Tallcree First Nation v Rath & Co, 2021 ABQB 234

Court of Queen’s Bench of Alberta Citation: Tallcree First Nation v Rath & Co, 2021 ABQB 234 Date: 20210326 Docket: 1803 05262 Registry: Edmonton Between: Tallcree First Nation Appellant - and - Rath & Co and Jeffrey R. W. Rath Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________ Appeal from the Decision of Dennis Pawlowski, Review Officer, dated the 7 th day of September, 2018 Table of Contents Introduction . 2 Subsequent Requests of the Parties . 5

The Parties November 2020 Submissions and Argument 6 A. The Fresh Evidence Rule. 6 B. Does the Court have Jurisdiction?. 6 C. Tallcree was given a copy of the CFA proposed by Rath in October 2014. 7 D. Tallcree was a financially successful First Nation Band at the time of the CFA.. 7 E. TallCree’s claims had been unresolved for many years by Tallcree’s previous lawyers. 8 F. The CFA’s Risk to Rath. 10 My Determination of the Final Award to Rath. 11 G. Case Authorities. 12 H. Determining a Fair and Reasonable Contingency Fee. 13 I. Some Comparators. 15 i. Commissions payable. 15 ii.

Lawyer and Judges Salaries. 16 Conclusion. 17 Introduction [1] This is an appeal from the Review Officer’s (“RO”) decision with respect to the Tallcree (“Tallcree”) First Nation’sContingency Fee Agreement (“CFA”) entered into with Rath & Company and Jeffrey RW Rath (“Rath”) of Priddis, Alberta, on or aboutOctober 14, 2015. The contingency fee agreement before the RO was a result of an agricultural benefits settlement pursuant to Treaty 8paid by the Government of Canada to Tallcree in the sum of $57,590,375 (“$57.5 million”).

The 20% contingency fee amounted to$11,518,075 (“$11.5 million”). [2] In my October 8, 2020 Memorandum of Decision now reported at 2020 ABQB 592 , 2020ABQB 592, I concludedthat the RO made two reversible errors. The first error was when he applied the standard that the resulting fee of over $11.5 milliondollars was not “unexpectedly unfair” or “clearly unreasonable”.

In that regard the RO did not follow the standard required of him todetermine the “reasonableness” of the CFA pursuant to Rule 10.9, but applied a lower standard for Rath to meet of “unexpectedly unfair”or “clearly unreasonable”. [3] The second error constituted a “palpable and overriding” error.

The RO set a 20% contingency fee as a reasonable low-endminimum percentage without question, without any evidence, and without any case law precedent, automatically justifying the over$11.5 million dollar legal fee. [4] The standard of review I applied and my ratio decidendi are found in my October 8, 2020 Memorandum of Decision at paras45 through 51 as follows: [45] The standard of review herein is such that I can vary or revoke the RO’s decision if the RO made a “palpable and overriding error”with respect to a question of mixed fact and law; and “correctness” with respect to an extricable error of law or principle, or with respectto the $11.5 million dollar fee award that betrays such error in principle. [46] In my analysis, the reasons and decision of the RO are reversible for “correctness”, and also contain “palpable and overridingerrors” of mixed fact and law. [47] Firstly, Rule 10.9 mandates a review based on whether the CFA is “reasonable”, not whether it is “clearly unreasonable”: 10.9 The reasonableness of a retainer agreement and the reasonableness of a lawyer’s charges are subject to review by a review officer inaccordance with these rules, despite any agreement to the contrary. [48] Requiring that the CFA be shown to be “clearly unreasonable”, is definitely a lower standard for Rath to meet.

Determining the“reasonableness” of the CFA is not the same as the RO’s decision that the resulting fee of $11,518,075 was not “unexpectedly unfair” or“clearly unreasonable” on the facts in this case. [49] The RO’s decision that the CFA was reasonable because of the resulting fee “was not unexpectedly unfair” or “clearlyunreasonable” on the facts in this case is not the same as determining the “reasonableness” of a retainer agreement pursuant to Rule 10.9.This decision by the RO represents a reversible error of law. [50] Secondly, it was also a palpable and overriding error for the RO on the facts as he found them to set a 20% contingency feeessentially as a minimum.

Setting a 20% contingency as a reasonable low-end minimum percentage without question and without anycaselaw precedent, automatically justified the $11.5 million dollar legal fee in the RO’s mind, as of course it was a simply mathematical

calculation (20% x Amount Recovered). However, accepting 20% as a minimal contingency fee ignored other factors critical in the determination of the reasonableness of the CFA, for example, the actual time Rath spent on the file, and how quickly and how easily the settlement was reached.

I note as well that Rath was a small six-lawyer law firm practicing in Priddis, Alberta, at all material times herein, and I have found that most of the work product found in the Record are actually simple emails created and signed by his paralegal. [51] I conclude that both of the RO’s decision on these two issues constitute reversible errors.

There is no proper legal basis or foundation for the RO to have limited or fixed his low-end minimum contingency fee amount at 20% of any amount recovered, which is why the RO’s decision resulted in an incredibly high legal fee that even he had never seen before, as he stated.

Furthermore, the RO’s standard of “clearly unreasonable” is not the “correct” legal standard with which to review the CFA. [ 5 ] Given that reasonableness of the contingency fee agreement depends on the circumstances in existence when the parties entered into it, I found that the circumstances included: 1) that Tallcree was in economically dire straits and needed money from the federal government urgently; 2) Tallcree was dissatisfied with its previous lawyers; 3) Tallcree was aware of the 20% contingency fee that could apply, and was aware of the range of recovery between $50,000,000 and $80,000,000.

However, Tallcree believed that the settlement process might take years. In fact, the settlement was completed in 18 months; 4) Tallcree had a draft of the proposed contingency fee agreement for a year before executing it but did not have the agreement reviewed by independent legal counsel; and 5) Tallcree was essentially unaware of how strong their claims to agricultural benefits were.

However, Rath knew that there was a strong chance that the federal government would change following the scheduled 2015 general election, and that the new administration would respond positively to agricultural benefits claims. [ 6 ] Having found these two reversible errors, I determined that Rule 10.27(1) and (2) applied. Pursuant to Rule 10.27(1)(b), I revoked the RO’s decision, and I now proceed to substitute my decision as stated in para 52 of my October 8 th Decision at follows: [52] Having found two reversible errors, Rule 10.27(1) and (2) applies.

Pursuant to Rule 10.27(1)(b), I will revoke the RO’s decision and substitute with my decision: 10.27(1) After hearing an appeal from a review officer’s decision, the judge may, by order, do one or more of the following: (

a) confirm, vary or revoke the decision; (

b) revoke the decision and substitute a decision; (

c) revoke all or part of the decision and refer the matter back to the review officer or to another review officer; (

d) make any other order the judge considers appropriate.

(2) If the amount of lawyer’s charges payable pursuant to the decision of the review officer has been paid and, after payment, is reduced on appeal, the lawyer may be ordered to return the excess and, if the lawyer fails to do so, the lawyer, in addition to being liable for that amount, may be found guilty of a civil contempt. (Emphasis added) [ 7 ] In that regard, I allowed the parties to make further written submissions with respect to the issue of determining the appropriate amount of Tallcree’s account with Rath as part of the process of substituting my decision for that of the RO, as I described below in paras 53 to 55 of my October 8, 2020 Memorandum: [53] Before deciding on the appropriate amount of the Respondent’s account, I will give each party a further opportunity to provide me with written submissions as to the appropriate final amount of Rath’s fee, based on the facts that I have found, and based on the Record that was before the RO.

Tallcree submits that a one or two-million dollar fee is appropriate in these circumstances. [54] Any new evidence that the parties wish to reply on will have to comply with the Palmer v The Queen test:

(1) The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial provided that this general principle will not be applied as strictly in a criminal case as in civil cases;

(2) The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial;

(3) The evidence must be credible in the sense that it is reasonably capable of belief; and

(4) It must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result. [55] I ask each counsel to supply me with their written argument with respect to the final amount of Rath’s fee no later than October 30th, 2020. [ 8 ] With respect to these post decision requirements, on October 13, 2020 Rath requested through his counsel more time to

complete the written submissions, and to have the opportunity to make oral submissions in addition to those written submissions. I granted a further time extension until November 20, 2020, and I allowed for oral submissions on November 27, 2020. My decision in this regard was contained in my October 29, 2020 letter to counsel, which is attached here to as

Schedule A in these Reasons. Subsequent Requests of the Parties [ 9 ] Rath now for the first-time requests that any future orders of this Court not be granted as against Jeffrey Rath in his personal capacity, as he submits that Jeffrey R W Rath is not a proper party to this action, and by extension is not a party to the CFA.

This request is strenuously objected to by Tallcree, for reasons that include that the style of cause in this matter has not changed or been previously challenged since this appeal was begun by Tallcree several years ago in March 2018. [ 10 ] I have determined that it is not necessary to deal with this request as part of my present determination. As Mr.

Rath is a practicing lawyer, currently represented on the same team of legal counsel that have appeared on his behalf in other matters, he is well aware of whatever steps need to be taken to have the issue of who is the proper party to this action and appeal readily determined. [ 11 ] I have also not dealt with Tallcree’s request of October 28, 2020 to consider ordering Security for Costs against Rath on the alleged grounds that Tallcree may face difficulty enforcing any decision which reduces the $11.5 million dollars fee that Rath already received in February 2018, because Jeffrey Rath may be the only lawyer remaining with Rath & Company currently.

Now that my decision is in hand, this too may be the subject of a future application if Tallcree deems it necessary. The Parties November 2020 Submissions and Argument A. The Fresh Evidence Rule [ 12 ] Rath objects to having to meet the test with respect to entering fresh evidence as cited in Palmer v The Queen as being clear procedural prejudice.

However, the same Record before the RO, is the Record before me, and Rath had the obligation to put its best case before the RO. [ 13 ] The Record that was before the RO included extensive material filed by Tallcree, that was not objected to by Rath, consisting of 69 pages of letters and e-mails provided by Rath to Tallcree during the time of the CFA.

Within those 69 pages of material filed for the RO as part of his Special Chambers September 7, 2018 hearing were many pieces of correspondence to Tallcree, and pieces of correspondence between Rath and Federal Government Officials. [ 14 ] Given that Rath’s own legal files acting as Tallcree’s lawyer are central to this matter, it is unlikely that there would be any further consequential material that Rath would have in his files, the non-disclosure of which would be highly prejudicial to Rath. [ 15 ] As is clear from the contents of the Schedules to these Reasons, and the numerous reported decisions involving Rath, Rath is very familiar with the litigation process.

As a lawyer and professional litigant himself, who has retained the same legal team of experienced counsel to again represent him, Rath could have easily approached the Court with particulars of the prejudicial nature of my fresh evidence ruling. [ 16 ] Therefore, it is difficult to envisage that there is any evidence of a material nature that Rath could not have produced, with due diligence, before the RO.

It is my duty to manage the process as efficiently as possible with respect to the CFA, which was signed in October 2015 approximately five and a half years ago, for which a review before the RO was sought in March 2018. The $11.5 million dollar fee was paid to Rath, and deduced from the Agricultural Benefits Settlement over three years ago in February 2018. B. Does the Court have Jurisdiction? [ 17 ] Rath now submits the appropriate amount of his fees are not an issue properly before me, and as such, I have no jurisdiction to determine the appropriate amount of Rath’s fees.

Alternatively, if I do make a final determination, it should be in the full amount of Rath’s account $11,518,075 dollars. [ 18 ] I reject these submissions as clearly Rule 10.27(1) and (2) contain a complete code to deal with the present situation. Rule 10.27(1)(

b) gives me the authority to substitute my decision for that of the RO; Rule 10.27(1)(

d) allows me to make any other order that I consider appropriate; and Rule 10.27(2) authorizes me after this appeal to order Rath to return any excess fees I find Rath charged to be returned to Tallcree. [ 19 ] While rule 10.27 (1)(

c) does give me the authority to refer the matter back to the RO, or another RO, I decline to do so because this would obviously delay matters further. Given that the entire Record that was before the RO in the first instance is already before me, it is obviously more efficient for the Court to now make the decision regarding Rath’s fees. [ 20 ] No jurisdictional issue was raised by Rath when Tallcree made the oral submissions when this matter was first argued in February 2020 that Rath’s fee should be between one and two million dollars, and no jurisdictional issue exists now.

To accept Rath’s current argument with respect to this Court’s jurisdiction, would mean that the Court had no authority other than to side with him and dismiss the appeal of Tallcree entirely, or simply confirm Rath’s $11.5 million dollar account. [ 21 ] However, Rule 10.27(1) and (2) clearly gives me the authority to confirm, vary or to revoke the RO’s decision, or make any other order I consider appropriate, and to return any excess fees that I find Rath was not entitled to, to Tallcree. Having revoked the RO’s decision, I can now substitute my decision for that of the RO.

C. Tallcree was given a copy of the CFA proposed by Rath in October 2014 [ 22 ] Rath now argues that the fact that he had given a proposed copy of the CFA to the Appellant the previous year in October 2014, is relevant. I fail to see any merit in this particular argument given that the CFA does not come into existence until it is signed by Tallcree a year later on October 14, 2015. Tallcree has not said that they were not given enough time to review or to understand the CFA.

As Tallcree points out, the 20% fee was set in stone from the beginning, and was a non-negotiable item throughout their involvement with Rath. What Tallcree did not understand however was the strength of their claim, and the speed with which the claim could be settled. D.

Tallcree was a financially successful First Nation Band at the time of the CFA [ 23 ] Rath argues that Tallcree’s March 31, 2018 financial statements show that the Band was doing very well financially, and now points out that the Band Administrator testified before the R.O. that Tallcree could have cash flow managed the CFA’s $11.5 million fee. [ 24 ] However, those 2018 financial statements do not cover the period of time when the CFA was entered into in 2015.

Most tellingly, in December 2015, Rath wrote to the two Federal Ministers in charge of this file (the Minister of Indigenous and Northern Affairs and the Minister of Justice) and spoke directly to Tallcree’s desperate economic plight: Our clients are in dire economic circumstances due to the rampant unemployment related to the collapse of the Alberta Oil & Gas Exploration Industry.

Tall Cree First Nation requires this money urgently on an emergency basis. [ 25 ] Virtually everyone who lived in Alberta or is familiar with Alberta’s economic state at the time of the CFA is well aware of the dire economic circumstances that Rath described above. [ 26 ] Further to emphasise the point, Rath wrote in his letter of December 10, 2015 that not resolving claims like “Tallcree’s” would be “withholding funds from some of Canada’s poorest citizens as a means of extracting an unfair or unreasonable settlement on the basis of the poverty that Canada itself has created...” E.

TallCree’s claims had been unresolved for many years by Tallcree’s previous lawyers [ 27 ] Tallcree’s agricultural settlements negotiation had been undertaken by several previous law firms without success for over a decade.

Rath now notes that his efforts on Tallcree’s behalf included issuing a lengthy Statement of Claim, and other formal steps Rath took eventually brought this matter to a final resolution after more than a decade of delay. [ 28 ] I do note however that no expert evidence was ever presented about the quality and complexity of the pleadings and legal proceedings Rath initiated for Tallcree. [ 29 ] While I accept that Rath has a specialized knowledge in this area and resolved the matter quickly, Rath’s submission that he succeeded where other lawyers tried and failed for many years prior to his resolution of the issue, ignores an essential fact that Rath himself pointed out in his December 10, 2015 letter to the federal ministers in charge. [ 30 ] While previous counsel Ackroyd’s lack of reporting dissatisfied Tallcree, it is clear from Rath’s own words quoted below, that no lawyer including Rath himself, would have been able to successfully conclude this claim, but for the fortuitous circumstances that occurred after the CFA came into effect when the federal government changed: . . .

In 2005, Canada’s negotiators were prepared to settle based on the figure of $42,500/person, after applying the risk discount to the $49,000/person to $51,000/person figures. However, these settlement agreements were shelved by the Government of Canada under Prime Minister Stephen Harper, as a result, these claims have since languished or been opposed by Canada, including in the Specific Claims negotiation process and before the Specific Claims Tribunal.

It is the respectful view of our clients that a failure to immediately undertake payment of this amount would be nothing more then a continuation of the immoral and unlawful conduct of the previous 10 years of failed First nations policy. (Emphasis added) [ 31 ] Therefore, in Rath’s own words in these two passages he essentially acknowledges that no possible settlement could be made with the previous Federal government because of the policies of the previous Harper government, which in

part certainly explains why Tallcree’s previous lawyers had no success settling Tallcree’s claims. [ 32 ] Rath’s present submission includes that he didn’t know the outcome of the election at the time of the CFA. However, the final result of the federal election would have probably been clear to Rath weeks/months before the time the CFA was entered into by Tallcree. This is particularly the case since the election campaign had been ongoing for several months before the CFA, as the election writ was issued in July 2015.

Tallcree’s administrator Cardinal testified before the RO that Rath had emphasized his connections with the federal Liberals on several occasions. [ 33 ] These political connections with the new federal Liberal government soon become quite clear, and were in my view critical to Rath’s success. In a letter dated August 9, 2016 to Tallcree’s Chief Rupert Mineen, Rath’s paralegal [1] reports on Rath’s efforts beginning in February 2016.

The letter describes Rath’s negotiations and Canada’s settlement offer weeks into the new Government, culminating with the July 15, 2016 personal meeting with the Prime Minister and the Prime Minister’s Issues Manager.

[ 34 ] This letter, which is page 19 of the filed material in the Record, specifically includes the following report by Rath’s paralegal to Tallcree: Mr.

Rath has attended on government officials numerous times this year, primarily to discuss agricultural benefits claims, and Canada’s settlement offer to certain Treaty 8 First Nations on February 8, 2016, including: March 10, 2016 – meeting with Canada’s negotiating team in Ottawa; June 6, 2016 – meeting with Bonnie Leask, Special Advisor, working out of the Office of the Minister of Indigenous & Northern Affairs; July 15, 2016 – meeting with Prime Minster Trudeau and Zita Astravas, Director of Issues Management, followed up with further correspondence directly to Ms. Astravas.

In addition to meetings with Federal Government officials, Rath & Company has met with Provincial representatives and members of the current government to discuss the economic impact of timely and honourable agricultural benefits claims with Alberta’s Treaty 8 First Nations, in an effort to have the Province apply pressure on the Canada. [ 35 ] It is clear from these passages that although Rath is the law firm retained pursuant to a CFA, Jeffrey Rath is conducting these negotiations with the opposing party in a non-typical manner.

Rath is personally meeting with the Defendant federal government representatives within a short period of time very early in the new government’s mandate, and meeting personally with the Prime Minister of Canada and his political advisors. [ 36 ] Less than one month after Rath’s meeting with the Prime Minister, Rath himself writes at Page 21 of the Record on August 12, 2016, that the Government of Canada will be making an offer “within the next several weeks”, and “there is a very good likelihood that this claim will be fully settled and paid out prior to March 2017, which means payout will occur within the next eight months”. [Presumably the delay from August 2016 to the projected payout eight months later was a result of Rath taking into account the Federal Government bureaucratic approval requirements documentation, and the ratification process that would have to take place within Tallcree by its members.

This meant that the entire process took approximately 18 months to complete from the time of the CFA]. [ 37 ] It is my finding of fact that the essence of Rath’s involvement leading to the eventual Settlement took place over a ten-month period between the execution of the CFA by Tallcree in mid October 2015, and the conclusion of the negotiations as reported by Rath to Tallcree occurred on August 12, 2016.

If one excludes the period of time it took to formally install the new government after the October 19, 2015 election, I find that Rath’s direct involvement in the settlement process covers the period from the December 10, 2015 letter to the two ministers in charge through to his August 12, 2016 report of success, an eight-month period. [ 38 ] This eight-month period included Rath issuing a Statement of Claim and filing some official notices, which efforts were discontinued in 2017 when this matter was finally resolved to everyone’s satisfaction.

Tallcree passed a Band Council resolution at the end of August 2016 accepting the settlement in principle, and eventually Tallcree’s general membership overwhelmingly accepted the Settlement. F.

The CFA’s Risk to Rath [ 39 ] Rath’s current submissions also include that he undertook significant risk by taking on Tallcree’s claim on a contingency basis pursuant to the CFA because Rath was binding himself to an arrangement that could take years or even decades of complex litigation to resolve. [ 40 ] However, I note that substantially all of Rath’s efforts were non-legal in nature, which involved little or no litigation risk or involvement of Rath.

Rath’s rapid resolution of the matter logically establishes this, especially Rath’s meeting with the Prime Minister and his advisors in person, who notably are the Defendant Canada’s main decisionmakers. [ 41 ] How much legal risk is Rath undertaking when in less than two months of the CFA, he can quote in his December 10, 2015 letter to the same Prime Minister, Canada’s announced policy to settle claims like Tallcree’s as follows: Pursuant to Prime Minister Trudeau’s statement on December 8, 2015 that “(i)t is time for a renewed, nation-to-nation relationship with First Nations peoples, one that understands that the constitutionally guaranteed rights of First Nations in Canada are not an inconvenience but rather a sacred obligation”, our client’s view is that it would be not only immoral and in bad faith, but in breach of the Honour of the Crown and the Crown’s Constitutional and fiduciary duties for the Government of Canada to continue to withhold monies that it has acknowledged for over 10 years are owing.

In continuing to do so, the Government would continue along the path of its predecessor in creating an unfair advantage in settlement negotiations by withholding funds from some of Canada’s poorest citizens as a means of extracting an unfair or unreasonable settlement on the basis of poverty that Canada itself has created and supported through its previous refusals to honour its “sacred obligations”. [ 42 ] Furthermore, with respect to the risks that Rath was incurring by entering into the CFA, I note that the October 14, 2015 CFA now attached as

Schedule B to these Reasons contain various problematic provisions for Tallcree. [ 43 ] There is an unfavourable arbitration clause on page 4 to Tallcree with respect to any dispute regarding any fee billed under the CFA, or fee rendered.

All costs of the arbitration were to be paid by Tallcree on a “Solicitor and own client basis”. [ 44 ] Furthermore Rath appears to have contemplated an early termination of legal services by Tallcree, because the CFA provides that in the event that an arbitration occurs and no settlement has been finalized, the costs of that arbitration would also be paid on a “solicitor and own client basis” by Tallcree.

The CFA on page 6 goes on to devote a full paragraph under heading “Termination of Legal Services” in which Tallcree is required to pay Rath’s account, whatever that account is, within 15 days of the termination of services, the failure of which will result in Rath not releasing Tallcree’s file. The provision goes on to state the fees earned at the time of dismissal,

remain payable in any event and such fees are a first charge on any settlement proceeds, which cannot be distributed until Rath’s fees are paid or settled by way of arbitration or otherwise. [ 45 ] The basis for the terminating of legal services includes that Tallcree is “deemed” to have discharged Rath in the event Tallcree fails to cooperate with the prosecution of the claim, or settles any of the claim without Rath’s approval or consent. [ 46 ] Several aspects of the arbitration clause, and the termination of legal services clause found in the CFA are not only arguably highly prejudicial to Tallcree, they may be contrary to the Rules of Court provisions regarding CFAs, and they may also violate the Alberta Law Society Code of Conduct which also applies to CFAs. [ 47 ] Furthermore with respect to Rath’s current submission about the great risk that he undertook pursuant to the CFA, given what we know actually occurred on the file from the Record, and given Rath’s obvious political acumen and lobbying abilities, plus his CFA exit strategies and a relatively harsh arbitration clause, it is safe to conclude that Rath knew what he was doing, and what outcomes would likely transpire during the relevant eight to ten-month period of activity.

It appears that Rath undertook little personal risk, and had a substantial likelihood of success. [ 48 ] While I appreciate that Treaty claims litigation can be very complex, and take years, if not decades to complete, there is no indication from the Record or in his submissions that Rath had ever undertaken such complex proceedings in the 20 years the firm had existed from 1995 to the time of the CFA. Rath’s reported cases seem to only involve fee disputes with other First Nations, and one can reasonably question if Rath could have ever undertaken complex Treaty litigation.

At the end of the day, Rath & Company was a small six-member firm established in 1995 operating in Priddis, Alberta, that received over $11.5 million dollars in legal fees for eight to 10 months of activity pursuant to the CFA. [ 49 ] Also when Rath issued his one-page statement of account in early 2018, he banked the over $11.5 million dollars, even though his statement of account did not comply with the requirements of Rule 10.7(7), which states that every account rendered under a CFA must contain a statement that the client can request a determine of the reasonableness of the account and the reasonableness of the CFA before an RO.

Although Rath never had the opportunity to explain the omission, and while the CFA mentioned the RO’s authority as well as this Court’s in such matters, the CFA contained provisions in the arbitration clause that are contrary to Rule 10.7(7), and contractually bound Tallcree to paying Solicitor Client costs on any taxation or collection effort by Rath, irrespective of the results of those efforts.

My Determination of the Final Award to Rath [ 50 ] The Court has a dual jurisdiction with respect to CFA’s to both interpret and to enforce the contract, and one when the contract is found to be unreasonable as in the present case, to vary, modify or disallow the agreement. [ 51 ] Tallcree submits that a one to two million dollar final award would be appropriate based on a 5% contingency fee. However, Tallcree’s math is wrong because a 5% contingency fee on a $58.5 million dollar settlement represents an approximately $3 million dollar fee.

Rath argues that if the Court has jurisdiction in this matter, his final fee award should remain at $11,518,075.00. [ 52 ] I will now determine what amount Rath’s fees should be, having decided that the CFA is unreasonable. In this regard, I will deal with some of the parties’ current submissions/argument, the context of what occurred, and the steps that Rath took around the time the CFA came into existence on October 14, 2015. [ 53 ] It should be noted that Rath never recorded time in Tallcree’s file and later “’recollected” the time spent.

Notwithstanding an average $500/hour billing charge ($600/hour for Jeffrey Rath himself), and his after the fact time records, the actual time charges on this file amounted to less than $392,000 or approximately 3% of the contingency fee amount received by Rath over $11.5 million dollars. G. Case Authorities [ 54 ] In this particular case, Tallcree conceded that the CFA was enforceable before the RO in September 2018.

However, the law concerning contract enforceability has changed since this acknowledgement by Tallcree. [ 55 ] Firstly, unconscionable transactions was the subject of an extensive review and in my opinion materially changed in the Supreme Court of Canada’s July 2020 decision in Uber v Heller , 2020 SCC 16 . In view of the Uber decision, I raised with counsel in August 2020, whether it had any applicability to the present matter, and counsel provided the Court with letter submissions in this regard.

Tallcree submitted that the Uber decision was relevant and that the CFA was unenforceable as a result of it being unconscionable. Rath submitted that the facts in Uber were materially distinguishable, and Uber did not apply to Rath’s CFA. [ 56 ] Ultimately, I decided it was not necessary to determine whether this CFA was “unconscionable”.

Nevertheless while Uber dealt with an arbitration clause as part of a standard form agreement, it is certainly arguable that portions of that decision could apply to CFAs given that CFAs are a form of standard form agreements: see for example Ontario Solicitors Act Regulation 563/20 Contingency Fee Agreements which now mandates contingency fee agreements as standard form agreements.

Furthermore, I have already noted that Rath’s arbitration clauses in the CFA are quite onerous and prejudicial in some respects. [ 57 ] Secondly, even more recently in late December 2020, the Supreme Court of Canada in CM Callow Inc v Zollinger , 2020 SCC 45 , revisited the duty to act honestly, not only at the time of the formation of the contract ( Bhasin v Hrynew , 2014 SCC 71 ), but also during the performance of the contract. [ 58 ] In any event, the equitable doctrine of unconscionability is used to protect the vulnerable in the contracting process by setting aside unfair agreements that result from an inequality of bargaining power.

This is relevant to CFAs given that people who rely on CFAs are often vulnerable individuals, as Rath himself described Tallcree as being.

[59] Furthermore, R 3.6-1 of the Alberta law Society Code of Conduct applies to contingency fees, and it states a lawyer cannotcharge or accept a fee unless the fee is fair and reasonable.

Therefore fees payable pursuant to a CFA must be fair and reasonable, whichI find they were not in Rath’s CFA with Tallcree. [60] As for other case authority applicable in this matter, both counsel agree that there is no binding authority upon me given thatTallcree sought to determine the reasonableness of the retainer agreement alone. [61] However there is persuasive authority found in Morrison v Rod Pantony Professional Corporation, 2008 ABCA 145.

Thefactors that were discussed in Morrison should be considered in light of the Supreme Court of Canada’s recent decisions in Uber andCM Callow Inc, and in light of this Court’s dual jurisdiction in these matters. [62] The facts in Morrison are also different from the present matter because it dealt with an individual who clearly had secondthoughts or buyer’s remorse with respect to her CFA. This is not the same issue with Tallcree who are upset because they believed thatthe settlement process might take years or decades, but in fact the total settlement process was completed in only 18 months.

Tallcreewas unaware of how strong their claims to agricultural benefits were.

However Rath knew, certainly by the time of the October 2015CFA and likely several weeks/months before that, there was a strong chance that the Federal government would change following themandated October 2015 general election, and that the new federal government would respond positively to Tallcree’s agriculturalbenefits claims. [63] There are also numerous authorities in this Court with respect to determining a fair and reasonable contingency fee: see forexample MS v DM, 2014 ABQB 702; Downes v Botan, 2018 ABQB 341; Athwal v Mather, 2019 ABQB 801.

What these cases andothers describe is a process in which the Court exercises its “discretion” according to certain parameters in determining a fair andreasonable contingency fee. H. Determining a Fair and Reasonable Contingency Fee [64] The authority given in the previous R 619(4) to vary, modify or disallow the agreement is now found in R 10.18(3)(

b) of theRules of Court which reads as follows:

(3) On considering a question referred to it, the Court may make any order it considers appropriate in the circumstances, including . . . (

b) with respect to a review of the terms of a retainer agreement, an order approving the agreement or varying or disallowing theagreement in whole or in part. [65] Having found that the CFA in question is unreasonable, a reasonable fee can now be determined pursuant to R 10.27(1),which factors include: 10.2(1) Except to the extent that a retainer agreement otherwise provides, a lawyer is entitled to be paid a reasonable amount for theservices the lawyer performs for a client considering (

a) the nature, importance and urgency of the matter, (

b) the client’s circumstances, (

c) the trust, estate or fund, if any, out of which the lawyer’s charges are to be paid, (

d) the manner in which the services are performed, (

e) the skill, work and responsibility involved, and (

f) any other factor that is appropriate to consider in the circumstances. [66] Similarly, one could apply the factors as stated at paras 38 through 40 from Rusk v Medicine Hat (City of), 2001 ABQB1020: [38] Whether, and to what extent, a contingency agreement produces a result which is unreasonable has most often been determinedaccording to the factors set out in Yule v.

Saskatoon (1955), (SK QB), 16 W.W.R. (N.S.) 305 (Sask.Q.B.) at 313, asfollows: The circumstances to be considered in arriving at the proper amount are the extent and character of the services rendered; the labour,time and trouble involved; the character and importance of the litigation in which the services were rendered; the amount of money or thevalue of the property to be affected; the professional skill and experience called for; the character and standing in his profession of thecounsel; the results secured, and to some extent at least the ability of the client to pay. [citations omitted] [39] Essentially those same factors govern all fee accounts of lawyers in Alberta by reason of Rule 613 of the Rules of Court whichprovides: 613.

Barristers and solicitors are entitled to such compensation as may appear to be a reasonable amount to be paid by the client for theservices performed having regard to

(

a) the nature, importance and urgency of the matters involved, (

b) the circumstances and interest of the person by whom the costs are payable, (

c) the fund out of which they are payable, (

d) the general conduct and costs of the proceedings, (

e) the skill, labour and responsibility involved, and (

f) all other circumstances, including, to the extent hereinafter authorized, the contingencies involved. [40] In

summary, a fair and reasonable legal fee in achieved on a case by case basis. The factors and considerations outlined in theauthorities reviewed above guide me in terms of methodology. I must reach a reasonable fee based on all the circumstances of this case.According to case law, I must express reasonable fees in a dollar amount and not a percentage. [67] Having reviewed these R. 10.21 and Rusk factors, I find that these factors are not material considerations in this matterbecause they apply when dealing with lawyers acting as legal counsel in a typical adversarial case, which is not the case here.

The over$11.5 million dollars in legal fees that Rath received as a result of the CFA as found by an experienced RO, was a high fee that he hadnever previously seen before.

This is because unlike all the previous cases that the RO was dealing with, this CFA was substantiallydifferent from any motor vehicle accident CFA and settlement, which is typically what RO’s deal with on a day-to-day basis, year in andyear out. [68] Firstly, there are virtually no $58.5 million dollar settlements arising out of a motor vehicle accident. [69] Secondly, the CFA was a legal document meant to deal with legal services performed by lawyers, which is basically not whatRath did in substance, because his success in this CFA was largely based on political representations including to the top political leaderof the Country, who happened to be the main decisionmaker of the Defendant Government of Canada in this case. [70] Thirdly, not only as the RO stated in his decision was liability not an issue in this CFA, Rath could actually quote from theDefendant Canada itself the Prime Minister’s statement that as government policy, claims like Tallcree’s had to settled for historical andmoral reasons.

Accordingly not only was liability acknowledged, it was indeed mandated by the Defendant itself as a matter of policyand conscience. [71] Fourthly, unlike virtually all defendants, the Defendant Canada had unlimited financial resources to work with to settle claimslike Tallcree’s. [72] Fifthly, the Record in this appeal is striking in that there was virtually no typical “negotiations” that take place in typicallawsuits and litigation, just fortuitous circumstances and discussions at the highest levels of the Defendant Canada, including meetingswith the Prime Minster and his staff. I.

Some Comparators [73] As previously described, the parties were given a chance to assist the Court in determining Rath’s final award. In this regard,the parties did not provide the Court with any comparators, other than Rath submitting that his fee should remain as previouslydetermined of over $11.5 million dollars, and Tallcree’s acknowledging that a one to two million dollar contingency fee would be fair toTallcree. [74] However I conclude that in order to determine the final award to Rath, one can go beyond just determining a fair andreasonable amount.

I can consider how lawyers are typically remunerated on an annual basis, particularly given the unique nature andsize of the final Tallcree settlement, and given how the matter was resolved so quickly. In order to determine the final award to Rath, it isalso helpful to compare how non-lawyers are compensated based on commissions earned and payable for large sized transactions. i. Commissions payable [75] I will firstly apply a comparator to what Realtors/Brokers earn as middlemen or facilitators as a typical percentagecommission or finders fee.

The Law of Evidence in Canada Fifth Edition, Sopinka, Lederman and Bryant, at §19.28, pg 1397 describeshow business and trade practices notorious generally or in the community are a recognized category of facts which do not require formalproof thereof and which can be judicially noticeable: 19.28 Another recognized category is that of business and trade practices notorious generally or in the community. In Sutherland v Bell,Beck J pointed out that: It is a matter of common experience . . .

We are not to decline to make use of our own knowledge of such ordinary methods of businessas are matter of common experience. [(1911), (AB CA), 3 Alta. L.R. 497, at 498, 18 W.L.R. 521 (Alta.C.A.). See also Davey v. Harrow Corp., [1957] 2 AllE.R. 305, [1958] 1 Q.B. 60 (C.A.) Gollan v. Edmonton Credit Co., (AB KB), [1938] 1 W.W.R.670, [1938] A.J. No. 4(Alta. Dist. Ct.); Poole v Smith’s Car Sales (Balham) Ltd., [1962] 2 All E. R. 482, at 486, [1962] 1 W.L.R. 744 (C.A.); R v Pinno, (SKDC), [1925] 1 W.W.R. 737, [1925] S.J. No. 4 (Sask. Dist.

Ct.).] [76] Similarly, Real Estate commissions are well known by anyone who has ever bought or sold a property, and thosecommissions payable upon closing usually average around 5%. In this comparable, I am dealing with a $58.5 million dollar settlement,

and given that there are relatively few $58.5 million dollar real estate transactions, a 5% award would seem quite reasonable, since higher value real estate transactions usually attract a lower percentage commission. Applying a 5% total award on a $58.5 million dollar transaction would result in a fee payable of approximately $3 million dollars in this particular case. [ 77 ] A $3 million dollar award to Rath is still substantially more that Rath’s after the fact estimated time records of under $400,000.

It would also result in a $300,000 a month retainer if you consider the 10-month period over which most of this single file was settled over, and close to a $400,000 a month retainer if you consider it was essentially completed within eight months. ii. Lawyer and Judges Salaries [ 78 ] Additionally, the Court could apply another measure based on what top producing lawyers at the height of their careers earn to determine Rath’s final CFA award. These top producing lawyer’s salaries are also used to determine Judges compensation.

At the time of the CFA in October 2015, Judges in Canada were earning approximately $300,000 a year; and the top producing lawyers at the 75 th percentile of Canadian lawyer’s earnings were estimated to be receiving $400,000 a year in salary: See paras 66 and 73 of the Report of the 5th Quadrennial Judicial Compensation and Benefits Commission established by the federal Minister of Justice on December 18, 2015 (“Report”). [ 79 ] This Commission was established at virtually the same time Rath wrote to the same Minister of Justice on Tallcree’s behalf in December 2015.

The Commission’s Report was completed within the same approximate nine-month period that Rath essentially completed his negotiations on Tallcree’s behalf. Accordingly, the salary and benefits analysis found in the Report is roughly concurrent in time to the CFA and to Rath’s negotiations on Tallcree’s behalf. [ 80 ] Rath’s $11.5 million dollar account would be the equivalent of the total earnings of a Judge and top earning lawyer over his/her entire combined working career of between 30 to 40 years.

A $3 million dollar fee payable to Rath would amount to approximately eight years of total annual compensation paid to a top producing 75 th percentile Canadian lawyer, or 10 years of total compensation paid to a Federally appointed judge. By comparison, Tallcree’s single file took approximately eight to 10 months essentially to settle. [ 81 ] In comparing Rath’s fee payable to the salaries of judges and top producing lawyers in the 75 th percentile in Canada, no provision has been made for Rath’s overhead expenses.

Since Rath practices in a small six-person firm in Priddis, Alberta, it can be safely assumed that his overhead expenses would not be significant. [ 82 ] Even if it was close to the 50% overhead factor incurred by large law firms in major metropolitan areas, this expense factor would be more than offset by the fact that Rath received his $11.5 million dollar fee in this matter in early 2018. Therefore no provision has been provided for the earnings that Rath would have received during the past two or three years on his $11.5 million dollar fee.

During the past three years, Rath’s pre-tax income on the $11.5 million dollar fee could amount to over a million dollars a year, assuming an annual 10% rate of return. Over the three year period since Rath banked his $11.5 million dollar fee, this additional income could amount to $3 million dollars pre tax. [ 83 ] Additionally, Rath operates through a professional corporation, so there would be additional tax advantages available to him which are not available to salaried lawyers in larger firms and not available to judges, reducing both his overhead factor and his taxable income.

Conclusion [ 84 ] My final award to Rath in this matter is $3 million dollars. Rath in the initial $11.5 million dollar account, did not charge disbursements because they were relatively insignificant. Real estate commissions and finder’s fees also typically do not add disbursements either because they are a cost of doing business.

Accordingly, the $3 million dollar award to Rath will be inclusive of all disbursements that Rath may have incurred in this matter. [ 85 ] Rath is directed to refund the difference of $8,518,075 dollars it received as fees [$11,518,075 minus $8,518.075 = $3,000,000] to Tallcree immediately, and in any event within 30 days of these Reasons.

Rule 10.27(2) which reads as follows is invoked: If the amount of lawyer’s charges payable pursuant to the decision of the review officer has been paid and, after payment, is reduced on appeal, the lawyer may be ordered to return the excess and, if the lawyer fails to do so, the lawyer, in addition to being liable for that amount, may be found guilty of a civil contempt. [ 86 ] The parties are welcome to make further submissions to the Court with respect to the costs to be awarded on this appeal, and any other matters they are unable to agree on within 30 days of these reasons.

Heard on the 27 th day of November, 2020 . Dated at the City of Edmonton, Alberta this 26 th day of March, 2021.

Donald Lee J.C.Q.B.A. Appearances: Priscilla Kennedy for Appellant, Tallcree First Nation Edward Molstad, QC Allie Larson for the Respondents Schedules A and B can be found on the Court file