MS v DM, 2014 ABQB 702


10.18: Reference to Court
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
15.5: Contingency fee agreements

Case Summary

The Plaintiff’s legal guardian, TS, sought an Order to confirm the settlement of the personal injury claim of the Plaintiff, MS, who was a minor. TS also sought an Order confirming the legal fees of MS’ counsel based on a 25% contingency fee retainer agreement (the “Agreement”) that was entered into in 2005. The Public Trustee of Alberta was opposed to the confirmation of the legal fees, arguing that the legal fees should be reduced substantially for failure to comply with the Rules.

The Court stated that the applicable requirements for contingency fee agreements are set out in Rule 10.7. Rule 10.8 stipulates that if counsel does not comply with Rule 10.7(1) to (4) and (7), they are is only entitled to charges determined in accordance with Rule 10.2, as if there had been no contingency fee agreement. However, the Agreement was entered into before the current Rules came into effect so the Court considered transitional Rule 15.5(1). According to Rule 15.5(1), contingency fee agreement requirements under Rule 10.7(2) do not apply to an agreement entered into before the current Rule came into effect, if the agreement complies with old Rules 615 to 620. Thus, the Court was required to determine whether the Agreement complied with the old Rules. If not, it would need to be determined if the Agreement was enforceable pursuant to the current Rules.

With respect to the Court’s jurisdiction in deciding cases involving contingency fee agreements, Justice Yungwirth cited prior case law and concluded that the Court had the jurisdiction to interpret and enforce contracts, and had exceptional jurisdiction under former Rule 619(4) to “vary, modify or disallow the agreement”. Further, former Rule 619(4) corresponds to current Rule 10.18(3)(b). Yungwirth J. held that the Agreement did not comply with the former Rules. To be enforceable, a contingency agreement needed to contain the particulars and statements as required under Rule 616, and the Agreement did not conform to the requirements in Rule 616(2), 616(7), and 616(3). Because the Agreement did not comply with the old Rules, new Rule 10.7(2) applied. The Court noted that Rules 10.7(2)(e) and (f) are very similar to former Rules 616(2)(e) and (f). Yungwirth J. held that the agreement also did not comply with the current Rules, and was not enforceable.

Her Ladyship noted that, pursuant to Rule 10.8, counsel is only entitled to lawyer’s charges determined in accordance with Rule 10.2. The Court considered Rule 10.2, relevant case law, and the nature, importance, and urgency of the matter. The Court considered factors including MS’ financial circumstances, the manner in which counsel performed its services, and the benefits received by MS and his family from the counsel’s willingness to take the matter on a contingency fee basis. The Court confirmed the overall settlement amount, and held that counsel was entitled to a reasonable and reduced fee of $65,000, plus GST and repayment of an advance that counsel provided to the Plaintiff.

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