Approval of infant settlement delayed because lawyer’s contingency fee agreement was unreasonable

10. January 2018 0

Approval of an infant settlement was delayed because the lawyer’s contingency fee agreement was unreasonable.

Insurance law – Practice – Settlement of action

Fairweather v. Davies, [2017] O.J. No. 6180, 2017 ONSC 7051, Ontario Superior Court of Justice, November 27, 2017, J.K. Trimble J.

The infant plaintiffs suffered minor injuries in a motor vehicle accident.  Their mother served as their litigation guardian.  Each plaintiff was to receive $12,500 pursuant to a settlement.  After their lawyer’s fees and disbursements, each plaintiff would pocket approximately $7,700.  The Court rejected the initial application for approval and asked for copies of the retainer agreements, an itemized bill and the lawyer’s submissions following the decision in Mounce v. Rae, [2017] O.J. No. 2783 (“Mounce”). The mother did not take issue with the lawyer’s fee.

The Court reproduced the contingency fee agreement and the principles from Mounce before its analysis.  Upon consideration, the Court determined that the contingency fee agreement, when viewed objectively, was not fair as required by the Solicitor’s Act, R.S.O. 1990, c. S.15, because it was confusing and inconsistent.  The agreement used the terms “fee”, “Statement of Account” and “legal fees” in ways which gave rise to ambiguities.  In addition, the agreement was unreasonable in the circumstances when viewed in light of the legal expense to the client and the lack of information provided in support of the fee.  The Court determined that a reasonable fee with tax and disbursements was $3,406.45, leaving the plaintiffs with $10,443.55 each.

This case was digested by Michael J. Robinson, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter.  If you would like to discuss this case further, please contact Michael J. Robinson at mrobinson@harpergrey.com.

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