COURT OF APPEAL FOR ONTARIO

CITATION: Lima v. Kwinter, 2021 ONCA 47

DATE: 20210126

DOCKET: C67269

Doherty, Hoy and Jamal JJ.A.

BETWEEN

David Lima

Applicant
(Respondent/Appellant in Cross-Appeal)

and

Alfred M. Kwinter, Alfred
    Kwinter Professional Corporation and 1736314 Ontario Inc. carrying on business
    as Singer Kwinter

Respondents
(Appellants/Respondents in Cross-Appeal)

Chris G. Paliare and Lauren Pearce, for
    the appellants/respondents in cross-appeal

Peter I. Waldmann, for the respondent/appellant
    in cross-appeal

Heard: In writing (submitted to a panel on
    September 17, 2020)

On appeal from the judgment of Justice Cynthia
    Petersen of the Superior Court of Justice, dated July 3, 2019 with reasons
    reported at 2019 ONSC 4064.

Doherty J.A.:

I

[1]

This is an appeal brought by the law firm,
    Singer Kwinter (SK), and a cross-appeal brought by their former client, Mr.
    David Lima.  SK represented Mr. Lima in an action brought against his insurer
    and his insurance broker. The appeal and cross-appeal are from an assessment of
    SKs fees. That assessment proceeded by way of an application before a Superior
    Court judge. In addition to appealing the assessment, both SK and Mr. Lima also
    seek leave to appeal the costs order made by the application judge.

[2]

I would allow SKs appeal, but only to the
    extent of eliminating the application judges recalculation of the
    disbursements to account for what she believed to be a double-counting of
    certain disbursements. I would dismiss Mr. Limas appeal from the assessment.

[3]

I would dismiss SKs application for leave to
    appeal the costs ordered on the application. I would grant Mr. Lima leave to
    appeal, allow the appeal and vary the costs order in his favour to $20,000.

II

background facts

[4]

Mr. Limas home and other buildings on his
    property burned down in February 2011. Investigation revealed the fire was
    deliberately set. Mr. Limas insurer suspected him.

[5]

In the summer of 2011, frustrated with the
    progress of his insurance claim, Mr. Lima decided to retain SK.
[1]
SK, a well-known plaintiffs
    litigation firm, has enjoyed considerable success taking lawsuits to trial
    against insurers who have denied coverage on fire insurance policies and alleged
    arson.

[6]

Mr. Lima could not fund what was potentially
    long, complicated and expensive litigation on an ongoing basis. He and SK
    negotiated a contingency fee agreement (CFA). SK initially proposed a fee
    equal to one-third of all monies ultimately paid by any defendants. Mr. Lima
    verbally agreed with this proposal, but shortly afterwards, suggested to Mr.
    Singer the fee was too high. Mr. Singer agreed to renegotiate.

[7]

In September 2011, Mr. Lima signed a retainer agreement
    with SK. The retainer provided for payment to SK, calculated in two ways. SK
    was to receive a fee based on a percentage of any amount recovered. Mr. Lima
    agreed to pay a fee equal to 20 percent of all claims paid by the defendants up
    to $500,000, and 10 percent of all claims paid in excess of $500,000. In
    addition to the percentage fee, the CFA also entitled SK to costs paid by the defendants.
    The relevant provision read:

In addition to the above-noted sums, the
    balance of our fees will be paid by the defendant known as partial indemnity
    costs. This amount is in addition to the amounts paid by you noted above.

[8]

In October 2011, SK commenced an action against
    the insurer and the insurance broker. In addition to claiming damages against
    the insurer of over $5 million for negligence and breach of contract, Mr. Lima sought
    punitive damages based on the insurers bad faith denial of coverage. As
    against the broker, Mr. Lima claimed damages of $2 million, alleging the broker
    failed to give him proper advice and arrange adequate or appropriate insurance
    coverage.

[9]

The insurer denied coverage in its statement of
    defence, alleging Mr. Lima had either started the fire or caused someone else
    to start the fire. The insurer and the broker both maintained the losses claimed
    by Mr. Lima were grossly exaggerated. The insurer also counterclaimed against
    Mr. Lima, seeking $1.7 million in damages for monies the insurer said it was
    obliged to pay to mortgagees under the terms of the policy.

[10]

The action proceeded through discoveries, three pre-trials,
    and a mediation. In May 2015, the broker agreed to settle the claims made
    against it with a payment to Mr. Lima of $150,000 all in. The insurer settled
    about a month later in June 2015 with an all in payment of $1,250,000.
    Neither settlement attributed any part of the settlement amounts to any specific
    head of damages, or to costs.

[11]

Mr. Lima directed that certain payments be made directly
    to third party creditors. The remainder of the settlement funds was paid into
    SKs trust account. SK billed Mr. Lima $50,000 in respect of the settlement
    with the broker. SK unilaterally attributed $20,000 of that amount to costs.
    The remaining $30,000 represented SKs fees calculated in accordance with the
    percentages set out in the CFA. SKs bill to Mr. Lima showed $33,900 ($30,000
    in fees, plus $3,900 HST) paid to SK from the settlement funds deposited into
    SKs trust account by the broker. Mr. Singer testified SK forgave the remaining
    amount owing on fees  as part of its final accounting with Mr. Lima after the
    settlement with the insurer.

[12]

In respect of the funds paid by the insurer into
    SKs trust account, SK took fees of $338,390.04, of which it unilaterally attributed
    $150,000 to costs, with the remainder representing the fees owed to SK under the
    percentages set down in the CFA.
[2]

[13]

In total, SK took fees of $372,290.04 ($33,900
    plus $338,390.04). In addition, disbursements of $101,994.34 were paid out of
    the settlement funds.

III

the application

[14]

About a year after receiving SKs final account,
    Mr. Lima served a Notice of Assessment under the
Solicitors Act
, R.S.O. 1990, c. S.15
. After a false
    start before an assessment officer, Mr. Lima commenced an application in the
    Superior Court in July 2017, challenging the legality of the CFA. The
    application was eventually heard in late January and early February 2019.

[15]

On the application, SK conceded that it knew
    when it entered into the CFA with Mr. Lima the agreement contravened s. 28.1(8)
    of the
Solicitors Act
, and was unenforceable by virtue of s. 28.1(9).
[3]
According to SK, it was
    commonplace in 2011 to negotiate contingency fee agreements, like the one
    negotiated with Mr. Lima, and to fail to apply for, or obtain, the judicial
    approval required under s. 28.1(8).
[4]

[16]

SK argued, that because the CFA was unenforceable,
    its fees should be calculated on a
quantum meruit
basis. SK further
    submitted, that in performing that
quantum merit
assessment, the court
    must look at Mr. Limas reasonable expectations as one of the relevant factors.
    SK contended Mr. Limas reasonable expectations were reflected in the terms of
    the CFA he had agreed to with SK. SK contended the amount it had billed Mr.
    Lima pursuant to the CFA was reasonable and justifiable on a
quantum meruit
analysis.

[17]

On the application, Mr. Lima did not argue that
    SK should be required to return all of the funds it had taken as fees as a
    consequence of deliberately entering into an unenforceable contingency fee
    agreement. Instead, Mr. Lima submitted SKs bills should be reduced by subtracting
    the amounts SK had arbitrarily allocated to costs in the settlement with the
    insurer and the broker ($170,000). Mr. Lima argued those arbitrary figures were
    made up numbers and amounted to double-counting, having regard to the fees SK
    had taken as a percentage of the settlement funds. Mr. Lima insisted he had
    never been told that SK would be entitled to costs paid by the defendant on top
    of the percentage fee he had agreed to pay. Finally, Mr. Lima submitted there
    should be other specific deductions from the fees charged to reflect duplications
    and excessive charges.

[18]

Prior to the application, counsel for Mr. Lima
    and SK agreed disbursements were not in issue and did not have to be proved. The
    application proceeded on the basis that the amount claimed for disbursements
    was not in issue.

[19]

The application judge agreed that SKs fees should
    be assessed on a
quantum meruit
basis. After referencing the many
    factors identified in
Cohen v. Kealey and Blaney
, [1985] O.J. No. 160
    (C.A.), the application judge proceeded to consider each factor at length.
    Ultimately, she concluded SK was entitled to fees in the amount of $328,546.41
    rather than the $372,290.04 SK had claimed. The application judge ordered the
    difference, $43,743.63, returned to Mr. Lima.

[20]

Despite the parties agreement that
    disbursements were not in issue, and the absence of any submissions from
    counsel, the application judge, based on her own review of the billing documents,
    concluded SK had inadvertently double-billed disbursements in the amount of
    $16,100. She ordered repayment of that amount by SK to Mr. Lima. In total, the
    application judge awarded judgment to Mr. Lima in the amount of $59,843.63,
    plus pre-judgment interest.

IV

the issues

[21]

Both parties advanced a number of grounds of
    appeal. Their arguments raised three questions:

·

Did the application judge err in failing to eliminate
    or at least substantially reduce SKs fees on account of SK entering into a CFA
    it knew to be unenforceable under the
Solicitors Act
?

·

Assuming the application judge was correct in assessing
    SKs fees on a
quantum meruit
basis, did she make legal errors or
    material factual errors in her analysis?

·

Should the application judge have reviewed the
    amounts attributed to disbursements, given the position of the parties on the
    application, and if so, did she correctly hold $16,100 in disbursements had
    been inadvertently double counted?

A.

should sks deliberate non-compliance with the
solicitors
    act
have disentitled sk to any fees or, alternatively resulted in a
    substantial reduction in sks fees?

[22]

The CFA crafted by SK required Mr. Lima to pay a
    percentage fee based on the amount he recovered and, in addition, authorized
    payment of costs to SK. Sections 28.1(8) and (9) of the
Solicitors Act
,
    when read together, provide that a contingency fee agreement, which includes
    both a fee payable under the agreement and an amount arising as a result of an
    award of costs or costs obtained as part of a settlement, is unenforceable
    unless that agreement is approved by a justice of the Superior Court. Approval is
    granted only if the lawyer and client make a joint application for approval of
    the contingency fee agreement, and satisfy the justice there are exceptional
    circumstances warranting including payment of costs to the lawyer as part of
    the fees owed under a contingency fee agreement. SK knew an application to the
    court for approval was necessary, but did not make any application. SK did not
    tell Mr. Lima court approval was required.
[5]

[23]

Sections
    28.1(8) and (9) are consumer protection legislation. The
requirements of a joint application for approval and judicial
    approval predicated on exceptional circumstances protect clients from excessive
    fees and fees determined, according to contractual terms, lacking in
    transparency and predictability:
Almalki v. Canada (Attorney General)
,
    2019 ONCA 26, at paras. 47-50. The lack of transparency is apparent from a
    review of the CFA entered into by SK and Mr. Lima. Under the terms of that
    agreement, it was left to SK to unilaterally attribute an amount from the
    settlement amounts to costs. Mr. Lima could not know, from the terms of the
    CFA, what amount from any settlement SK would attribute to costs paid by the
    defendant, and therefore ultimately payable to SK as part of its total fee.

[24]

With the CFA rendered unenforceable by the
Solicitors
    Act
, the question becomes how should SKs fees be assessed? Counsel for
    Mr. Lima on appeal submits SKs reliance on a CFA it knew to be contrary to the
Solicitors Act
and unenforceable should disentitle SK to any payment
    for the services it provided, or alternatively should result in a substantial reduction
    of any amount otherwise payable to SK for those services. Counsel argued that
    SKs blatant disregard of the constraints of the
Solicitors Act
resulted in a breach of its fiduciary duty to Mr. Lima and an improper removal
    of Mr. Limas funds from SKs trust account. Counsel stresses SK knew all along
    the CFA contravened the
Solicitors Act
and could not be enforced. He
    submits that SKs deliberate and knowing breach of the
Solicitors Act
distinguishes this case from cases like
Tri Level Claims Consultants Ltd.
    v. Koliniotis
(2005), 257 D.L.R. (4
th
) 297 (Ont. C.A.), at
    para. 40, in which this court allowed recovery of fees on a
quantum meruit
basis, after a paralegal unknowingly entered into an unenforceable contingency
    fee agreement.

[25]

I cannot accept Mr. Limas submission for
    several reasons. The assessment process is intended to provide a relatively
    expeditious manner in which to determine a reasonable fee for legal services
    provided. Allegations of misconduct against a lawyer, which have no impact on
    the value of the legal service provided, are not properly resolved in the
    context of an assessment application. Mr. Limas argument would introduce a
    punitive element into the assessment process. He invites the court to punish
    SK for non-compliance with the
Solicitors Act
by eliminating or reducing his fee. Punishment is
    not normally a goal of civil litigation. If SK should be punished, that task must
    be left to the state or the Law Society.

[26]

Mr. Lima also seeks a windfall. He would have
    the court make an order allowing him to avoid reasonable payment for legal
    services that resulted in significant financial benefit to Mr. Lima. The approach
    urged by Mr. Lima, which would allow him to reap the benefits of the settlements
    achieved by SKs efforts without paying a fair and reasonable fee, goes well
    beyond any legitimate consumer protection goal, and strikes me as the very
    definition of unjust enrichment.

[27]

Mr. Limas contention that SKs breach of
    the
Solicitors Act
should disentitle SK to reasonable fees for
    services finds no support in the language of the relevant provisions in the
Solicitors
    Act
. Section 28.1(9) renders a
    contingency fee agreement that does not comply with s. 28.1(8) unenforceable.
    Courts have long drawn a distinction between services provided pursuant to an
    agreement which is illegal as offensive to fundamental public policy notions
    and agreements that are unenforceable. Services provided under agreements which
    are unenforceable but not illegal as contrary to public policy are compensable
    on a
quantum meruit
basis:
Tri Level Claims Consultants Ltd.
, at para. 34 (Ont. C.A.).

[28]

Section 28.1(9)
    speaks only to the enforceability of a non-compliant contingency fee agreement.
    SK cannot enforce the CFA. That is, SK cannot rely on the terms of that
    agreement to fix the value of the legal services provided to Mr. Lima. The unenforceability
    of the CFA does not, however, alter the reality that the services provided by
    SK had real value to Mr. Lima. Nor, in my view, does the unenforceability of
    the CFA negate SKs entitlement to reasonable compensation for the services it
    provided. Had the legislature intended to deny legal fees for services provided
    pursuant to an unenforceable CFA, or had the legislature intended that
    non-compliance with s. 28.1(8) should compel a deduction in fees otherwise
    owed, the legislature would have done much more than simply declare the contingency
    fee agreement unenforceable.

[29]

Apart from
    the specific language of s. 28.1(9), the common law provides no basis for
    depriving SK of any payment for its services by virtue of its non-compliance
    with s. 28.1(8). Courts will not recognize or enforce claims predicated on illegal
    agreements that are offensive to public policy. For example, the court process will
    not lend itself to recovery for services provided pursuant to an agreement to
    commit a tort or a crime:
Tri Level Claims
    Consultants Ltd.
, at
    para. 35.

[30]

The CFA
    entered into by SK and Mr. Lima does not contemplate the commission of a crime.
    Nor do the terms necessarily constitute champerty, maintenance or any other
    tort: see
McIntyre Estate v. Ontario (Attorney
    General)
(2002), 61
    O.R. (3d) 257 (C.A.), at paras. 26, 47, 70-76. The common law offers no
    justification for going beyond the statutory consequences described in s. 28.1(9).
    That section speaks only to the enforceability of the contingency fee agreement,
    and not to any entitlement to compensation for the value of services provided
    pursuant to the agreement.

[31]

Sections 23 and 24 of the
Solicitors Act
offer strong support for the interpretation of s. 28.1(9) that does not deny a
    lawyer a
quantum meruit
assessment of fees if the contingency fee
    agreement is rendered unenforceable by s. 28.1(9). Under s. 23, a client may
    challenge fees owing under any agreement, including a contingency fee agreement,
    on the basis the terms of the agreement are not fair and reasonable between the
    parties. If the court accepts that the terms are not fair and reasonable, s.
    24 directs:

the agreement may be declared void, and the
    court may order it to be cancelled and may direct the costs, fees, charges and
    disbursements incurred or chargeable in respect of the matters included therein
    to be assessed in the ordinary manner.

[32]

As s. 24 makes plain, a contingency fee
    agreement that is not fair and reasonable is void and cancelled. The
    section, however, goes on to provide that fees are to be assessed in the
    ordinary manner, that is by a determination of  what is reasonable in all the
    circumstances: see
Raphael Partners v. Lam
(2002), 61 O.R. (3d) 417
    (C.A.), at paras. 30-33, 49-50;
Henricks-Hunter v. 814888 Ontario Inc.
    (Phoenix Concert Theatre)
, 2012 ONCA 496.

[33]

Although s. 28.1(9) does not specifically
    indicate a contingency fee agreement found unenforceable under that section
    should be assessed in the ordinary manner, I see no principled reason to draw a
    distinction between a contingency fee agreement found unenforceable under s.
    28.1(9) and a contingency fee agreement found void or cancelled under s.
    24. The same consequence should follow in respect of agreements found wanting
    under either s. 24 or s. 28.1(9). The lawyer can no longer rely on the terms of
    the contingency fee agreement as the basis for determining their fee, but is entitled
    to reasonable compensation reflective of the value of the legal services
    provided.

[34]

The case law,
    while sparse, is also against Mr. Limas position. In
Cookish v. Paul Lee Associates Professional Corporation
, 2013 ONCA 278, the client claimed the
    contingency fee agreement with his lawyer was invalid for non-compliance with
    the
Solicitors Act
. This court framed the issue in this way,
    at para. 2:

As it turns out, however, there is a dispute
    about the nature of the retainer agreement entered into between the parties. Is
    it, or is it not, a valid contingency fee agreement, as contemplated by the
Solicitors
    Act
[citation omitted]? If the answer is no  as Ms. Cookish contends
    then the account may be assessed as to the amount on a
quantum meruit
basis. If the answer is yes  as the solicitors contend  then effect must be
    given to the formula set out in the agreement in determining the amount.

[35]

Ultimately, at para. 60, the court remitted the
    matter to the application judge to consider the nature, validity and effect of
    the agreement entered into between the client and the solicitor.

[36]

In
Du Vernet v. 1017682 Ontario Limited
    and Victor Wong
, 2009 ONSC 29191, the client sought an assessment of his
    lawyers fees payable under a contingency fee agreement. The motion judge held
    the contingency fee agreement did not comply with the relevant regulations
    under the
Solicitors Act
:
Du
    Vernet
, at paras. 18-20. He further
    held the agreement was void under s. 24 of the
Solicitors Act
as unfair and unreasonable:
Du Vernet
, at para. 23. The motion judge went on, however, to
    determine that the lawyers were entitled to fees assessed in the ordinary
    manner:
Du Vernet
, at
    paras. 26-29.

[37]

In
Sé
guin v. Van Dyke
, 2013
    ONSC 6576, the motion judge considered a contingency fee agreement that did not
    comply with s. 28.1(8). He declared the agreement void and unenforceable. The
    motion judge said, at para. 20:

I grant the application and declare the
    contingency fee agreement void and unenforceable. The reasonableness of the
    fees charged by the defendant will be determined by the trial judge in the tort
    action, who will receive
viva voce
evidence and who will be in a
    better position to determine the credibility of the parties.

[38]

The order in
Sé
guin
recognizes the lawyers entitlement to reasonable fees,
    despite non-compliance with s. 28.1(8) of the
Solicitors Act
, and the unenforceability of the contingency fee
    agreement. For reasons peculiar to that case, the motion judge directed that
    the assessment of the fees should be determined in the context of the pending tort
    action.

[39]

Mr. Lima
    relies on
Chudy v. Merchant Law Group
, 2008 BCCA 484. In
Chudy
,
    the client sued his former solicitors alleging fraud, breach of trust and
    breach of fiduciary duty. Among other things, the client demanded the return of
    the funds paid pursuant to a contingency fee agreement. The client alleged the
    agreement was invalid for a variety of reasons, all of which involved
    misconduct by his former lawyers. The client maintained any fees paid were paid
    as a result of the lawyers deceit and breach of their fiduciary duty.

[40]

The majority
    of the British Columbia Court of Appeal concluded the contingency fee agreements
    were unenforceable primarily because the solicitor who entered into the
    agreements was not licensed to practice law. The majority also rejected the
    lawyers claim to a
quantum meruit
assessment of those fees. The court said,
    at para. 76:

The appellants arguments do not address the
    misconduct found by the trial judge or how that misconduct affects the
quantum
    meruit
claim. In this respect, the finding that the respondents would have
    taken the file elsewhere had they known the truth about Mr. Shaws professional
    status in the winter of 2002 takes on particular significance. The application
    seeks to recover fees it would not have earned but for Mr. Shaws deceit. His
    deceit clearly makes the
quantum meruit
claim untenable in equity.

[41]

I agree with the conclusion reached by the
    majority of the British Columbia Court of Appeal. On the findings of the trial
    judge, the fees paid by the client were paid directly as a consequence of the
    deceit perpetrated upon the clients by the lawyers. The client was entitled to
    recover any fees paid as damages flowing from the lawyers fraud. A
quantum
    meruit
claim could not mitigate those damages.

[42]

There is no suggestion in this record Mr. Lima
    would not have agreed to the terms of the CFA if he knew the agreement contravened
    s. 28.1(8) of the
Solicitors Act
. Further, on the application judges
    findings, Mr. Lima was not deceived or misled as to the terms of the CFA.
Chudy
does not assist Mr. Lima.

[43]

Both parties made some reference to
Hodge v.
    Neinstein
,
supra
. In that case, the Divisional Court and this
    court were concerned with whether s. 28.1(8) of the
Solicitors Act
could support a cause of action for the purposes of certification as a class
    action. Neither court opined on the consequences of non-compliance with s.
    28.1(8). The
Divisional Court did, however,
    indicate the court trying the action might order the return to the client of
    all funds paid under the unenforceable contingency fee agreement. The court
    went on to observe, if the funds were ordered returned, it would be incumbent
    on the lawyer to establish a valid
quantum meruit
claim for fees:
Hodge v. Neinstein
, at para. 8.

[44]

In summary, for the reasons set out above, the
    application judge correctly held the CFA was unenforceable. She properly concluded
    SKs fees should be assessed on a
quantum meruit
basis and correctly
    did not treat SKs deliberate breach of s. 28.1(8) of the
Solicitors Act
as a reason for eliminating or substantially discounting fees otherwise earned by
    SK.

[45]

On the application judges findings, the CFA
    reflected Mr. Limas agreement as to how SKs fees would be calculated. Specifically,
    the application judge was satisfied Mr. Lima understood the CFA included both a
    percentage fee component and a costs component. In coming to that conclusion, the
    application judge rejected Mr. Limas evidence to the contrary, stating at,
    para. 176:

I find that Mr. Lima was aware, from the time
    that he retained Singer Kwinter, that partial indemnity costs would be added to
    the solicitors percentage fees in the event of a settlement. There is,
    however, no evidence that Mr. Lima knew how partial indemnity costs would be
    calculated.

[46]

By all accounts, Mr. Lima is a successful and
    experienced business person. He negotiated the fee agreement with SK. The terms
    of the agreement negotiated by Mr. Lima provided valuable insight into his
    reasonable expectations as to the fees he would eventually have to pay. His
    reasonable expectations are a significant factor in determining reasonable
    value for the service provided. It must, however, be stressed that the terms of
    the agreement go only so far in shedding light on Mr. Limas reasonable expectations.
    Based on the CFA, Mr. Lima could not know how the costs component would be determined,
    or what the amount would be.

B.

did the application judge make errors in her
quantum
    meruit
analysis?

[47]

The application judges
quantum meruit
assessment tracked the individual factors identified in the case law. She
    clearly understood it was not her function to value the services according to
    the terms of the unenforceable CFA. Instead, she had to arrive at a
quantum
    meruit
assessment after weighing all of the relevant factors, including
    Mr. Limas reasonable expectations as to the fees he would be required to pay:
Lima
    v. Singer
, at para. 62.

[48]

In her detailed consideration of the factors
    relevant to a
quantum meruit
assessment, the application judge made a
    number of significant factual findings:

·

SK took appropriate and reasonable steps to
    advance Mr. Limas litigation (para. 85);

·

It would have been reasonable for SK to have
    spent roughly 300 billable hours on the file (paras. 86-88);

·

The file had significant legal complexity (para.
    100);

·

SK handled the litigation with demonstrable
    expertise and competence. They showed a high degree of skill, which favours a
    generous assessment of their fees (paras. 100, 124);

·

Mr. Limas claim that SK failed to follow his
    instructions on a specific matter was, like significant other parts of his
    evidence, false (paras. 121, 175);

·

SK assumed a substantial financial risk by
    committing to take Mr. Limas case all the way through trial without payment.
    There was a genuine risk the claim would be dismissed at trial. Had the claim
    failed at trial, SK would have been required to absorb losses in excess of
    $500,000 (paras. 133, 134, 141-43, 159);

·

The results achieved by SK were very good and
    excellent (para. 160);

·

Without SK extending the contingency fee
    agreement, Mr. Lima would not have been able to finance the litigation. On a
    normal fee-for-service basis, he would have been required to advance at least
    $100,000 before the case got to trial (para. 164); and

·

The amounts to be paid to Mr. Lima under the
    terms of the settlements were commensurate with the amounts he had been told he
    could expect to receive under those settlements before Mr. Lima signed the
    Minutes of Settlement and the Directions to Counsel (para. 186);

[49]

It is fair to say that neither SK nor Mr. Lima
    are happy with the application judges
quantum meruit
analysis. Both
    argue she was wrong about the level of success Mr. Lima realized through the
    settlements. SK argues the application judge understated the success by
    calculating SKs fees at the low end of the range suggested by one witness. Mr.
    Lima, however, submits the application judge mischaracterized what were, in
    reality, average results as very good or excellent.

[50]

I will not go through the arithmetic and other
    exercises performed by the parties in support of their very different
    interpretations of the results achieved by SK. The assessment of the level of
    success achieved, like other assessments (e.g. the level of risk assumed by the
    lawyers, the skill of the lawyers), requires a holistic assessment which places
    the results in the context of the entirety of the relevant circumstances. There
    is no doubt an element of subjectivity to some of the necessary assessments. It
    is sufficient, in my view, to hold that the application judges assessments
    were reasonable and available to her on the record before her. I would not
    interfere with any of her factual findings.

[51]

SK and Mr. Lima allege errors in respect of the
    treatment of the evidence of the witness, David Leblanc. Mr. Leblanc, an
    appraiser who had been retained by Mr. Lima during the litigation, was called
    as a witness on the assessment by Mr. Lima. In cross-examination, Mr. Leblanc
    was asked about his experience working with law firms in cases like this one
    and the kinds of fees charged by those law firms. Mr. Leblanc testified to his considerable
    experience in cases like this one. He indicated that, as a rough average,
    fees ranged from 25 to 35 percent of the recovery. Counsel for Mr. Lima
    objected to the answer, but the trial judge admitted it, indicating the witness
    was speaking only to his personal experience and not offering a broader
    opinion.

[52]

The application judge ultimately determined SK
    should receive a fee of 25 percent of the settlement funds, less disbursements
    (paras. 189-92). SK submits the 25 percent falls at the bottom of Mr. Leblancs
    range and, given the findings of the application judge, the assessment should
    have been closer to the 35 percent, at the top of the range. Mr. Lima maintains
    Mr. Leblancs evidence was inadmissible and should have been rejected outright.
    He claims Mr. Leblanc was not qualified to give expert evidence and the
    procedural requirements in respect of expert evidence were not followed.

[53]

The trial judge was entitled to consider Mr.
    Leblancs evidence, based on his personal experience, for what it was worth.
    His evidence constituted some evidence of fees charged in cases that were, at
    least, generically similar to this one.

[54]

I would also reject SKs submission in respect
    of Mr. Leblancs evidence. That submission proceeds on the faulty assumption
    that, because the application judge permitted Mr. Leblanc to testify about his
    personal experience, she was required to translate that evidence into a range
    of fees within which she must operate, for the purposes of determining SKs
    fees. Mr. Leblancs evidence did not set a general range, and the application
    judge did not use it for that purpose. His testimony simply provided some
    evidence of the level of contingency fees charged in similar cases in which he had
    been involved.

[55]

The application judge made no error in her
    treatment of Mr. Leblancs evidence. She did not arrive at 25 percent as an
    appropriate fee by relying on Mr. Leblancs evidence. She explained how she
    arrived at 25 percent as an appropriate fee, at para. 190:

This percentage takes into consideration the
    significant monetary value of the matters in issue and their importance to Mr.
    Lima, the very substantial amount of time reasonably expended by the solicitors
    on the file, the high degree of skill and competence demonstrated by the
    solicitors, the risk of non-payment assumed by the solicitors, the excellent
    results achieved by the solicitors, Mr. Limas ability to pay any amount that
    Mr. Lima could reasonably have expected to pay in the circumstances. It also takes
    into consideration the fact that the claims were settled prior to trial and
    prior to completing full trial preparation. Had the matter gone to trial with
    the same result, I would have found that a higher percentage than 25 percent
    was appropriate.

[56]

SK next submits the application judge wrongly
    took into account Mr. Limas ability to pay his legal fees as at the time of
    the assessment, some four years after the settlement. SK submits Mr. Limas
    ability to pay at the time of the retainer, or at the time of settlement, may
    have relevance in assessing his fees on a
quantum meruit
basis, but
    Mr. Limas financial circumstances years after the settlement cannot have any
    relevance.

[57]

There is merit to SKs submission. However,
    although the application judge made a brief reference to Mr. Limas difficult
    financial circumstances as of 2019 under the heading Ability of the Client to
    Pay (para. 163), I do not read Mr. Limas financial difficulties as having any
    impact on the application judges ultimate assessment. The application judge
    went no further than to indicate some reduction in SKs fees could provide
    financial help for Mr. Lima. The application judge did not endorse that
    approach or identify any reduction on account of Mr. Limas difficult financial
    circumstances.

[58]

SKs last submission challenging the
quantum
    meruit
assessment by the application judge arises out of the treatment of
    legal services provided by SK in respect of ancillary claims made by Mr. Limas
    creditors. These claims had some collateral connection to Mr. Limas claims
    against the insurer and the broker. Mr. Singer testified SK undertook to help Mr.
    Lima on these matters without charging him anything beyond the amounts payable
    under the CFA.

[59]

SK submits that its decision not to charge for
    services relating to ancillary matters was predicated on the existence of the
    CFA. SK contends, that because the CFA was unenforceable, it is entitled to a
quantum
    meruit
assessment of all of the services it provided.

[60]

SKs submission is bold, if nothing else. In
    effect, SK submits that it should not be bound by its agreement not to charge
    for certain legal services because the CFA, which it knew all along was
    unenforceable, is indeed unenforceable. In any event, Mr. Lima clearly had
    every reason to reasonably expect he would not be required to pay for services
    rendered in respect of the ancillary matters.

[61]

Even if the service in respect of these ancillary
    matters should have been taken into account in the
quantum meruit
assessment, the application record indicates that minimal work was done on
    these ancillary files. Assuming the work should have been taken into account, I
    see no reason to think the minimal additional work involved would have led to
    any different ultimate determination as to the appropriate fee.

[62]

Like SK, Mr. Lima raises several alleged errors
    in the application judges
quantum meruit
assessment. He argues, that
    without a valid contingency fee agreement, a
quantum meruit
assessment
    cannot be based on a percentage of the settlement amounts. He submits, if a
quantum
    meruit
assessment is based on the percentage of the settlement amounts, it
    is simply a contingency fee under another name. Contingency fees that do not
    comply with the
Solicitors Act
are not enforceable. Counsel contends
    the application judge could not avoid the prohibition against enforcing the CFA
    by, in effect, implementing a contingency fee agreement under the guise of a
quantum
    meruit
assessment.

[63]

The application judge did not base her
quantum
    meruit
assessment on a percentage of
    the settlement amounts. She based that assessment on her thorough review of the
    relevant factors and a careful blending of those factors. Her reasons clearly
    set out the path to her decision.

[64]

The application judge did ultimately determine
    that the assessment should be quantified as a percentage of the settlement
    amounts. I see no error in that mode of quantification, particularly where a
    significant part of the value of the legal services provided flowed from the
    lawyers assumption of a very real, significant financial risk, absent which
    the client could not have pursued the claim. Furthermore, an assessment based
    on a percentage of the settlement amounts was clearly the mode of
    quantification contemplated by both SK and Mr. Lima.

[65]

Mr. Lima next argues, that even if the
    application judge properly determined that
quantum meruit
fees could be awarded as a percentage of the
    settlement amounts, the motion judge erred in failing to deduct the amounts SK
    had attributed to costs ($170,000) from the settlement amounts before
    determining the fee based on 25 percent of the settlement amounts.

[66]

I would reject this argument. The amount SK
    had attributed to costs from the settlement for the purposes of their fee
    calculations under the CFA had no relevance to the application judges
quantum
    meruit
assessment. The application
    judge concluded the value of SKs legal services should be quantified as a
    percentage of the settlement amounts recovered for Mr. Lima. Whatever part of
    those amounts SK unilaterally attributed to costs, for the purposes of the CFA,
    had no relevance to the trial judges assessment of SKs fees on a
quantum
    meruit
basis.

[67]

Mr. Lima further submits that time spent on
    the file is the major factor in any
quantum meruit
assessment. He contends, that while the application
    judge referred to the hours spent, she largely ignored them in her assessment:
Lima
    v. Singer Kwinter
, at paras. 73-88.

[68]

Time spent on the file is obviously a relevant
    consideration. Under traditional retainers, it will, in all likelihood, be
    among the most important considerations. Its significance in any given case,
    however, depends on the interplay of all of the relevant factors.

[69]

The application judge decided that the nature of
    the retainer and the totality of the circumstances warranted giving prominence
    to factors other than the time spent on the file. She said, at para. 143:

Given the substantial risk assumed by Singer
    Kwinter, it would be inequitable to compensate the solicitors in this case on
    an hourly basis for the services they provided on a percentage contingency fee
    basis. The clients assume no financial hardship. Mr. Lima paid an initial retainer
    of only $5,000, but that amount was ultimately refunded to him. The clients
    benefitted from skilled legal representation at no costs to them with all the
    financial risk assumed by their solicitors.

[70]

I agree with the trial judges
    observations. They explain why the hours put in on the file were not as
    important in arriving at a
quantum meruit
assessment in this situation, as they would be in many others.

[71]

None of the arguments advanced by SK or Mr. Lima
    give cause to set aside or vary the application judges
quantum meruit
assessment.

C.

should the application judge have reviewed the
    disbursements and, if so, did she err in finding an inadvertent double-counting?

[72]

The parties had agreed well before the
    application commenced that SK was entitled to the disbursements listed in its
    accounts and need not prove those disbursements. The application proceeded on
    that basis. The disbursements went unchallenged and the documents relevant to
    the disbursements were left unexplored.

[73]

In her reasons, the application judge concluded
    SK had inadvertently included in its final bill disbursements in the amount of
    $16,100, that had already been claimed and paid in connection with the
    settlement with the broker:
Lima v. Singer Kwinter
, at paras. 57-60,
    191-95. The application judge had discovered the apparent double-counting on
    her own review of the records during the preparation of her reasons. Neither
    party had any opportunity to address the issue. They first became aware that
    disbursements were in issue when they read the application judges reasons.

[74]

The rules governing raising issues not properly
    pleaded are not necessarily applied as strictly in a proceeding involving an assessment
    of a lawyers fees, as they would be in regular civil litigation. I think it would
    have been appropriate for the application judge to raise the question of the possible
    double-counting of disbursements, even though the parties had agreed
    disbursements were not in issue. The application judge erred, however, in
    deciding that issue without giving the parties any opportunity to address the
    apparent double-counting she had discovered during her review of the evidence.

[75]

SK had no reason to think the amount of
    disbursements it claimed were challenged, or that the application judge would
    take issue with the amount claimed for disbursements. Fairness dictated that
    when the application judge had concerns about the amounts claimed for
    disbursements during her review of the record, she bring those concerns to the
    attention of the parties and give them an opportunity to call evidence and make
    submissions before she decided the issue.

[76]

The wisdom of allowing counsel an opportunity to
    address the issue before deciding it, is made clear on this record. The billing
    documents referred to by the application judge do not demonstrate any
    double-counting, although they do raise that distinct possibility. The
    submissions made in the facta filed in this court are not convincing either
    way. There may or may not have been an inadvertent double-counting. It may also
    be that the fees owing to SK as a result of the settlement with the insurance
    broker were understated in the same billing documents. Evidence and submissions
    based on that evidence would, in all likelihood, have resolved the issue one
    way or the other.

[77]

Normally, the onus would be on SK to prove the
    disbursements. However, when, as here, the parties had specifically agreed SK
    was entitled to the disbursements claimed and need not prove them, it would be
    unfair to deny SK disbursements for want of proof. Absent a clear and
    demonstrated double-counting, I would hold Mr. Lima to his agreement that SK
    was entitled to the disbursements claimed. The application judge erred in
    requiring SK to repay $16,100 to correct a double-counting of disbursements.

V

conclusion on the appeal and cross-appeal

[78]

I would allow SKs appeal to the extent that the
    judgment in favour of Mr. Lima is reduced by $16,100 from $59,843.63 to
    $43,743.63, plus pre-judgment interest.

[79]

Mr. Limas cross-appeal is dismissed.

VI

the costs appeals

[80]

The application judge awarded Mr. Lima costs on
    a partial indemnity basis up to November 13, 2018, the date on which SK served
    Mr. Lima with an Offer to Settle in the amount of $50,000. The application
    judge fixed those costs at $20,000.

[81]

The application judge treated the $50,000 offer
    as more favourable than the judgment obtained by Mr. Lima, as in her view the
    $16,100 attributable to the inadvertent double-counting of disbursements should
    be deducted from the judgment for the purposes of assessing costs, leaving a net
    judgment of $43,743.63. Based on this calculation, the November 13, 2018
    $50,000 offer exceeded the judgment. The application judge awarded SK partial
    indemnity costs after November 13, 2018. She fixed those costs at $17,000.
[6]

[82]

In the end, SK was required to pay Mr. Lima
    $3,000 in costs ($20,000 minus $17,000).

[83]

Both parties have alleged a myriad of errors by
    the application judge in her costs assessment. I do not propose to address each
    argument. Nor do I think the appropriate costs order in these circumstances
    should turn on the rules applicable to offers to settle. There are two fundamental
    facts which are largely determinative of the proper costs order on this
    application.

[84]

First, SK bears the responsibility for the need
    for an assessment. By entering into a fee agreement it knew to be contrary to
    the
Solicitors Act
and unenforceable without prior court approval, and
    by failing to inform the client of these facts, SK made the ultimate assessment
    of its fee virtually inevitable if and when the client learned the CFA was
    unenforceable. Not only was the assessment made inevitable by SKs conduct, I
    think its very combative tone was also very much a predictable consequence of
    SKs troubling lack of candor with Mr. Lima. Mr. Lima had little reason to
    accept at face value anything SK said about their fees by the time he commenced
    his application.

[85]

SKs misconduct in respect of the CFA made the
    assessment of its fees virtually inevitable and goes a long way to making SK
    responsible for the costs of that assessment, regardless of the outcome.

[86]

The second important fact, however, points in
    the opposite direction. Beginning about two months before the application
    hearing, SK made several
bona fides
attempts to settle the assessment.
    Mr. Lima made none. His only offer to settle proposed terms more suggestive of
    capitulation than settlement.

[87]

Mr. Lima bears significant responsibility for
    the four-day hearing that eventually ensued. Two of the offers he rejected were
    better, one was much better, than the amount Mr. Lima is due under the
    judgment, as varied by this court. While SKs actions are largely responsible
    for the bringing of the assessment application, Mr. Limas actions are
    primarily responsible for the four-day hearing.

[88]

In my view, a proper balance is achieved by
    awarding Mr. Lima his costs up to the point of the offer in November 2018 and
    denying either party any costs after that point.

[89]

The application judge fixed Mr. Limas costs at
    $20,000 up to November 2018. This amount may be somewhat high on a partial
    indemnity basis. However, Mr. Lima was entitled to something more than partial
    indemnity costs, given SKs misconduct.

[90]

I would grant Mr. Lima leave to appeal costs and
    vary the costs to $20,000, all inclusive. I would dismiss SKs motion for leave
    to appeal costs.

VII

costs of the appeal

[91]

SK was successful on the main appeal to the
    extent of reducing the judgment by $16,100. Mr. Lima was successful on the
    costs appeal to the extent of increasing the costs award to him by $17,000. In
    light of the similar and limited success of both parties, I would make no order
    as to costs on the appeal.

Released: DD JAN 26 2021

Doherty J.A.

I agree Alexandra Hoy J.A.

I agree M. Jamal J.A.

[1]
SK was retained by Mr. Lima and his common-law wife, Ms.
Martha
    Hildebrandt. I will refer to Mr. Lima as the client.

[2]
As the application judge points out, at para. 61, by treating the
    settlement amounts paid by the broker and insurer separately, contrary to the
    terms of the CFA, the total amount claimed for fees by SK exceeded the amount
    actually owed under the percentages set out in the CFA. The application judge
    did not quantify that amount, but it would appear to be about $15,000.

[3]

The CFA also did not comply with the applicable regulations:
    O. Reg. 195/04  Contingency Fee Agreements, ss. 2, 3.

[4]
The practice apparently changed after December 2015, when the
    Divisional Court certified a class action against a law firm. The class action
    raised common issues with respect to the enforceability of the contingency fee
    agreements and the clients entitlement to a return of any and all fees
    collected under contingency fee agreements that contravened the
Solicitors Act
:
Hodge
    v. Neinstein
, 2015 ONSC 7345 (Div. Ct.), affd in part, 2017 ONCA 294, leave to
    appeal to SCC dismissed, [2017] S.C.C.A. No. 341
.

[5]

In May 2018, legislation was enacted repealing ss. 28.1(8)
    and (9) of the
Solicitors Act
. That amendment
    has not yet been proclaimed in force.

[6]

The application judge erred in deducting the $16,100 from
    the judgment, for the purposes of determining whether SKs offer exceeded the
    judgment. However, that error was overtaken when this court varied the judgment
    to $43,743.63, the amount used by the trial judge in determining whether the
    offers exceeded the judgment.


COURT OF APPEAL FOR ONTARIO

CITATION: Lockhart v. Lockhart, 2021 ONCA
    329

DATE: 20210519

DOCKET: C68651

Huscroft, Paciocco and Jamal
    JJ.A.

BETWEEN

Barbara
    Lockhart personally and in her capacity as attorney for property
of June Lockhart

Applicant/Moving Party (Respondent)

and

Robert Lockhart personally and
    in his capacity as attorney for property
of June Lockhart, and June Lockhart

Respondent/Responding Party (Appellant)

Robert Lockhart, acting in person

Matthew Rendely and Bryan Gilmartin,
    for the respondent

Heard: May 13, 2021 by videoconference

On
    appeal from the order of Justice Bernadette Dietrich, of the Superior Court of
    Justice, dated August 12, 2020.

REASONS FOR DECISION

[1]

In 2018, the appellant, Robert Lockhart, arranged for his mother, June
    Lockhart, to execute a Power of Attorney for Property (POAP) and a Power of
    Attorney for Personal Care (POAPC) appointing him as her attorney. His
    sister, the respondent, Barbara Lockhart, brought a successful motion
    challenging the validity of those appointments. By order dated August 12, 2020,
    the POAP and POAPC were declared to be void
ab

initio

and of no force or effect. Pursuant to the
Health Care Consent Act
, 1996
, S.O. 1996, c. 2,
    Sched. A, the appellant and the respondent were also ordered to jointly make
    personal care, health care and treatment decisions on Junes behalf. Costs were
    awarded to the respondent in the amount of $55,000 inclusive of HST and
    disbursements.

[2]

The appellant appeals the declaration relating to the POAPC and the
Health Care Consent Act

order,
    as well as the costs order.

[3]

The appellant submits that the motion judge erred in law by misapplying
    the capacity test for a POAPC and by placing the onus on him to establish
    Junes capacity to grant the POAPC. We disagree. The motion judge clearly
    understood the test of capacity under the POAPC and applied it correctly.
    Moreover, we see no error in the motion judges ruling, pursuant to s. 2(3) of
    the
Substitute Decisions Act
, 1992
,
    S.O. 1992, c. 30, that the appellant had reasonable grounds to believe that
    June was incapable of entering into the POAPC, and therefore could not rely upon
    the presumption of capacity. That holding was supported by factual findings the
    motion judge was entitled to make relating to the manner in which the POAPC was
    executed, efforts by the appellant to avoid an assessment of Junes competence
    to execute a POAPC, and the significant delay by the appellant in disclosing
    that the POAPC was executed.

[4]

Nor do we accept the appellants submissions that the motion judge
    misapprehended or failed to consider evidence, committed palpable and
    overriding errors in making findings, or failed to give adequate reasons for
    her decision. We find no errors in her analysis, and her reasons for decision
    adequately address the evidence and issues before her.

[5]

Finally, we see no basis for interfering with the costs decision. Leave to
    appeal costs is denied.

[6]

We need not address the reasonable apprehension of bias claim initially
    advanced by the appellant, as he abandoned that ground of appeal for tactical
    reasons at the outset of the oral hearing.

[7]

The appeal is therefore dismissed. Costs in this appeal are awarded to
    the respondent in the amount of $30,000 inclusive of HST and disbursements.

Grant Huscroft J.A.

David M. Paciocco
    J.A.

M. Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Longueépée v. University of
    Waterloo, 2021 ONCA 53

DATE: 20210126

DOCKET: C67862

Strathy C.J.O., Lauwers and van
    Rensburg JJ.A.

BETWEEN

Roch Longueépée

Applicant (Respondent)

and

University of Waterloo
and
Human Rights Tribunal of Ontario

Respondents (
Appellant
/
Respondent
)

Frank Cesario and Amanda P. Cohen, for
    the appellant

David Baker and Laura Lepine, for the
    respondent Roch Longueépée

Brian A. Blumenthal and Jason Tam, for
    the respondent Human Rights Tribunal of Ontario

Heard: June 1 and 5, 2020 by video conference

On appeal from the order of the
    Divisional Court (David L. Corbett, Graeme Mew, and Frederick L. Myers JJ.),
    dated September 20, 2019, with reasons reported at 2019 ONSC 5465, 439 D.L.R.
    (4th) 326, allowing an application for judicial review of a decision of the
    Human Rights Tribunal of Ontario dated May 25, 2017, with reasons reported at
    2017 HRTO 575 and a reconsideration decision dated December 22, 2017, with
    reasons reported at 2017 HRTO 1698.

COSTS ENDORSEMENT

[1]

We have received and considered the written submissions on costs of the
    appeal.

[2]

The respondent Roch Longueépée seeks his partial indemnity costs of the
    appeal severally from the appellant University of Waterloo and from the Human
    Rights Tribunal of Ontario (the HRTO). He seeks approximately 25% of his
    costs from the HRTO. Both the University and the HRTO resist the claim for
    costs.

[3]

We disagree with the University that this is a case where no costs
    should be awarded as between itself and Mr. Longueépée because success was
    divided on the appeal. Mr. Longueépée was largely successful, and is entitled
    to his costs. The central issue on appeal  whether the HRTOs decision
    dismissing Mr. Longueépées human rights complaint was unreasonable  was
    determined against the University. The appeal was allowed only to the extent
    that the matter was sent back to the HRTO for a remedy.

[4]

The University does not take issue with the number of hours spent or work
    done by Mr. Longueépées counsel but argues that the partial indemnity rates
    claimed, when compared with his counsels actual rates, is too high; we agree
    and fix Mr. Longueépées costs against the University at $25,000 inclusive of
    disbursements and HST.

[5]

In seeking costs against the HRTO, Mr. Longueépée asserts that the appeal
    was made more complex by the positions taken by the HRTO: first, in
    unsuccessfully seeking a five-judge panel for the appeal, and second, in
    arguing that the correct standard of review of a decision of the HRTO post-
Vavilov
(
Canada (Minister of Citizenship and Immigration) v. Vavilov
,
    2019 SCC 65), was patent unreasonableness  an argument that was not made by
    the University. Although the HRTO did not take a position on the outcome of the
    appeal, it provided detailed written and oral submissions on the standard of
    review issue, to which Mr. Longueépée responded. Ultimately, this court
    concluded that it was unwise and unnecessary in this appeal to determine the
    issue because it should be decided in a case where the standard of review makes
    a difference to the outcome and where the parties with a stake in the dispute
    have joined issue on the point (at para. 56).

[6]

While we agree with the HRTOs submission that it did not raise the
    standard of review issue in bad faith or improperly, it is nevertheless
    appropriate in the context of this case for the HRTO to be responsible for a
    portion of Mr. Longueépées partial indemnity costs. The HRTOs decision
    to advance the standard of review argument necessarily expanded the scope of
    the appeal, and Mr. Longueépée had no choice but to respond.

[7]

We fix Mr. Longueépées costs against the HRTO in the sum of $7,500,
    inclusive of disbursements and HST, which amount reflects the proportion of
    time required to address the standard of review issue raised by the HRTO and to
    respond to the request for a five-judge panel.

[8]

Mr. Longueépée is therefore entitled to partial indemnity costs of $25,000
    from the University and $7,500 from the HRTO, both amounts inclusive of
    disbursements and HST.

G.R.
    Strathy C.J.O.

P.
    Lauwers J.A.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Louis v. Poitras, 2021 ONCA 49

DATE: 20210125

DOCKET: C68953

Watt,
    Lauwers and Hourigan JJ.A.

BETWEEN

Firma Louis and Marcdere Louis

Plaintiffs

(Moving
    Parties/Appellants)

and

Jacques
    Poitras and
Security National Insurance Company

Defendants

(
Responding Party/Respondent
)

AND BETWEEN

Firma Louis

Plaintiff

(Moving
    Party/Appellant)

and

TD Insurance
    Meloche Monnex and Security National Insurance Company

Defendants

(Responding
    Parties/Respondents)

Joseph Y. Obagi and
    Elizabeth A. Quigley, for the moving parties/appellants

Barry Marta, for
    the responding party/respondent Security National Insurance Company

Joseph Griffiths,
    for the responding parties/respondents TD Insurance Meloche Monnex and Security
    National Insurance Company

Heard: January 20, 2021, by video conference

On appeal from the order of the
    Divisional Court (Justices Thomas R. Lederer, Darla A. Wilson, and Jamie K.
    Trimble), dated November 16, 2020, with reasons reported at 2020 ONSC 6907, granting
    the appeal of the order of Justice Robert N. Beaudoin of the Superior Court of
    Justice, dated September 9, 2020, with reasons reported at 2020 ONSC 5301, 152
    O.R. (3d) 760.

Hourigan J.A.:

I.        Introduction

[1]

The civil justice system in Ontario faces an
    unprecedented crisis. Among other challenges, the COVID-19 pandemic has
    significantly reduced the availability of courtrooms. Trial courts have
    necessarily had to prioritize criminal and family law cases to the detriment of
    civil cases' timely resolution. Consequently, civil justice reform has shot to
    the forefront as a public policy imperative. Procedural reforms have been implemented
    to respond to the challenge, including increasing the use of electronic filing
    and electronic hearings. In addition, more fundamental changes in the operation
    of the civil justice system are being contemplated, such as the potential
    elimination of civil jury trials. Whether these reforms will come to pass
    remains to be seen. In the meantime, our courts are charged with the management
    of a civil justice system that is being overwhelmed.

[2]

Judges of the Superior Court work tirelessly to
    keep the civil justice system afloat. This sometimes means that they must find
    creative ways to ensure that parties get their day in court in a timely manner.
    In so doing, they respond to the Supreme Court's injunction in
Hryniak v. Mauldin
,
    2014 SCC 7, [2014] 1 S.C.R. 87, that no less than a cultural shift is required
    to preserve our civil justice system. In the cases at bar, the motion judge
    made such a creative order. He struck the jury notices and ordered that the
    cases proceed in three-week tranches. On appeal, the Divisional Court held that
    while the motion judge had the discretion to make that order, it was made on an
    insufficient evidentiary basis and was therefore arbitrary. It set aside the
    motion judges order and restored the jury notices.

[3]

There is no single province wide answer to the
    problems we face in delivering timely civil justice; local conditions will
    necessarily impact the choice of effective solutions. However, what must remain
    consistent across the province is that motion and trial judges have the
    discretion to respond to local conditions to ensure the timely delivery of
    justice. It is a necessary corollary to that proposition that intermediate
    courts of appeal should not lightly second guess those discretionary decisions.
    In the cases at bar, the Divisional Court did just that under the guise of a
    finding regarding the evidentiary record. That finding is unsupportable. The
    motion judge had an abundance of evidence to justify his order.

[4]

More fundamentally, the Divisional Courts
    approach is at odds with the current reality faced by our courts. Superior
    Court judges are acutely aware of local conditions, and it is counterproductive
    for intermediate appeal courts to interfere unnecessarily. It is only in rare
    situations that an appellate court should overrule discretionary case
    management decisions.  This was not such a rare case. On the contrary, this was
    a situation where the motion judges creativity should have been the subject of
    approbation, not condemnation. Therefore, for the reasons I will more fully
    detail below, I would grant leave to appeal, set aside the Divisional Courts
    order, allow the appeal and restore the motion judges order.

II.       Facts

[5]

The appellants were involved in a motor vehicle
    collision in Ottawa on May 9, 2013. Two actions resulted: a tort action and an
    accident benefits action. Jury notices were filed by the defendants in each proceeding,
    which were ordered tried together in a 10-week jury trial commencing April 20,
    2020.

[6]

COVID-19 then intervened, and the trial date was
    lost. All parties were ready for trial.  But for the pandemic, the trial of
    both actions would have proceeded in April 2020.

[7]

In July 2020, the plaintiff moved for an order
    striking the jury notices in both actions, which the motion judge granted.
    Civil jury trials were not being scheduled at that time in Ottawa, but
    judge-alone trials of three weeks or less were available within the following
    six months. Consequently, the motion judge ordered the trials to proceed in
    three-week tranches, beginning in February 2021.

[8]

The defendant insurers appealed the motion
    judges order to the Divisional Court. That court allowed the appeal, reinstating
    the jury notices in both actions. The Divisional Court concluded that the
    motion judges decision to strike the jury notices was arbitrary because it was
    attributed solely to the presence of delay but lacked sufficient evidence of actual
    prejudice to the parties.

[9]

The Divisional Court summarized its reasoning in
    overturning the motion judge at para. 2 of its reasons:

The decision of the motion judge to strike the
    jury notice was attributed, by him, solely to the presence of delay without any
    reliance on evidence that explained the anticipated length of the delay, the
    circumstances that might cause it to be extended or ameliorated or its impact
    on the administration of justice. There was nothing to which he referred that
    considered the particular circumstances. In the absence of such information,
    the decision was arbitrary. The recognition of the presence of delay, without
    more, is not enough.

[10]

The plaintiffs moved to stay the Divisional
    Courts order pending appeal to this court. Brown J.A. granted the stay, finding
    strong grounds to suggest the Divisional Court misapprehended relevant facts,
    particularly regarding uncertainty in Ottawa as to when or how a jury trial
    might proceed in light of the pandemic. Further, Brown J.A. noted that pandemic-related
    delay affecting civil jury trial scheduling has been raised in several cases
    and may require consideration by this court. Upon granting the stay, Brown J.A.
    ordered that this motion for leave to appeal be expedited and heard together
    with the appeal if the panel entertains submissions on the appeal, as we did.

III.      Analysis

(a)

Leave to Appeal

[11]

The test on a motion for leave to appeal in
    these circumstances is found in
Re Sault Dock Co. Ltd. and City of Sault
    Ste. Marie,
[1973] 2 O.R. 479 (C.A.) at pp. 480-81. These appeals fall
    into the category of special circumstances:

The Court will of course consider also cases
    where special circumstances would make the matter sought to be brought before
    the Court
a matter of public importance or would appear
    to require that in the interest of justice leave should be granted
such
    as the introduction of new evidence,
obvious
    misapprehension of the Divisional Court of the relevant facts
or a clear
    departure from the established principles of law resulting in a miscarriage of
    justice.

[12]

The plaintiffs submit that there are two grounds
    upon which leave to appeal ought to be granted: (i) the Divisional Court decision
    discloses an obvious misapprehension of the relevant facts considered by the motion
    judge in granting the order to strike the jury notices; and (ii) there is a
    serious question raised by this appeal that engages a matter of public
    importance that this court should consider in the interests of justice.

[13]

I am satisfied that the Divisional Courts analysis
    shows an obvious misapprehension of the relevant facts. The details of these
    patent errors will be considered in the analysis of the merits of the proposed
    appeal. For the purposes of the motion for leave to appeal, I note that the
    Divisional Court made an obvious error in concluding that the motion judge made
    his decision without regard to evidence of the local conditions as they
    impacted these actions. As I will explain, the motion judge was explicit
    regarding the evidence he was relying on in making that order, evidence that went
    to the specifics of the situation then extant regarding jury trials in Ottawa
    and its impact on these proceedings.

[14]

I also have no hesitation in finding that this appeal
    raises a matter of public importance regarding the administration of civil
    justice. Guidance is necessary regarding civil case management during the
    current pandemic crisis. When I say guidance, I do not mean that this court
    should provide advice to trial courts on how to manage their civil lists. I
    have every confidence that they know how to do so in the context of local
    conditions. What I mean is that guidance is necessary for intermediate courts
    of appeal to remind them of the minimal role they play in reviewing discretionary
    case management decisions.

[15]

Given the foregoing, I would grant leave to
    appeal. Simply put, the decision below is flawed on its face, and the approach
    taken by the Divisional Court must be discouraged if courts are going to properly
    manage their civil lists during the pandemic and beyond.

(b)

Merits of the Appeal

[16]

The Divisional Court's reasons and the reasons
    of the motion judge are like ships passing in the night. The Divisional Court
    makes a series of findings in reaching its conclusion that the decision of the
    motion judge is arbitrary. In so doing, it purports to undertake a detailed
    analysis of the motion judge's reasons to demonstrate that there was an
    insufficient evidentiary foundation for the decision to strike the jury notices.
    That analysis does not withstand scrutiny.

[17]

It is well settled in the jurisprudence that the
    substantive right to a civil jury trial is qualified because a partys
    entitlement to a jury trial is subject to the power of the court to order that
    the action proceed without a jury. While a court should not interfere with the
    right to a jury trial in a civil case without just cause or compelling reasons,
    a judge considering a motion to strike a jury notice has a broad discretion to determine
    the mode of trial. This court described the role of the court this way in
Cowles
    v. Balac
, (2006) 83 O.R. (3d) 660 (C.A.), at paras. 38-39, leave to appeal
    refused, [2006] S.C.C.A. No. 496:

While that test confers a rather broad
    discretion on a court confronted with such a motion, it is nonetheless a
    sensible test. After all, the object of a civil trial is to provide justice
    between the parties, nothing more. It makes sense that neither party should
    have an unfettered right to determine the mode of trial. Rather, the court,
    which plays the role of impartial arbiter, should, when a disagreement arises,
    have the power to determine whether justice to the parties will be better
    served by trying a case with or without a jury.

The application of this test should not
    diminish the important role that juries play in the administration of civil
    justice. Experience shows that juries are able to deal with a wide variety of
    cases and to render fair and just results. The test, however, recognizes that
    the paramount objective of the civil justice system is to provide the means by
    which a dispute between parties can be resolved in the most just manner
    possible.

[18]

It is equally well settled that an appellate
    court reviewing a decision to strike a jury notice has a very limited scope of
    review. It may only interfere where the decision to strike was exercised arbitrarily
    or capriciously or was based upon a wrong or inapplicable principle of law:
Kostopoulos
    v. Jesshope
(1985), 50 O.R. (2d) 54 (C.A.), at pp. 69-70, leave to appeal
    refused, [1985] S.C.C.A. No. 93.

[19]

Given the Divisional Courts reasoning in this
    case, the admonition from this court in
Cowles
regarding deference
    bears repeating. The court warned that an appeal court should not merely pay
    lip service to the concept of deference and then proceed to substitute its own
    view as to what the proper result should be for that of the lower court.
    Interference is only justified when the lower court is shown to have committed
    the type of error referred to in
Kostopoulos
:
Cowles
, at
    para. 42.

[20]

With that comment in mind, I turn to a review of
    the Divisional Courts reasons. There is considerable overlap in the Divisional
    Courts analysis, but certain key findings emerge from the courts reasons. In
    my view, all of these findings are erroneous and reflect a fundamental
    misunderstanding of the role of appellate courts in considering appeals from orders
    to strike jury notices.

[21]

First, the court found that delay alone is not
    enough to strike a jury notice. According to the Divisional Court, there must
    also be proof of some additional prejudice before a court is justified in
    striking a jury notice. Thus, the court concluded, at para. 24, that in these
    cases, there was no just cause or cogent reason to interfere with the statutory
    right of the defendants to seek trial by jury.  I disagree.

[22]

The accident in this case occurred over seven
    years ago. There was no indication when a civil jury trial might be held in
    Ottawa at the time of the motion. Accordingly, the motion judge found that the
    real and substantial prejudice arises simply by reason of delay: at para. 46.
    I agree with the statement of Brown J.A. in his decision on the stay motion
    that this was a legally permissible finding and that delay in obtaining a date
    for a civil jury trial can, by itself, constitute prejudice and justify striking
    out a jury notice. As Brown J.A. notes, the whole
raison dêtre
of
    the civil justice system, as captured in r. 1.04(1), is that courts will work
    to provide the most expeditiousdetermination of every civil proceeding on its
    merits:
Louis v. Poitras
, 2020 ONCA 815, at para. 33.

[23]

This case neatly captures the competing
    approaches to the crisis faced by the civil justice system. The motion judge
    approached this case practically, cognizant of his responsibility to the
    parties and the system to move cases forward and offer timely service. By
    contrast, the Divisional Court took the wrong approach to the new reality of
    the civil justice system. Implicit in its reasoning is that delay is to be
    expected and tolerated; it is the ordinary course. That is precisely the type
    of complacency that has led to the civil justice systems systemic delay and was
    subject to criticism by the Supreme Court of Canada in
Hryniak
.

[24]

Second, the Divisional Court expanded the scope
    of its analysis beyond the interests of the parties and considered the broader
    context of the civil justice system during the pandemic. The court correctly recognized,
    at paras. 26-30, that the right to a jury trial is subject to the overriding
    interests of the administration of justice and issues of practicality: see
Girao
    v. Cunningham
, 2020 ONCA 260, 2 C.C.L.I. (6th) 15, at para. 171;
MacLeod
    v. Canadian Road Management Company,
2018 ONSC 2186, 79 C.C.L.I. (5th)
    314, at para. 29;
Belton v. Spencer
, 2020 ONSC 5327 at paras. 13-20, stay
    denied, 2020 ONCA 623.

[25]

There is no debate that in considering a request
    to strike a jury notice, the court may look beyond the parties interests and
    consider the broader interests of the administration of justice. While the
    Divisional Court purported to consider the administration of justice, it ignored
    the realities of the current situation. In its analysis, the importance of the
    administration of justice was almost totally discounted.

[26]

A proper consideration of the administration of
    justice would recognize that local judges are best positioned to understand the
    availability of resources and the appropriate approach in the circumstances of
    a given case. Judicial responses to the pandemic and court resources
    availability vary across the province:
Passero v. Doornkempt
, 2020
    ONSC 6384, at para. 49. That does not mean that different approaches reflect a
    conflict in the case law. Rather, they reflect the due exercise of judicial
    discretion in differing local circumstances:
Belton

v. Spencer
,
    2020 ONCA 623, at para. 75.  An appeal court must respect the reasonable
    exercise of this discretion. It impedes the proper administration of justice by
    second-guessing the local courts discretionary case management decisions under
    the pretext of an arbitrariness analysis.

[27]

Third, the Divisional Court undertook a
    comparison of the circumstances of the cases at bar to other cases where the
    pandemic was considered in the context of a motion to strike a jury notice. It concluded
    that while the courts in those cases were justified in striking a jury notice, there
    was an insufficient evidentiary basis here. The Divisional Court concluded, at
    para. 55, that the [motion] judge relied only on the fact of delay without any
    evidence applicable to the specific situation. It also found at para. 66:

The mere statement of delay or the implication
    of its presence is not enough. There must be some evidence or other indication
    that contributes to prejudice to the parties or concerns for the administration
    of justice. In this case the judge relied on delay removed from the specific
    concerns of the parties.

[28]

The Divisional Court went on to distinguish
    other decisions regarding striking jury notices like
Belton, MacDougall v.
    Sisley,
2020 ONSC 6632

and
Higashi v. Chiarot
, 2020 ONSC
    5523

on the basis that in those cases, the motion judges had evidence
    regarding the particular circumstances of the local civil list such as
    directives issued by the court and information provided to the court by the
    Regional Senior Judge.

[29]

The Divisional Courts analysis of
Higashi
,
    another Ottawa case, is particularly illuminating. There the motion judge,
    Roger J., made inquiries of the Regional Senior Judge, court staff, and the
    judge in charge of civil litigation in Ottawa regarding the status of the civil
    list. He took judicial notice that he did not know when a civil jury trial
    could proceed and that it was doubtful that criminal courtrooms would be
    available for civil jury trials.

[30]

The Divisional Court accepted that the court in
Higashi
had a sufficient evidentiary foundation to make an order striking the jury
    notice. It contrasted the evidence available in
Higashi
with these
    cases and concluded that the motion judges decision was so lacking an
    evidentiary basis that it was arbitrary.  With respect, this analysis is deeply
    flawed and sets the bar regarding what constitutes an arbitrary decision at a
    dangerously low level, a level that can be easily utilized to strip a motion
    judge of his or her discretion.

[31]

I start by noting that in his reasons, the
    motion judge referenced the decision in
Higashi
,
which
    had been released
eight
days earlier. This reference
    is ignored by the Divisional Court. Left unanswered by its reasons is why the
    motion judge could not rely on the information from Roger J. regarding the
    status of the availability of civil jury trials in Ottawa. Is it suggested that
    this information was reliable in
Higashi
but unreliable in these cases?
    Was the motion judge obliged to undertake his own investigation?  How exactly
    can reliance on very recent information in a judicial colleagues decision
    qualify as an arbitrary exercise of discretion?

[32]

The flaws in the Divisional Courts analysis
    become even more apparent when the motion judges reasons are properly
    analyzed. It is plain from his reasons that he undertook a detailed analysis of
    Ottawa's situation and reached his own conclusion regarding the status of civil
    jury trials in the city.  The motion judge noted that in June 2020, formal
    notice was given to the Ottawa bar that civil jury trials would not proceed
    until January 2021 at the earliest. He observed that only a limited number of
    courtrooms in Ottawa had been retrofitted with plexiglass dividers at the time
    of the motion, and no plan had been finalized to accommodate jury trials.
    Further, the conversion of a jury assembly room into a jury deliberation room
    in the Ottawa courthouse would permit only a single jury trial to proceed at
    any given time.

[33]

Thus, contrary to the Divisional Courts
    finding, the motion judge turned his mind to the local conditions and made an
    unassailable finding that it was unknown when or how a jury trial might be
    heard in these matters. I concur with the comment of Brown J.A. that this
    finding was correct at the time of the motion; correct at the time of the
    Divisional Court hearing; and correct today.
Louis
, at para. 29. In
    the circumstances of these cases, including that the accident took place over
    seven years ago, the motion judge was entirely justified in striking the jury
    notices.

[34]

Finally, I note the respondent Security National
    Insurance submission that since the release of the Divisional Court's decision,
    the tortfeasor defendant settled with the plaintiffs. I am not satisfied that
    this settlement changes the analysis in any meaningful way.

[35]

In summary, the Divisional Court erred in its
    analysis. Its conclusion that the motion judges decision was arbitrary finds
    no support in the motion judges reasons or the record before him. The appeal
    must be allowed on this basis.

IV.     Disposition

[36]

I would grant leave to appeal, allow the appeal,
    set aside the judgment of the Divisional Court, and restore the order of the
    motion judge.

[37]

Regarding the costs of the appeal, the parties
    requested that they be given until January 29, 2021, to attempt to reach an
    agreement on costs. I would grant that request and order that, in the absence
    of an agreement, the appellants have until February 5, 2021, to serve and file
    their costs submissions, the respondents have until February 12, 2021, to serve
    and file their responding submissions, and any reply submissions be served and
    filed by February 17, 2021.

Released: D.W. January 25, 2021

C.W. Hourigan J.A.

I Agree. David Watt J.A.

I Agree. P. Lauwers J.A.