Counsel involved in a Class Action, related to the alleged negative impacts of the drug Paxil, applied to resolve the allocation of Legal Fees pursuant to Section 35(2) of the Class Proceedings Act, SA 2003, c C-16.5. The Class and the Defendant ultimately settled for $7,500,000. There were two counsel purporting to represent the Class from different firms. One had incurred $850,000 in legal expenses while the other had incurred $50,000 in legal expenses. Partway through the litigation, the Class Representative had changed counsel pursuant to Rule 2.28. Therefore, there was also prior counsel who had incurred $1,100,000 in legal expenses.

Prior counsel had previously applied before an Assessment Officer, pursuant to the Rules, to determine the quantum of disbursements to which the firm was entitled. The Assessment Officer determined that disbursements would be payable only upon the successful completion of the matter, as per the Contingency Fee Agreement.

The Class Representative alleged that former counsel for the Class had not advanced the case effectively. A third-party lawyer brought an Application seeking a portion of legal fees pursuant to Rule 10.4 on the basis of an agreement he had as a partner with one of the representing firms. The Court held that Rule 10.4 was not the appropriate method for addressing a contractual dispute. Justice Sidnell ultimately held that “contractual disputes between lawyers, partners and law firms should be dealt with in an action where the facts are pleaded and the applicable contractual relief is claimed”.

Sidnell J. directed that a fair and reasonable outcome was apportionment of 61% of the Settlement Amount to the Class and 39% to the Lawyers for their Costs and Disbursements. The Court directed procedural steps to finalize the Costs analysis and the specific allocation between counsel.

The Court asked counsel to agree on costs but, in the event they could not do so, directed that written submissions include an analysis of Rule 10.33 and a draft Bill of Costs pursuant to Schedule C of the Rules.