Botan (Botan Law Office) v. St. Amand, 2011 ABQB 774

Court of Queen ’ s Bench of Alberta Citation: Botan (Botan Law Office) v. St. Amand, 2011 ABQB 774 Date: 20111208 Docket: 1003 19856 Registry: Edmonton Between: Allan Mitchell Glen Botan operating as Botan Law Office Plaintiff - and - Brian Gerrard St. Amand Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ Introduction [ 1 ] The Plaintiff Allan Botan is a lawyer practising in the area of HCV tainted blood claims.

He seeks an order paying him a fee of $58,633.33 on account of a contingency fee agreement (“the Agreement”) with the Defendant Brian St. Amand. For reasons which follow I find Botan is entitled to compensation not on the basis of a percentage set out in the Agreement but rather on an hourly basis. [ 2 ] The parties conducted a one-day trial with the following issues to be decided:

a. Whether the contingency agreement between the parties and the account of the plaintiff to the defendant are valid; b. If on the trial of this matter the Court holds that the contingency agreement is valid, whether the fee charged by the plaintiff to the defendant under the contingency agreement is fair and reasonable; c. If on the trial of this matter the Court holds that the contingency agreement is invalid, what is a fair and reasonable fee on a quantum meruit basis; d. Whether the Plaintiff is entitled to any further damages. Background [ 3 ] Botan self-represented at trial.

He gave lengthy, uncontradicted but also unsupported evidence regarding his expertise and experience in advancing claims under various HCV tainted blood compensation regimes in Canada over the past 12 years. Of particular relevance in St. Amand’s case is the federal government’s 2007 compensation plan for individuals infected before January 1, 1986 and after July 31, 1990.

Botan’s evidence includes reference to the following ‘facts and figures’: a. that to his knowledge he is the only lawyer in Canada specializing in HCV tainted blood claims; b. that over the years he has spent “hundreds and thousands of dollars” advertising his services to potential HCV tainted blood clients, approximately $150,000 in 2009/2010 alone; c. that approximately 95% of his HCV tainted blood clients were unaware of HCV compensation plans before they saw or heard Botan’s advertisements; d. that in his experience with claims and appeals, fewer than 1/3 of submitted HCV tainted blood claims are successful; that based on his own experience and analysis of certain web-based information the total HCV tainted blood claim rejection rate is in the order of 70%; and e. that he encounters “huge” expenses and write-offs in his practice each year on account of advancing HCV tainted blood claims. [ 4 ] Botan acknowledges that St.

Amand’s claim “…was one of those few that had no issues”. He maintains that was an unknown however at the outset of the Agreement. [ 5 ] The parties agree that in St. Amand’s case it was necessary to prove three things: a. that St. Amand had HCV; b. that he was transfused with at least three units of blood sometime between January 1, 1958 and September 28, 1998 (and was therefore entitled to rely on a ‘tracing’ protocol); and

c. that his HCV infection came about from that transfusion, and not from certain other ‘risky’ activities. [ 6 ] If approved, St. Amand’s claim would be quantified simply by reference to a

schedule correlating year of birth with “disease level”. [ 7 ] St. Amand was first in touch with Botan on March 25, 2008 by telephone. The two discussed St. Amand’s potential claim. St. Amand advised he had received blood transfusions in 1977. He denied any other risk factors. He had been told he had HCV. Given these bare facts, Botan told St. Amand he had a potential claim. Botan sent a letter of March 25, 2008 to St. Amand including amongst other things his form of contingency fee agreement. The Agreement includes a 25% contingent fee of any claim proceeds.

Paragraph 12 of the Agreement further provides: If I [the client] choose to terminate your [the lawyer’s] services for any reason whatsoever, you shall be entitled to fair and reasonable compensation for your services up to the time of the termination, based on an hourly rate of $250.00 per hour unless at the time of termination an application for compensation have [sic] been submitted by you which is ultimately successful in obtaining proceeds, in which case your reasonable compensation shall be 25% of any claim proceeds so obtained. [ 8 ] There is no dispute that Botan did not serve the Agreement on St.

Amand strictly in compliance with former Rule 616 of the Alberta Rules of Court , or likewise of course that Botan swore no affidavit of service in that regard. Nor is it disputed that no witness affidavit of execution is attached to the Agreement. [ 9 ] St. Amand testified that within days of receiving Botan’s correspondence in late March or early April, 2008, he signed the Agreement, completed a questionnaire and some authorizations, then returned them to Botan by mail. St. Amand dated the authorizations May 16, 2008. [ 10 ] Botan testified St.

Amand’s completed forms arrived in his office on July 16, 2008, some three-plus months after they were first provided. [ 11 ] On July 16, 2008 Botan emailed St. Amand to confirm he had received the forms. He immediately went about requesting records from Hay River Community Health Board in connection with St. Amand’s July 2, 1977 treatment at hospital in Hay River after a serious car accident. [ 12 ] The Hay River hospital records were received in Botan’s office around August 8, 2008. The records confirm blood donations in 1997.

They were not from a Red Cross blood bank but rather from individuals in the community. St. Amand testified he was told he was transfused with at least three units of this donated blood. Botan suggested in cross examination the Hay River records showed only that donated blood was available for transfusion. He repeatedly denied at trial that he relied on the hospital records to establish actual transfusions. Botan however appeared to have fewer doubts about actual transfusions when he communicated with St. Amand in emails of September 17, 2008 and December 18, 2008.

In the first email he wrote: “I have your hospital records and they say you were transfused ...” In the second email he wrote: “... all is good. [The hospital records] list 3 units being given.” [ 13 ] Some further questions arose at trial whether the transfusions, not of blood collected by Red Cross, were capable of being ‘traced back’ as part of the HCV tainted blood claims process. It was agreed however that with proof of these transfusions in 1977, St.

Amand would benefit from a protocol which deemed the blood tainted unless the HCV compensation plan administrator (“the Administrator”) could prove otherwise. [ 14 ] In his December 18, 2008 email Botan also advised St. Amand he would prepare forms to be forwarded to him for his signature. The forms were never provided. [ 15 ] On July 9, 2009 Botan and St. Amand met at Botan’s office in Edmonton. It was their first and only face to face meeting. Botan presented forms to be signed by St. Amand. They were the same forms he had promised to send by email almost seven months earlier.

They were forms Botan downloaded from the Administrator’s web site, then merged with client information. One form, entitled “Form 2 - Treating Physician Form”, was to be forwarded to St. Amand’s physician Dr. Bailey for his signature. The Form 2 was indeed

mailed to Dr. Bailey’s office July 10, 2009. [ 16 ] Much conflicting evidence was before the court with regard to the Form 2. The parties agreed the form was completed and signed by Dr. Bailey and dated December 14, 2009. They agreed Dr. Bailey prepared a covering letter addressed to Botan dated December 16, 2009. [ 17 ] However, Botan testified the originally-signed Form 2 was received by him more than five months later, on June 1, 2010. It was couriered to him on that date after he checked with Dr. Bailey’s office for its whereabouts.

Botan testified his memory for these events was aided by his notes to file, kept as a series of electronic diary entries. An entry of May 19, 2010 states: “10:33 AM - called dr bailey for form 2 status”. An entry of May 31, 2010 states: “10:59 AM - called bailey for original form 2”. Finally an entry of June 1, 2010 states: “7:49 AM - sent in forms, will send in Dr. Bailey’s when it gets here.” [ 18 ] There is no diary entry however indicating Botan’s actual receipt of an original inked Form 2. Nor is there an entry that he sent the original inked Form 2 to the Administrator.

However, Botan testified that he recalled contacting Dr. Bailey’s office just after 9 a.m. on June 1, 2010, arranging to have a courier pick up the original Form 2, confirming receipt of an “inked” original, then sending the completed package to the Administrator. Dr. Bailey charged Botan nothing for the Form 2 preparation. No covering letter from Dr. Bailey’s office was on Botan’s file. [ 19 ] No one disputes that Botan delivered a claim application to the Administrator on June 1, 2010, receipt of which was acknowledged in a letter from the Administrator received June 21, 2010. [ 20 ] St.

Amand’s evidence is starkly different as to the Form 2 and Dr. Bailey’s involvement. St. Amand testified he spoke with Botan by telephone May 18, 2010. His last contact with Botan had been some 10 months earlier, in early July, 2009. St. Amand had an appointment with Dr. Bailey on May 19, 2010. On May 18, 2010 he called Botan in advance of that appointment to seek an update regarding the claim. St.

Amand testified Botan advised him on May 18, 2010 that all forms had been submitted and that he awaited results of a “blood trace-back” from the Administrator. (It was agreed the trace back procedure is the last step in the claims process and is undertaken by the Administrator only once all other forms are received by him.) [ 21 ] St. Amand further testified that on May 19, 2010 he attended at Dr. Bailey’s office. He learned the Form 2 and covering letter had been waiting for Botan’s pick-up since December 16, 2009. St. Amand testified he asked an assistant in Dr.

Bailey’s office to allow him to take the signed form away. He was eventually permitted to do so. He paid a $100 fee for its preparation. He was unable to recall at trial whether the Form 2 he took away was an “inked” original. [ 22 ] Neither Dr. Bailey, nor anyone from his office, was called at trial. [ 23 ] St. Amand testified that later on May 19, 2010 he telephoned Botan. He expressed dismay at the May 18/19, 2010 turn of events. He accused Botan of lying to him on May 18, 2010 about the state of his application.

He testified that he unequivocally terminated the Agreement at that time, and indicated he would carry on with the claim on his own. [ 24 ] Although his diary notes are silent on the following points, Botan testified he did take a call from St. Amand but on May 19, 2010. He denies any May 18, 2010 call took place. And he flatly denies St. Amand ever said before June 1, 2010 that he wished to terminate the Agreement. He maintains that in the May 19, 2010 phone call St. Amand was simply looking for a status update. In response he told St. Amand he was still waiting for Dr. Bailey’s Form 2.

He recalled some discussion about the June 30, 2010 limitation for the claim and St. Amand’s concern about that impending deadline.

[ 25 ] Botan then gave the following evidence in cross examination: Q: When Mr. St. Amand called you to check on the status of his file, whether it be the 18th or the 19th, did you tell him that everything had been done and you were just waiting for the trace back report? A: No. Q: Are you certain? A: I’m pretty positive. Q: Did you ever tell him anything to that effect? A: Not to my recollection. Q: Is that, that you wouldn’t say that because the trace back couldn’t be started until all the documents had been filed? A: No, because it wasn’t true.

If I had his claim, if I had the Amicus [diary] page open, I’m looking at it, and the Amicus page tells me I’m waiting for a Form 2, I don’t know why I would say that to anybody. Q: I’m sorry could you say that again, I didn’t hear you. A: Well, if the client calls me, I have my computer on, it’s right by my phone, I look, I call up the client’s file on Amicus, I look at my Amicus to give him a status report. Q: I’m simply asking you whether on May 18 you told Mr. St. Amand that you were waiting on the trace back report? A: Um, I don’t recall. [ 26 ] Botan asked St.

Amand no questions in cross examination regarding the May 19, 2010 conversation or the alleged May 18, 2010 phone call. [ 27 ] After the events of May 18/19, 2010, and mindful of the June 30, 2010 limitation period, St. Amand testified he was then in touch personally with the Administrator. He obtained and completed a booklet of forms to complete. He couriered those forms, together with his copy of Dr. Bailey’s letter, to the Administrator on June 25, 2010. He had requested medical records from Hay River and faxed them to the Administrator shortly after the forms were couriered.

In due course his claim was acknowledged by the Administrator, then approved in a letter of October 7, 2010 in the sum of $234,533. [ 28 ] Botan testified that he next dealt with St. Amand in a telephone call of July 8, 2010. He testified St. Amand called him. He was clearly angry. He was concerned Botan had never picked up Dr. Bailey’s Form 2. He expressed doubts whether he would continue to use Botan’s services.

[ 29 ] Botan’s diary note states as follows: July 8 10 - 1:05 PM - client called and pissed off - Baily’s office said I didn’t have tran2 picked up so he did it himself and sent it. now pissed off at Baily that he did send me the Tran 2 back in May and filed all the forms already, not sure if he will still use me - but nothing more to do? He will talke to Baily’s office and then get back to me. [ 30 ] Not included in the July 8, 2010 diary note is Botan’s further evidence at trial that St. Amand told him he had called the Administrator on June 21, 2010 and was told no claim had yet been submitted.

Botan testified he was “stunned” by this information. He started to suspect he was being “set up”. [ 31 ] St. Amand did not address the alleged July 8, 2010 phone call in his own evidence. [ 32 ] Exhibited at trial was an email string apparently starting with Botan’s July 20, 2010 inquiry of a staff member with the Administrator’s office. The email was tendered as evidence amongst other things to contradict St. Amand’s testimony that he had contacted the Administrator’s office before the June 30, 2010 deadline, and was told that no claim had been submitted on his behalf.

On its face the July 20, 2010 email states “There is no indication of the claimant calling about this file in June.” [ 33 ] It is not disputed that the email is hearsay. No one was called at trial from the Administrator. The parties agreed at the outset of trial that the court should weigh the value of this hearsay evidence as against other evidence tendered and/or heard at trial. [ 34 ] What then follows chronologically in the evidence is a series of correspondence in mid-October/early November, 2010 in which Botan asserts his position that he is entitled to payment and seeks to have St.

Amand acknowledge his position in that regard, failing which Botan stated he will commence an action against him for his fees and disbursements. [ 35 ] Botan wrote to St. Amand on October 12, 2010, again on October 14, October 20, and finally November 2, 2010. St. Amand responded to this series of letters for the first time in his own letter of November 7, 2010. In that letter he explained he had not responded earlier by reason of the after-effects of Hepatitis C treatments then being undertaken.

He offered to pay Botan for his services up to the point he terminated the Agreement in May, 2010. [ 36 ] Botan countered the same day in a lengthy and aggressive letter challenging St. Amand’s position. Botan enclosed a statement of account dated November 7, 2010 for 25% of the then-expected $224,443 settlement. No disbursements were claimed as none had been incurred. The letter concluded with the comment: Brian, don’t make this difficult for the both of us. I’ve been a lawyer for 27 years and no client has ever successfully stiffed me on a bill. [ 37 ] There being no further reply from St.

Amand, Botan followed up with service of a Statement of Claim on November 23, 2010. [ 38 ] As of the date of Botan’s account St. Amand had yet to receive funds from the Administrator. [ 39 ] In cross examination Botan acknowledged a number of errors in correspondence which he characterized a typographical mistakes. In the letter to St. Amand of October 12, 2010 he refers to “…the entire set of claim forms [going out to the Administrator] two months earlier in May of 2010”. A similar error appears in Botan’s email of July 20, 2010 to the Administrator. In that email Botan refers to the Form 2 filled out by Dr.

Bailey in May and sent to Botan’s office. In cross examination Botan stated he intended to refer to the month of June, not May. A similar error appears in Botan’s diary entry of July 8, 2010, in which he notes Dr. Bailey “…did send me the Tran 2 back in May …” Finally, Botan was cross examined on his November 7, 2010 letter to St. Amand which refers to a telephone call between them on May 18, 2010. In cross examination Botan testified the May 18 reference was incorrect. He stated the correct date

should have been May 19, 2010. Issues [ 40 ] The following issues are to be determined: a. Whether the contingency agreement between the parties and the account of the plaintiff to the defendant are valid; [ 41 ] As I interpret the question, two broad issues need to be addressed: first, were the Agreement and subsequent account of the Plaintiff invalid owing to defects in form? And second, was the 25% contingency fee provision in the Agreement invalidated owing to St. Amand’s alleged termination of the Agreement on May 19, 2010? Defects in form [ 42 ] St.

Amand argues the Agreement is invalid owing to a number of technical defects including that it was not dated or arguably signed, was not formally served on him, and was not appropriately witnessed in the sense that no one swore an affidavit attesting to his witness’s signature. [ 43 ] Numerous cases were referred to regarding the need for strict though not perfect compliance with the form of contingency fee agreements and with former Rule 616: Morrison v. Rod Pantony Professional Corporation 2008 ABCA 145 ; Rusk v. Medicine Hat (City of) 2001 ABQB 1020 ; Sonnenberg v.

Schumacher & Associates 2005 ABQB 352 . [ 44 ] In all of the circumstances I would not invalidate the Agreement. The formalities around execution of a contingency fee agreement aim to avoid uncertainty and disputes as to what was agreed. Formal service of such an agreement creates a “cooling off” period enabling the client to walk away from the agreement without liability even for disbursements. Here the Agreement would have been no clearer to St. Amand with or without an affidavit of execution of the witness to St. Amand’s signature or indeed with or without Botan’s signature. And St.

Amand was no worse off for the loss of the “cooling off” period that follows service. He could terminate the Agreement at any time before Botan submitted an application for compensation, without liability for fees and – given Botan’s waiver of out-of-pocket expenses – without liability for disbursements. [ 45 ] Turning then to Botan’s November 7, 2010 Statement of Account, St. Amand argues it too is defective as it fails to give St. Amand notice of his rights of review and fails to contain any statement or description of Botan’s services. St.

Amand also objects that as of November 7, 2010 he had received no monies and as such the account was a nullity. [ 46 ] I also reject St. Amand’s arguments as to the validity of the account. St. Amand knew or ought to have known what services Botan was claiming for in the account of November 7, 2010. He also knew or ought to have known that on November 7, 2010 he was going to receive funds and knew they were conditional only on his executing a standard form of release. Termination [ 47 ] Assuming a valid agreement, was it terminated by St. Amand on May 19, 2010?

The evidence on this critical point of course was conflicting. I accept St. Amand’s evidence, for reasons which follow. [ 48 ] In his written submissions before the court Botan stated he would prove that St. Amand’s evidence around termination of the Agreement was a “total fabrication”. Botan referred to what he called his own

“…careful notes of every phone call, meeting, email or letter concerning [St. Amand’s] file… There is no record of any phone call by [St. Amand] on May 18, 2010, and no record of any such conversation.” [ 49 ] I pause to note the difficulty Botan creates for himself when he argues how carefully he documents his file, yet time and again on critical points his diary is silent. Clearly there are no diary records of a call with St. Amand on May 18, 2010. Yet the diary also records no dealings with St. Amand on May 19, 2010 .

All that is noted for May 19, 2010 is “10:33 AM - called dr bailey for form 2 status?” Yet Botan insists he recalls speaking with St. Amand on May 19, 2010. It was their first contact in some 10 months. Botan noted no Form 2 had been received from Dr. Bailey. He addressed St. Amand’s concern that the claim could expire in just a few weeks. Given Botan’s professed reliance on his diary, it is reasonable to expect that if the conversation occurred as Botan suggests, at least some details of it would be recorded. [ 50 ] In his further efforts to impeach St.

Amand’s evidence, Botan relies on the July 20, 2010 hearsay email from the Administrator which suggests St. Amand never contacted its offices in June, 2010. However, St. Amand did not testify that he called the Administrator in June, 2010. He was not even asked about it. The only evidence on the point is Botan’s. And again there is nothing in his diary on the point despite his testimony that he was “stunned” by St. Amand’s alleged disclosure that he contacted the Administrator on the specific date of June 21, 2010, and that Botan was feeling he was being “set up”.

Again, it is reasonable to expect that if such a conversation occurred, at least some details of it would be recorded. [ 51 ] On all the evidence I am unable to conclude that a specific June 21, 2010 date was given by St. Amand in any July 8, 2010 phone call. And without that evidence there is no contradiction with the Administrator’s email. [ 52 ] Botan further argues St. Amand must be fabricating his evidence because the Administrator’s claim file before the court fails to disclose the alleged contact from St. Amand in June, 2010.

While that is so, the claim file produced at trial also fails to disclose the very July 20, 2010 email exchange Botan relies on. I have to question therefore whether the Administrator’s entire file is before the court, and whether I can accept at face value the information conveyed in the hearsay email that “There is no indication of the claimant calling about this file in June”. For these additional reasons I am unable to give weight to the inconsistency alleged as between St. Amand and the Administrator. [ 53 ] On the whole I find no merit to the assertion St. Amand is fabricating his evidence.

To the contrary, I find St. Amand’s evidence was given in a candid and straightforward manner. I accept his evidence where it conflicts with Botan’s, particularly with regard to the events of May, 2010. [ 54 ] I recognize St. Amand kept no notes to back up his recollection. Botan’s on the other hand were inexplicably incomplete, and on numerous occasions - taken together with his correspondence - were simply mistaken. [ 55 ] I find that St. Amand would have better reason to remember the events of May 18 and May 19, 2010. He was obviously personally affected by the claim and its progress. For Botan, St.

Amand was one more of an apparently large number of HCV claim clients. By May, 2010 St. Amand had not heard from Botan for some 10 months. St. Amand was aware of a looming June 30, 2010 limitation expiry. He had the appointment with Dr. Bailey on May 19, 2010. It was logical that he would contact Botan the day before to seek an update. His memory at trial of what Botan told him on May 18, 2010 was clear and unequivocal. So too was his memory at trial of what he told Botan on May 19, 2010. Botan made no effort to cross examine St.

Amand as to what happened on those dates. [ 56 ] I am also influenced in my findings of credibility by Botan’s denials on the issue of blood transfusions (as noted at paragraph 12 of these Reasons) but particularly by his answers in cross examination regarding the May 18 or 19, 2010 telephone calls. Again, St. Amand was unequivocal that on May 18, 2010 Botan told him he was just waiting for trace back results. Botan wavered in cross examination on this important point.

At noted at paragraph 25 of these Reasons, and again very much relying on his Amicus diary, Botan conceded in the end that he ‘did not recall’ if he gave St. Amand that trace back information. [ 57 ] I am further strengthened in my findings by reviewing St. Amand’s actions following the telephone call of May 19, 2010. St. Amand proceeded to gather up and submit the necessary materials in support of his claim for compensation and to meet the June 30, 2010 limitation expiry. His actions were consistent with having terminated the Agreement with Botan, and with his belief that no claim

had yet been submitted. [ 58 ] Finally, in accepting St. Amand’s evidence as to what occurred on May 18/19, 2010, I have real doubts about what if anything occurred on July 8, 2010 to give rise to Botan’s diary entry of that date. St. Amand was silent at trial - not only in cross examination but also in examination in chief - with regard to the apparent July 8, 2010 telephone call. He neither acknowledges nor denies any such call took place. Be that as it may, whatever may have happened on July 8, 2010 does not alter my finding that St. Amand clearly terminated Botan’s services on May 19, 2010.

I therefore reject the conflicting evidence, in Botan’s July 8, 2010 diary entry, that St. Amand was “…not sure if he will still use me … he will talke [sic] to Baily’s office and then get back to me.” b. If on the trial of this matter the Court holds that the contingency agreement is valid, whether the fee charged by the plaintiff to the defendant under the contingency agreement is fair and reasonable; [ 59 ] If I am wrong on issue (

a) and the Agreement was not terminated, I would find the 25% fee is not fair and reasonable in all of the circumstances. [ 60 ] On this court’s role in the review of contingency fee agreements both parties rely on the Morrison v. Pantony case mentioned above. Morrison involved a contingency fee agreement dispute in the context of a complex motor vehicle accident personal injury claim. The litigation proceeded to the then-Certificate of Readiness stage, disbursements of $15,825 were incurred, and the claims were resolved in a subsequent JDR session. A dispute arose in Morrison as to the

interpretation of the contingency fee agreements between the parties. The case offers guidance as to how a court should proceed in the face of an impugned contingency fee agreement: 25 Retainer agreements are obviously in a special category. The client is negotiating an agreement with a person (the solicitor) that the client would usually look to for advice on such matters. In negotiating the agreement the parties are adverse in interest, contrary to the normal state of affairs where the solicitor is bound to represent the client’s interest.

There is also an imbalance of information and knowledge, because the solicitor will be more familiar with the terms and operations of the retainer agreement than the client. It is undoubtedly for those reasons that solicitor-client contracts are reviewed by the court, whereas the court will not conduct that sort of analysis of ordinary contracts.

The courts will obviously not tolerate any sharp practice by the solicitor, or any patent unfairness. 26 That being said, the courts should not set aside agreements between solicitors and clients without good cause…. 27 The Rules do not provide a test for determining whether the court should “vary, modify or disallow the agreement”. There is no closed list of factors that should be considered. The following considerations will often arise: (

a) As of the date the agreement was signed, was the agreement unfair or oppressive in its business terms, having regard to the risks, facts and prospects known to the parties at that time? (

b) Did the lawyer run an unusually high or low risk of not being paid anything for his or her services? (

c) Even if the agreement was fair when signed, did the file evolve in unexpected ways, so that the eventual application of the formula in the agreement results in an unexpectedly unfair fee? Merely because a large fee results will not show unfairness, because a reward for the risks undertaken by the solicitor is the basis on which these agreements operate: Re Cogan at paras. 4, 55, 57, 65, 74. (

d) Did the client understand how the agreement would operate to generate the fee? Of relevance here will be the length of the agreement, the technicality of the language used, the education and abilities of the client, indications by the client that he or she understands the arrangement, and other similar factors. The key is that the client should understand how the fee will be calculated in practical terms, and not necessarily that the client have or be given a technical explanation of how litigation is conducted under the Rules.

(

e) Was there any unreasonable conduct by either party? (

f) In appropriate circumstances regard may be had to the factors mentioned in R. 613 that are used to assess solicitors’ accounts, although some of these factors will be subsumed in the terms of the contingency agreement and any settlement achieved, and R. 613 should not effectively be allowed to displace the agreement. In assessing “fairness”, the Taxing Officer or judge should remember that fairness is a two-way street, and that the covenants between the client and the lawyer should be given a meaningful amount of weight during the fairness analysis. [ 61 ] There is no dispute as to the appropriate test.

Curiously however Botan at trial failed to include with his copy of Morrison the following key paragraph in which the test was applied, and without which the reader is deprived of necessary context when considering its applicability to the current dispute. On the facts in Morrison : [30] The Taxing Officer found nothing inherently unfair about the agreements, and was prepared to enforce them according to their terms. Having listened to the parties for several hours on the subject, and given the Taxing Officer’s expertise in these areas, his decision is entitled to deference.

The respondents did not demonstrate that there is anything inherently unfair about the percentage fee stipulated by the agreements. The effort required from the lawyer increases as the litigation moves through the stages of litigation to a JDR, and the setting of the claims down for trial, justifying a graduated percentage. The appellant worked on the claims for three years, and was able to get them ready and set down for trial. There is no evidence that the fee was disproportionate to the work on the file.

The work necessary to prepare for the JDR session was done, as was the preparatory work necessary to get the claims ready to be set down for trial. It was not shown to be unreasonable for the appellant to set the matter down on the trial list, even though it was contemplated that a JDR session would be held.

The respondents agreed to the settlement, so the result should be taken to be satisfactory. (emphasis added) [ 62 ] It is clear then that Morrison permits an inquiry into the proportionality between the fee sought on the one hand and the work performed/risk taken on the file on the other, the focus of that inquiry based largely on what the parties knew or reasonably ought to have known when the Agreement was entered into. [ 63 ] The following evidence is relevant to the test: Botan did not seriously dispute his work for St.

Amand consisted of completing forms previously downloaded from the Administrator’s web site, obtaining records from Hay River and from Dr. Bailey, submitting those materials, meeting once personally with St. Amand, and corresponding with him on about a dozen occasions before May 19, 2010. There was no litigation in the ordinary sense. There were no pleadings, questioning, trial preparation or indeed trial. There was even no negotiation: once certain facts were accepted by the Administrator, St. Amand’s compensation would be determined by a glance at a chart.

The entire process should not have been lengthy. [ 64 ] As to risk, it appears to have been minimal. Again, at the time the Agreement was entered into Botan was informed St. Amand believed he had HCV, that blood had been transfused at hospital in Hay River, that no other risk factors were present, and given the 1977 transfusions, that St. Amand would likely benefit from the tracing protocol. Granted, each of these things known to Botan also needed to be proved to the Administrator’s satisfaction. But they were to be proven by St.

Amand’s own declaration, by the Hay River hospital records, and by the letter that was ultimately commissioned from Dr. Bailey. This is the kind of evidence Botan knew he needed at the time the Agreement was entered into. Granted, he knew that in theory the Administrator could reject the claim. But I find that at the time of the Agreement Botan had no reasonable basis for believing there was a significant risk that would occur. [ 65 ] Botan acknowledges St.

Amand’s claim had “no issues.” In his evidence and materials however Botan lays out that in his experience most claims do have issues or are rejected outright, for any number of apparent reasons. As noted, this evidence is Botan’s alone, unsupported and virtually impossible to challenge - or indeed to accept uncritically - in the absence of any proper foundation which is lacking before me. In short, it is not evidence that I find to be reliable.

In any event, Botan’s apparent risk experience with other’s claims does not persuade me that at the time the Agreement was entered into he reasonably believed there were significant risks with St. Amand’s claim. [ 66 ] What’s more, even if the risk was more significant than I have allowed, that risk does not exist in a vacuum. It takes on meaning only when weighed against Botan’s actual work product on the file, and more to the point what he reasonably believed his actual effort would likely be at the time the Agreement was entered into.

Did he risk losing many or relatively few hours of work, or many or relatively few dollars in disbursements? [ 67 ] I have commented already on what minimal claim materials Botan knew he required. What actual time did Botan spend on

the claim? He kept no time records. In argument St. Amand estimated, based on Botan’s diary entries and other evidence, the expenditure of perhaps seven hours’ time on the claim. At trial Botan failed to provide any competing estimate of actual time. [ 68 ] As to disbursements, I am mindful of the fact Botan agreed to waive his disbursements virtually at the outset. That he actually incurred no disbursements whatsoever is of less consequence than whether I can conclude on the evidence that he reasonably believed at the time of the Agreement he risked losing significant disbursements.

I am unable to find such evidence. At the outset Botan knew he would have only to obtain hospital records and a prescribed form to be filled out by a physician prepared to give an HCV opinion. What’s more, Botan gave no evidence as to what he believed these or indeed other disbursements might have been at the time the Agreement was entered into. [ 69 ] On the whole, was the 25% recovery provided for in the Agreement unfair, mindful of the risks, facts and prospects known at the time it was reached?

Added up, at seven hours’ time or even at double that, and with few if any disbursements, there was an obvious lack of proportionality between the time and money likely to be expended and the likely risk of failure. Botan ran no unusually high risk of not being paid anything for his services. If anything, the reverse was true. [ 70 ] I conclude therefore that I am entitled to ‘vary, modify or disallow the Agreement’. I was provided with no submissions as to what a variation or modification should look like.

The parties were each invited to make further submissions to me in writing on any points arising from the evidence. Both declined to do so. That being said, taking into account all the evidence and the Morrison test properly understood, I would vary the Agreement to allow a still very generous contingency fee recovery of 15%. c. If on the trial of this matter the Court holds that the contingency agreement is invalid, what is a fair and reasonable fee on a quantum meruit basis; [ 71 ] I have found that the Agreement is valid notwithstanding imperfections in its execution.

I have also found that the Agreement was terminated effective May 19, 2010.

No one disputed that as such, if terminated “for any reason whatsoever” the Agreement continued to have force in that it both ousted the 25% contingency fee and triggered the alternate payment scheme agreed to at paragraph 12: If I [the client] choose to terminate your [the lawyer’s] services for any reason whatsoever, you shall be entitled to fair and reasonable compensation for your services up to the time of the termination, based on an hourly rate of $250.00 per hour unless at the time of termination an application for compensation have [sic] been submitted by you which is ultimately successful in obtaining proceeds, in which case your reasonable compensation shall be 25% of any claim proceeds so obtained. [ 72 ] The Agreement is therefore not invalid for purposes of this question.

And if not invalid, there is no reason to answer the question of “…what is a fair and reasonable fee on a quantum meruit basis”. The question I have to answer rather is what is “…fair and reasonable compensation … based on an hourly rate of $250 per hour”. [ 73 ] To decide, I need to determine how many hours Botan spent in St. Amand’s service. As noted, Botan kept no such records and provided no such evidence and failed to respond in argument to estimates by St. Amand’s counsel that he spent roughly seven hours on the claim through May 19, 2010. [ 74 ] Seven hours at $250/hour results in a fee of $1,750.

If I were generously to triple St. Amand’s seven-hour estimate, Botan’s fee would be $5,250. Giving him every benefit of the doubt it is difficult to imagine how Botan could have spent more than 21 hours prosecuting St. Amand’s claim up to May 19, 2010. I therefore set his fee at $5,250. d. Whether the Plaintiff is entitled to any further damages. [ 75 ] In his pleadings Botan seeks punitive and aggravated damages and solicitor client costs owing to allegations that St. Amand:

…wrongfully plotted to devise a scheme to avoid paying the Plaintiff fees under the contingency fee agreement (at paragraph 16) … attempted to “defraud” the Plaintiff by making “clearly false” statements regarding the receipt and submission of certain forms and St.

Amand’s dealings with the Administrator; (at paragraph 23) …engaged in “…wrongful conduct [that] was contrived, malicious, outrageous and directed with the sole intent to harm the Plaintiff and benefit the Defendant at the Plaintiff’s expense, and as such is deserving of aggravated and punitive damages.” (at paragraph 31) [ 76 ] Botan failed to prove at trial the allegations against St. Amand of scheming, fraud, lying or “contrived, malicious, outrageous” conduct. [ 77 ] In conclusion, I make the following findings: a. the contingency fee agreement between the parties is valid as is the account of the Plaintiff.

The contingency fee agreement was terminated however by the Defendant on May 19, 2010; b. if I am wrong regarding the Agreement’s termination, I find in the alternative that the 25% fee was not fair and reasonable; the agreement is varied to provide a 15% fee; c. termination of the Agreement triggered a compensation scheme that results in a fee $5,250; d. the Plaintiff is not entitled to any further damages. COSTS [ 78 ] While the outcome is divided, success is largely with the Defendant. There are also unproven allegations of fraud and other wrongful conduct.

If the parties are unable to agree, they may of course speak to costs. Heard on the 16 th day of September, 2011. Dated at the City of Edmonton, Alberta this 8 th day of December, 2011.

Peter Michalyshyn J.C.Q.B.A. Appearances: Allan G. M. Botan Botan Law Office for the Plaintiff Dennis G. Groh, Q.C. Randall C. Heil Professional Corporation for the Defendant