Cope v. Dickson

2002BCSC0098 Citation: Stanley T. Cope v. June Dickson Date:20020123 2002 BCSC 98 Docket: S012004 Registry: Chilliwack IN THE SUPREME COURT OF BRITISH COLUMBIA RE: THE LEGAL PROFESSION ACT BETWEEN: STANLEY T. COPE, PERSONAL LAW CORPORATION SOLICITOR AND: JUNE DICKSON CLIENT REASONS FOR DECISION OF DISTRICT REGISTRAR SAINTY Appearing in person S.T. Cope Counsel for the Client G. Dickin Date and Place of Hearing/Trial: January 3, 2002 Chilliwack, BC [1] This was an application brought by the client for: 1. review of the bill of Stanley T. Cope Personal Law Corporation; and 2. review of agreement between Stanley T. Cope Personal Law Corporation and June Dickson. [2] The client was involved in a motor vehicle accident on July 15, 1997. She retained the solicitor to act on her behalf on or about July 9, 1999. On that date, the parties entered into a Contingency Fee Agreement (the "Agreement"). The Agreement provides as follows: I agree to pay for the professional services of STANLEY T. COPE, Personal Law Corporation, for the advancement of a personal injury claim arising from a motor vehicle collision occurring on July 15, 1997, the following fees: A. 33 1/3 percent on any settlement or judgment sum, exclusive of taxable costs and disbursements; B. $200.00 per hour for all services related to the recovery of taxable costs and disbursements; and 3. $275.00 per hour for all services rendered by STANLEY T. COPE and the prevailing hourly rate charged by STANLEY T. COPE, Personal Law Corporation, for assisting junior counsel and paralegals where and when the engagement of STANLEY T. COPE is terminated prior to the settlement or judgment. I further agree to pay for all disbursements as they are incurred and billed by STANLEY T. COPE, Personal Law Corporation, and to pay interest on unpaid disbursements and fee accounts at 18% per annum. The Rules of the Law Society of British Columbia provide that, subject to the Supreme Court approving the higher remuneration, the maximum compensation to which a lawyer is entitled in a claim for personal injury or wrongful death arising out of the use or operation of a motor vehicle is 33 1/3% of the total amount recovered. Fees charged by different lawyers vary. [The agreement was dated July 9, 1999 and was signed by the client.] [3] Not included in the Agreement was the statement required by Rule 8-3 of the Law Society Rules which provides as follows: 8-3 A contingent fee agreement must (a) be in writing, (b) state that the person who entered into the agreement with the lawyer may, within 3 months after the agreement was made or the retainer between the solicitor and client was terminated by either party, apply to a district registrar of the Supreme Court if British Columbia to have the agreement examined, even if the person has made payment to the lawyer under the agreement,... [4] Prior to retaining Mr. Cope, the client received advances from the Insurance Corporation of British Columbia for her injuries. Mr. Cope included such advances in the amount on which his fee was based - 33 1/3% of all monies (save prescriptions and disability payments) paid to the client by in settlement of her claims. [5] The criteria for an examination of a contingent fee agreement are set out in s.68 of the Legal Profession Act, S.B.C. 1998, c. 9 as follows: 68(2) A person who has entered into an agreement with a lawyer may apply to the registrar to have the agreement examined. ... (5) On an application under subsection (2), the registrar must confirm the agreement unless the registrar considers that the agreement is unfair or unreasonable under the circumstances existing at the time the agreement was entered into. (6) If the registrar considers that the agreement is unfair or unreasonable under the circumstances existing at the time the agreement was entered into, the registrar may modify or cancel the agreement. (7) If an agreement is cancelled under subsection (6), a registrar (a) may require the lawyer to prepare a bill for review, and (b) must review the fees, charges and disbursements for the services provided as though there were no agreement. [6] At the hearing, I determined that I must examine the agreement pursuant to the provisions of the above section of the Act prior to undertaking a review of the accounts. [7] The process for examination of a contingency fee agreement pursuant to the provisions of the Legal Profession Act was enumerated by Levine, J. in Randall v. Hope, [1996 B.C.J. No. 1601 (Q.L.) (S.C.), at para. 36, as follows: [36] In my opinion, the two-step process outlined in Commonwealth [Commonwealth Investors Syndicate Ltd. V. Laxton (1990), 50 B.C.L.R. (2d) 186] is still applicable to a review of a contingency fee agreement under s.78 [now s.68] of the Legal Profession Act. The two matters on which the registrar must be satisfied are fairness and reasonableness, and the two-step inquiry clarifies the issues involved and the questions to be considered with respect to each. The only change in the legislation from the Barristers and Solicitors Act to the Legal Profession Act is with respect to the time at which the reasonableness of the agreement is to be determined. Both fairness and reasonableness are to be determined under the circumstances existing at the time the contract was entered into. This may change some of the questions asked, but not the matters to be determined: fairness still involves the mode of obtaining the contract and whether the client understood and appreciated its contents, and reasonableness still involves the amount of the fee. [8] I must therefore first determine if the agreement was fair at the time it was entered into and, presuming fairness, I must then determine if the Contract was reasonable. Was the Contract fair? [9] The factors to be considered in determining whether the contract is fair were set out by the Court of Appeal in Commonwealth, supra, at 198: The first step investigates the mode of obtaining the contract and whether the client understood and appreciated its contents. The inquiry would include whether, at the time the contract was entered into, there was any lack of capacity on the part of the client, whether there was any undue influence exercised or unfair advantage taken by the solicitor, whether any mistake was made, or whether any other flaw arose in the formation of the contract which would indicate that the client did not understand and appreciate its content. [10] Both the solicitor and the client testified about the meetings between them which led to the signing of the Agreement. [11] Although the parties evidence differed on the nature and extent of the discussions between them regarding the provision of the Agreement, there is no evidence of a lack of capacity on the client's part at the time the contract was entered into. Nor is there evidence of undue influence or advantage taken by Mr. Cope or of a mistake or other flaw in the formation of the contract. Although the client was unable to confirm all of the matters discussed during her meeting with Mr. Cope, she was unable, as well, to say that she did not understand the Agreement. The client did not receive independent legal advice prior to signing the Agreement. She did acknowledge, however, that her husband is a lawyer. She took the Agreement home after signing it and showed it to her husband. The client did not raise any issue with respect to the Agreement until after she received Mr. Cope's account. [12] In my view, the contract was not unfair under the circumstances existing at the time the agreement was entered into. Was the agreement reasonable? [13] Here the issue is the amount of the fee, i.e., was a 33 1/3% contingency fee unreasonable? [14] The criteria to be applied in determining if the percentage fee charged was reasonable are as follows (Randall v. Hope, supra, (para. 48)): (a) the complexity of the case, (b) the difficulty of establishing liability, (c) an assessment of the amount that may be recovered, (d) an assessment of the quantity and the nature of the work to be undertaken to achieve recovery, (e) the time that will be involved to completion of the case, (f) the risk undertaken by the law firm, including whether it agreed to carry disbursements, and (g) the special skill or knowledge required of counsel. [15] I recently had occasion to consider the matter of the reasonableness of a contingent fee agreement in Kelly v. McMillan et al, 2001 BCSC 1556. At paras. 24 - 25, I stated: [24] Counsel for the petitioner raised a number of issues with respect to the interpretation of the Contract. Although the statue has been changed, the law regarding the nature of the inquiry as set out in Commonwealth Investors Syndicate Ltd. v. Laxton, supra, still applies. In that case the Court held, at p. 277: If the first inquiry terminates with the finding that the contract has been fairly made, then any difficulties in construction are to be dealt with on the second inquiry. As the object is to find whether the compensation is reasonable, this depends in part on what the parties meant when they made the contract - what was their intention - and on the other factors mentioned in this judgment. Much may turn upon the construction of difficult terms or clauses in the contract - e.g., asset value - but it is the duty of the court to give meaning to what the parties wrote, and it can be assisted by extrinsic evidence if this is permissible, according to the ordinary rules. Once the true construction of the contract is ascertained, the court will be well on the way to deciding whether the claimed remuneration is reasonable. [Emphasis added] [25] In my opinion, I should first deal with the alleged difficulties in constructing the Contract before performing the inquiry set out by Master Scarth in Long, Miller et al v. Sawchuk, supra. If I determine that the Contract was unreasonable based on the difficulties in construction, in my opinion, I do not have to perform such review. [16] Mr. Cope testified that he had thoroughly reviewed the nature of the Agreement with the client, including advising her that all monies received by her in settlement of her claim would attract the 33 1/3 percentage, not just "new money" offered and accepted. The client testified that, had she understood that the solicitor would apply the percentage fee to the advances received, she would not have retained Mr. Cope. [17] Mr. Cope further noted that he believed the client to be reasonably sophisticated and that, therefore, a more comprehensive agreement was not required. He used only his "short-form" contingency fee agreement with this client, believing that she fully understood the nature of the agreement between them. [18] Mr. Cope testified that, in explaining the agreement, he made it clear to the client that he expected to be paid based on all funds paid to the client, including funds paid as advances, although payments for prescriptions and disability benefits were to be excluded. [19] Mr. Cope also confirmed that the Agreement (paragraph B) provides for a separate charge, on an hourly basis (in addition to the 33 1/3% contingent fee) for any time expended recovering costs awarded to the client, or agreed to be paid as part of a settlement of the action. He testified that he explained this clause to the client. The client testified that she had no recollection of Mr. Cope explaining the nature of this clause to her. She testified that, had she understood that a separate fee would be charged for this work, she would not have retained Mr. Cope. I wish to note that although Mr. Cope testified that he spent time recovering costs for the client, he did not bill separately under the Agreement for that work. [20] Counsel for the client argued that the provision in the Agreement allowing Mr. Cope to charge separately for this work is contrary to the provisions of Rules 8-2 and 8-4 of the Law Society Rules which provide as follows: 8-2(1) Subject to the court's approval of higher remuneration under section 66(7) of the [Legal Profession] Act, the maximum remuneration to which a lawyer is entitled under a contingent fee agreement, when acting for a plaintiff in (a) a claim for personal injury or wrongful death arising out of the use or operation of a motor vehicle, is 33 1/3% of the amount recovered,... 8-4(1) A contingent fee agreement between a lawyer and a plaintiff in a claim for personal injury or wrongful death arising out if the use or operation of a motor vehicle must include the following statement, prominently placed: The Rules of the Law Society of British Columbia provide that, subject to the Supreme Court approving a higher fee, the maximum amount that a lawyer may charge in a claim for personal injury or wrongful death arising out of the use or operation of a motor vehicle is 33 1/3% of the total amount recovered. Fees charged by different lawyers vary. ... (3) If a contingent fee agreement includes a provision permitted under Rule 8-2(2), the statement required under subrule (1) or (2) must include the following: The Law Society Rules allow a lawyer and client to agree that the lawyer may choose to charge the amount of costs awarded instead of a percentage of the amount recovered. [21] As set out above, the Agreement contained the provision required to be included by Rule 8(4)(1). The issue, according to Mr. Dickin was whether the inclusion of the right to charge an additional fee for costs recovery made the Agreement unreasonable or unfair in that it could, potentially, result in a greater than 33 1/3% being recovered by the lawyer. [22] Counsel for the client contended that, as the provisions required to be appended to the Agreement pursuant to the Law Society Rules were missing, the Agreement should be void. Mr. Cope, in response to this argument, cited Pohorecky v. Remedios, [1995] B.C.J. No. 1005 (Q.L.) (S.C. - Registrar), in support of the proposition that the lack of these clauses is to be dealt with on the reasonableness inquiry and that the Agreement should not be cancelled outright for such failure. I agreed that this was the proper course to follow. This is consistent with my decision in Kelly v. McMillan et al, supra. [23] The difficulties in construction raised in this matter relate, as set out above, to the fact that the required wording as set out in the Law Society Rules is missing, as well as the fact that paragraph B contains a provision that could result in the solicitor receiving a fee that is greater than 33 1/3% of the amount recovered. In addition, an issue arises as to whether the Agreement means that amounts paid to the client as advances prior to retaining the solicitor are to be included in the percentage fee. [24] It is incumbent on the solicitor wishing to uphold the contract to ensure that the client understood the nature of it. (See Finch v. Finch, 2001 BCSC 125 (Registrar).) The solicitor has the onus of proving the interpretation of the Agreement and its reasonableness. (See Kelly v. McMillan et al, supra.) [25] In my view, the failure of the solicitor to include the provisions set out in the Law Society Rules is not, in and of itself, sufficient to render the Agreement unreasonable, particularly in this instance where the client had the opportunity to review the Agreement with her husband, a solicitor. [26] However, the provision of the Agreement which provides for a separate fee for recovery of costs and disbursements could, in my view, lead to a greater recovery of fees than that allowed by the Law Society Rules. While Mr. Cope did not charge the client for such recovery, I must determine if this clause rendered the Agreement unreasonable, at the time it was entered into. In my view, the inclusion of this clause in the Agreement renders it unreasonable. [27] Further, in my opinion, the fact that the parties were not ad idem with respect to whether the Agreement covered advances paid to the client prior to the Agreement, also renders the Agreement unreasonable in that it may not be capable of construction. While this is an evidentiary issue, in my view, the Agreement is not clear on this point. If Mr. Cope intended to include those advances he should have clearly stated that fact in the Agreement. [28] As I have found the Agreement to be unreasonable, I must now determine whether it should be modified, or cancelled. (See s. 68(6) of the Legal Profession Act.) At the hearing, I asked counsel if they would prefer to make submissions related to this at the hearing or subsequent to this decision. Both counsel agreed that it would be preferable to make their submissions subsequent to this decision being made. [29] Accordingly, counsel should schedule a further hearing before me to argue this matter. If the Agreement is cancelled, I may require the lawyer to prepare a bill for review and then review the fees, charges and disbursements for the services provided as though there were no agreement. (See s. 68(7) of the Legal Profession Act.) If I choose to modify the Agreement, I must then perform the review set out in Randell v. Hope, supra. In the latter instance, I will require additional evidence in relation to the factors set out above. [30] Counsel should set this matter down before me for a hearing to determine if the Agreement should be cancelled or modified. [31] Finally, as suggested to the parties, I am prepared to hold the next hearing of this matter in New Westminster, if a time convenient to both parties can be agreed upon. If not, the matter should be scheduled for hearing in Chilliwack. "District Registrar K. Sainty"