Contingency fee can arise from recovery of property, not just recovery of money, ruling says
The Ontario Court of Appeal has ruled that a former client’s receipt of a monetary benefit as a direct result of an arbitral award justified the payment of a contingency fee to the lawyer who assisted him during arbitration.
The appellant in this case and his son were Mohawks of the Bay of Quinte. The two of them had a business dispute involving an on-reserve gas bar on Tyendinaga Mohawk Territory. They decided to settle the dispute via binding arbitration.
The respondent in this case served as the appellant’s lawyer during arbitration. They had a contingency fee agreement (CFA), which provided the respondent a contingency fee worth 25 percent of the arbitral award.
The arbitrator ultimately ruled in the appellant’s favour. The arbitrator dissolved the partnership that owned the business and awarded the appellant $11,486,238 as his share of the undistributed profits of the business.
Though the appellant had yet to recover this sum awarded by the arbitrator, the respondent went to court to claim a contingency fee worth $2,871,000, which was allegedly owed to him. The appellant had not paid the contingency fee apart from a small amount.
A motion judge of the Ontario Superior Court of Justice issued summary judgment directing the appellant to pay the respondent the amount of $2,858,500. On appeal, the appellant argued that he did not owe the contingency fee claimed since he had yet to receive the monetary amount under the arbitral award. He also wanted to set aside a solicitor’s lien granted to the respondent.
In Bogue v. Miracle, 2025 ONCA 188, the Court of Appeal for Ontario dismissed the appeal. First, the appeal court noted that Ontario’s Solicitors Act, 1990 provided that a contingency fee could arise from the recovery of property, not just the recovery of money.
The appeal court then noted that the arbitrator set out a buy/sell process for the disputed business. Under this process, the appellant gained control of the business. For $1, he acquired his son’s interest in the business plus the land where the bar stood.
As a direct result of the arbitral process, the appellant received a real monetary benefit and gained access to significant funds generated by the business, the appeal court said. This monetary benefit to the appellant called for the payment of the contingency fee to the respondent, the court added.
Regarding contractual interpretation, the appeal court read the CFA as a whole, gave its words their ordinary and grammatical meaning, and considered the surrounding circumstances that the parties knew at the time of the contract’s formation.
The appeal court interpreted the CFA as requiring the appellant to pay the respondent if he received any benefit from the arbitration. The appeal court saw no reason to interpret the CFA as requiring the appellant to compensate the respondent only if he collected the cash award.
The appeal court noted that – in an assignment agreement signed in the context of enforcing the arbitral award – the appellant expressly and unconditionally acknowledged that he owed the respondent $2,871,000.
As for the challenge to the solicitor’s lien, the appeal court found that the motion judge’s decision addressed all the issues raised by the appellant. The appellant failed to show any legal error or palpable and overriding factual error in the judge’s reasons, the appeal court concluded.
