Stanchfield v Doe, 2023 ABKB 273

Court of King’s Bench of Alberta Citation: Stanchfield v Doe, 2023 ABKB 273 Date: 20230504 Docket: 2201 14094 Registry: Calgary Between: Heather Stanchfield and Connor Bakken by His Next Friend, Heather Stanchfield Plaintiffs - and - John Doe and the Administrator of the Motor Vehicle Accident Claims Act Defendants _______________________________________________________ Reasons for Decision of the Honourable Justice M.A. Marion _______________________________________________________ I.

Introduction [ 1 ] Heather Stanchfield’s son, Connor Bakken, was involved in two car accidents, one in April 2019 and one in April 2022. The second accident involved an unidentified driver and, therefore, the Administrator of the Motor Vehicle Accident Claims Act (RSA 2000 c M-22 ) became involved. On her own behalf and as mother and litigation representative of her son, Ms. Stanchfield retained Jonathan Denis, KC of Guardian Law Group in respect of the second accident and filed this action.

She applies pursuant to section 4(2) of the Minors’ Property Act , SA 2004, c M-18.1 for the approval of a settlement of the claim in relation to the April 2022 accident. [ 2 ] In the course of the application, Mr.

Denis also sought court approval for the payment of his fees out of the settlement funds pursuant to the terms of a contingency fee agreement ( Contingency Agreement ). [ 3 ] The Administrator agrees with the approval of the settlement pursuant to section 4(2) of the Minors’ Property Act and has executed a Partial Consent Judgment which provides for judgment against the Administrator in the amount of $25,200 plus $1,650.24 of taxable costs and disbursements for a total settlement amount of $26,850.24. The Administrator did not attend the application. [ 4 ] Pursuant to

section 15 of the Minors’ Property Act , the Public Trustee must be given notice of any application in which the existence, nature or disposition of a minor’s property interest is in issue. Counsel for the Public Trustee attended the application. The Public Trustee has no objection to the approval of the settlement pursuant to section 4(2) of the Minors’ Property Act . However, the Public Trustee objected to the amount of fees proposed to be paid to Mr. Denis. [ 5 ] For the reasons set out below, the settlement with the Administrator is approved. Of the settlement proceeds, I find and direct that Mr. Denis is entitled to payment of $7,637.65, not the claimed amount of $10,327.33.

II. Issue [ 6 ] As noted, there is no dispute about whether the settlement should be approved. I have reviewed the application, the affidavit materials including the details of Connor’s treatments. I agree that the settlement is reasonable and should be approved. [ 7 ] The remaining issue on this application is what is an appropriate amount to be paid to Mr. Denis as legal counsel from the settlement proceeds. III. Analysis [ 8 ] The Minors’ Property Act gives the Public Trustee input, and the court oversight, in dealings with property of minors. In addition to giving the court discretion in the approval of settlements under section 4(2) , pursuant to section 4(4)(

c) of the Act the court has oversight and discretion over the payment of the settlement proceeds. The court may consider whether an amount proposed to be paid to legal counsel as part of a settlement of the minor’s claim is reasonable in all of the circumstances. In the case of a valid contingency fee agreement, that would include an assessment of reasonableness of the contingency fee agreement: Tallcree First Nation v Rath & Company , 2022 ABCA 174 at para 57 ; Morrison v Rod Pantony Professional Corp , 2008 ABCA 145 at para 25 . [ 9 ] Mr. Denis relies on his Contingency Agreement, which is dated April 21, 2022.

It provides that the client agreed to pay the lawyer 33% on claims proceeds calculated upon commencement of a Statement of Claim, among other things. In particular, it provides that the client is to pay all disbursements and other charges plus GST that are paid or charged by Mr. Denis during the course of the matter, and that if a recovery is made by settlement Mr. Denis will not deduct unpaid disbursements and other charges from the claims proceeds. It states that “the applicable contingency fee rate .... applies upon any and all disbursements recovered”. [ 10 ] Mr.

Denis proposes that he be paid a total amount of $10,327.33, inclusive of GST. His calculation is based on 33% of the total settlement amount (excluding “other costs”), then adding onto the contingency amount other costs and GST. His calculation included at least some disbursements amounts in the calculation of the contingency amount. His calculation is set out below: ITEM Total Settlement 26,850.24 Less: other costs - 1,455.90 BALANCE 25,394.34 Contingency (33%) 8,380.13 Add: other costs 1,455.90 Total (before GST) 9,836.03 GST 491.80 TOTAL 10,327.83 [ 11 ] During the application, Mr.

Denis advised that he had sent for filing an updated affidavit of his client. He provided me an unfiled copy of that affidavit. In that affidavit, Ms. Stanchfield stated: “My counsel has advised that he has agreed to a reduction to a rate of 29%. The amount of the account is $9,798.61”. In argument, Mr. Denis indicated that his agreement was contingent upon reaching agreement with the Public Trustee, which did not happen. However, that is not what the affidavit says.

In my view, it is not appropriate for counsel to advise his client that he accepts a reduction in his contingency rate, to assist her in producing a sworn affidavit that incorporates that reduction, which is then sent for filing with the court, and then to resile from that evidence when the question of his fee entitlement is disputed before the court. I proceed on the basis that Mr.

Denis agreed to a 29% contingency fee, and that his revised calculation would be either $9,798.61 as indicated in the update affidavit, or as below (using the calculation he explained to me but using 29% instead of 33%): ITEM Total Settlement 26,850.24 Less: other costs - 1,455.90 BALANCE 25,394.34 Contingency (29%) 7,364.36 Add: other costs 1,455.90 Total (before GST) 8,820.26 GST 441.01 TOTAL 9,261.27 [ 12 ] The Public Trustee objects to Mr. Denis charging a 33% or 29% contingency, including because the matter did not need to proceed with questioning.

The Public Trustee was of the view that 25% was a more appropriate contingency award amount having regard to various factors: Morrison at para 27 ; Athwal v Mather , 2019 ABQB 801 at para 5 (citing MS v DM , 2014 ABQB 702 at para 43 ) Further, the Public Trustee’s position is that no costs and disbursements should be included in the contingency amount. The Public Trustee’s calculation is: ITEM Total Settlement 26,850.24 Less: Disbursements and Other Costs -1,650.24 BALANCE 25,200.00 Contingency (25%) 6,300.00

GST 315.00 Total (with GST) 6,615.00 Plus Other Costs 1,524.95 TOTAL 8,139.95 [ 13 ] I reserved my decision so that I could review the updated affidavit provided by Mr. Denis. [ 14 ] I have considered Mr. Denis’ submissions as well as the submissions of the Public Trustee. I find that I cannot agree with either of them. An assessment of the reasonableness of a contingency fee agreement presumes that the contingency fee agreement was valid and in accordance with the requirements of rules 10.7 and 10.8 of the Alberta Rules of Court , Alta Reg 124/2010 .

I have reviewed the Contingency Agreement and I find that it did not comply with rule 10.7 . [ 15 ] Rules 10.7 and 10.8 provide: Contingency fee agreement requirements 10.7(1) A contingency fee agreement must (

a) be in writing, and (

b) be signed by the lawyer and the lawyer’s client or by their authorized agents.

(2) To be enforceable, a contingency fee agreement must contain the following particulars in precise and understandable terms: (

a) the name and address of each client; (

b) the name and address of the lawyer; (

c) a statement of the nature of the claim; (

d) a statement of the event or contingency on which the lawyer’s fees are to be paid to the lawyer; (

e) a statement about (

i) the manner in which the contingency fee is to be calculated, provided that no fee, calculated as a percentage or otherwise, may be payable on disbursements or other charges recovered, (ii) the maximum fee payable, or the maximum rate calculated, detailing the disbursements and other charges that are included in that fee or rate or indicating that disbursements and other charges are in addition to that fee or rate, and (iii) whether the client is responsible to pay disbursements and other charges, and if so, a general description of the types of disbursements and other charges likely to be incurred, other than relatively minor disbursements; (

f) if the lawyer is to receive any amount from a costs award, a statement that (

i) the cost award is intended to be a complete or partial reimbursement of the lawyer’s charges to the client, (ii) the cost award is owned by the client and that by signing the contingency fee agreement the client is waiving the right to any amount from the costs award that is payable to the lawyer in accordance with subclause (iv), (iii) the amount from the costs award retained by the lawyer will be in addition to the lawyer’s percentage, fixed fees or other form of legal fees, and (iv) the percentage of the costs award that the lawyer may receive may not exceed the percentage of the judgment or settlement that the lawyer is entitled to; (

g) a statement that, if the client gives notice in writing to the lawyer within 5 days after the client’s copy of the contingency fee agreement is served on the client, the client may terminate the contingency fee agreement without incurring any liability for the lawyer’s fees, but that the client is liable to reimburse the lawyer for reasonable disbursements; (

h) a statement that (

i) at the request of the client, a review officer may review either or both of the contingency fee agreement and any lawyer’s charges in an account rendered under the agreement, and (ii) either or both of the contingency fee agreement or any lawyer’s charges may be further reviewed by way of an appeal from a review officer’s decision to a judge.

(3) The contingency fee agreement must be witnessed by a person who sees the client sign the agreement, and that person must then swear an affidavit of execution.

(4) The client must be served with a copy of the signed contingency fee agreement within 10 days after the date on which the agreement is signed, and an affidavit of service to that effect must be executed by the person who served the agreement.

(5) A client may terminate a contingency fee agreement without incurring any liability for the lawyer’s fees under the

agreement if the client, within 5 days after service on the client of the copy of the contingency fee agreement, gives written notice of the termination to the lawyer, but the client is liable to reimburse the lawyer for reasonable disbursements incurred by the lawyer.

(6) If a contingency fee agreement provides that a lawyer is entitled to an amount from a costs award, the lawyer is not entitled to receive from the costs award any higher percentage of the judgment or settlement than the lawyer is entitled to receive under the contingency fee agreement.

(7) Every account rendered under a contingency fee agreement must contain a statement that at the client’s request a review officer may determine both the reasonableness of the account and the reasonableness of the contingency fee agreement.

(8) An account that does not contain the statement required by subrule (7) is of no effect unless the Court (

a) is satisfied (

i) that the omission of the statement was inadvertent, and (ii) the client has not been misled or prejudiced, and (

b) the Court waives the requirement for the statement. AR 124/2010 s10.7;128/2015 Lawyer’s non-compliance with contingency fee agreement 10.8 If a lawyer does not comply with rule 10.7(1) to (4), (6) and (7), the lawyer is, on successful accomplishment or disposition of the subject-matter of the contingency fee agreement, entitled only to lawyer’s charges determined in accordance with rule 10.2 as if no contingency fee agreement had been entered into. [ 16 ] In this case, the Contingency Agreement: (

a) did not contain a statement that “...no fee, calculated as a percentage or otherwise, may be payable on disbursements or other charges recovered” as required by rule 10.7(2)(e)(i). In fact, it said the opposite, namely that: “the applicable contingency fee rate .... applies upon any and all disbursements recovered” and “the contingency also applies to disbursements recovered”; (

b) provided that Mr. Denis was to receive a portion of a costs award, but did not include the statements required in rule 10.7(2) (f); (

c) did not include the statement required in rule 10.7(2)(g), but instead contained this awkwardly-worded provision which only potentially covers a portion of the requirements of rule 10.7(2)(g): The Client has 7 business days after this agreement has been served to notify the Lawyer in writing that I have decided to terminate it. In that instance, the Client will have no liability for fees, but the Client will remain liable for the Lawyer’s reasonable disbursements or other charges incurred prior to receipt of my written notification; and (

d) did not include the statement required in rule 10.7(2)(h). [ 17 ] Further, the invoice appended as Exhibit G to Ms. Stanchfield’s update affidavit does not include the statements required by rule 10.7(7). [ 18 ] As a result, I find that the Contingency Agreement is unenforceable, pursuant to rule 7.8. Accordingly, Mr. Denis is only entitled to “a lawyer’s charges determined in accordance with rule 10.2”: MS v DM at para 52 ; Morrison at para 43 . [ 19 ] Rule 10.2(1) provides:

(1) Except to the extent that a retainer agreement otherwise provides, a lawyer is entitled to be paid a reasonable amount for the services 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. [ 20 ] Rule 10.2 contemplates a reasonable fee. In the case of unenforceable contingency agreements, some courts have nonetheless enforced them or found that a reasonable fee is one calculated in accordance with the contingency agreement: Botan (Botan Law Office) v St Amand , 2011 ABQB 774 at para 4 ; appeal dismissed 2013 ABCA 227 . Other cases apply quantum meruit : Steinke v Hajduk Gibbs LLP , 2014 ABQB 34 at para 51 , 53; McDonald v Crawford , 2004 ABCA 150 at para 11 ; Downes v Botan , 2018 ABQB 341 at para 22 .

[ 21 ] A contingency fee agreement is only enforceable if the requirements of rule 10.7(2) are met. Courts should be reluctant to calculate a reasonable fee pursuant to rule 10.2 that, effectively, enforces an unenforceable contingency fee agreement. This is particularly so given that the requirements of rule 10.7 are not onerous and are easily incorporated into contingency agreements.

In cases where the non-compliance is not minor or technical but undermines the client protection and clarity the rules are designed to create, courts must be careful not to reward counsel, or prejudice clients, for counsel’s non-compliance. In my view, this is even more apt when counsel act on behalf of minor children, where the court must protect the welfare of infants: MS v DM at para 41 . If counsel and their clients wish to use a contingency model, which may very well provide access to justice in some cases, it is incumbent on counsel to follow the rules. Accordingly, Mr.

Denis should only be entitled to his rule 10.2 assessed fees (unless they are more than what he would have been entitled to had he complied with the Rules , in which case they may need to be adjusted). In either scenario, I do not enforce the terms of the Contingency Agreement. [ 22 ] Although it was not in evidence, Mr. Denis provided me with a “Matter Billing Log” that set out the time entries for work on this matter on behalf of the Plaintiffs. I have considered the entries. I note that several of the time entries are for administrative or non- substantive work performed by non-lawyers.

I find that it is not reasonable to charge the client for administrative, non-legal work in this case. [ 23 ] I have reviewed Mr. Denis’ time entries, as well as the entry of one other lawyer. As was noted by Mr. Denis in oral argument, a material amount of time was spent seeking the consent of the Administrator because notice was not given within the 90-day period pursuant to

section 7 of the Motor Vehicle Accident Claims Act . While there is some evidence that police delayed in reporting to the client about the identity of the other driver, given that counsel was retained shortly after the accident I find that it is not reasonable to charge the client for the work to extend the notice period. Similarly, I find that charging for legal work to get a fiat as a result of an error by a commissioner for oaths is not reasonable.

Finally, I do not believe it is reasonable to charge the client for the portion of work that was dedicated to preparing an application based on an unenforceable Contingency Agreement. I have also factored in that a material portion of the work in relation to this application surrounded Mr.

Denis’ entitlement to fees given that approval of the settlement and the judgment were by consent. [ 24 ] I find that a reasonable amount of fees for legal work on this matter is as set out below: Lawyer's Time Time Value Reasonable Amount 10 Nov 22 Denis 1.6 960.00 960.00 02 Dec 22 Denis 2 1,200.00 1,200.00 15 Dec 22 Denis 1.3 780.00 - 20 Dec 22 Denis 1.7 1,020.00 - 29 Dec 22 Denis 0.9 540.00 - 06 Jan 23 Denis 2.1 1,260.00 1,260.00 11 Jan 23 Denis 2.3 1,380.00 1,380.00 02 Mar 23 Denis 1.2 720.00 720.00 07 Mar 23 Denis 2.3 1,380.00 500.00 20 Mar 23 Bishop 1 250.00 - TOTAL 16.4 9,490.00 6,020.00 [ 25 ] This is less then what the Contingency Agreement may have provided had Mr.

Denis complied with the Rules . Accordingly, I find that Mr. Denis is entitled to $6,020 plus GST, for a total of $6,321, for his fees. [ 26 ] With respect to disbursements and other costs, I have assessed the disbursements and other costs claimed and find that, absent an agreement by the client, some of them are not reasonable.

I allow the following: Disbursements and Other Costs Number Rate Amount Claimed Allowed Rate Total Allowed Disbursements 151.10 151.10 Facsimile 13 1.00 13.00 0.25 3.25 Colour Printing/Reproduction 98 0.50 49.00 0.25 24.50 Scanning 641 0.35 224.35 0.25 160.25 KB Filing Page Fee 31 1.00 31.00 1.00 31.00 Process Server 324.60 324.60 File Opening Fee 175.00 - Doctor 40.00 40.00 Medical Report 12.50 12.50 EFT Service Charge 0.50 0.50 Hospital File 14.23 14.23 Courier Fee 16.57 16.57 Courier Fee 17.40 17.40 Print/Reproduction/Printing 170 0.35 59.50 0.25 42.50 Filing Fees 257.00 257.00 Law Society Filing Levy 75.00 75.00 Filing Fees Application 100.00 100.00 Physio Chart 46.25 46.25

TOTAL 1,607.00 1,316.65 [ 27 ] In conclusion, Mr. Denis is entitled to $7,637.65 ($6,321 plus $1,316.65) in aggregate to be paid to him out of the settlement funds, and I so direct that this be done pursuant to section 4(4) (

c) of the Minors’ Property Act . IV. Conclusion [ 28 ] The Partial Consent Judgment is granted. Mr. Denis may submit the Partial Consent Judgment to my attention through KB Digital filing for my signature. [ 29 ] I further order: (

a) The Settlement of the claims of the minor plaintiff, Connor Bakken by his next friend and litigation representative, Heather Stanchfield, is hereby confirmed pursuant to section 4(2) of the Minors’ Property Act ; (

b) Legal fees, disbursements, other costs and GST in the total sum of $7,637.65 are hereby approved for payment out of the settlement proceeds to Mr. Denis; (

c) The remaining net sum of $19,212.59 shall be paid to Heather Stanchfield as guardian of Connor Bakken; and (

d) There shall be no costs of this application, and no further amount payable by the Plaintiff to Mr. Denis in respect of this action. [ 30 ] Mr. Denis is directed to prepare the order arising out of this decision and to send it to me for signature through KB Digital Filing. Heard on the 12 th day of April, 2023. Dated at the City of Calgary, Alberta this 4 th day of May, 2023. M.A. Marion J.C.K.B.A. Appearances: Jonathan Denis, KC for the Plaintiffs No appearance for the Administrator of the Motor Vehicle Accident Claims Act Kristen Clarke for the Public Trustee