COURT OF APPEAL FOR ONTARIO

CITATION:
Fontaine v. Duboff
    Edwards Haight & Schachter, 2012 ONCA 471

DATE: 20120704

DOCKET: C53526

Rosenberg, Juriansz and
    Rouleau JJ.A.

BETWEEN

Larry Philip Fontaine in his personal capacity
    and in his capacity as the Executor of the estate of Agnes Mary Fontaine,
    deceased, Michelline Ammaq, Percy Archie, Charles Baxter Sr., Elijah Baxter,
    Evelyn Baxter, Donald Belcourt, Nora Bernard, John Bosum, Janet Brewster,
    Rhonda Buffalo, Ernestine Caibaiosai-Gidmark, Michael Carpan, Brenda Cyr,
    Deanna Cyr, Malcolm Dawson, Ann Dene, Benny Doctor, Lucy Doctor, James Fontaine
    in his personal capacity and in his capacity as the Executor of the Estate if
    Agnes Mary Fontaine, deceased, Vincent Bradley Fontaine, Dana Eva Marie
    Francey, Peggy Good, Fred Kelly, Rosemarie Kuptana, Elizabeth Kusiak, Theresa
    Larocque, Jane McCullum, Cornelius McComber, Veronica Marten, Stanley Thomas
    Nepetaypo, Flora Northwest, Norman Pauchey, Camble Quatell, Alvin Barney
    Saulteaux, Christine Semple, Dennis Smokeyday, Kenneth Sparvier, Edward
    Tapiatic, Helen Winderman and Adrian Yellowknee

Plaintiffs

and

Duboff Edwards Haight
    & Schachter

Appellant

and

The Attorney General of
    Canada, The Presbyterian Church in Canada, The General Synod of The Anglican
    Church of Canada, The United Church of Canada, The Board of Home Missions of
    The United Church of Canada, The Women's Missionary Society of The Presbyterian
    Church, The Baptist Church in Canada, Board of Home Missions and Social
    Services of The Presbyterian Church In Bay, The Canada Impact North Ministries
    of The Company for The Propagation of The Gospel in New England (also known as
    The New England Company), The Diocese of Saskatchewan, The Diocese of The Synod
    of Cariboo, The Foreign Mission of The Presbyterian Church in Canada, The
    Incorporated Synod of The Diocese Of Huron, The Methodist Church of Canada, The
    Missionary Society of The Anglican Church of Canada, The Missionary Society of
    the Methodist Church of Canada (also known as The Methodist Missionary Society
    of Canada), The Incorporated Synod of The Diocese of Algoma, The Synod of The
    Anglican Church of The Diocese of Quebec, The Synod of The Diocese of Athbasca,
    The Synod of The Diocese of Brandon, The Anglican Synod of The Diocese of
    British Columbia, The Synod of The Diocese of Calgary, The Synod of The Diocese
    of Keewatin, The Synod of The Diocese of Qu'appelle, The Synod of The Diocese
    of New Westminister, The Synod of The Diocese of Yukon, The Trustee Board of
    The Presbyterian Church in Canada, The Board of Home Missions and Social
    Service of The Presbyterian Church of Canada, The Women's Missionary Society Of
    The United Church of Canada, Sisters of Charity, A Body Corporate also known as
    Sisters of Charity of St. Vincent De Paul, Halifax (also known as Sisters of
    Charity Halifax), Roman Catholic Episcopal Corporation of Halifax, Les Soeurs
    de Notre Dame- Auxiliatrice, Les Soeurs de St. Francois D'assise, Insitut des
    Soeurs du Bon Conseil, Les Soeurs de Saint-Joseph de Saint- Hyancithe, Les
    Soeurs de Jesus-Marie, Les Soeurs de L'assomption de La Sainte Vierge, Les
    Soeurs de L'assomption de La Saint Vierge de L'alberta, Les Soeurs de La
    Charite de St.-Hyacinthe, Les Oeuvres Oblates de L'ontario, Les Residences
    Oblates du Quebec, La Corporation Episcopale Catholique Romaine de La Baie
    James (The Roman Catholic Episcopal Corporation of James Bay), The Catholic
    Diocese of Moosonee, Soeurs Grises de Montréal/Grey Nuns of Montreal,  Sisters
    of Charity (Grey Nuns) of Alberta, Les Soeurs de La Charité des T.N.O., Hotel-Dieu
    de Nicolet, The Grey Nuns of Monitoba Inc.-Les Soeurs Grises du Monitoba Inc.,
    La Corporation Episcopale Catholique Romaine de La Baie d'hudson - The Roman
    Catholic Episcopal Corporation of Hudson's Bay, Missionary Oblates - Grandin
    Province, Les Oblats De Marie Immaculee du Manitoba, The Archiepiscopal
    Corporation of Regina, The Sisters of The Presentation, The Sisters of St.
    Joseph of Sault St. Marie, Sisters Of Charity of Ottawa, Oblates of Mary
    Immaculate - St. Peter's Province, The Sisters of Saint Ann, Sisters of
    Instruction of The Child Jesus, The Benedictine Sisters of Mt. Angel Oregon,
    Les Peres Montfortains, The Roman Catholic Bishop Of Kamloops Corporation Sole,
    The Bishop of Victoria, Corporation Sole, The Roman Catholic Bishop of Nelson,
    Corporation Sole, Order of The Oblates Of Mary Immaculate in The Province of
    British Columbia, The Sisters of Charity of Providence of Western Canada, La
    Corporation Episcopale Catholique Romaine de Grouard, Roman Catholic Episcopal
    Corporation of Keewatin, La Corporation Archiépiscopale Catholique Romaine de
    St. Boniface, Les Missionnaires Oblates Sisters de St. Boniface-The Missionary
    Oblates Sisters of St. Boniface, Roman Catholic Archiepiscopal Corporation of
    Winnipeg, La Corporation Episcopale Catholique Romaine de Prince Albert, The
    Roman Catholic Bishop of Thunder Bay, Immaculate Heart Community of Los Angeles
    Ca, Archdiocese of Vancouver - The Roman Catholic Archbishop of Vancouver,
    Roman Catholic Diocese of Whitehorse, The Catholic Episcopale Corporation of
    Mackenzie-Fort Smith, The Roman Catholic Episcopal Corporation of Prince
    Rupert, Episcopal Corporation of Saskatoon, OMI Lacombe Canada Inc. and Mt.
    Angel Abbey Inc.

Defendants (Respondents)

Harley Schachter, for the appellant Duboff Edwards Haight
    & Schachter

E.F. Anthony Merchant Q.C., for the intervener Merchant
    Law Group LLP

Charles Hofley and Leanne N. Fisher, for the respondent
    Chief Adjudicator, Independent Assessment Process

Catherine Coughlan and Dalal Mouallem, for the intervener
    Attorney General of Canada

Heard: January 31, 2012

On appeal from the order of Chief Justice Winkler acting
    in his capacity as Administrative Judge for the Indian Residential Schools
    Settlement Agreement, dated March 7, 2011.

Rouleau J.A.:

INTRODUCTION

[1]

For more than 100 years, Canada required aboriginal children to attend
    residential schools. The children were isolated from their families and
    communities and many were subjected to profoundly disturbing physical, sexual,
    and psychological abuse. The schools were operated primarily by religious
    organizations under Canadas supervision. The last residential schools were
    closed in 1996. Canada has since acknowledged its long-standing policy
    respecting the Indian residential schools as a seriously flawed failure.

[2]

Various class action proceedings were brought against the Attorney
    General of Canada in relation to the Indian residential schools in Canada. On
    December 15, 2006, nine provincial and territorial superior courts issued
    concurrent reasons approving a national settlement agreement (S.A.)
    concluding the class actions: see
Baxter v. Canada (A.G.)
(2006), 83 O.R.
    (3d) 481 (S.C.). The reasons of the courts were followed by a set of nine
    identical approval orders incorporating the S.A. and addressing issues of
    implementation and administration of the settlement (implementation orders).

[3]

The S.A. provides two mechanisms through which class members can obtain
    individual compensation: (1) the Common Experience Payment (CEP), which is
    available to all eligible class members who resided at a residential school;
    and (2) the Independent Assessment Process (IAP), which is available to those
    claimants who establish that they suffered serious physical or sexual abuse, or
    psychological harm at a residential school.

[4]

Most claimants under the IAP retain counsel to represent them. Under the
    terms of the S.A., Canada agreed to contribute an amount up to 15% of the
    compensation awarded to the claimant for legal fees. This amount is paid in
    addition to the full amount of the award paid out to the successful claimant.

[5]

When the S.A. was approved, Winkler R.S.J. (as he then was) expressed
    concern that it did not provide for any review of the fees charged by counsel
    to their clients under the IAP: see
Baxter
, at paras. 73-78. All nine
    approving courts addressed this issue in the formal implementation orders of
    the S.A.

[6]

The implementation orders were not opposed by the parties to the S.A.,
    including the appellant  a Manitoba law firm. The implementation orders limit
    the legal fees that counsel may charge to IAP claimants to 30% of the
    compensation award. This limit is inclusive of, and not in addition to,
    Canadas 15% contribution to legal fees. The implementation orders also permit
    an Independent Adjudicator under the IAP (Adjudicator) to assess the fairness
    and reasonableness of the legal fees. With respect to this type of review, the
    implementation orders provide, at para. 18:

THIS
    COURT FURTHER ORDERS
that upon a claimants request which
    request shall be made at the conclusion of the hearing, or within fourteen (14)
    days thereof, or on the Adjudicators own motion, legal counsels legal fees
    for conducting the IAP may be reviewed by the Adjudicator for fairness and
    reasonableness. In the event of such a review legal counsel shall in addition
    to submitting their retainer agreement provide any other information pertinent
    to their legal fees. The Adjudicator shall assess the fairness and
    reasonableness of the legal fees in accordance with the generally accepted
    principles and authority for the assessment of accounts, including the
    following:

a.

time expended by legal counsel;

b.

the legal complexity of the matters;

c.

the degree of responsibility assumed by legal counsel;

d.

the monetary value of the matters at issue;

e.

the importance of the matter to the claimant;

f.

the degree of skill and competence demonstrated by the legal
    counsel;

g.

the results achieved and the contribution of legal counsel to the
    result;

h.

the ability of the claimant to pay; and

i.

the claimants expectations as to the amount of the legal fees,

and [the Adjudicator] shall take into account the fact that
    Canada will contribute an amount equal to 15% of the compensation award towards
    the legal fees.

[7]

The assessment of the legal fees can be initiated at the claimants
    request or on the Adjudicators own motion.

[8]

Paragraph 19 of the implementation orders provides that claimants or
    their legal counsel may request the Chief Adjudicator or his designate to
    review an Adjudicators ruling on the fairness and reasonableness of legal fees
    (for ease of reference, in these reasons Chief Adjudicator includes the Chief
    Adjudicators designate). Any such request is to be brought within seven days
    of the Adjudicators ruling and the Chief Adjudicator is to release written
    reasons within 14 days.

[9]

The implementation orders also provide for the ongoing supervisory role
    of the courts in relation to the S.A. The orders state, at para. 23, that:

[T]he Courts shall supervise the implementation of the
    Agreement and this order and, without limiting the generality of the foregoing,
    may issue such further and ancillary orders, from time to time, as are
    necessary to implement and enforce the provisions of the Agreement, the
    judgment dated December 15, 2006 and this order.

[10]

Schedule
    A to the implementation orders is a Court Administration Protocol (CAP).
    The CAP sets out a process for addressing issues that may arise regarding the
    administration or implementation of the S.A. The CAP provides that  where a
    matter requires court orders, directions or consideration  the party,
    counsel or other entity bringing the matter forward should file a Request for
    Direction. The request will be brought to the attention of one of two
    designated Administrative Judges, who are selected from among the nine judges
    who heard the motions for approval of the S.A.

OVERVIEW OF THE APPEAL

[11]

This
    is an appeal from directions issued by Winkler C.J.O. in his capacity as
    Administrative Judge pursuant to the CAP. The appellant, Duboff Edwards Haight
    & Schachter (DEHS), and the respondent, Chief Adjudicator, jointly brought
    a Request for Direction to the Administrative Judge following a review of the
    fairness and reasonableness of the legal fees that the appellant contracted to
    charge its client in the IAP. In his directions, the Administrative Judge
    determined, among other matters, that there is no right to appeal from, or to
    obtain judicial review of, decisions of the Chief Adjudicator in the fee review
    process. DEHS brought an appeal to this court from the Administrative Judges
    directions.

[12]

The
    respondent brought a motion to this court to quash the appeal on the basis that
    the court does not have jurisdiction to hear an appeal from a judges order
    giving directions pursuant to the S.A. The motion to quash was heard together
    with the appeal.

[13]

For
    the reasons that follow, I would dismiss the motion to quash and would also
    dismiss the appeal.

FACTS

(1)

The Adjudicators Legal Fee Review

[14]

The
    appellant, DEHS, represents claimants under the IAP and is a signatory to the
    S.A. In July 2006, DEHS entered into a contingency fee agreement with one of
    its IAP clients for 30% of any compensation awarded. The clients claim was
    heard in April 2009 and the Adjudicator awarded $103,000. Legal fees claimed at
    30% of the award were $30,900, plus applicable taxes totalling $3,708.

[15]

The
    reported time value of DEHS fees and disbursements when the claim hearing took
    place was $15,685.88. The Adjudicator informed the client of his right to
    initiate a legal fee review at the original claim hearing and in a letter
    following the hearing. The client did not seek a review.

[16]

On
    May 25, 2009, the Adjudicator undertook a legal fee review hearing on his own
    motion. The Adjudicator gave notice to the appellant of his intention to review
    the legal fees, and received both written and oral submissions from the
    appellant. The Adjudicator received the oral submissions by way of a conference
    call with counsel in the presence of the claimant.

[17]

On
    June 30, 2009, the Adjudicator issued a ruling adjusting DEHS proposed fee
    down to $20,600, plus taxes totalling $2,472. The approved fees reduced the 30%
    contingency fee to 20% (15% to be paid by Canada, 5% to be paid by the client).

[18]

A
    dispute erupted between Canada and the claimant involving whether GST and PST
    owing on compensation awarded under the S.A. is a disbursement to be paid by
    Canada on behalf of the claimant. A separate hearing to deal with those issues
    was scheduled to take place before the Chief Adjudicator on November 19, 2009.
    At the end of those proceedings, the reported time value of DEHS fees and
    disbursements had increased from $15,685.88 to $27,532.18.

(2)

Chief Adjudicators Decision

[19]

On
    July 29, 2009, DEHS appealed the decision of the Adjudicator to the Chief
    Adjudicator by way of written submissions. DEHS argued a list of 13 grounds for
    review. Of particular relevance to this appeal, DEHS argued that the
    Adjudicator erred in these three ways: (1) by basing his decision on the time
    that had been spent up to the date of the hearing, and on the fact that the
    hearing was completed in less than one day when the GST and PST disbursement
    issue was not yet settled and would require significant additional time; (2) by
    considering what other lawyers might charge for IAP claims for other clients;
    and (3) by presuming that 15% is the standard fee in IAP hearings.

[20]

On
    September 17, 2009, the Chief Adjudicator issued a ruling dismissing DEHS
    appeal and upholding the Adjudicators decision to reduce the legal fees. The
    Chief Adjudicator held that the Adjudicators decision provided a transparent reasoning
    path, fell within a range of reasonable outcomes, and was consistent with
    similar cases that had been the subject of fee review.

[21]

In
    response to DEHS three concerns described above, the Chief Adjudicator first
    noted that the reduced fee would be subject to a possible further ruling [by
    the Adjudicator or the Chief Adjudicator] that will be made on completion of
    the decision regarding the question of whether GST and PST on this case are a
    legitimate disbursement to be paid by Canada.

[22]

On
    the second point he reasoned that:

An adjudicator does not operate in a vacuum. Adjudicators bring
    with them the experience of handling other cases and learning what other
    lawyers charge for the same kind of work. To refer again to my fee review
    [appeal] decision of W-13760 I stated:

Many lawyers across Canada accept Canadas contribution of
    15% as full payment for their services. Lawyers in Quebec who handle IAP cases
    have agreed among themselves to limit their fees to Canadas contribution. It
    is difficult to accept that some lawyers would expect more than others for
    similar cases and delivery of the same quality of work. In fact, in many cases
    the difference cannot be reconciled.

I continue to stand behind these words. The fact that other
    lawyers working in the IAP process accept payment at Canadas contribution is a
    well known fact among lawyers and adjudicators working in this process.

[23]

Finally,
    regarding DEHS third point, the Chief Adjudicator was satisfied that the
    Adjudicator never presumed that a standard fee should be 15% in an average
    case. He reiterated that there is no such presumption, only a maximum fee of
    30% and a minimum fee of zero. The Chief Adjudicator concluded that, in all
    respects, the Adjudicator acted in accordance with the terms of the S.A. and
    there was no basis to interfere with the legal fee review decision.

(3)

The Administrative Judges Directions

[24]

On
    October 16, 2009, DEHS filed a notice of application at the Manitoba Queens
    Bench, seeking judicial review and other relief in respect of the decision of
    the Chief Adjudicator. Before the matter was heard, the Chief Adjudicators
    office took the view that a Request for Direction ought to be brought to one of
    the Administrative Judges to clarify the procedure for appealing or reviewing
    decisions of the Chief Adjudicator in the IAP legal fee review process.

[25]

In
    March 2010, the Chief Adjudicators office and DEHS submitted a joint Request
    for Direction to Winkler C.J.O., in his capacity as Administrative Judge
    pursuant to the CAP. The Chief Adjudicator requested directions on whether or
    not its fee review appeal decisions are reviewable by the courts, and if so,
    the proper procedure for such a review.

[26]

DEHS
    requested directions on several general points concerning the interpretation of
    the terms of the IAP legal fee review process as set out in the implementation
    orders. Of relevance to this appeal, DEHS sought direction on the issue of how
    contingency fee agreements are to be dealt with in provinces with statutes that
    govern the legal fee review process. DEHS also sought directions on three case
    specific issues, two of which pertain to this appeal: (1) whether the fee
    review in this case was commenced prematurely; and (2) whether the Adjudicator
    failed to consider the relevant factors in the fee review process.

[27]

In
    response to the joint request for directions, on March 7, 2011, the
    Administrative Judge issued directions. He summarized the directions sought by
    the Chief Adjudicator, at para. 8:

The Chief Adjudicator seeks directions regarding the extent to
    which IAP legal fee reviews conducted by him (or his designate) are subject to
    any further appeal; if there is a right to further appeal, to whom the appeal
    lies; and the nature of such appeal.

[28]

The
    Administrative Judge then summarized the directions sought by DEHS, at para. 9:

DEHS also seeks directions on issues specific to the Chief
    Adjudicators legal fee review in [this case]. In addition to the IAP file
    specific issues, DEHS seeks directions concerning the various factors to be
    considered by the IAP Adjudicators when they are conducting fee reviews.

[29]

On
    the first question raised by the Chief Adjudicator, the Administrative Judge
    concluded that no appeal lies from a decision of the Chief Adjudicator. The
    underlying litigation has ended and the relationship among the parties is
    governed by the court orders approving the settlement. The claims
    administration and assessment process is a creature of the S.A. In the words of
    the Administrative Judge, at para. 17: [T]he only appeal rights from decisions
    rendered under the claims administration and assessment process in respect of
    individual claims are those expressly set out in the terms of the order. The
    implementation orders provide for an appeal from a fee review to the Chief
    Adjudicator. Once that appeal route is exhausted, there is no further right of
    appeal.

[30]

The
    Administrative Judge rejected the suggestion that judicial review of the
    decision of the Chief Adjudicator is available. He explained, at para. 19, that
    the Chief Adjudicator acts pursuant to the terms of the implementation orders
    issued by the court and, therefore, cannot be said to be exercising a statutory
    power of decision that is subject to judicial review.

[31]

The
    Administrative Judge went on to say, at para. 22:

Further, no right of appeal can be grounded on the supervisory
    jurisdiction that the courts have over the implementation of the Settlement and
    the Settlement Orders. In other words, there is no implicit right to appeal
    each determination made within the context of the claims administration or
    assessment process as an incident of the judicial oversight function.

[32]

The
    Administrative Judge then responded to DEHS request for directions concerning
    the manner in which certain factors are to be considered by Adjudicators when
    reviewing the fairness and reasonableness of legal fees. He addressed the
    following five factors: (1) contingency agreements; (2) the IAP claimants
    views concerning legal fees; (3) the 30% limit for legal fees under the IAP;
    (4) Canadas 15% contribution to legal fees; and (5) fees charged by other
    lawyers.

[33]

The
    Administrative Judge issued the following directions with respect to each
    factor:

(1)
    Contingency agreements

The terms of a contingency agreement are only one factor to be
    considered by the Adjudicator. The weight to be given to the contingency
    agreement must be assessed in the context of the facts of each case (at para.
    28).

(2)
    Claimants views

[O]nce the Adjudicator decides that a fee review is
    appropriate, the claimants views are one of the factors that the Adjudicator
    must take into consideration. In particular, the claimants views go to his or
    her expectations [...]. The weight to be given to the views of the claimant
    must be assessed in the context of the facts of each case (at para. 32).

(3) The
    30% limit for legal fees

The maximum fee under the IAP, 30% of a claimants compensation
    award, ought to be reserved for the most-time consuming or difficult of cases
    (at para. 37).

(4)
    Canadas 15% contribution

Canadas 15% contribution to the legal fees of an IAP claimant,
    is neither a positive nor negative factor in the fee assessment process. An
    Adjudicator must have regard to the total amount of legal fees sought in order
    to conduct the fairness and reasonableness review (at para. 38)

(5) Fees
    charged by other lawyers

The range of fees being charged by lawyers across the country
    in relation to IAP claims is a fact that may go to the claimants expectations.
    That said, it is no more than one factor to be considered (at para. 41).

[34]

The
    Administrative Judge confirmed that the factors listed in para. 18 of the
    implementation orders (set out above at para. 6) are to be taken into account
    in rendering a decision as to the fairness and reasonableness of legal fees,
    and those factors cannot be ignored by the Adjudicator. He explained, at paras.
    37 and 41:

In conducting a review of the fairness and reasonableness of
    legal fees, IAP Adjudicators
must
consider the factors set out in
    paragraph 18 of the Implementation Orders ... [T]he test is fairness and reasonableness
    in all the circumstances and, as such,
it remains necessary for
    Adjudicators to apply the required factors
in arriving at their
    determination in any particular case.

...

In the same way that the lawyers cannot limit the discretion of
    the Adjudicators as set out in paragraph 18 [of the Implementation Orders],
the
    Adjudicators cannot ignore its provisions
. [Emphasis added].

[35]

Finally,
    with respect to DEHS request for directions on its specific concerns related
    to the assessment of its legal fees, the Administrative Judge said, at para.
    44:

No appeal lies from the decision of the Chief Adjudicator
    pursuant to paragraph 19 of the Implementation Orders.  Accordingly, the
    request for a review of the decision is denied.

[36]

DEHS
    appeals from these directions.

PRELIMINARY ISSUE: THE CHIEF ADJUDICATORS MOTION TO QUASH

[37]

I
    would dismiss the motion to quash for the following reasons.

[38]

The
    Chief Adjudicator argues that when the Administrative Judge issued directions,
    he was acting pursuant to the S.A. and not in his capacity as a judge of the
    Superior Court. Directions given by the Administrative Judge are not court
    orders in the traditional sense. Rather, they are made pursuant to a
    self-contained system designed to administer a private agreement reached by the
    parties.

[39]

I
    disagree. The S.A. was incorporated into a series of court orders. Paragraph 23
    of the implementation orders states that the Courts shall supervise the
    implementation of the Agreement and this order. The CAP sets out the procedure
    through which parties to the S.A. can ask the court to exercise its supervisory
    jurisdiction. It provides, at para. 2, that [a]ll matters that require court
    orders, directions or consideration, will be brought to the attention of the
    Administrative Judges at first instance by the filing of a Request For
    Direction. The Administrative Judges are chosen from among the nine judges who
    heard the motions for approval of the S.A., or their successors.

[40]

In
    my view, the Request for Direction was made to the Administrative Judge acting
    in his capacity as a Superior Court judge appointed pursuant to s. 96 of
The

Constitution Act, 1867
(U.K.)
,
30 & 31 Victoria, c. 3.
    Under the terms of the implementation orders and the CAP, the Administrative
    Judges are representatives of the nine provincial and territorial superior
    courts that approved the S.A. Thus, in issuing his directions, he was acting in
    a judicial capacity. The judicial role of the Administrative Judge is confirmed
    by the fact that his directions were affixed with the seal of the Superior
    Court, were released on Superior Court forms, and refer to the court file
    number for the claim that was issued by the class members to the S.A.

[41]

The
    Administrative Judges directions finally determined the issue whether legal
    fee review decisions of the Chief Adjudicator are subject to any further appeal
    or review. His directions were incorporated as a final order of a judge of the
    Superior Court of Justice. An appeal lies to this court pursuant to s. 6(1)(b)
    of the
Courts of Justice Act
, R.S.O. 1990, c. C.43.

ISSUES

[42]

The
    appellant in his factum raised the following issue:

Are decisions of the Chief Adjudicator immune from judicial
    scrutiny by the Superior Courts of each province?

[43]

However,
    in the course of oral submissions, it became clear that the appellant does not
    take issue with the Administrative Judges conclusion that no appeal lies to
    the Superior Courts of each province from a decision of the Chief Adjudicator.
    Rather, the appellants position was that the Chief Adjudicator is subject to
    the rule of law and the rules of natural justice. In the event that these rules
    are breached, a judge of the Superior Court in the province, having
    jurisdiction over the parties and the subject matter, could intervene to
    correct those errors.

[44]

Having
    regard to counsels position in oral argument, I would reframe the issues as
    follows:

1.

Are there any circumstances in which a Chief Adjudicators
    decision in the fee review process is reviewable by a judge of Superior Court?

2.

Did the Administrative Judge err in not granting the specific
    directions requested by the appellant?

DISCUSSION

Issue 1: Are there any circumstances in which a Chief
    Adjudicators decision in the fee review process is reviewable by a judge of
    Superior Court?

Positions of the Parties

[45]

The
    appellant argues that the Administrative Judges directions in this case leave
    the parties to the S.A. in an impossible position. According to the appellant,
    the Administrative Judge effectively ruled that he has no jurisdiction to
    correct any errors of law or to redress any denial of natural justice that the
    Chief Adjudicator may have committed in reviewing an Adjudicators fee review
    assessment. Thus, decisions of the Chief Adjudicator are immune from judicial
    scrutiny, even if he or she fails to comply with the terms of the S.A. and
    implementation orders and the rules of natural justice. Such decisions would
    also be immune from judicial scrutiny if the Chief Adjudicator incorrectly
    concludes that the Adjudicator complied with the terms of the S.A. and the
    implementation orders and the rules of natural justice. For convenience,
    reference to a failure to comply with the S.A. and the implementation orders
    includes a failure to comply with the rules of natural justice.

[46]

The
    intervener Attorney General of Canada and the intervener Merchant Law Group
    agree that, pursuant to the terms of the CAP, recourse to the Administrative
    Judges from a decision of the Chief Adjudicator should be available in limited
    circumstances where a legal fee review decision does not comply with the terms
    of the S.A. or the implementation orders.

[47]

The
    respondent Chief Adjudicator argues that the ongoing supervisory role of the
    court contemplated by the implementation orders does not allow the
    Administrative Judge to review or correct fee decisions made pursuant to the
    implementation orders. The only appeal from a legal fee decision lies to the
    Chief Adjudicator. In accordance with the IAP legal fee review process, there
    is no further appeal from that decision. The intention of the parties to the
    S.A. is clear: the process is meant to be expeditious. The S.A. is final and
    the process giving effect to the S.A. must be limited to what is set out in the
    implementation orders.

[48]

The
    Chief Adjudicator also submits that allowing further review of IAP legal fee
    determinations, whether framed as an appeal, judicial review, or a Request for
    Direction, stands to re-introduce power imbalances that the IAP was intended to
    avoid and to frustrate the efficiency and finality that was intended for the
    IAP and S.A. more generally.

[49]

Furthermore,
    there are sufficient checks and balances built into the IAP legal fee review
    process to ensure that the Chief Adjudicator respects the terms of the
    implementation orders. For example, the Chief Adjudicators appointment is
    approved by the court and the Chief Adjudicator remains accountable to the
    court and the parties to the S.A.; the Chief Adjudicator is accountable to an
    oversight committee comprised of interested parties; and the Chief Adjudicator
    reports to the courts on a regular basis on all aspects of the implementation
    and operation of the IAP.

Analysis

[50]

The
    Administrative Judge correctly concluded that no appeal lies from a legal fee
    review decision of the Chief Adjudicator. I agree with his reasons on this
    point and the appellant did not press the contrary position in oral argument.

[51]

The
    Administrative Judge also correctly concluded that there is no right to seek
    judicial review from a legal fee review decision of the Chief Adjudicator. The
    courts jurisdiction to issue a declaration under s. 2(1)2 of the
Judicial
    Review Procedure Act
, R.S.O. 1990, c. J.1 (
JRPA
), relates only
    to the exercise, refusal to exercise or proposed or purported exercise of a
    statutory power. As the Administrative Judge explained, the Chief Adjudicator
    is not exercising a statutory power of decision, but rather renders his fee
    review appeal decision pursuant to the authority derived from the
    implementation orders, as approved by the relevant provincial and territorial
    superior courts.

[52]

The
    appellant further contends that the office of the Chief Adjudicator is a
    quasi-judicial public body that is subject to judicial review proceedings by
    way of an application for an order in the nature of mandamus or certiorari
    under s. 2(1)2 of the
JRPA
. I do not agree with this assertion.
    Judicial review is not available to review the exercise of authority by a
    judicially-created body, which has been given certain duties as provided by the
    terms of the S.A. and the implementation orders. The office of the Chief
    Adjudicator was created by order of the courts in approving the negotiated
    terms of settlement of class action litigation. The authority of that office is
    exercised in relation to those class members who have elected to advance claims
    through the IAP and their counsel. The terms of the S.A. and the implementation
    orders set out the process for reviewing decisions of the IAP Adjudicators.
    Recourse to the courts is only available if it is provided for in the S.A. or
    the implementation orders.

[53]

I
    turn now to whether a process, other than an appeal or judicial review, is
    available to review a decision by the Chief Adjudicator. The Administrative
    Judge properly confirmed that the IAP Adjudicators cannot ignore the
    provisions of the implementation orders and that it remains necessary for
    Adjudicators to apply the required factors when conducting a legal fee review
    at first instance. In the perhaps unlikely event that the final decision of the
    Chief Adjudicator reflects a failure to consider the terms of the S.A. and
    implementation orders, including the factors set out in para.18 of the
    implementation orders, then, in my view, the parties to the S.A. intended that
    there be some judicial recourse. Having said that, I emphasize my agreement
    with the Administrative Judges comment, at para. 22 of his reasons, that
    there is no implicit right to appeal each determination made within the
    context of the claims administration or assessment process as an incident of
    the judicial oversight function. As I will go on to explain, the right to seek
    judicial recourse is limited to very exceptional circumstances.

[54]

The
    parties intended that implementation of the S.A. be expeditious and not mired
    in delay and procedural disputes. As noted by the Chief Adjudicator, there are
    already many checks and balances in place to ensure that the process is
    administered fairly and in accordance with the terms of the S.A. The Chief
    Adjudicator is granted broad discretion by the terms of the S.A.

[55]

The
    implementation orders speak to the principles that are to be applied by the
    Adjudicator in carrying out a fee review at first instance. The parties
    provided for an ongoing right to seek the assistance of the courts to require
    compliance with the terms of the implementation orders. As noted, the
    implementation orders provide, at para. 23:

[T]he Courts shall supervise the implementation of the
    Agreement and this order and, without limiting the generality of the foregoing,
    may issue such further and ancillary orders, from time to time, as are
    necessary to implement and enforce the provisions of the Agreement, the
    judgment dated December 15, 2006 and this order.

[56]

The
    CAP specifies that recourse to the courts may be obtained by way of a Request
    for Direction that is to be brought to one of the two Administrative Judges, as
    designated by the courts.

[57]

Thus,
    in the very limited circumstances where the final decision of the Chief
    Adjudicator reflects a failure to comply with the terms of the S.A. or the
    implementation orders, the aggrieved party may apply to the Administrative
    Judges for directions. These limited circumstances would include where the
    Chief Adjudicator upholds a decision of the Adjudicator as fair and reasonable
    even though the Adjudicator failed to consider the factors set out in para. 18
    of the implementation orders in arriving at his/her fee review decision in a
    specific case. By providing for recourse to an Administrative Judge in these
    limited circumstances, the parties will be able to ensure that the bargain to
    which they consented is respected.

[58]

Before
    leaving this issue, I note that I agree with the Chief Adjudicators submission
    that allowing a party to request directions when it is
alleged
that
    the Chief Adjudicators decision reflects a failure to apply the terms of the
    implementation orders raises concerns about finality, efficiency and has the
    potential to overburden the Administrative Judges. However, I am satisfied that
    these concerns are alleviated by the clear limits on when such a request is
    available. Moreover, the Administrative Judges who hear such requests are well
    aware of the concerns that led to the adoption of the implementation orders,
    namely, the need to protect vulnerable claimants and the need for timely
    resolution of disputes in light of the advanced age of many claimants: see
Baxter
,
    at paras. 74 and 85.

Issue 2: Did the Administrative Judge err in not granting the
    specific directions requested by the appellant?

[59]

The
    appellant argues that the Chief Adjudicators decision upholding the
    Adjudicators fee review decision was not carried out in accordance with the
    terms of the implementation orders. According to the appellant, the fee review
    decision of the Chief Adjudicator is infected by four errors. Three of these
    errors were committed by the Adjudicator and went uncorrected by the Chief
    Adjudicator. The fourth error was allegedly committed by the Chief Adjudicator.
    The alleged errors are as follows:

(1) The Adjudicator did not consider or apply Manitoba law
    which requires that a contingency fee agreement be set aside before an
    assessment of fees is carried out.

(2) The Adjudicator failed to give due or proper weight to the
    expectations of the client in assessing the fairness and reasonableness of the
    fee agreement.

(3) The Adjudicator carried out the fee assessment before the
    appellant had completed all of the work required.

(4) The Chief Adjudicator relied on the erroneous assumption
    that all Quebec lawyers had agreed to limit their contingency fee to 15%.

These errors  whether on their own or taken together
     are said to demonstrate that the Chief Adjudicator acted outside the scope of
    his authority and in breach of the terms of the implementation orders,
    warranting directions by the Administrative Judge to correct said errors.

[60]

I
    will now explain why none of these alleged errors demonstrates any basis for
    finding that the Administrative Judge erred in refusing the appellants request
    for specific directions concerning the Chief Adjudicators decision in this
    case.

(1) The Alleged Failure to Apply Manitoba law

[61]

The
    appellant argues that it entered into a contingency fee agreement with its
    client, who is a resident of Manitoba, and that their agreement is governed by
    ss. 55(5) and 55(7) of Manitobas
Legal Profession Act
, C.C.S.M., c.
    L107 (Act). These sections read as follows:

55.(5) The client may, at any time within six months after the
    remuneration provided for in the contingency contract is paid to or retained by
    the member, apply to the Court of Queens Bench for a declaration that the
    contract is not fair and reasonable to the client.

(7) If the judge hearing the application is satisfied that the
    contingency contract is not fair and reasonable to the client, the judge must

(a) declare the contract void;

(b) order the costs, fees, charges, and disbursements of the
    member in respect of the business done to be taxed as if no contingency
    contract has been made; and

(c) if the member has received or retained more than the
    amount so taxed, order repayment of the excess to the client.

[62]

According
    to the appellant, the Adjudicator ought to have considered these statutory
    provisions because para.18 of the implementation orders requires that a fee
    review be conducted in accordance with the generally accepted principles and
    authority for assessment of accounts. The appellant says that the Act requires
    the court to set aside a contingency fee agreement before the court can order
    that the fees be taxed as if there was no such contract. In this case, the
    Adjudicator assessed the reasonableness of the legal fees without first
    explaining why the contingency agreement ought to be set aside and he is thus
    said to have failed to comply with Manitoba law and the terms of the S.A. and
    implementation orders.

[63]

In
    my view, the appellants position misconceives the effect of the S.A. and the
    implementation orders. Indeed, in initiating a review of the fairness and
    reasonableness of the legal fees charged by the appellant, the Adjudicator was
    acting in accordance with the terms of the implementation orders, rather than
    outside of the terms of those orders. Conducting a fee review assessment in
    accordance with the generally accepted principles and authority for assessment
    of accounts  as provided by para. 18 of the implementation orders  does not
    obligate the Adjudicator to follow the process for assessing contingency fee
    agreements set out in the Manitoba Act. The terms of the implementation orders
    create a complete procedural code for assessing the fairness and reasonableness
    of legal fees. The client or the Adjudicator is not required to also follow
    procedures under provincial legislation for assessing contingency fee
    agreements.

[64]

None
    of the parties to the S.A., including the appellant, opposed the terms of the
    implementation orders, including the criteria to be taken into account by the
    Adjudicator in the legal fee review process. Paragraph 18 of the implementation
    orders sets out these criteria. Moreover, in contrast with the Act, para. 18
    requires the Adjudicator to consider the fairness and reasonableness of the
    legal fees, and not the fairness and reasonableness of the contract between the
    lawyer and client.

[65]

The
    Administrative Judge did not err in refusing the appellants request for a
    specific direction that the fee review process must be conducted having regard
    to the particular laws of the province or territory in which the adjudication
    took place.

(2) The Alleged Failure to Give Sufficient Weight to the
    Clients Expectations

[66]

As
    I have explained, a Request for Direction may be brought where it is alleged
    that the Chief Adjudicators decision reflects a failure to enforce the
    provisions of the S.A. or the implementation orders. Here, the appellant
    alleges that the Adjudicator failed to give sufficient weight to the fact that
    the client agreed to a legal fee of 30% of the amount awarded, as provided for
    in a contract that was freely entered into between the parties.

[67]

If
    a contingency fee agreement exists, para. 18 of the implementation orders
    requires that it be provided to the Adjudicator. However, contrary to the
    appellants suggestion, the existence of a fee agreement, freely entered into,
    is not determinative of the fairness and reasonableness analysis. The weight to
    be assigned to the fee agreement in determining the expectations of the client,
    and ultimately the fairness and reasonableness of the fees, is entirely within
    the discretion of the Adjudicator.

[68]

The
    reasons of the Adjudicator demonstrate that he considered the views of the
    claimant in arriving at his legal fee review decision. The Adjudicator observed
    that the claimant signed the fee agreement without any duress or coercion and
    that the claimant was content with the appellants fee. However, it was open to
    the Adjudicator to refuse to treat the claimants expectations as the critical
    factor in assessing the fairness and reasonableness of the legal fees.

[69]

Thus,
    the Administrative Judge did not err in refusing to grant the requested
    direction addressing the weight that should have been assigned to this
    factor.

(3) The Fee Assessment was Conducted Prematurely

[70]

The
    appellant submits that it was a breach of the rules of natural justice and of
    the terms of the implementation orders for the Adjudicator to proceed with the
    legal fee review before all of the legal work in this case was completed. The
    legal fee review was carried out at the conclusion of the IAP hearing. At that
    time a dispute remained between the claimant and the federal government over
    liability for GST and PST owing on compensation awarded under the S.A. The
    value of the additional time expended by the solicitor in resolving this
    dispute after the completion of the IAP hearing was claimed to be approximately
    $12,000.

[71]

The
    appellant contends that by failing to delay the assessment until all of
    counsels work was completed, the Adjudicator did not respect the terms of the
    implementation orders. The Chief Adjudicator did not correct this error on
    appeal and his decision ought to be set aside.

[72]

I
    would not give effect to this submission. The Chief Adjudicators designate was
    aware of the need for additional time to be expended when the fee review appeal
    was heard. He indicated that the Chief Adjudicator was seized with the dispute
    regarding the GST and PST and stated that the Chief Adjudicator may address
    the matter of fees in this application or if not, the Adjudicator remains
    seized with this case and can hear more submissions solely on the matter of
    whether additional fees are justified on the matter of liability for GST and
    PST.

[73]

The
    appellant does not appear to have pursued the matter as suggested by the Chief
    Adjudicators designate. The appellant has failed to establish that the terms
    of the S.A. were ignored or that the rules of natural justice were breached.
    There was no basis for the Administrative Judge to intervene in this respect.

(4) The Chief Adjudicator Wrongly Assumed that all Quebec
    Lawyers Limited their Contingency Fee to 15%

[74]

The
    appellant submits that the Chief Adjudicator incorrectly referred to Quebec
    lawyers having agreed amongst themselves to limit their fees to Canadas 15%
    contribution. The appellant was not given the opportunity to challenge this
    assertion. This error is said to fail to respect the terms of the
    implementation orders and to thereby constitute a breach of the rules of
    natural justice. As such, the Chief Adjudicators decision should be set aside.
    Fresh evidence filed by the appellant shows that there is no such agreement
    among Quebec lawyers.

[75]

I
    agree that the Chief Adjudicators reference to an alleged agreement among
    Quebec lawyers is incorrect. I also agree with the appellants submission that
    there is no presumption in the S.A. that a 15% contingency fee should apply to
    most cases. As stated by the Administrative Judge, at para. 41:

The range of fees that are being charged by lawyers across the
    country in relation to IAP claims is a fact that may go to the claimants
    expectations. That said, it is no more than one factor to be considered. The
    fee must be assessed on its fairness and reasonableness in the context of the
    facts of the case and the language set out in paragraph 18 [of the
    implementation orders].

[76]

However,
    despite referencing the supposed agreement among Quebec lawyers, the Chief
    Adjudicator correctly explained that there is no presumption that the standard
    fee in an average case is 15%. The Chief Adjudicator confirmed that he
    understood this by agreeing with the Adjudicator that a 20% fee is appropriate
    in this case. Viewed in context, the error is not significant enough to warrant
    intervention beyond the comment made by the Administrative Judge in his general
    directions concerning the nature of the fee review process under the S.A. and
    the implementation orders.

CONCLUSION

[77]

A
    fee review decision of the Chief Adjudicator in the IAP is not reviewable by
    way of an appeal to the Superior Court, or by way of an application for
    judicial review to the Superior Court. The Chief Adjudicators decision is only
    reviewable by an Administrative Judge through a Request for Direction under the
    CAP, but such review is available only in very limited circumstances.

[78]

In
    particular, a Request for Direction may only be brought where it is alleged
    that the Chief Adjudicators decision reflects a failure to enforce the
    provisions of the S.A. and the implementation orders. This very limited
    availability of a right to seek review of a Chief Adjudicators decision
    reflects both the importance of the finality of decisions under the S.A. and
    the relative expertise of the Chief Adjudicator in the legal fee review
    process.

[79]

In
    this case, the appellant has not established that the Chief Adjudicators
    decision reflects a failure to comply with the S.A. or the implementation
    orders. Thus, I would dismiss the appeal from the Administrative Judges
    refusal to grant the specific directions sought by the appellant.

[80]

For
    these reasons I would dismiss the appeal. The parties have agreed that there
    should be no order as to costs.

Paul Rouleau J.A.

I agree M. Rosenberg
    J.A.

I agree R.G. Juriansz
    J.A.

Released: July 4, 2012


COURT OF APPEAL FOR
    ONTARIO

CITATION:
Galdamez v. Allstate
    Insurance Company of Canada,
2012 ONCA 508

DATE: 20120724

DOCKET: C54231

Laskin, Simmons and Epstein JJ.A.

BETWEEN

Hayfa Galdamez

Plaintiff (Appellant)

and

Allstate Insurance Company of Canada

Defendant (Respondent)

Jane L. Poproski, for the appellant

Terrence H. Hill, for the respondent

Heard: February 8, 2012

On appeal from the order of Justice James A. Ramsay of
    the Superior Court of Justice, dated July 28, 2011, with reasons reported at
    2011 ONSC 2606, [2011] I.L.R. I-5176.

Simmons
    J.A.:

A.

Introduction

[1]

The appellant was injured in a car accident, and applied for non-earner
    benefits under the
Statutory Accident Benefits Schedule - Accidents on or After
    November 1, 1996
, O. Reg. 403/96 (the 1996 SABS). The main issue on
    appeal is whether the motion judge erred in holding that the appellant is
    ineligible for non-earner benefits under the 1996 SABS for the sole reason that
    she was working at the time she was injured in an accident.

[2]

Where an insured person sustains an impairment as a result of an
    accident, s. 12(1)(1) of the 1996 SABS sets out the eligibility requirements
    for obtaining a non-earner benefit. One of the eligibility requirements is that
    the insured person does not qualify for an income replacement benefit.

[3]

Under s. 4(1)(1) of the 1996 SABS, an insured person qualifies for an
    income replacement benefit where he or she was employed at the time of the
    accident and as a result of and within 104 weeks after the accident, suffers a
    substantial inability to perform the essential tasks of that employment.

[4]

On a motion for summary judgment, Ramsay J. dismissed the appellants
    action for non-earner benefits. He concluded that because the appellant was employed
    at the time she was injured in an accident, she could not qualify for a
    non-earner benefit.

[5]

For the reasons that follow, I would allow the appeal, set aside the
    motion judge's order dismissing the action, and remit the matter to the trial
    court without prejudice to the respondent's right to renew the motion for
    summary judgment if so advised.

B.

Background

(1)

The Accident and its
    Impact

[6]

Hayfa Galdamez was injured on October 26, 2002 when a car ran over her
    foot. Prior to the accident, she worked at a Fortinos supermarket.

[7]

According to Ms. Galdamez, she returned to work four days after the
    accident on modified duties and hours because she was unable to do any heavy
    lifting or complete her work-related tasks at her pre-accident levels. Ms.
    Galdamez says that she eventually left Fortinos on January 19, 2004 and that
    she has not worked since that date.

[8]

Ms. Galdamez claims she is presently suffering from a number of physical
    symptoms: left hand pain; left arm pain; left arm numbness and tingling; knee
    pain; right foot pain; occasional swelling of the right foot; throbbing pain in
    toes; lower back pain; upper back pain; mid-back pain; right thigh pain;
    headaches and fatigue.

[9]

In addition to her physical symptoms, Ms. Galdamez says she is irritable
    and suffers from pedestrian anxiety. She describes a number of impacts on her
    life: alteration in housekeeping tasks; functional limitations; inability to go
    for daily walks as she did previously; difficulty standing for long periods of
    time, bending, and lifting; inability to bake; inability to lift her children; and
    inability to engage in recreation with her children in the same manner as prior
    to the accident.

[10]

In support
    of her claim, Ms. Galdamez relies in particular on a medical report dated July
    9, 2011 in which the doctor opined that she sustained an impairment as a result
    of, and within 104 weeks of, the accident and that, in addition, she suffered a
    complete inability to carry on a normal life.

(2)

The Appellant's
    Applications for Accident Benefits

[11]

Ms. Galdamez
    applied to the drivers insurer for statutory accident benefits on November 8,
    2002. On January 7, 2003, the insurer advised her that she may be eligible for
    more than one weekly benefit. The insurer requested that she select which
    benefit she wished to receive by completing an Election of Benefits form. Ms.
    Galdamez completed the form on January 15, 2003, indicating she wished to
    receive an income replacement benefit.

[12]

On January
    28, 2003, the insurer informed Ms. Galdamez she was not eligible for income
    replacement benefits. The insurer explained that the Employers Confirmation of
    Income form indicated that she only missed one day of work as a result of the
    accident, and that, under s. 5(2)(a) of the 1996 SABS, no benefit is payable
    for the first week of disability. The insurer also noted that because Ms.
    Galdamez had elected income replacement benefits, she was not entitled to
    non-earner benefits.

[13]

On
    February 25, 2005, the respondent, Allstate Insurance Company of Canada
    (Allstate), accepted responsibility as the priority insurer
[1]
and began managing Ms. Galdamezs claim.

[14]

In a
    letter to Ms. Galdamezs lawyer dated June 14, 2005, Allstate took the position
    that Ms. Galdamez did not qualify for an income replacement benefit for the
    following reasons: (i) a November 1, 2002 Disability Certificate did not
    indicate a substantial inability [to perform the essential tasks of her
    employment]; (ii) the Employers Confirmation of Income form indicated Ms.
    Galdamez missed a six-hour shift on the day of the accident; and (iii) the
    employers records confirmed that Ms. Galdamez worked continuously from the
    date of the accident until January 19, 2004, at which time she went on maternity
    leave.

[15]

After a
    failed attempt at mediation, Ms. Galdamez commenced an action against Allstate
    for breach of contract and failure to pay income replacement benefits. In its
    statement of defence, Allstate pleaded, among other things, that Ms. Galdamez did
    not, as a result of and within 104 weeks of the accident, suffer a substantial
    inability to perform the essential tasks of her employment. That action was
    scheduled for trial in November 2011.

[16]

In 2009,
    Ms. Galdamez wrote to Allstate and applied for a non-earner benefit arising
    from the 2002 accident. Allstate denied her request.

[17]

After a
    failed mediation on the issue of non-earner benefits, Ms. Galdamez started the
    present action on December 16, 2010.

C.

Relevant 1996 SABS Provisions
[2]

[18]

Section 4
    of the 1996 SABS provides for income replacement benefits, while s. 12 provides
    for non-earner benefits. As the interpretation of these sections is central to
    the issue on appeal, I will set out the full text of the relevant portions of
    these provisions.

[19]

Section 4(1)(1)
    of the 1996 SABS provides as follows:

4. (1)  The insurer shall
    pay an insured person who sustains an impairment as a result of an accident an
    income replacement benefit if the insured person meets any of the following
    qualifications:

1. The insured person was employed at
    the time of the accident and, as a result of and within 104 weeks after the
    accident, suffers a substantial inability to perform the essential tasks of
    that employment.

[20]

Section
    12(1)(1) of the 1996 SABS states the following:

12. (1)  The insurer shall
    pay an insured person who sustains an impairment as a result of an accident a
    non-earner benefit if the insured person meets any of the following
    qualifications:

1. The insured person suffers a
    complete inability to carry on a normal life as a result of and within 104
    weeks after the accident and does not qualify for an income replacement
    benefit.

[21]

Impairment
    is defined in s. 2 of the 1996 SABS as meaning a loss or abnormality of a
    psychological, physiological or anatomical structure or function.

[22]

Under s.
    2(4) of the 1996 SABS, a person suffers a complete inability to carry on a
    normal life as a result of an accident if, and only if, as a result of the
    accident, the person sustains an impairment that continuously prevents the
    person from engaging in substantially all of the activities in which the person
    ordinarily engaged before the accident.

[23]

Section
    36(1) of the 1996 SABS stipulates that only one of the three benefits available
    under the 1996 SABS regime (an income replacement benefit, a non-earner benefit
    or a caregiver benefit) may be paid to a person in respect of a period of
    time.

[24]

Under s.
    36(2), if a persons application for 1996 SABS benefits indicates that he or
    she may qualify for more than one type of benefit, the insurer shall notify
    the person that he or she must elect within 30 days after receiving the notice
    which benefit he or she wishes to receive.

[25]

See
    Appendix I for the full text of all sections of the 1996 SABS referred to in
    these reasons.

D.

The Motion Judge's Reasons

[26]

The motion
    judge concluded that, because the appellant was employed at the time of the
    accident, she could not qualify for non-earner benefits regardless of whether
    or not she met the disability requirement. The crux of his analysis appears at
    paras. 9-12 of his reasons:

On [the appellants] interpretation, the Regulation would mean
    that a person who was employed at the time of the accident can be entitled to
    non-earner benefits if he or she, although able to perform the essential tasks
    of his or her job, suffers a complete inability to carry on a normal life.
In my view, a person who can work at his or her own job cannot
    be said to suffer a
complete
inability
    to carry on a normal life.
Such a person has the ability to lead a
    normal life at least in part.
I do not think that the interpretation
    proposed by the [appellant] makes sense of the legislation.

It seems to me to be more consonant with
    the scheme of the legislation to interpret clause 12(1)1 to say that a person
    who was employed at the time of the accident does not qualify for non-earner
    benefits, whether he or she meets the disability requirement or not.

This does not leave a gap. A person who was employed at the
    time of the accident is entitled to income replacement if a certain level of
    disability is established. A person who was not employed is entitled to
    non-earner benefits if a higher level of disability is established.
There is
    no situation in which a person who was employed at the time of the accident
    could be so disabled as to qualify for non-earner benefits, but not income
    replacement benefits.

It is not possible that the plaintiff could qualify for
    non-earner benefits. On the agreed facts, she qualifies for income replacement
    or nothing. [Italics in original; underlining added.]

E.

Analysis

(1)

Eligibility for
    Non-Earner Benefits

[27]

The issue
    of whether the motion judge was correct in holding that a claimant is
    ineligible for non-earner benefits for the sole reason that the claimant was
    employed at the time of being injured in an accident raises an issue of
    statutory interpretation  a question of law  which is reviewable on a
    correctness standard:
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2
    S.C.R. 235, at paras. 8-9.

[28]

The
    interpretation of the provisions of the 1996 SABS, as with other regulations
    under the
Insurance Act
, R.S.O. 1990, c. I.8, must be guided by
    Professor Elmer Driedgers modern approach to statutory interpretation:
Segnitz
    v. Royal & Sun Alliance Insurance Co. of Canada
(2005), 76 O.R. (3d)
    161 (C.A.), at para. 60. This approach requires that the words of an Act be
    read in their entire context and in their grammatical and ordinary sense
    harmoniously with the scheme of the Act, the object of the Act, and the
    intention of Parliament: E.A. Driedger,
Construction of Statutes
, 2
nd
ed. (Toronto: Butterworths, 1983), at p. 87; see, e.g.,
Rizzo & Rizzo
    Shoes Ltd. (Re)
, [1998] 1 S.C.R. 27, at para. 21;
Bell ExpressVu
    Limited Partnership v. Rex,
2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26;
R v. Tse
, 2012 SCC 16, 280 C.C.C. (3d) 423, at para. 20.

[29]

In my
    view, it is clear from a plain reading of ss. 4 and 12 of the 1996 SABS that a
    claimants status as an employed person does not, in itself, establish that the
    claimant is ineligible for non-earner benefits. Moreover, I do not agree that the
    motion judges interpretation of these provisions is supported by the scheme of
    the 1996 SABS, or the purpose of these specific provisions. Instead, I conclude
    that such considerations support the opposite interpretation to the one he
    reached.

[30]

I will
    repeat ss. 4(1)(1) and 12(1)(1) of the 1996 SABS for ease of reference:

4. (1)  The insurer shall
    pay an insured person who sustains an impairment as a result of an accident an
income
    replacement benefit
if the insured person meets
    any of the following qualifications:

1. The insured person
was
    employed at the time of the accident and, as a result of and within 104 weeks
    after the accident, suffers a substantial inability to perform the essential
    tasks of that employment
.

...

12. (1)  The insurer shall
    pay an insured person who sustains an impairment as a result of an accident a
non-earner
    benefit
if the insured person meets any of the
    following qualifications:

1. The insured person suffers a
    complete inability to carry on a normal life as a result of and within 104
    weeks after the accident and
does not qualify for an income
    replacement benefit.
[Emphasis added.]

[31]

The
    language of s. 12(1)(1) is clear: an individual can only qualify for a
    non-earner benefit if he or she does not qualify for an income replacement
    benefit. However, the language of s. 4(1)(1) is equally clear. Employment
    status at the time of an accident is only
one part
of the test for
    qualifying for an income replacement benefit; a claimant must also demonstrate
    that he or she meets the relevant disability standard  namely, a substantial
    inability to perform the essential tasks of his or her employment.

[32]

In its
    factum, Allstate relied on the following statement in
Sutherland v. Singh
,
    2011 ONCA 470, 106 O.R. (3d) 553, at para. 6, as supporting the motion judge's
    interpretation: [b]ecause [the claimant] was employed at the time of the
    accident, he was not eligible for a non-earner benefit.

[33]

However,
    in
Sutherland
,
the claimants entitlement to a non-earner
    benefit was not raised by either party. The parties agreed, for the purposes of
    the motion forming the subject of the appeal, that the claimant was eligible
    for both an income replacement benefit and a caregiver benefit. Moreover, the
    issues in that case related solely to income replacement benefits and caregiver
    benefits. The statement pointed to by Allstate was narrative only and had no
    effect on the ultimate holding in
Sutherland
. It is therefore clearly
obiter
.

[34]

In my
    view, the plain language of the relevant sections makes it clear that eligibility
    for an income replacement benefit is determined by a two-part test. A claimant
    is not to be barred from receiving a non-earner benefit solely because he or
    she meets one of the prongs of the two-part test for obtaining an income
    replacement benefit.

[35]

The motion
    judge set out two interrelated bases for interpreting ss. 4(1)(1) and 12(1)(1)
    of the 1996 SABS as meaning that a person who was working at the time he or she
    was injured in an accident is ineligible for a non-earner benefit.

[36]

On the one
    hand, he concluded, essentially as a matter of common sense, that a person who
    can work at his or her job following an accident cannot be said to suffer a
    complete inability to carry on a normal life. On the other hand, he determined that
    it is more consonant with the scheme of the legislation to interpret s. 12(1)(1)
    of the 1996 SABS as providing that a person who was employed at the time of an
    accident simply cannot qualify for non-earner benefits regardless of whether he
    or she meets the disability requirement.

[37]

I do not
    agree with either of these conclusions.

[38]

Concerning
    the first reason, the motion judge said:

In my view, a person who can work at his or her own job cannot
    be said to suffer a
complete
inability to carry on a normal life. Such
    a person has the ability to lead a normal life at least in part. [Emphasis in
    original.]

[39]

However,
    s. 2(4) of the 1996 SABS stipulates that to qualify for a non-earner benefit,
    it is necessary only that a person be continuously prevented from engaging in
substantially
    all
of the activities in which the person ordinarily
engaged
    before the accident (emphasis added). Substantially all does not mean all.

[40]

Moreover,
    in
Heath v. Economical Mutual Insurance Co.
, 2009 ONCA 391, 95 O.R. (3d)
    785, at para. 50, this court set out several general principles as  part of a
    proper approach to the application of [the non-earner benefit eligibility
    requirements of the 1996 SABS].

[41]

The
    principles articulated in
Heath

include
,
among other
    things
:

·

recognition that the starting point for the analysis of whether a
    claimant suffers a complete inability to carry on a normal life will generally
    involve comparing the claimants activities and life circumstances before the
    accident to his or her activities and life circumstances after  though there
    may be instances where a detailed comparison is not necessary because of the
    nature of the post-accident condition;

·

recognition that, in determining whether a claimant is able to
    engage in substantially all of his or her pre-accident activities, it may be
    necessary to assign greater weight to those activities which the claimant
    identifies as being important to his or her pre-accident life;

·

recognition that it is necessary to consider the manner in which
    the relevant activity is performed and the quality of the performance when
    assessing the claimants ability to engage in activities; and

·

if pain is a primary factor preventing the claimant from engaging
    in activities, recognition that the question is not whether the claimant can
    physically do the relevant activities, but rather whether the degree of pain experienced
    is such that the claimant is practically prevented from engaging in the
    activity.

[42]

In
    dismissing the possibility that an individual who is able to work may,
    nonetheless, suffer a complete inability to carry on a normal life, the motion
    judge did not avert to the language of s. 2(4) of the 1996 SABS or to the
    principles enunciated in
Heath
. In doing so, he failed to consider the
    meaning of the provisions at issue in the context of the SABS scheme, as a
    whole.

[43]

Although I
    consider it unlikely that persons who can work at their pre-accident jobs following
    an accident will often meet the disability standard for non-earner benefits, I
    do not rule out such a possibility.

[44]

For
    example, in jobs where mobility is not a requirement (e.g. department store
    greeter, telemarketer, etc.) and the job was not of great importance in the
    claimant's pre-accident life, it may be possible for a claimant who returns to
    his or her pre-accident employment following an accident to satisfy the test
    for non-earner benefits.

[45]

Accordingly,
    I do not agree with the first basis for the motion judges decision.

[46]

Turning to
    the second basis for the motion judges decision, he said:

It seems to me to be more consonant with the scheme of the
    legislation to interpret clause 12(1)1 to say that a person who was employed at
    the time of the accident does not qualify for non-earner benefits, whether he
    or she meets the disability requirement or not.

This does not leave a gap
. A person who was employed
    at the time of the accident is entitled to income replacement if a certain
    level of disability is established. A person who was not employed is entitled
    to non-earner benefits if a higher level of disability is established.
There
    is no situation in which a person who was employed at the time of the accident
    could be so disabled as to qualify for non-earner benefits, but not income
    replacement benefits
.

It is not possible that the plaintiff could qualify for
    non-earner benefits. On the agreed facts, she qualifies for income replacement
    or nothing. [Emphasis added.]

[47]

I disagree
    with this analysis for two reasons. First, it ignores the clear language of the
    1996 SABS. As I have said, on a plain reading of ss. 4(1)(1) and 12(1)(1), a
    claimant can only qualify for non-earner benefit if he or she does not qualify
    for income replacement benefit. Employment status is only one part of the test
    for qualifying for an income replacement benefit; the claimant must also show
    that he or she meets the relevant disability standard.

[48]

Second, as
    I have already explained, in my view, the motion judge was wrong when he said there
    is no situation in which a person who was employed at the time of the
    accident could qualify for non-earner benefits, but not income replacement
    benefit. Although such situations may be rare, in my view, they could exist. The
    purpose of the legislation in these circumstances would be to provide
    compensation to persons who have suffered a severe diminution in their overall quality
    of life, even though they may be able to continue to work.

[49]

Thus, to
    foreclose the very possibility of recovery in such an instance would not be
    consonant with the purpose of the legislation, as the motion judge suggested;
    rather, it would undermine the purpose of the legislation. Contrary to the
    motion judges assertion, his interpretation would, in fact, leave a gap in
    the legislative scheme.

[50]

Based on
    the foregoing reasons, I conclude that the motion judge erred in holding that
    Ms. Galdamez is ineligible for 1996 SABS non-earner benefits for the sole
    reason that she was working at the time she was injured in an accident.

(2)

Other Issues

[51]

In oral
    argument on the appeal, counsel for Allstate acknowledged that the motion judge
    may well have been wrong in his interpretation of the eligibility requirements
    for a non-earner benefit. However, counsel asserted that, before the motion
    judge, Allstate did not take the position that Ms. Galdamez was ineligible for
    non-earner benefits because she was working at the time of the accident.
    Rather, Allstates position was that, on the evidence before the motion judge,
    Ms. Galdamez qualified for an income replacement benefit, but was not entitled
    to any payments. Having qualified for an income replacement benefit, Ms.
    Galdamez was therefore ineligible for non-earner benefits.

[52]

In this
    regard, Allstate relied on a Disability Certificate signed by Ms. Galdamezs
    treating physician on November 30, 2005. In the Disability Certificate, the
    doctor ticked a box indicating that Ms. Galdamez met the disability requirement
    for income replacement benefits; he also ticked a box indicating she did not
    meet the disability requirement for non-earner benefits.

[53]

Allstate also
    argued that, while Ms. Galdamez qualified for an income replacement benefit,
    her entitlement was nil because (i) she was only off work for one day following
    the accident and  (ii) any subsequent time out of the workforce within the 104
    week period was due to her maternity leave.

[54]

According
    to Allstate, even if the trial judge erred in his interpretation of the
    eligibility requirement for a non-earner benefit, he was correct in granting
    Allstates motion for summary judgment and dismissing Ms. Galdamezs action  because
    the only medical evidence on the motion that addressed the question of
    eligibility for income replacement benefits demonstrated that Ms. Galdamez was
    eligible.

[55]

I would
    not accept this argument for two reasons. First, the trial judge neither addressed
    this argument nor made any findings about Ms. Galdamezs eligibility or
    entitlement to an income replacement benefit. In particular, he made no
    findings about why she remained out of the work force after leaving Fortinos. Moreover,
    the record before him relating to this issue was scant.

[56]

Second,
    Allstates evidence on the motion indicated that Ms. Galdamezs action for
    income replacement benefits was proceeding to trial imminently. In that action,
    Allstate pleaded that Ms. Galdamez is not entitled to income replacement
    benefits as she did not, as a result of and within 104 weeks following the
    accident, suffer a substantial inability to perform the essential tasks of her
    employment. In my view, the fact that the income replacement benefit action was
    proceeding to trial parallel to the motion for summary judgment in this action demonstrates
    that a genuine issue for trial exists concerning Ms. Galdamezs eligibility for
    income replacement benefits.

[57]

In oral
    argument, Allstate did not pursue two other arguments raised in its factum: (i)
    Ms. Galdamez elected to receive income replacement benefits and not non-earner
    benefits; and (ii) a limitation issue. As the motion judge made no findings in
    relation to either of these issues, I would not give effect to either argument.

[58]

Finally, I
    would simply observe that, apart from claiming that Ms. Galdamez qualified for
    an income replacement benefit, on the motion below Allstate did not join issue
    with her concerning whether she met the disability standard for obtaining a non-earner
    benefit.

F.

disposition

[59]

Based on
    the foregoing reasons, I would allow the appeal, set aside the motion judge's
    order dismissing the action, and remit the matter to the trial court without
    prejudice to the respondent's right to renew the motion for summary judgment if
    so advised.

[60]

I would
    award costs of the appeal to the appellant on a partial indemnity scale fixed in
    the amount of $6000.00, inclusive of disbursements and applicable taxes. I
    would set aside the motion judges costs order and award costs of the motion to
    the appellant on a partial indemnity scale fixed in the amount of $3500.00,
    inclusive of disbursements and applicable taxes.

Signed:        J.M. Simmons
    J.A.

I agree J.I.
    Laskin J.A.

I agree G.J.
    Epstein J.A.

Released: J.S. July 24, 2012

APPENDIX I

Statutory
    Accident Benefits Schedule - Accidents on or After November 1, 1996
, O Reg
    403/96

2.       (1)
      In this Regulation,

...

impairment means a loss or
    abnormality of a psychological, physiological or anatomical structure or function;

...

(4)  For the purpose of this
    Regulation, a person suffers a complete inability to carry on a normal life as
    a result of an accident if, and only if, as a result of the accident, the
    person sustains an impairment that continuously prevents the person from
    engaging in substantially all of the activities in which the person ordinarily
    engaged before the accident.

...

4.       (1)  The insurer shall pay an insured
    person who sustains an impairment as a result of an accident an income
    replacement benefit if the insured person meets any of the following
    qualifications:

1. The insured person was employed at the time of the
    accident and, as a result of and within 104 weeks after the accident, suffers a
    substantial inability to perform the essential tasks of that employment.

...

5.       (1)  Subject to subsection (2), an
    income replacement benefit is payable during the period that the insured person
    suffers a substantial inability to perform the essential tasks of the
    employment in respect of which he or she qualifies for the benefit under
    section 4.

(2)  The insurer is not required to pay an income
    replacement benefit,

(a) for the first week of the disability;

...

12.     (1)  The insurer shall pay an insured
    person who sustains an impairment as a result of an accident a non-earner
    benefit if the insured person meets any of the following qualifications:

1. The insured person suffers a complete inability to carry
    on a normal life as a result of and within 104 weeks after the accident and
    does not qualify for an income replacement benefit.

...

36.     (1)  Only one of the following
    benefits may be paid to a person in respect of a period of time:

1. An income replacement benefit.

2. A non-earner benefit.

3. A caregiver benefit.

(2)   If a persons application indicates that he or she
    may qualify for more than one of the benefits referred to in subsection (1),
    the insurer shall notify the person that he or she must elect within 30 days
    after receiving the notice which benefit he or she wishes to receive.

(3)  The insurer shall deliver the notice under subsection
    (2) within 10 business days after receiving the persons application.

[1]
Allstate was the insurer of Ms. Galdamezs estranged husband, Romeo Galdamez.

[2]
The sections referred to in these reasons are the sections that were in force
    at the time of the accident. Some of these sections were subsequently amended
    effective September 1, 2010.


COURT OF APPEAL FOR ONTARIO

CITATION:
Henricks-Hunter v. 814888
    Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496

DATE: 20120712

DOCKET: C54982

OConnor A.C.J.O., MacPherson and Rouleau JJ.A.

BETWEEN

Stephanie
    Marie Henricks-Hunter, by her litigation guardian,

the
    Office of the Public Guardian and Trustee, Britney Starr Henricks,

by her
    litigation guardian, Michael Alberts Henricks, Arianna Monique

Hunter,
    a minor by her litigation guardian, Atley Hunter, Michael

Albert Henricks, Cecilia Delprima Henricks
    and Michael Edward Henricks

Plaintiff (Respondent)

and

814888
    Ontario Inc., carrying on business as Phoenix Concert

Theatre and Sherbourne
    Community Clinic Inc.

Defendants

J.G. Hodder, for the appellant, Howie Sacks and Henry
    LLP

No one appearing for the respondent, Stephanie Marie
    Henricks-Hunter

Heard: July 6, 2012

On appeal from the order of Justice John C. Wilkins of
    the Superior Court of Justice, dated January 23, 2012.

By
    the Court:

[1]

The appellant, Howie Sacks and Henry LLP, is the law firm that acted for
    the respondent, Stephanie Marie Henricks-Hunter, in this action.  The appellant
    was appointed by Stephanies litigation guardian, the office of the Public
    Guardian and Trustee (PGT).  The appeal is from the motion judges order fixing
    the fees that the appellant can charge to Stephanie at $325,000 including HST, plus
    disbursements of $46,831.27, for a total of $371,831.27. The appellant
    originally sought to recover a total of $516,536.92 from Stephanie in
    accordance with a contingency fee agreement (the CFA) that it negotiated with
    the PGT.

BACKGROUND

[2]

Stephanie and several family law claimants brought the within action as
    a result of the serious injuries suffered by Stephanie when she fell from a
    catwalk while attending a concert at the premises of the defendant Phoenix
    Concert Theatre.  The accident occurred when Stephanie leaned back against what
    she thought was a railing from which an advertisement banner was hanging.
    There were, however, no vertical stiles in that area between the railing and
    the floor.  As a result, when Stephanie leaned back she fell through the banner
    down to the floor below. She sustained serious personal injuries including a
    severe traumatic brain injury.

[3]

A capacity assessment was conducted in February 2006.  The assessment
    showed that Stephanie was incapable of managing property.  Since all of
    Stephanies family over the age of majority resided in the United States of
    America, the PGT became her guardian of property by default pursuant to s. 16
    of the
Substitute Decisions Act, 1992
,
    S.O. 1992, c. 30
.

[4]

On March 2, 2006, the PGT entered into a CFA with the appellant on
    Stephanies behalf.  Pursuant to that agreement, the appellant agreed to defer
    rendering an account to Stephanie for disbursements or legal fees until a successful
    conclusion of her action.  The CFA also provided that the appellant would
    receive fees equal to 25 per cent of any judgment or settlement up to $2.5
    million and 20 per cent of any judgment or settlement in excess of that
    amount.  The agreement further provided that Stephanie would recover any
    partial indemnity costs awarded and any amount attributed to costs in any
    settlement or judgment would be excluded from the application of the CFA.  Finally,
    the appellant was to receive 100 per cent of all out-of-pocket expenses and
    disbursements.

[5]

The action was commenced on July 26, 2006.  Phoenix contested liability
    on the basis that Stephanie was responsible for her injuries.  The defendant,
    Sherbourne Community Clinic Inc., was the owner of the land, but had no
    involvement as it had leased the premises to Phoenix.  Sherbourne denied any
    liability, claiming that it did not have care or control over the premises.

[6]

The claim was settled in October 2009 at mediation without the need for a
    trial. The gross settlement amount was $2,050,000.  This represented a net
    recovery to the plaintiffs of approximately 20 per cent of the value of their
    claims.  The appellant was of the view that the case on liability against
    Phoenix was very good.  However, the appellant believed that the claim against
    Sherbourne would probably fail given the lack of evidence and weak legal basis for
    it.

[7]

The liability insurance carried by Phoenix had limits of $2 million. The
    appellant recommended that Stephanie accept the settlement offer. The PGT also recommended
    acceptance of the settlement, and took no position on the amount of fees being
    requested other than to confirm that they accurately reflected the amount
    produced by applying the CFA to the settlement.  The PGT has not appeared and
    takes no position on this appeal.

ISSUES

[8]

On appeal, the appellant makes two principal submissions:

1)

The motion judge erred
    in failing to consider whether the CFA was fair and reasonable in accordance
    with the two-part test set out in s. 24 of the
Solicitors Act
,
R.S.O. 1990, c. S.15.

2)

In the alternative, if
    the two-part test does not apply to persons under a disability, then the motion
    judges reasons are inadequate and he failed to consider the relevant factors
    in arriving at an appropriate fee.

[9]

For the reasons that follow, the appeal should be allowed and the matter
    remitted to a motion judge to determine whether, after applying the analysis
    set out in
Raphael Partners v. Lam
(2002), 61 O.R. (3d) 417 (C.A.),
    the CFA ought to be cancelled and the fees assessed in the ordinary manner.

ANALYSIS

[10]

The
    appellant argues that the CFA negotiated with the PGT is a fee agreement that
    can be enforced and that s. 24 of the
Solicitors Act
applies.  Section
    24 provides that a court may enforce a fee agreement if it is in all respects fair
    and reasonable between the parties.  The appellant relies on this courts
    decision in
Raphael
for the approach that is to be taken by a court
    determining whether a contingency fee agreement is fair and reasonable and
    ought to be enforced.

[11]

The
    reasons of the motion judge on the approval of the settlement and the setting
    of the appellants fees are quite short.  On the first appearance, on January
    13, 2012, the motion judge indicated that the materials submitted in support of
    the requested $516,536.92 in fees were inadequate.  He stated that the full
    amount of docketed time, disbursements and taxes should be shown in a separate
    table and explain extra undocketed work.

[12]

On
    January 23, 2012, after additional materials were filed, the matter returned to
    the motion judge.  The motion judge approved the settlement amount of
    $2,050,000.  On the issue of fees, he started his analysis by stating that the
    solicitor entered into an agreement as to how they would be compensated
which does not bind Stephanie or the court
 (emphasis
    added).  The motion judge made no further mention of the CFA.

[13]

In
    our view, the motion judge erred in failing to consider whether the CFA should
    be enforced and by proceeding directly to the determination of the amount of
    fees without regard to the CFA.  In
Raphael
this court
explained the two-step process
    to be followed by a judge where enforcement of a contingency fee agreement is
    sought pursuant to s. 24 of the
Solicitors Act
.  First, the fairness
    of the agreement is assessed as of the date it was entered into.  Second, the
    reasonableness of the agreement is assessed as of the date of the hearing. A contingency
    fee agreement can only be declared void, or be cancelled and disregarded, where
    the court determines that it is either unfair or unreasonable.

[14]

In
    this case, the motion judges analysis of the proposed fees focussed almost
    exclusively on the amount of time spent by the solicitors and their hourly
    rates.  As noted in
Raphael
, at para. 54, because of the important
    role played by contingency fee agreements in the administration of justice, the
    time spent by solicitors on a file is a relevant factor, but it does not
    control the question of whether a solicitor is entitled to the fees charged
    through enforcement of a contingency fee agreement.

[15]

When
    a solicitor seeks to enter into an enforceable contingency fee agreement with a
    party under a disability, the solicitor must comply with the regulations passed
    pursuant to the
Solicitors Act
.  Section 5(1) of O. Reg. 195/04 provides
    that:

5. (1) A solicitor for a person under disability represented by
    a litigation guardian with whom the solicitor is entering into a contingency
    fee agreement shall,

(a) apply to a judge for approval of the agreement before the
    agreement is finalized;  or

(b) include the agreement as part of the motion or application
    for approval of a settlement or a consent judgment under rule 7.08 of the Rules
    of Civil Procedure.

[16]

Therefore,
    the solicitor can choose to have the agreement approved by the court before it
    is finalized with the PGT.  If a contingency fee agreement is approved by the
    court before being finalized, the fairness of the agreement is no longer an
    issue.

[17]

Alternatively,
    the agreement can be finalized and presented on a motion or application for
    approval of a settlement under rule 7.08 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194.  Upon hearing a rule 7.08 motion or application, the
    judge cannot simply disregard a finalized contingency fee agreement.  Rather, the
    motion judge must assess both the fairness and reasonableness of the agreement.
    If the agreement is fair and reasonable, the motion judge may give effect to it.

[18]

In
    the present case, the appellant did not apply for the approval of a judge
    before finalizing the CFA. Thus, the motion judge had to treat the CFA as an
    agreement that the appellant was seeking to enforce. Both the fairness and the
    reasonableness of the CFA ought to have been assessed.

[19]

We
    turn now to that assessment.

Fairness

[20]

In addressing the issue of fairness,
Raphael
provides, at para. 37, that the solicitor bears the
    onus of satisfying the court that the way in which the agreement was obtained
    was fair. The fairness requirement 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 (
Raphael
,

at para. 37).  As noted above, the
    fairness of the agreement is determined as of the date the agreement was
    entered into.

[21]

In the present case, the
    CFA was negotiated with the PGT.  It is apparent from the materials filed by
    the PGT and the appellant that the CFA was fair when it was negotiated.  We
    note, in particular, that when it was negotiated there was considerable uncertainty
    as to the likely success of the claim and the extent of the investment that
    would be required of the solicitors to bring the action to a favourable
    conclusion.  Thus, in our view the CFA was fair.

Reasonableness

[22]

The test for reasonableness was set out in
Raphael
, at para. 50
.
The factors to be considered are:

(a)
the time expended by the solicitor;

(b) the legal
    complexity of the matter at issue;

(c) the results
    achieved; and

(d) the risk assumed by
    the solicitor.

[23]

Assessing
    the reasonableness of a contingency fee agreement in a matter as complex as the
    one in issue in this case is more difficult and nuanced than assessing the
    fairness of the agreement.  In our view, this court is not well placed to carry
    out that review.  On the appeal the appellant made virtually no submissions on
    the issue of reasonableness of the CFA, and the court is faced with the
    substantial record of what was before the motion judge on the approval motion.

[24]

If
    a judge faced with a contingency fee agreement calls into question the fairness
    or reasonableness of the agreement, the judge should normally raise the issues
    with the solicitors and seek their submissions.  In the present case, no issues
    were raised by the motion judge; no doubt because he considered that the CFA was
    not binding.

[25]

In
    our view, it would also be incumbent upon the PGT to raise any concerns as to the
    fairness and reasonableness of a fee agreement.  The failure by the PGT to
    raise any such concerns ought to be given substantial weight.

CONCLUSION

[26]

The
    appeal is allowed and the matter is remitted to a motion judge for
    determination of the reasonableness of the CFA in accordance with these
    reasons.  If, upon remittal, the motion judge has concerns with respect to the
    reasonableness of the fee agreement, those should be raised with the appellant
    and the appellant should be given an opportunity to respond.

D. OConnor A.C.J.O.

J.C.
    MacPherson J.A.

Paul Rouleau J.A.

Released: July 12, 2012