LC v Alberta, 2016 ABQB 491

Court of Queen ’ s Bench of Alberta Citation: LC v Alberta, 2016 ABQB 491 Date: 20160906 Docket: 0703 10836 Registry: Edmonton Between: LC, EMP by her Litigation Representative Phillip Tinkler, DC by his next friend LC and CC by her next friend LC Plaintiffs - and - Her Majesty the Queen In Right of Alberta and Metis Settlements Child & Family Services, Region 10 Defendants Restriction on Publication Identification Ban – See the Child, Youth and Family Enhancement Act ,

section 126.2. No one may publish the name or photograph of a child, or of the child's parent or guardian, in a manner that reveals that the child is receiving, or has received, intervention services. NOTE: This judgment is intended to comply with the restriction so that it may be published. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Robert A. Graesser _______________________________________________________ Introduction [ 1 ] This application arises in the context of the class proceeding certified in this matter on July 11, 2016. [ 2 ] Mr.

Lee brought an application for advance costs in June, 2016 to require Her Majesty the Queen (“HMQ”) to pay advance costs to him to conduct the class action. This application on behalf of HMQ arises in their defence of that application.

[ 3 ] HMQ seeks production of all fee agreements between Mr.

Lee and EMP, arguing that they are relevant to the determination of issues required to be dealt with following British Columbia (Minister of Forests) v Okanagan Indian Band , 2003 SCC 71 and Little Sisters Book and Art Emporium v Canada (Commissioner of Customs and Revenue) , 2007 SCC 2 , [2007] 1 S.C.R. 38. [ 4 ] HMQ’s application also seeks a direction that Phillip Tinkler, EMP’s litigation representative, reappear for cross- examination on the application so that questions can be asked about the fee agreements. [ 5 ] While the application seeks production of all fee agreements between EMP and any lawyer representing her in this matter, there is no information suggesting that anyone but Mr.

Lee represents her, so I will deal only with fee agreements between Mr. Lee and EMP. Procedural Background [ 6 ] In my decision LC v Alberta , 2016 ABQB 151 , I provisionally certified this action. There were outstanding issues to be settled following my written decision, and the final details were worked out at a case management conference on July 11, 2016. HMQ has appealed the provisional and final certification of the action. [ 7 ] In the lead-up to the certification application, which was heard in January, 2016, some scheduling decisions had to be made. Mr.

Lee had indicated in case management conferences that it was his intention to pursue advance costs for the certification application itself, and for the class proceeding itself if the certification application was successful. [ 8 ] The advance costs application for the certification application was filed on September 19, 2014. [ 9 ] Because of the limited court time available, it was determined in case management proceedings that the certification application should proceed first, as there would be inordinate delay in hearing that application if advance costs were pursued. [ 10 ] Mr.

Lee agreed that it was expedient for him to incur the costs of the certification application and take the risk that it might not be successful, rather than delay bringing the certification application to pursue advance funding for it. [ 11 ] The application for advance costs of the class proceeding was filed on June 24, 2016, in advance of the case management application set for July 11.

At that conference, it was agreed that the application would be dealt with through the exchange of briefs, and that I would decide on the basis of the briefs unless I determined that I required oral argument. [ 12 ] As a result, HMQ filed this application on June 30. HMQ filed an affidavit from Danielle Lorieau sworn July 28, 2016 in support of this application. HMQ’s brief was filed on July 29. Mr. Lee filed his response brief on August 8. HMQ filed a rebuttal brief dated August 10, supported by an affidavit of Danielle Lorieau sworn August 15.

Background to Application [ 13 ] This action is the “failure to file” lawsuit against HMQ arising out of its failure to file care plans in a timely way, or in some cases at all, for children in government care under temporary guardianship orders. After a number of false starts, this action was selected by Mr. Lee as the vehicle to pursue recovery on behalf of the children and their parents or guardians affected by the failure to file. [ 14 ] In L.C. v Alberta (Metis Settlements Child & Family Services, Region 10) , 2011 ABQB 42 , I ordered that HMQ pay Mr.

Lee’s fees for the purposes of finalizing pleadings on behalf of EMP so that a certification application could proceed. In case management, that order has been referred to as the “mini- Okanagan order,” referring to the leading Supreme Court of Canada decision on the subject of advance costs, British Columbia (Minister of Forests) v Okanagan Indian Band . [ 15 ] The current application for advance costs seeks funding for the certification application itself and for the class proceeding recently certified. [ 16 ] Mr.

Lee’s application is predicated on EMP’s inability to pay for the costs of legal representation herself, and the impracticality of the class proceeding being litigated without some form of advance costs from HMQ. [ 17 ] The materials in support of the advance costs application (the “ Okanagan application”) demonstrate EMP’s attempts (through Mr. Lee) to find other counsel, as well as the difficulties encountered litigating this action. Other applications are pending by HMQ relating to the admissibility of some of the evidence put forward by Mr.

Lee on the Okanagan application. [ 18 ] This application deals only with fee agreements between Mr. Lee and EMP. [ 19 ] HMQ is aware that EMP, through her mother and then litigation representative LC, signed a contingency agreement with Mr. Lee before this action was commenced in 2007. HMQ is also aware that I, as case management judge, approved a fee agreement between LC by her litigation representative Phillip Tinkler. That was done on June 13, 2012, following ex parte hearings involving only Mr. Lee. [ 20 ] At that time, the action had not been certified.

HMQ was aware that the application for approval of the fee agreement would be made (as it is required under

section 38 of the Class Proceedings Act , RSA 2000 c 16.5). HMQ through Mr. Barber wrote me on February 10, 2012 relating to the process of approval of the fee arrangements between Mr. Lee and EMP. It did not object to the process at that time, but reserved its “right to argue on any application for a broader Okanagan order that the terms of the retainer considered by the Court on this application are relevant to the consideration of the broader order”. [ 21 ] A fee agreement with LC in her personal capacity and in her capacity as representative plaintiff for the parent and guardian

class was approved by me on June 21, 2016, following an ex parte hearing with Mr. Lee. That agreement is not relevant to this application. Positions of Parties [ 22 ] HMQ argues that:

a) Retainer agreements in class proceedings are not privileged;

b) If they are presumptively privileged, privilege here has been waived by the plaintiff, by applying for advance costs;

c) Production of the retainer agreements is necessary to determine one of the main Okanagan tests, namely EMP’s inability to pursue the action without advance costs;

d) If the retainer agreements are not produced, there should be an adverse interest against EMP relating to her ability to retain legal counsel on a contingency agreement; and

e) EMP’s litigation representative, Phillip Tinkler, should be required to re-attend questioning or cross-examination on the Okanagan application. [ 23 ] HMQ argues that previous fee agreements are relevant and should be produced as it is possible that EMP might be able to rely on the previous agreement to require Mr. Lee to continue to act for her. [ 24 ] HMQ relies on Okanagan ; Little Sisters ; Roth v Alberta , 2005 ABQB 505 ; C(

L) v Alberta , 2012 ABQB 394 ; MS v DM , 2014 ABQB 702 ; Fehr v Sun Life Assurance Co. of Canada , 2012 ONSC 2715 ; and Imperial Tobacco Company v Newfoundland and Labrador , 2007 NLTD 172 . [ 25 ] Affidavits of Danielle Lorieau were filed in support of this application.

The first deals with HMQ’s requests for production of the fee agreements and details of the materials EMP will rely on at the Okanagan application; the second relates more to the substance of the Okanagan application than the current application. [ 26 ] EMP argues that the fee agreements are not relevant to the application for Okanagan funding, stating that “the fee agreement could only be relevant to determine if no other realistic option exists for bringing the issues to trial”. According to EMP, the only issue on the application is “whether there are other realistic options for bringing (her) issues to trial”.

EMP also relies on the foundational rules in the Alberta Rules of Court (Rule 1.2) [ 27 ] Affidavits from Phillip Tinkler sworn July 14, 2016 and July 21, 2016 were filed in opposition to HMQ’s application. [ 28 ] Mr. Tinkler’s affidavits describe some of the terms of the court-approved fee agreement, and in particular the provision that allows Mr. Lee to withdraw from the matter if advance costs are not awarded to EMP. [ 29 ] EMP essentially argues that HMQ should accept what Mr.

Tinkler says about the fee agreement and that it needs to know nothing further about it. [ 30 ] EMP argues that the details of the agreement are privileged as they relate to Mr. Lee’s and Mr.

Tinkler’s views about the strengths and weaknesses of the case. [ 31 ] Finally, EMP argues that production of the fee agreements will lead to “a marathon of steps” that HMQ will conduct before the Okanagan application can be heard, including more applications and potential appeals to the Court of Appeal along the way. [ 32 ] With respect to previous fee agreements, EMP argues that they too are irrelevant, especially since they are unenforceable having regard to the requirement of court approval under the Class Proceedings Act . [ 33 ] EMP relies on R v Caron , 2011 SCC 5 , [2011] 1 SCR 78; Hyrniak v Mauldin , 2014 SCC 7 , [2014] SCR 87; Fehr v Sun Life Assurance Co. of Canada , 2012 ONSC 2715 ; LC v Alberta , 2012 ABQB 394 ; LC v Alberta (Metis Settlements Child & Family Services, Region 10) , 2011 ABQB 42 ; and The Wheat and the Chaff: Class Action Case Selection , Ward Branch and Won Kim, Litigating Class Actions Seminar (Toronto: Canadian Institute, September 2005).

Short Answer [ 34 ] For the reasons that follow, the court-approved fee agreement between Mr. Lee and EMP is relevant and producible in the context of EMP’s application for advance costs. Roth v Alberta and Fehr v Sun Life Assurance Co. of Canada are both persuasive on the point of privilege, and while I do not go so far as to say no privilege exists in a fee agreement between the representative plaintiff in a class proceeding and his or her lawyer, the privilege is more easily overcome in a class proceeding than in an ordinary lawsuit. [ 35 ] Here, Mr.

Lee has waived any privilege on some portions of the court-approved fee agreement by having Mr. Tinkler refer to portions of that agreement in his affidavits opposing HMQ’s application. He has also done so by putting his client’s ability to pay for legal services in issue. [ 36 ] A witness is rarely allowed to refer to part of an agreement or document in evidence, without actually producing the agreement or document. If there are contested portions of a document or agreement, the practice is to produce the agreement or

document in an expurgated version, deleting privileged, confidential or irrelevant portions. Any issues concerning relevance,confidentiality or privilege can be determined by a judge looking at the whole of the document or agreement. [37] An opponent does not have to take the witnesses’ word for what a document or agreement says or what is relevant in adocument or agreement. Parties are entitled to see documents and agreements and determine for themselves what may be relevant to theissues and what

interpretation should be placed on terms and conditions. [38] There is still some scope for removing portions of the court-approved fee agreement on the basis of relevance. I have in mindthe actual numbers involved (contingency fee percentages, hourly rates, strategic matters) as I do not see that the precise financial detailsare relevant to the substantive application and HMQ’s opposition to it.

But apart from those redactions, the basic terms and conditionsshould be disclosed as these are relevant to determining whether EMP has other alternatives available to her to pursue her claim. [39] With previous fee agreements, Mr. Lee argues that they are irrelevant because they were not court-approved and are notenforceable. They were in any event superseded by the court-approved fee agreement.

That agreement was put in place after it wasdetermined that this lawsuit should proceed as a class proceeding for children, parents and guardians affected by HMQ’s failure to filecare plans. [40] It is not for HMQ to argue that Mr. Lee should pursue the class proceeding for EMP on the terms of the earlier fee agreement,and that he can be compelled to do so (under the Law Society of Alberta’s rules of professional conduct). That is for EMP in the eventMr. Lee were to cease to act under the terms of the court-approved fee agreement. [41] Previous fee agreements are not relevant to the issues on this application.

There has been no waiver of privilege regardingthose. Any previous agreements preceded EMP’s intention to proceed with this claim as a class proceeding. They need not be producedto HMQ. [42] I should be provided with an unredacted copy of the court-approved agreement so that I can resolve any disputes over anyredacted portions. Analysis [43] Advance costs are rarely ordered. They are an exceptional remedy. The Okanagan decision describes the conditionsnecessary for the Court to consider ordering advance costs. Those are described at para 40: 1.

The party seeking interim costs genuinely cannot afford to pay for the litigation, and no other realistic option exists for bringing theissues to trial — in short, the litigation would be unable to proceed if the order were not made. 2. The claim to be adjudicated is prima facie meritorious; that is, the claim is at least of sufficient merit that it is contrary to the interestsof justice for the opportunity to pursue the case to be forfeited just because the litigant lacks financial means. 3.

The issues raised transcend the individual interests of the particular litigant, are of public importance, and have not been resolved inprevious cases. [44] There is ultimately a broad discretion for the Courts to exercise in dealing with such applications. Little Sisters states at para37: In analysing these requirements, the court must decide, with a view to all the circumstances, whether the case is sufficiently special thatit would be contrary to the interests of justice to deny the advance costs application, or whether it should consider other methods tofacilitate the hearing of the case.

The discretion enjoyed by the court affords it an opportunity to consider all relevant factors that arise onthe facts. [45] R v Caron emphasized the residual discretion in para 6: [6] As a general rule, of course, it is for Parliament and the provincial legislatures to determine if and how public monies will be used tofund litigation against the Crown, but it has sometimes fallen to the courts to make such determinations.

To promote trial fairness incriminal prosecutions, for instance, the courts have in narrow circumstances been prepared to order a stay of proceedings unless theCrown funded an accused in whole or in part: R. v Rowbotham (1988), (ON CA), 41 C.C.C. (3d) 1 (Ont. C.A.); R. vRain (1998), 1998 ABCA 315 , 223 A.R. 359 (C.A.).

In the civil context, British Columbia (Minister of Forests) v OkanaganIndian Band, 2003 SCC 71 , [2003] 3 S.C.R. 371, extended the class of civil cases for which public funding on an interim basiscould be ordered to include “special circumstances sufficient to satisfy the court that the case is within the narrow class of cases wherethis extraordinary exercise of its powers is appropriate” (para. 36).

Okanagan was based on the strong public interest in obtaining a rulingon a legal issue of exceptional importance that not only transcended the interest of the parties but also would, in the absence of publicfunding, have failed to proceed to a resolution, creating an injustice. In Little Sisters Book and Art Emporium v Canada (Commissionerof Customs and Revenue), 2007 SCC 2 , [2007] 1 S.C.R. 38 (“Little Sisters (No. 2)”), the majority affirmed that the injustice that would arise if the application is not granted must relate both to the individual applicant and to the public at large.

Thismeans that a litigant whose case, however compelling it may be, is of interest only to the litigant will be denied an advance costs award.It does not mean, however, that every case of interest to the public will satisfy the test. [para. 39] Court-Approved Fee Agreement [46] For the purposes of this application, the relevant consideration is the determination as to whether “the party seeking interim

costs genuinely cannot afford to pay for the litigation, and no other realistic option exists for bringing the issues to trial – in short, the litigation would be unable to proceed if the order were not made.” ( Okanagan at para 40) [ 47 ] HMQ argues that the presence of a contingency agreement for the plaintiff in a class proceeding is strong presumptive evidence that the plaintiff has found a way of bringing the issues to trial. That is a sound argument.

Contingency agreements are a common arrangement between solicitor and client to have the solicitor run the risk of not getting paid any fees at all in the event of lack of success in the action in consideration for getting a higher-than-normal fee in the event of success. [ 48 ] Without contingency fee agreements, many litigants would be unable to pursue claims because of their inability to fund the enormous costs of litigation. Even where there is minimal risk of not recovering anything, lawyers reasonably expect to be paid for their work as it is being done, rather than wait months if not years to be paid.

There is no implied rule that lawyers are required to finance litigation costs. [ 49 ] Here, Mr. Lee answers HMQ’s presumption by saying that this particular contingency fee agreement is itself conditional on EMP being awarded advance costs, and if she is not awarded advance costs, he may, and will, cease to act. [ 50 ] That exception to the “normal” arrangements brings the specific terms and conditions of the fee agreement here into issue.

I do not think that a party can rely on the terms and conditions of an agreement but refuse to let the other party see the agreement by saying “trust me, this is what it says”. People frequently interpret the same terms and conditions differently. [ 51 ] If the wording of an agreement is relevant and material to an issue, that makes the agreement relevant and producible under the Rules of Court. There is the ability to redact irrelevant or privileged or confidential portions of an otherwise producible document, subject to judicial oversight on the extent of the redactions. [ 52 ] Mr.

Lee has made the provisions of the fee agreement relevant and material to the issue of whether EMP is able to continue with the litigation in the absence of advance costs. [ 53 ] In ordinary circumstances, the terms of a lawyer’s retainer by his or her client are not only irrelevant, but they are privileged. That flows from Descoteaux et al v Mierzwinski , [1982] 1 SCR 880 . Terms and conditions of the retainer are communications between the lawyer and the client for the purposes of giving and receiving legal advice and disclose information that is intended to be confidential.

It also may disclose (expressly or inferentially) information about the client’s financial position. [ 54 ] In most cases, the opposing party has no legitimate interest in knowing the terms and conditions of the retainer.

Here, however, the plaintiff has put the terms and conditions into issue by arguing that despite the fee agreement, the plaintiff is impecunious and will be unable to pursue the litigation if advance costs are not awarded. [ 55 ] As far as privilege is concerned, HMQ cites Slatter J’s (as he then was) comment in Roth v Alberta at para 8 that “the privilege over the retainer agreement in a class proceeding is more illusory than real.” [ 56 ] In that case, the representative plaintiff in a proposed class proceeding applied for court approval of the fee agreement under the Class Proceedings Act .

The defendant objected to the application proceeding in its absence. The above statement was made in the context of the requirement that the notice of certification contain a description of the fee agreement between class counsel and prospective class members. [ 57 ] Slatter J referred to the open court principle, and held at para 9: [9] Further, disclosure of the contents of the privileged contingency agreement will rarely prejudice the interests of the plaintiff.

The contingency agreement would not usually disclose any of the tactics of the plaintiffs, nor would it reveal any privileged information about counsel’s assessment of the merits. As a practical matter, while the retainer agreement is confidential, disclosure of its contents is unlikely to substantively prejudice the interests of the plaintiffs.

In all of the circumstances, there is little point in holding the hearings in camera, or of sealing the entire court record. [ 58 ] Perell J opined in Fehr v Sun Life Assurance Co. of Canada that there should be no privilege in a fee agreement in a class proceeding, or at least that any privilege would be waived on an application for court approval. That case involved court approval of a third party funding agreement for a class proceeding, and not the solicitor-client retainer agreement.

He was also of the view (following Roth v Alberta ) that the defendant in that case should be permitted to attend the approval hearing, and that it should not proceed in camera. [ 59 ] I do not need to decide if there is privilege in a retainer agreement. I prefer the view that privilege exists at least until an application for approval is made.

In any event, I am satisfied that EMP has waived privilege over the court-approved fee agreement by putting its terms and conditions in issue. [ 60 ] In view of my finding that privilege has been waived, it is not necessary for me to consider the alternative remedy sought by the defendants: a finding of an adverse inference against the plaintiff.

Previous Retainer Agreements [ 61 ] With respect to the production of previous retainer agreements, the defendants raise a legitimate issue concerning the apparent termination of the initial contingency agreement and its replacement by the court-approved agreement. [ 62 ] HMQ may be correct that EMP could raise the previous contingency agreement if Mr. Lee ceased to act in the event the advance costs application ultimately fails. That, however, is for EMP to determine.

Any previous agreement was made at a time when (from the information available to me through this case management process and case management of a number of similar actions

against HMQ concerning child welfare matters) this lawsuit was not intended to be a class proceeding. [ 63 ] I do not think that the Plaintiff has waived any privilege in any previous agreements. [ 64 ] The mini- Okanagan application proceeded in 2011. Mr. Lee argues that it is significant that HMQ did not seek production of the then-existing retainer agreement for the purposes of opposing that application. [ 65 ] In my view, the circumstances here are significantly different.

That application proceeded on the basis that the plaintiff EMP, an impecunious minor, would be unable to pursue her claim if advance costs were not given to her. That was in the context of a process of applications and appeals that still left her statement of claim in a state that needed significant amendment. She was not then the representative plaintiff in a certified class proceeding. She was given advance costs only to the point of amending her pleadings. [ 66 ] EMP’s circumstances have changed. Firstly, she is not merely pursuing the action on her own behalf.

She is the representative plaintiff for hundreds or perhaps thousands of children who were under temporary guardianship orders. Secondly, the terms of her court- approved retainer agreement will be disclosed to potential plaintiffs who may wish to join the class proceeding. No one else will know of her previous arrangements with her solicitor. Confidentiality is far less of a concern now than it may have been in 2011. Thirdly, HMQ has now raised the issue. The fact that they did not pursue it on an earlier, similar application is no bar to raising the issue on an application that has significantly more at stake.

The plaintiff seeks advance costs in the amount of $1,700,000 (pre-trial). Other issues [ 67 ] Mr. Lee raises the foundational rules and argues that HMQ is by this application delving into the “minutia of arguing interesting and complex legal issues” instead of taking a practical approach to resolving the real issues between the parties. [ 68 ] The foundational rules can certainly be used to prevent a party from making frivolous or unnecessary applications. They can also be used to prevent abuses of process. This application by HMQ cannot be characterized as any of frivolous, unnecessary or frivolous.

The plaintiff seeks a very large amount of advance costs from HMQ. Applications for advance costs are rare and they succeed only in exceptional or special cases. [ 69 ] I do not see HMQ’s approach on this application to be an attempt to relitigate the 2011 advance costs application. The application in 2011 was not opposed by HMQ on the basis that EMP was not impecunious, or that Mr. Lee would withdraw if advance costs were not granted.

It is clear that the court-approved fee agreement is different from the agreement in place in 2011. [ 70 ] I also do not see HMQ’s position on this application as being in any way contrary to Hryniak v Mauldin and the Supreme Court’s concerns about timely and affordable means of accessing the civil justice system. [ 71 ] Nor do I see its position as reinforcing what Perell J described as the “systemic imbalance in favour of defendants in litigation” in Fehr v Sun Life Assurance Co. of Canada .

I cannot think that advance costs are likely to become the “norm” in litigation where there is an imbalance in power or resources between plaintiff and defendant. [ 72 ] The foundational rules and access to justice do not mean that defendants have to roll over and forfeit their ability to use all reasonable measures to defend themselves from claims. Conclusion [ 73 ] EMP is required to produce to HMQ the court-approved fee agreement forthwith. If a redacted version is provided, I should be provided with a copy of the unredacted agreement, together with EMP’s explanation for any redactions.

I will determine if any or all of the redactions are appropriate in the circumstances. [ 74 ] EMP is not required to produce any previous agreements between herself and counsel. Heard on the 29 th day of July, 2016. Dated at Edmonton, Alberta, this 6th day of September, 2016.

Robert A. Graesser J.C.Q.B.A. Appearances: R.P. Lee Robert P. Lee Professional Corporation for the Plaintiffs P. Barber and G.K Epp Alberta Justice; W. Branch Branch McMaster for the Defendants