10.18: Reference to Court
10.2: Payment for lawyer’s services and contents of lawyer’s account
10.44: Appeal to judge
10.7: Contingency fee agreement requirements
10.8: Lawyer’s non-compliance with contingency fee agreement

Case Summary

This was an Appeal of the Chambers Judge’s review of a Review Officer’s decision, pursuant to Rule 10.44. The Appeal was brought by the former client of a law firm (the “Client”) in respect of fees payable under a Contingency Fee Agreement (“CFA”).

The underlying facts involved a patent infringement case before the Federal Court. Following Questioning in that case, the law firm advised the Client that it would continue to represent him under the CFA only if the client would agree to negotiate a settlement. The law firm put forward a settlement proposal to settle the Action, which was accepted by the opposing party. Subsequently, the Client took the position that no settlement had been reached. The law firm disagreed and advised that it could not continue to act. Though the Client challenged the settlement agreement before the Federal Court and Federal Court of Appeal, the settlement agreement was found to have been binding on the Client.

Later, relying on a term in the CFA which stated that no fees would be payable in the event that the law firm withdrew from representation based on low likelihood of success at Trial, the Client asserted that it was not required to pay the law firm’s fees. The Review Officer examined the CFA and found that it failed to satisfy the particularity requirements, pursuant to Rule 10.7(2), and accordingly, was unenforceable. The Review Officer then relied on Rule 10.8 to find that, notwithstanding the CFA’s unenforceability, the law firm’s fees remained payable, pursuant to a reasonableness review under Rule 10.2. The Chambers Judge agreed, noting that the Review Officer is entitled to consider under Rule 10.2 the Client’s reasonable expectations for payment based on the terms of the contract. 

The Court of Appeal agreed with the Chambers Judge in full. In addition, the Court rejected the Client’s submission that a finding of unenforceability, pursuant to Rule 10.7, required interpretation of the CFA such that the matter should have been referred to the Court of Queen’s Bench under Rule 10.18. The Court also rejected the Client’s contention that he should have been entitled to rely on language in the CFA excusing payment of fees payable upon withdrawal notwithstanding that the CFA was found to be unenforceable. In rejecting the Client’s argument on this point, the Court held that it was appropriate for the Review Officer to consider the reasonableness of the law firm’s fees, in light of the context, which included both the CFA and the circumstances in which the law firm withdrew from representation. Further, a finding of unenforceability need not necessarily apply for the benefit of the Client only. The Court held that the Review Officer’s decision was reasonable in the circumstances and, accordingly, dismissed the Appeal.

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