Contingency agreement in personal injury case falls short: Alberta court

A lawyer was entitled to around $2,700 less than he claimed because the contingency fee agreement was unenforceable under r. 7.8 of the Alberta Rules of Court, Alta Reg 124/2010, a recent ruling said.

The case arose from a minor plaintiff’s involvement in two car accidents in April 2019 and April 2022. On her own behalf and as her son’s litigation representative, his mother retained Jonathan Denis, founding partner of Guardian Law Group, for her lawsuit arising from the second accident. She then requested the approval of a settlement relating to this accident under s. 4(2) of Alberta’s Minors’ Property Act, 2004.

The second accident involved an unidentified driver, which meant that Alberta’s Motor Vehicle Accident Claims Act, 2000's administrator was a part of the case. The administrator also called for the approval of the settlement and executed a partial consent judgment, which would award a total settlement amount of $26,850.24 against the administrator.

Denis asked the court to approve the payment of his fees of $10,327.33 out of the settlement funds in line with the terms of a contingency fee agreement. The public trustee agreed that the settlement should be approved but objected to the amount of fees that Denis sought.

Agreement unenforceable

In Stanchfield v Doe, 2023 ABKB 273, the Court of King’s Bench of Alberta granted the partial consent judgment relating to the second accident. It approved the settlement of the minor plaintiff’s claims because it found the settlement reasonable.

The court awarded Denis $7,637.65 out of the settlement proceeds, ordered the payment of the remaining net sum of $19,212.59 to the mother as the minor plaintiff’s guardian, and awarded no costs of the application.

The court found Denis entitled to $6,020 as a reasonable fee for a lawyer’s charges under r. 10.2. Including goods and services tax, that amount should be increased to $6,321. Including disbursements and other costs, that amount should be raised to $7,637.65, to be paid out of the settlement funds under s. 4(4)(c) of the Minors’ Property Act.

The contingency fee agreement was unenforceable because it did not comply with r. 10.7 of the Alberta Rules of Court. The agreement failed to include the following:

• a statement that “… no fee, calculated as a percentage or otherwise, may be payable on disbursements or other charges recovered” as required by r. 10.7(2)(e)(i), and instead stated the opposite
• the statements required by r. 10.7(2)(f), even though it provided that Denis would receive a portion of a costs award
• a statement regarding the notification needed to terminate the agreement as required by r. 10.7(2)(g), and instead contained an awkwardly-worded provision that only potentially covered a portion of that rule’s requirements
• a statement required by r. 10.7(2)(h)

The court added that the invoice appended as exhibit G to the mother’s updated affidavit failed to include the statements required by r. 10.7(7).