Fridays with Rogers Partners

October 23, 2020

At our weekly meeting, Chris MacDonald discussed a decision of the Ontario Court of Appeal, Krukowski v. Aviva Insurance Company of Canada, 2020 ONCA 631.

In this case, the Court considered an appeal brought by Deutschmann Law Professional Corporation, whose principal was Mr. Deutschmann. Mr. Deutschmann represented Mr. Krukowski, a disabled claimant, in an accident benefits claim.

The appellant appealed the quantum of costs ordered in the settlement of an accident benefits claim brought on behalf of the claimant, who was under disability pursuant to Rule 7.08 of the Rules of Civil Procedure.

Facts

The respondent, Mr. Krukowski, was catastrophically injured in a snowmobiling accident in 2014. The snowmobile was insured only for use on the respondent’s property, and the accident occurred off of the property. As a result, Mr. Krukowski was excluded from receiving income replacement benefits or housekeeping and home maintenance benefits due to the exclusions set out in the Statutory Accident Benefits Schedule. He remained eligible to receive medical or rehabilitation and attendant care benefits.

The respondent’s litigation guardian eventually entered into a contingency agreement with Mr. Deutchmann wherein it was agreed that the appellant would receive 15% of any settlement reached with Aviva, including costs, interest, disbursements and H.S.T.

The appellant reached a settlement of accident benefits claim with Aviva for $1,200,000. Based upon the contingency agreement, the appellant was entitled to approximately $200,000 in legal fees.

When the settlement was brought before the Court for approval, the Court sought the opinion of the Office of the Public Guardian and Trustee (PGT) as to what quantum of fees were appropriate. The PGT suggested $180,000 in fees were reasonable. Both the appellant and the respondent’s litigation guardian agreed with this recommendation. 

Findings of the Application Judge

The Application Judge stated that a contingency fee agreement involving a party under disability is not binding until it is approved by the Court. The court noted that pursuant to Aywas v. Kirwan, 2010 ONSC 2778, the factors to be considered when fixing fees to be paid to counsel where a party is under disability include:

  1. the time expended by the lawyer;
  2. the legal complexity of the matter;
  3. the degree of responsibility assumed by the lawyer
  4. the monetary value of the matters in issue
  5. the importance of the matters to the client
  6. the degree of skill and competence demonstrated by a solicitor
  7. the results achieved
  8. the client’s ability to pay,
  9. the client’s expectations of the amount of the fee
  10. the financial risk assumed by the lawyer of pursuing the action, including the risk of non-payment, the likelihood of success and the amount of the expected recovery; and
  11. the social objective of providing access to justice by injured parties.

The onus is on counsel to establish that the contingency fee was fair at the time it made, and that the fees being charged are reasonable under the circumstances.

The Court addressed these factors in its analysis and ultimately concluded that while the proposed settlement was in Mr. Krukowski’s best interests, it was fair and reasonable to fix fees for the appellant at $60,000 plus disbursements and H.S.T.

Issue on Appeal

The only issue was whether the Application Judge erred in law by failing to apply the correct legal test to the determination of whether legal costs of the accident benefits claim are reasonable.

Findings of the Court of Appeal

The Court disagreed with the appellant’s assertion that the Application Judge failed to consider all of the factors set out in Aywas when fixing fees to be paid to counsel where a party is under disability.

In dismissing the appeal, the Court held that the Application Judge addressed and weighed all appropriate factors in deciding whether it would be fair and reasonable to approve the legal fees sought. Accordingly, the Court upheld the Application Judge’s order that the appellant’s costs be fixed at $60,000 plus disbursements and H.S.T.

Significance of this Decision

This decision shows the Court may not permit counsel to collect legal fees that are disproportionately high in an accident benefit case where there is little risk assumed by the lawyer in pursuing the claim and the claimant is under disability.

This is even so where the terms of a contingency agreement are clear and the proposed legal fees are regarded as reasonable by counsel, the claimant’s litigation guardian, and the PGT.