The Applicants, involved in selling their manufacturing company, engaged the Respondent law firm for tax planning advice in 2017. The initial sale fell through, but the Applicants paid for the legal work. In 2021, they sought the same advice for a renewed sale attempt, resulting in a $750,000 final fee from the Respondent, which the Applicants contested as excessive. Pursuant to Rule 14.5, the Applicants sought permission from the Court of Appeal to appeal an Order of the Court of King’s Bench affirming (with a small variation) the Review Officer’s decision that established the reasonable legal fee payable to their lawyers for tax planning advice facilitating the sale of a business. The Order was made pursuant to Rule 10.26 and Rule 10.27.

At the heart of the Appeal was the determination of the correct test for appeals brought pursuant to Rule 14.5(1)(i), as that Rule was amended January 1, 2024, to add appeals from decisions under Rules 10.26 and 10.44. Both the Applicants and Respondent submitted that the test for permission to appeal under Rule 14.5(1)(i) asks whether: (i) there is an important question of law or precedent; (ii) there is a reasonable chance of success on appeal; and (iii) the delay will not unduly hinder the progress of the action or cause undue prejudice.

However, the Court noted that this test was developed when Rule 14.5(1)(i) dealt exclusively with permission to appeal from appeal decisions made pursuant to Rule 12.71 and the Family Law Act.  The Court concluded that the nature of a Rule 12.71 appeal is different from an appeal under Rule 10.26, as unlike Rule 12.71(1), nothing in the Rules expressly limits permission to appeal a decision under Rule 10.26 (or Rule 10.44) to a question of law or jurisdiction. The Court noted that while the amendment to Rule 14.5(1)(i) clarified that permission to appeal is required, the applicable test for considering whether to grant permission is not prescribed in the Rules.

After reviewing the case law, the Court concluded that the conventional three-part test for permission to appeal under Rule 14.5(1) should be varied to account for the exceptional nature of second appeals, the absence of a strict requirement for a question of law or jurisdiction, and the objectives of the simplified, timely, and economical process for reviews contemplated by Part 10 of the Rules.

Feth J.A. noted that the ultimate inquiry is whether a second appeal serves the interests of justice. Accordingly, the test for permission to appeal under Rule 14.5(1)(i) from a Rule 10.26 appeal decision should consider whether: (i) there is a question of general or public importance that warrants another appeal; (ii) there is a reasonable chance of success on appeal; and (iii) the delay will not unduly hinder the progress of a related proceeding or cause undue prejudice to the simplified, timely and economical process contemplated for the review of a lawyer’s charges.

Applying the test to the facts at hand, Feth J.A. determined that the magnitude of the final fee did not warrant a second appeal, as pursuant to Rule 10.9, the Review Officer found both the retainer agreement and lawyer’s charges reasonable, and this finding was owed deference. Further, the Court found that the Review Officer did not exceed jurisdiction, as the retainer agreement clearly governed the 2021 work and allowed for a final fee adjustment, and the Applicants did not request that the retainer agreement be referred by the Review Officer to the Court of King’s Bench for interpretation, pursuant to Rule 10.18. Appeal Justice Feth also found that the hearing was procedurally fair, with evidence properly tendered, as there is no requirement that the evidence must be sworn under Rule 10.17. The 2017 payments were not deducted as they pertained to a separate matter. The Court upheld the Review Officer’s decision, finding no errors in principle or palpable and overriding errors, and the Applicants failed to demonstrate a reasonable chance of success on appeal.