BARRY v INDUSTRIAL ALLIANCE INSURANCE AND FINANCIAL SERVICES INC (IAF), 2022 ABKB 706
10.2: Payment for lawyer’s services and contents of lawyer’s account
10.7: Contingency fee agreement requirements
10.8: Lawyer’s non-compliance with contingency fee agreement
10.9: Reasonableness of retainer agreements and charges subject to review
The Application concerned a Costs Award granted against a Defendant assessed as a percentage of a contingency fee agreement between the Plaintiff and their counsel. The Defendant advanced an argument contesting the validity of the Contingency Fee Agreement (the “CFA”) and the reasonableness of the contingency fee and asserted Costs such that they should be calculated in accordance with Rule 10.2, and not as a percentage of the damages Award.
The Court noted that the CFA did not meet several of the requirements set out in Rule 10.7, which sets out requirements to ensure the terms of a contingency fee are clear and that the client has executed and been provided with a copy of the agreement. The Court noted that in accordance with Rule 10.8, a Court is required to assess a lawyer’s reasonable compensation pursuant to Rule 10.2 where an invalid contingency fee agreement is found, with no weight given to the invalid contingency fee agreement.
The Plaintiff had been successful on a Summary Judgment Application. The Court noted that the CFA only provided percentage recoveries for the lawyer where the matter was settled or where there was Court Order after the matter had proceeded to Trial. The Court noted that Summary Judgment was a dispositive Application occurring prior to Trail and therefore distinct from a settlement or a Court Order after a Trial. The Court found that the Plaintiff and their counsel entered into an agreement with respect to the circumstance at issue (re: the successful Summary Judgment Application), and although it was a reasonable compromise, it was an agreement after the fact and therefore did not comply with Rule 10.7 and as such the Court was not bound by the agreement in its assessment of reasonableness of the fees as between the solicitor and client.
The Court noted that even if the CFA had specified the fee applicable when the case was determined by a dispositive pre-Trial Application and had complied with Rule 10.7, Rule 10.9 enables a Court to review a contingency fee provided by a valid agreement for reasonableness. The Court additionally understood there was nothing in Rule 10.2 that operated to preclude a reasonable amount of compensation for a lawyer’s services being calculated based on a percentage of a Court’s damages Award, and that a Court may determine a lawyer’s reasonable compensation as a percentage of a damages Award in the absence of a contingency fee agreement.
In accordance with Rule 10.2, the Court noted that the nature of the matter and circumstances of the client and found that the only realistic way that the claim could have been advanced was if counsel took on the financial risk of working for free and bearing the cost of disbursements. The Court found that the circumstances merited compensation based on a percentage of damages Award. The Court distinguished the present circumstances from other cases on the basis the claim advanced was complex, required an investigation in a foreign country, and the Defendant had made it clear from the outset that the claim would be resisted. The Court found that the Plaintiff was faced with a determined adversary and that their counsel “delivered an outstanding result”.
The Court noted that the claim was resolved by Summary Judgment which avoided the effort and expense of a full Trial, and as therefore the “high percentage success fees” that are sometimes justified when a complex matter goes to Trial were not warranted in the circumstances. The Court determined that a 25% success fee applied to the damages Award and the interest which had accrued to the date of payment of the damages Award was appropriate. The Court additionally stipulated that the success fee would not be calculated on the Costs Award or disbursements. The Court ultimately found that the Plaintiff was entitled to recover 75% of the 25% success fee from the Defendant in addition to reasonable disbursements.View CanLII Details