costs he had incurred in prosecuting the Action and the lack of progress made. Mr. Wallace introduced Mr. Clare to David Williams of HP, and Mr. Williams agreed to act as trial counsel in and assume carriage of the Action. In his affidavit filed in support of HP, Mr. Williams described the Action as the riskiest case he has taken on in 43 years of practice.

[10] In 2013, Mr. Williams suggested to Mr. Clare that HP be retained on a contingency fee arrangement while also offering Mr. Clare the option of an hourly-rate retainer. Both Mr. Wallace and Mr. Williams discussed with Mr. Clare that under the contingency fee arrangement, HP would only be paid if it succeeded at trial or if there was a settlement. Mr. Clare chose to proceed on a contingency fee basis. This was the first time that Mr. Clare retained a law firm on a contingency fee basis.

[11] HP says that the fee arrangement between it and the Client was not reduced to writing until 2018, approximately 5 years after HP’s retainer, and that the executed Agreement was lost. Mr. Clare says that he did not receive a copy of the Agreement until about May 2023 but that he had always understood the agreement between the Client and HP to be that HP “would receive a percentage of the money I recovered at trial or as a result of settlement at or before trial (33 or 40%), but if we lost the trial, Harrison Pensa would get no payment.”

[12] The Agreement was drafted by HP. Mr. Clare did not receive independent legal advice. There is no evidence regarding the negotiation of any of the terms of the Agreement.

[13] The parties agree that the unsigned Agreement in the record represents the retainer and fee arrangement made between the parties. Both HP and the Client agree that the Agreement is valid and enforceable.

The Trial

[14] Following Mr. Williams and HP becoming the lawyers of record and trial counsel for Aylmer and prior to the trial, the defendants in the Action brought an unsuccessful motion for security for costs. They were ordered to pay to Aylmer $35,000 in costs for the motion. HP received and retained this costs award.

[15] In early 2020, on the eve of trial, Canada settled for $120,000. HP received and retained these settlement funds. HP used $60,000 of the settlement funds to reimburse itself for disbursements it paid in relation to the Action.

[16] On January 6, 2020, the trial began and proceeded against Ontario for 18 days.

[17] On October 5, 2020, the trial judge dismissed the Action and ordered Aylmer to pay $750,000 in costs. The trial judge found that Ontario did not owe Aylmer a duty of care, did not breach the standard of care, and was not the cause of Aylmer’s damages. The trial judge found that the relationship between Ontario and Aylmer “was not sufficiently proximate that it would be fair and just to impose a duty of care” and that “a private duty of care towards licensees cannot coexist with [Ontario’s] public duties”: Aylmer Meat Packers Inc. v. Ontario, 2020 ONSC 6053, paras. 89, 92.

[18] Further, the trial judge held that even if Ontario’s acts and omissions fell below the standard of care, Aylmer failed to prove that this conduct was the cause of its losses. As part of her reasons for decision, the trial judge completed an assessment of damages. She accepted HP’s theory of damages and assessed the loss of enterprise value at $3,520,000. Aylmer’s damages expert at trial assessed Aylmer’s damages at between $11.3 to $12.1 million.

[19] Had HP been retained on an hourly rate basis, HP says that its fees through to the end of the trial would have amounted to approximately $776,107. In addition, HP paid $65,000 in disbursements on behalf of Aylmer.

[20] On November 18, 2020, HP issued an account and applied the remaining $60,000 of the settlement with Canada towards its fees. The remaining work in progress of $716,107 was then written off by HP.

The Appeal

[21] Aylmer appealed the trial decision and retained Lax O’Sullivan Lisus Gottlieb LLP (“LOLG”) to represent it on the appeal. Under a new retainer agreement between LOLG and Aylmer, Aylmer paid LOLG approximately $312,000 in fees for the appeal. HP was not involved in the appeal, apart from briefing LOLG.

[22] No retainer agreement relating to the appeal was made between HP and the Client. There is no evidence of any discussions occurring between HP and the Client relating to HP’s fees at trial once Aylmer made the decision to appeal.

[23] On August 10, 2022, the Court of Appeal for Ontario allowed Aylmer’s appeal, accepting the findings of fact made by the trial judge but finding that she had misapplied the law in that Ontario did owe a duty of care to Aylmer. The Court of Appeal overturned the trial judge’s decision, substituted its own decision, and awarded the damages amount assessed by the trial judge. Aylmer was awarded $3,520,000 in damages and $25,000 for the costs of the appeal: Aylmer Meat Packers Inc. v. Ontario, 2022 ONCA 579.

[24] On August 31, 2022, the Court of Appeal awarded Aylmer $475,000 for the costs of trial, inclusive of disbursements and HST, and $600,000 in prejudgment interest: Aylmer Meat Packers Inc. v. Ontario, 2022 ONCA 629.

Events Following the Successful Appeal

[25] Between September 2022 and January 2023, communications occurred between Mr. Clare and HP regarding the signing of a direction for Ontario to send the funds to HP.

[26] On May 4, 2023, the Supreme Court of Canada dismissed Ontario’s application for leave to appeal, with costs payable by Ontario to Aylmer in the amount of $1,070.

[27] On May 12, 2023, Mr. Wallace sent an email to Mr. Clare’s assistant setting out the amounts to be received from Ontario and stated: “Fees and expenses come off this.”

[28] On May 24, 2023, Mr. Williams wrote to Mr. Clare to advise that HP received and was holding $4,724,735.21 in trust from Ontario and that HP would take $1,723,735.21 for its fees at trial. The letter states the following:

We have, as you know, completed thousands of hours of work to obtain this result. And, as you and I discussed when I agreed to take on this file from Toronto counsel, we have weathered the significant risk that we faced in bringing this claim to a conclusion.

It is for those reasons, and in keeping with the contingency agreement that you agreed to for our retainer for this claim, that we propose the following accounting.

Our retainer agreement stipulates that if judgment was obtained after a trial, our legal fees would be charged at 40% of the trial judgment, not including the costs and disbursements paid by the defendant, plus HST.

In order to do that calculation, we back out the costs, and we work with only the damages and interest payable, as follows:

Damages: $3,520,000
Pre-Judgment Interest: $600,000
Post-Judgment Interest: $103,665.21
[Total]: $4,223,665.21

However, as you may recall, there were legal costs ($35,000) ordered to be paid, and they were, by Ontario and the Attorney General following our successful defeat of their motions for security for costs. As well, the Attorney General settled with us on the eve of the trial for $120,000. We credit those amounts to you in order to reach a total net damages and interest of $4,068,665.21.

40% of $4,068,665.21 is $1,627,466.08. When we add HST of $211,571, the total becomes $1,839,037. Using that calculation in accordance with our agreement nets you total proceeds of $2,885,698.

That figure is arrived at as follows:

Net after application of agreement: $2,384,628.21
Plus: Costs/Disbursements
Paid by Ontario for Trial: $475,000
Court of Appeal Costs: $25,000
SCC Costs: $1,070
[Total]: $2,885,698.21

Despite our retainer agreement, we would like to do better than that for you, and so we are proposing that you net $3 million from the Judgment and costs proceeds and we will take less than 40% of the Judgment net of the costs.

That will leave us to render to you in due course an account for the remaining balance of $1,724,735.21 inclusive of fees, HST and disbursements.

[Emphasis in original.]

[29] After receiving this letter, Mr. Clare contacted Mr. Wallace and expressed his objection to HP being paid over $1.7 million. Mr. Clare’s evidence is that he had always understood that if HP lost at trial, HP would not be paid. Shortly after this letter was sent, a meeting occurred between Mr. Clare, Mr. Williams, and Mr. Wallace in which Mr. Clare continued to object to HP’s purported fee.

[30] On June 12, 2023, HP received the funds from Ontario. Also on June 12, 2023, HP paid Aylmer $3 million from the funds it received.

[31] On June 22, 2023, HP issued an invoice (Invoice #236805) in the amount of $1,725,019.64 (the “Funds”) and transferred the Funds from its trust account to its general account.

The Applications

[32] On August 16, 2023, the Client brought this application seeking various declarations including that: (i) HP hold the Funds in trust for the Client; (ii) HP has no right, title, or entitlement to the Funds; and (iii) the Agreement is enforceable in favour of the Client pursuant to ss. 23, 24 and 25 of the Solicitors Act, RSO 1990, c S.15.

[33] On June 24, 2024, HP commenced its own application against the Client seeking a declaration that HP is entitled to the Funds under the Agreement. In the alternative, HP seeks judgment in the amount of the Funds pursuant to the equitable remedy of quantum meruit.

The Issues, Law and Analysis

[34] The following issues are before me:

(a) Is HP entitled to a percentage of the appeal judgment for its fees at the trial pursuant to the Agreement?
(b) Is HP entitled to its reasonable fees for the trial on a quantum meruit basis?

Interpretation of the Agreement

[35] The parties agree that the Agreement is valid and enforceable and that no ambiguity exists therein. There is no dispute that the Agreement now relied on by both parties was drafted by HP. There is no evidence related to the drafting of the Agreement, whether any terms were negotiated by the parties, or surrounding the execution of the Agreement. It is unclear to me whether the Agreement was ever actually executed or when it was formed. The parties agree, however, that the Agreement before me in the record reflects the agreement made between them. Where the parties disagree is on the interpretation of the Agreement.

[36] The principles of contractual interpretation established by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, are applicable to retainer agreements: Boudreau v. Lavery, de Billy LLP, 2022 ONCA 691, paras. 5-7. These principles include the following:

(a) The context and purpose of the agreement will inform its interpretation: Sattva, at para. 50; Noseworthy v. Noseworthy, 2017 ONSC 2752, para. 16.

(b) The court must read the contract as a whole, giving the words used their ordinary and grammatical meaning consistent with the surrounding circumstances known to the parties at the time of the formation of the contract: Sattva, at para. 47; Noseworthy, at para. 16; Earthco Soil Mixtures Inc. v. Pine Valley Enterprises Inc., 2024 SCC 20, paras. 2, 61-65.

(c) The objective evidence of the facts that were known – or reasonably ought to have been known – by both parties at the time the agreement was formed is admissible, while evidence of the subjective intentions of the parties is not admissible: Sattva, at paras. 58, 60; Noseworthy, at para. 16; Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59, para. 50.

(d) Evidence of the surrounding circumstances should not be used to deviate from the words of the agreement to effectively create a new agreement. Evidence outside the words of the written agreement that would add to, subtract from, vary, or contradict a contract is not admissible. While surrounding circumstances may influence the interpretation of the contract, “they must never be allowed to overwhelm the words of the agreement”: Sattva, at para. 57; Noseworthy, at para. 16; Boudreau, at para. 7.

[37] In addition, lawyer-client retainers are agreements that carry special duties for lawyers to communicate clearly so that the client understands the terms of the retainer. Lawyers are bound by the terms of their retainer agreement with the client, which must be interpreted according to its plain language in keeping with the fundamental principles of contractual interpretation, the special nature of lawyer-client relationships, and the strict obligations lawyers have regarding trust funds. If there is any ambiguity in a lawyer-client retainer, it is to be construed against the drafter of the agreement, i.e., the lawyer: Boudreau, at paras. 5-7; Strother v. 3464920 Canada Inc., 2007 SCC 24, paras. 133-134; Erez v. Greenspan Partners, 2023 ONSC 4986, paras. 101, 113.

[38] HP argues that the Agreement should be interpreted on its plain language such that if the Client receives money, then HP is paid regardless of the stage in the Action that the money is obtained by the Client, including after trial. I do not agree. Reading the Agreement as a whole and giving the words their ordinary and grammatical meaning leads me to conclude that the Agreement limits HP’s recovery to a percentage of an amount recovered on behalf of the Client prior to or at trial. In my view, the Agreement explicitly excludes any judgment obtained by the Client on an appeal.

[39] Paragraphs 19 and 20 of the Agreement are the operative sections. They appear under the heading “Legal Fees”, and state as follows:

19. If you do not receive money for the Claim, you do not pay us for legal fees under this contingency fee agreement.

20. You agree to pay to us fees for our services, exclusive of disbursements, upon the following contingency: recovery of any damages for your benefit, whether by settlement award obtained through negotiation, mediation, settlement meetings or judgment at trial. [Emphasis added.]

[40] Paragraph 21, also under the heading “Legal Fees,” sets out the contingency fee percentage that HP is entitled to under the Agreement. The section begins with the words, “If you receive money for the Claim, you agree to pay us your fee which shall be determined as set out below”. These appear to be the words that HP focuses its submissions on. The remainder of paragraph 21, however, then identifies and repeats the contingencies listed in paragraph 20: “whether by settlement award obtained through negotiation, mediation or settlement meeting, or judgment at trial”. Section 21 identifies the contingency fee percentages as follows:

(i) 33 1/3% of the amount of a settlement award if we settle your claim, or any part of it, less than 90 days before the pre-trial or after the pre-trial and up to 30 days before trial;

(ii) 40% of the amount of a settlement award if we settle your claim, or any part of it, after 6 months following your examination for discovery or during trial, or 40% of the amount awarded in a trial judgment if your claim does not settle.

[41] The plain language of paragraph 21 limits HP’s fee to a percentage of “the amount awarded in a trial judgment” or a settlement prior to trial. Paragraph 21 also specifies that the Client is entitled to “all amounts which are separately specified as costs.” This paragraph of the Agreement does not address HP’s fee on money received by the Client on an appeal or following a trial.

[42] The words of paragraph 23 of the Agreement, also under the heading “Legal Fees,” similarly limit the amount HP will receive to a percentage of a settlement award or judgment at trial: “We shall not recover more in fees than you recover as damages by way of settlement award or judgment at trial.”

[43] HP argues that the contingent event under the Agreement is the receipt of the money by the Client at any stage. In my view, the plain language of the Agreement requires one of the payment triggers or contingencies, being judgment at trial or settlement prior to trial, to occur, otherwise HP will not be paid for its services. The wording is clear and unambiguous. The intention of the parties was a contingency fee arrangement in which HP would be paid in the event of one of the specifically stated circumstances occurring. Neither a settlement nor a judgment at trial occurred.

[44] The word “appeal” is mentioned only in paragraphs 11 and 12 of the Agreement under the heading “What You Can Expect from Us”. Paragraph 11 explicitly states that the Agreement “does not apply to any appeal from a judgment at trial initiated by any party”, while paragraph 12 requires the parties to “enter into a separate agreement respecting payment of fees and disbursements for the appeal” if HP agrees to represent the Client on an appeal. This is the plain language of the Agreement, and it excludes appeals from the application of the Agreement.

[45] If there was any ambiguity in these paragraphs of the Agreement, which in my view there is not, the ambiguity would be construed against HP. HP also had a special duty to communicate clearly so that the Client understands the terms of the Agreement: Boudreau, at paras. 5-7; Strother at paras. 133-134; Erez at paras. 101, 113.

[46] HP argues that when the Agreement is interpreted by reference to the entirety of the Agreement in its ordinary and grammatical sense, the clear and unambiguous interpretation is that HP was to be paid under the Agreement if the Client received any compensation. In support of this argument, HP relies on the definition of “Claim” in the Agreement to say that the Claim is damages that Aylmer “will” receive because of the wrongful occupation of its business. Paragraph 2 of the Agreement, however, defines “Claim” as “damages you have sustained as a result of the wrongful occupation of your business premises …” (emphasis added). In my view, this section simply defines the client matter that the Agreement relates to, and the plain wording of the section does not contemplate a future event but rather a past one. The plain language of the Agreement simply does not support the interpretation proffered by HP, and HP could not, in my view, reasonably expect to recover 40% of an award obtained by the Client on an appeal with new counsel.

[47] The surrounding circumstances known to the parties at the time of the formation of the Agreement is unclear based on the record before me. What is known is that HP was retained in 2013 on a contingency fee retainer, but, for unknown reasons, the Agreement was not reduced to writing until 2018. The Client understood that it retained HP on the following terms: HP would receive a percentage of the money recovered at trial or from a settlement at or before trial (33 or 40%), but, if it lost the trial, HP would get no payment. Based on a plain reading of the Agreement, what HP and the Client intended at the time that the Agreement was formed – both in 2013 and in 2018 – only took the parties to the end of a trial. The Agreement is clear that if either the Client or Ontario appealed the trial decision, a separate agreement would have to be entered into by the parties for the payment of HP’s fees on the appeal.

[48] HP, as the drafter of the Agreement, could have specifically included a judgment obtained on appeal as one of the payment triggers in paragraphs 20, 21, and 23 by either adding the word “appeal” so that the paragraphs read “judgment at trial or appeal”, or by excluding the word trial so the contingency in the paragraph simply read “judgment.” If this were the case, my interpretation of the Agreement would be different and would include recovery of HP’s fees based on a judgment obtained on appeal by new counsel.

[49] It was also open to HP to approach the Client following the loss at trial to preserve its fees in the event of a successful outcome on appeal. It did not do so. It was reasonable in all of these circumstances for the Client to believe that the Agreement it had with HP was at an end once the trial was lost, and that no fees would be payable if the Client’s new lawyers were successful on appeal.

[50] HP also argues that the Agreement, based on a plain reading, must also make commercial sense. I agree, and the question is whether the nature of the bargain that emerges from a plain reading of the Agreement is in line with commercial reality: Boudreau, at para. 6.

[51] HP says that an interpretation of the Agreement that results in the Client receiving compensation for their claim against Ontario without being liable to pay HP’s legal fees would be a commercial absurdity. HP argues that as a matter of law and as a practical matter, the Client could not have recovered the judgment but for the efforts of HP. The position of HP is that the practical, common-sense, objective interpretation of the Agreement, read as a whole, is that legal fees were payable when the Client recovered compensation. An interpretation that permits the Client to recover the full judgment and not pay its trial lawyers, HP says, does not accord with commercial reality or the mutual and objective intention of the parties.

[52] With respect, I do not agree. The language of the Agreement simply does not support HP’s interpretation. Further, the nature of a contingency fee agreement, and the justification for their use, is one of risk versus reward. Any lawyer who enters into a contingency fee agreement knows that they run the risk of not being paid. HP on its own evidence knew that it was taking on a risky case, which is why HP proposed a contingency fee retainer rather than an hourly rate retainer to Mr. Clare. Under the Agreement, HP stood to gain a significant fee. For example, if the Client was successful at trial and the trial judge had awarded the low end of the Client’s expert’s assessment of damages, HP would have been entitled to a fee of $4.5 million ($11.3 million x 0.40), while having only approximately $800,000 worth of actual time spent on the Action. The policy reasons for contingency fee agreements justify HP’s significant fee in this scenario given the risky nature of the case. This is the deal that the parties made, and HP was certainly aware at the time that it was retained by the Client that it ran the risk of being paid no fees. This was a commercial risk encouraged and freely accepted by HP.

[53] HP argues that the court should be “loath” to support an interpretation of the Agreement that would enable the Client to “pocket the proceeds from the litigation, the result of the many hours of work” of HP. The proceeds of the litigation, however, were not recovered within the contingency events -- a settlement prior to trial or a judgment at trial -- contemplated by the Agreement and specifically identified in the Agreement. The proceeds were recovered following a successful appeal and the retainer of new lawyers. But for the Client funding the appeal, there would have been no recovery.

[54] HP also argues that the risks associated with the Action, including liability risk, novel damages risk, and an unlikeable plaintiff, should be a factor taken into consideration in the interpretation of the Agreement. But again, this is the nature of contingency fee agreements. The risk factor is used to justify the contingency fee percentage. There is no question that HP took a risk on this case, and that would have justified a 40% fee if damages were recovered at trial. But HP did not recover any damages for the Client from Ontario. As a result, it is not entitled to recover a fee under the Agreement. On a plain reading of the Agreement, there is no commitment by the Client to pay HP’s fees on an award the Client obtained on appeal.

[55] HP relies heavily on the Court of Appeal’s decision in Dumbrell. That case, however, is distinguishable from the present one. Dumbrell was an employment case decided on employment principles that have no application to the present Agreement, apart from general interpretation principles. Dumbrell did not involve a contingency fee agreement or a lawyer-client relationship.

[56] When the Agreement is interpreted by reference to the entirety of the Agreement in its ordinary and grammatical sense, the clear and unambiguous interpretation is that the Agreement was intended to cover only what would happen up to the end of the trial. The Agreement contemplated a new agreement would be entered into once either the Client or Ontario appealed. It was a bargain, with a commercial risk, that was freely made, drafted, understood, encouraged, and accepted by HP. There is nothing unfair to HP in this interpretation.

[57] With respect, HP’s argument that the Agreement should be interpreted in a way that favours HP as the drafters of the Agreements and as the lawyers in a lawyer-client relationship offends both the principles of contractual interpretation applicable to lawyer-client retainer agreements and the plain language of the Agreement. It was HP that prepared the Agreement and limited the Agreement to the trial outcome with the words chosen by it. It freely assumed the risk of a loss at trial when it entered into the Agreement with the Client. There is no evidence that the Agreement was intended to include an award won on appeal. In fact, the Agreement explicitly excludes appeals. The Client’s recovery of damages from Ontario was a consequence only of its successful appeal to the Court of Appeal and the denial of Ontario’s leave to appeal by the Supreme Court of Canada.

[58] The Client agrees that HP is entitled to reimbursement of the disbursements HP paid for the trial. Under paragraph 21 of the Agreement, HP is entitled to a contingency fee calculated on those amounts it did achieve a recovery of before trial, being the $120,000 for the settlement with Canada. HP is not entitled to the costs awards, or a percentage of the costs awards, under the plain language of paragraph 21 of the Agreement.

Quantum Meruit

[59] If no entitlement to fees is found under the Agreement, in the alternative, HP argues that it is entitled to the payment of its fees based on the equitable doctrine of quantum meruit: the principle that one who benefits from the labour supplied by another should not be unjustly enriched by it. The doctrine may be applied in either (i) a contractual setting, where although a contract is found to exist, there is no clause addressing in express terms the consideration for the contract, or (ii) in a restitutionary setting, where no contract exists or a contract cannot be recognized or enforced: G.H.L. Fridman, Restitution, 2nd ed. (Scarborough: Carswell, 1992), at pp. 285, 289-290.

[60] Contractual quantum meruit is a discretionary remedy that may be granted when a contingency fee retainer agreement is unenforceable but work is done for the benefit of a party such that one of the contracting parties should be compensated: Komorowski v. Van Weel; Bowen et al. v. JC Clark Ltd., 2021 ONSC 2016, para. 88; and Lima v. Kwinter, 2021 ONCA 47, paras. 34, 44; Cookish v. Paul Lee Associates Professional Corporation, 2013 ONCA 278, para. 2; Koliniotis v. Tri Level Claims Consultants Ltd., para. 34.

[61] Neither HP nor the Client argue that the Agreement is unenforceable, and, in my view, contractual quantum meruit does not apply in this case.

[62] HP argues that if I make a finding that there was no term in the Agreement that stipulated how HP was to be paid for their work at trial if the Client recovered judgment following an appeal, then I may use my discretion to apply the doctrine of contractual quantum meruit. HP relies on the decision of the application judge and the Court of Appeal in Lima, including para. 26 of the Court of Appeal’s decision, where the court stated as follows:

Mr. Lima also seeks a windfall. He would have the court make an order allowing him to avoid reasonable payment for legal services that resulted in significant financial benefit to Mr. Lima. The approach urged by Mr. Lima, which would allow him to reap the benefits of the settlements achieved by SK’s efforts without paying a fair and reasonable fee, goes well beyond any legitimate consumer protection goal, and strikes me as the very definition of unjust enrichment.

[63] That is not the present case and the decision in Lima may be distinguished. In Lima, the contingency retainer agreement was found to be unenforceable, the matter settled prior to trial, the agreement in question did contemplate the services performed, and the law firm seeking compensation was responsible for the financial benefit received by the client. Lima’s only relevance to the present case is to establish that quantum meruit does not arise in this case because there is an enforceable agreement.

[64] I also do not accept HP’s argument that recovery on appeal by the Client was only made possible by HP’s work at trial. With respect, the Client was required to retain and pay new counsel to secure the judgment on appeal after HP declined to act for the Client. The Client paid for those services under a separate retainer agreement. In this case, the Client was enriched by the services provided by LOLG on the appeal, not by services provided by HP.

[65] I find that the Agreement compensated HP for the work they were retained to do. There was no gap in services provided. HP may not be happy with the fees that it is entitled to under the Agreement, but it is compensated for the work that it did. In the result, I decline to order relief based on the principles of quantum meruit.

Costs and Interest

[66] I encourage the parties to attempt to settle the issues of interest and costs of these applications. If they cannot, then the Client may serve and file brief written submissions of no more than five (5) double spaced pages (exclusive of any costs outlines, bill of costs, dockets, offers to settle, or authorities) by June 27, 2025. HP may then serve and file responding written submissions of no more than five (5) double spaced pages (exclusive of any costs outlines, bill of costs, dockets, offers to settle, or authorities) by July 11, 2025.

Conclusion

[67] For these reasons, I order:

(a) HP holds the Funds in trust for the Client;
(b) HP shall disgorge or pay to the Client forthwith the Funds; and
(c) HP is entitled to a contingency fee on the $120,000 settlement with Canada.

Jacqueline A. Horvat
Released: June 6, 2025