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Civil Litigation - Disability - Settlement (2). Leduc v. Dufour
In Leduc v. Dufour (Ont CA, 2026) the Ontario Court of Appeal dismissed an appeal, this from a contingency fee court approval order "under r.7 [SS: 'Rule 7 Parties Under Disability - Representation by Litigation Guardian'] of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for approval of the settlement and the fee payable":B. Decision below
[7] The motion judge began his analysis by noting that both the 2015 CFA and the 2018 CFA did not strictly comply with the requirements for CFAs [SS: 'contingency fee agreements'] set out in Contingency Fee Agreements, O. Reg. 195/04 (the “Regulation”).[4]
[8] He then turned to analyze whether the 2018 CFA was fair and reasonable, and thus enforceable under s. 24 of the Solicitors Act, R.S.O. 1990, c. S.15. In doing so, the motion judge applied the well-developed framework articulated in Raphael Partners v. Lam (2002), 2002 CanLII 45078 (ON CA), 61 O.R. (3d) 417 (C.A.).
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Fairness
[9] The motion judge concluded the agreement was not entered into fairly. After identifying all of the formal requirements that were not complied with in the 2018 CFA, he acknowledged that technical non-compliance with the Regulation does not necessarily result in adverse consequences for the non-compliant solicitor. He noted that there were cases suggesting that “substantial compliance” was sufficient and he stated that he was “not inclined to be as forgiving as some of [his] colleagues”: at para. 44. He emphasized the consumer protection role of the Regulation. In his view, the requirements of the Regulation “were a means of providing crucial pieces of information designed to ensure that the lawyer-client imbalance was attenuated”, and “the further a CFA strays from compliance with governing legislation and regulations”, the more difficult it will be to find that it was entered into fairly: at para. 49.
[10] The personal circumstances of Ms. Vanier, as Mr. Leduc’s litigation guardian, were at the forefront of the motion judge’s analysis. In considering them, he found that she was a vulnerable client based on a number of circumstances, including that she only had a high school education, her only prior experience with retaining a lawyer was in connection with a single real estate transaction, and her professional experience was largely confined to working as a heavy equipment operator before Mr. Leduc was born. Additionally, Ms. Vanier’s life changed drastically after Mr. Leduc’s injury. She quit her job to look after Mr. Leduc. At the time the CFAs were entered into, Ms. Vanier’s life was largely devoted to figuring out how to care for her son on her and her now-deceased husband’s modest incomes. The motion judge found that Ms. Vanier was, by all accounts, in dire straits when she engaged Mrs. Wallbridge. Given Ms. Vanier’s vulnerability, the motion judge found that both CFAs should have more closely complied with the Solicitors Act and Regulation.
[11] The motion judge also found that aspects of both CFAs were drafted in a way that could lead to disproportionately large fees for the firm, in some cases in excess of what the respondents would have recovered in damages. Neither CFA referenced that there were limits on counsel’s fees or that the agreement would need to be reviewed and approved by a judge.
Reasonableness
[12] The motion judge also concluded that the fee was not reasonable at the time of the hearing. Under that branch of the Raphael Partners test, the motion judge examined the time Mrs. Wallbridge expended on the claim, its legal complexity, the result achieved, and the risk Mrs. Wallbridge assumed.
[13] He reasoned that, although Mrs. Wallbridge exercised skill and experience in prosecuting an inherently difficult claim, the result achieved fell short of the plaintiffs’ and defendants’ damages assessments and Mr. Leduc’s needs. Moreover, the motion judge assessed the risk to the appellant at several points in time, concluding that the odds of success were strong when the 2018 CFA was entered into, and even stronger at the time of the judicial pre-trials in 2021. These factors, assessed together, militated towards finding that the 2018 CFA was not reasonable as of the date of the hearing.
[14] The motion judge also noted that when approving a settlement where legal fees were agreed to by a litigation guardian, the court must consider whether the party under disability needs to be protected from “any mistakes which may have been made by the litigation guardian”: Cogan (Re) (2007), 2007 CanLII 50281 (ON SC), 88 O.R. (3d) 38 (S.C.), at para. 20. Notwithstanding the fact that Ms. Vanier was initially eager to accept the settlement, the motion judge determined that she was mistaken in agreeing to the terms of the 2018 CFA. This was because the 2018 CFA’s fixed percentage, regardless of the amount of the settlement, resulted in an unreasonable fee.
Remedy
[15] The motion judge substituted what he concluded was a reasonable fee of $3.25 million, plus fees and disbursements. He did so according to a “staggered percentage” model, according to which the appellant was entitled to 33 percent of the first $5 million recovered as damages, 25 percent of the next $5 million, and 15 percent of the remaining amount recovered as damages.
D. Standard of review
[16] The fairness and reasonableness of a fee agreement between a solicitor and client is a question of mixed fact and law, reviewable for palpable and overriding error, absent an error in principle: Chrusz v. Cheadle LLP, 2010 ONCA 553, 272 O.A.C. 1, at para. 30; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 37.
E. Analysis
[17] It is not in dispute that a contingency fee agreement, in order to be approved by the court, must be both “fair” at the time it was entered into and “reasonable” at the date of the hearing to approve it: Raphael Partners, at paras. 37-58. A contingency fee agreement can be declared void, cancelled or disregarded if it is found to be either unfair or unreasonable: Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, 294 O.A.C. 333, at para. 13. Therefore, in order to succeed on the appeal, the appellant must establish that the motion judge erred in both his conclusion that the 2018 CFA was not fair, and his conclusion that it was not reasonable.
The motion judge did not err in concluding the 2018 CFA was not fair
[18] In Raphael Partners, at para. 37, this court described the question to be considered as follows:The fairness requirement of s. 24 of the Act is concerned with the circumstances surrounding the making of the agreement and whether the client fully understands and appreciates the nature of the agreement that he or she executed. [19] The onus is on the solicitor to show that the way in which a fee agreement was obtained was fair: Raphael Partners, at para. 37.
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[24] The motion judge recognized that the regulations governing CFAs serve as a form of consumer protection legislation, and that the requirements of the regulation governing CFAs were a “means of providing crucial pieces of information designed to ensure that the lawyer-client imbalance was attenuated”. It was not unreasonable for him to observe that “[c]ompliance with the governing legislation was particularly important in this case” because of Ms. Vanier’s vulnerability and the need for crucial information “to level the playing field between the lawyer and the client”. And, contrary to the appellant’s submission, the motion judge’s conclusion that Ms. Vanier was a vulnerable client was firmly grounded in the evidence and reveals no reversible error.
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[28] The appellant also takes issue with the motion judge’s reference to the fact that he was “not inclined to be as forgiving as some of [his] colleagues in relation to the 2018 CFA’s compliance with the Regulation.
[29] This passing comment by the motion judge does not point to any reversible error. Non-compliance with the Regulation does not render a CFA void or unenforceable; rather in each case the court must determine whether the CFA is fair and reasonable. In making this determination it is relevant whether any failings in the contents of the CFA are material to the nature of the proceedings: Bogue v. Miracle, 2025 ONCA 188, at paras. 19-20. Given what the motion judge viewed as significant non-compliance with the Regulation and Ms. Vanier’s vulnerability, he was not convinced that the 2018 CFA was entered into fairly. Whether or not other judges in other cases[5] may have been more “forgiving” of instances of non-compliance with the Regulation is irrelevant to the analysis.
[30] For these reasons, we see no basis to interfere with the motion judge’s finding that the appellant had not shown the 2018 CFA was fair. Consistent with the required approach in Raphael Partners, he focused on “the circumstances surrounding the making of the agreement and whether the client fully [understood and appreciated] the nature of the agreement that [she] executed”.
[31] As this conclusion disposes of the appeal, we do not need to consider the motion judge’s additional finding that the 2018 CFA was not reasonable. That said, nothing in these reasons should be taken as an endorsement of the motion judge’s analysis on this prong of the Raphael Partners test. In particular, we do not agree with the motion judge’s approach to the assessment of the risk undertaken by the appellant that focused on the risk of non-payment at the time the case was settled. Rather, “[t]he reasonableness of the fee should of course be assessed by reference to the risk as it appeared at the time the agreement was negotiated, and not as of the time of the assessment, when it may falsely appear with the benefit of hindsight that the risk of failure was minimal all along”: Laushway Law Office v. Simpson, 2011 ONSC 4155, 336 D.L.R. (4th) 632, at para. 131, citing Gavin MacKenzie, Lawyers & Ethics: Professional Responsibility and Discipline (Toronto: Thomson Reuters Canada, 2018) (loose-leaf updated April 2025), at § 12:1, appeal to Ont. C.A. dismissed for delay, 2013 ONCA 317.
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