This matter came before the Court by way of Desk Application. Justice Marion was asked to determine whether a proposed settlement of $50,000 (the “Settlement”), negotiated by counsel for the Applicants, ought to be approved on the terms presented. The proposed Order sought approval for legal fees, disbursements, other associated costs, and applicable GST. The underlying claim arose from a motor vehicle accident in which the Applicant and a minor were struck by the Defendants’ vehicle. In respect of the minor’s claim, the Applicant entered into a contingency fee agreement (“Contingency Agreement”) with legal counsel.

The Court was satisfied that the Settlement was in the best interests of both the Applicant and the minor, subject to the Court’s assessment of the legal fees proposed to be paid to counsel. The Court considered the jurisprudence governing its supervisory role in approving settlements involving minors, particularly with respect to the reasonableness of legal fees claimed under a contingency arrangement.

Justice Marion confirmed that where a valid contingency fee agreement exists, it must comply with Rules 10.7 and 10.8. Where a lawyer fails to comply with Rule 10.7(1)–(4), (6), and (7), any contingency fee agreement is rendered unenforceable, and the lawyer is instead entitled only to fees determined in accordance with Rule 10.2, as if no contingency agreement had been entered into.

The Contingency Agreement in this case did not comply with the mandatory requirements of Rule 10.7. Specifically, the Contingency Agreement contemplated counsel receiving an amount from a costs award but failed to include the language mandated by Rule 10.7(2)(f)(iii) and (iv), as well as portions of the language required under Rule 10.7(2)(h)(i) and (ii). Consequently, the Contingency Agreement was deemed unenforceable.

Notwithstanding the unenforceability of the agreement, the Court acknowledged that it had discretion under Rule 10.2 to determine a reasonable fee. This may be a fee that aligns with the expectations of the parties as reflected in the contingency arrangement or may be calculated on a quantum meruit basis. In this instance, the Court reviewed the detailed time entries provided by counsel and recalculated the legal fees accordingly.

Justice Marion approved the Settlement, subject to amendments to the proposed form of Order with respect to the fees payable to counsel.