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Representation - Lawyers - Contingency Fees. S.E.C. v. M.P.
In S.E.C. v. M.P. (Ont CA, 2023) the Court of Appeal considered contingency fee arrangements, here in the settlement of a personal injury action:[9] On June 30, 2021, Dr. C.’s litigation guardian settled a tort and accident benefit claim for $8,500,000. On September 17, 2021, the appellants moved in writing for the judicial approval of the action’s settlement under r. 7.08 and the Contingency Fee Agreement (“CFA”) under s. 24 of the Solicitors Act, R.S.O. 1990, c. S.15, and s. 6(b) of the Contingency Fee Agreements Regulation, O. Reg. 563/20 (“CFA Regulation”). ... . Novosel v. Campisi
In Novosel v. Campisi (Ont CA, 2023) the Court of Appeal considered whether an order 're-opening' a solicitor's contingency fee agreement under Solicitors Act s.25 was final or interlocutory:[3] Ms. Novosel challenged the jurisdiction of this court to hear the lawyers’ appeal, arguing that the application judge’s order is interlocutory since the substantive right to payment remains to be determined at the assessment hearing. Ordinarily, this submission would have merit, but the application judge’s finding that the fee charged under the CFRA for the Accident Benefit Claim was excessive and unreasonable is a final determination, as it would be binding during the assessment and foreclose an order for the entire fee claimed. Since we have jurisdiction relating to this final determination, and it is in the interests of justice to hear all of the issues in the appeal together, we decided to hear the appeal, pursuant to s. 6(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43. . Novosel v. Campisi
In Novosel v. Campisi (Ont CA, 2023) the Court of Appeal considered an appeal from a lawyer-client 're-opening' and re-assessment of an accident contingency fee agreement:[2] Ms. Novosel subsequently brought a successful application under the Solicitors Act, R.S.O. 1990, c. S.15. Pursuant to s. 25 of that Act, the application judge “reopened” the compensation agreement after it had been paid (the “re‑opening order”). She then declared the CFRA was unenforceable; ordered the “costs, fees, charges and disbursements” chargeable to Ms. Novosel to be assessed “pursuant to the provisions of ss. 24 and 25 of the Solicitors Act” (the “assessment order”); ordered $150,000 to be repaid after finding the fees paid towards the Accident Benefit Claim to be “unreasonable and excessive”; and fixed costs in the application payable to Ms. Novosel of $66,000 plus HST and disbursements.
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[6] The lawyers pursued two challenges to the application judge’s finding that the Accident Benefit Claim fee was “excessive and unreasonable”. The first of those challenges requires consideration of the operation of ss. 24 and 25 of the Solicitors Act, which provide, as follows:24 Upon any such application, if it appears to the court that the agreement is in all respects fair and reasonable between the parties, it may be enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit, but, if the terms of the agreement are deemed by the court not to be fair and reasonable, the agreement may be declared void, and the court may order it to be cancelled and may direct the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein to be assessed in the ordinary manner.
25 Where the amount agreed under any such agreement has been paid by or on behalf of the client or by any person chargeable with or entitled to pay it, the Superior Court of Justice may, upon the application of the person who has paid it if it appears to the court that the special circumstances of the case require the agreement to be reopened, reopen it and order the costs, fees, charges and disbursements to be assessed, and may also order the whole or any part of the amount received by the solicitor to be repaid by him or her on such terms and conditions as to the court seems just. [7] Specifically, the lawyers argue that this was a simple s. 25 application, and that once the application judge chose to reopen the CFRA, an assessment order was automatic under the terms of s. 25, without the need to determine whether the Accident Benefit Claim fee was “fair and reasonable” within the meaning of s. 24. The application judge therefore erred in ordering the assessment “pursuant to the provisions of ss. 24 and 25 of the Solicitors Act” (emphasis added), and in deciding whether the assessment was “fair and reasonable”.
[8] We do not agree. Ms. Novosel pleaded both provisions. She required s. 25 to reopen the CFRA (as the fees had been paid), and to secure the repayment order she was seeking. She required s. 24 to obtain a declaration that the CFRA was void. Both sections provided a path to an assessment order. The application judge did not err by considering both routes.
[9] Moreover, there is merit in Ms. Novosel’s submission that the application judge was entitled to consider the fairness and reasonableness of the Accident Benefit Claim fees in deciding whether to order the repayment of $150,000. It was in that context that she made the impugned finding.
[10] The lawyers second argument is that the application judge erred in principle by considering only the hours docketed in determining the reasonableness of the fee for the Accident Benefit Claim, and by giving insufficient reasons for this decision. They isolate a paragraph from her decision in which the application judge, in accepting Ms. Novosel’s submission that the fees charged by the lawyers were excessive and unreasonable, referred only to the disparity between the fees charged and the fees quantified based on the lawyers’ hourly rates and the hours expended. The lawyers argue that this is contrary to authority from this court that hourly rates do not control the reasonableness of contingency fees, and that numerous relevant factors are to be considered: Raphael Partners v. Lam, 2002 CanLII 45078 (ON CA), 61 O.R. (3d) 417 (C.A.), at para. 54; Newell v. Sax, 2019 ONCA 455, at paras. 40-43.
[11] We are not persuaded that the application judge made this error in principle or that her reasons were insufficient. When the decision is read as a whole, it is evident that the application judge engaged the issue of the reasonableness of the fees appropriately. She stated the law accurately in describing how the reasonableness of legal fees is to be assessed, and referred explicitly to additional factors she had considered, including the fact that there were undocketed hours, the risk the lawyers were undertaking, the insurer’s concession that Ms. Novosel had been catastrophically injured (thereby simplifying the case), and “the excellent result achieved by the Lawyers.”
[12] Finally, this is not a case for interfering with the discretionary determination of the application judge to make the costs award that she did. The lawyers have not sought leave to appeal costs. This is enough to warrant dismissing their challenge to the costs award. In any event, they are not well-situated to challenge the costs award given that the costs award given to Ms. Novosel of $66,000 is but a fraction, only slightly more than half, of the $120,098 costs award the lawyers were seeking on the application.
[13] The appeal is dismissed.
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