LPA Section 67(4)

2000 BCSC 690 Citation: LPA Section 67(4) 2000 BCSC 690 Date:20000427 Docket No.: 08366 Registry: Prince George IN THE SUPREME COURT OF BRITISH COLUMBIA IN THE MATTER OF THE LEGAL PROFESSION ACT SECTION 67(4) REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE MEIKLEM Counsel for Name Withheld Date and Place of Hearing: January 11, 2000 Prince George, BC ISSUE [1] This application is for a declaration that an action proposed to be commenced by the petitioner, M, against a common-law spouse of many years seeking relief on the basis of constructive trust is not a "matrimonial dispute" within the meaning of that term in s. 67(4) of the Legal Profession Act which restricts contingency fee agreements relating to matrimonial disputes. Alternatively, if the action is held to be one relating to a matrimonial dispute, the law firm and the petitioner seek court approval of the contingency fee agreement entered into between them. [2] Because of the special provisions of the Legal Profession Act designed to preserve solicitor client privilege, these reasons will not disclose the names of the lawyer or the client or any information that may identify either of them. DECISION [3] I have reached the conclusion that the proposed action does not fall within the meaning of the term "matrimonial dispute" as it is used in s. 67(4) and (5). As such, the contingency fee agreement that the petitioner and his lawyer have entered into is not void under s. 67(4) and there is no need for the lawyer to apply to the court for approval of the contingency fee agreement under s. 67(5). [4] For the benefit of the client in this matter, it is important to emphasize that this conclusion does not in any way affect his right under s. 68 of the Legal Profession Act to apply to have the agreement examined by the registrar of the court for fairness and reasonableness and possibly modified or cancelled, or his separate right under s. 70 of the same Act to have the lawyer's bill reviewed. In both cases, time limits for the applications are set out in those sections. ANALYSIS [5] Subsections (4) and (5) of s. 67 of the Legal Profession Act provide as follows: 67. . . . (4) A contingent fee agreement for services relating to a matrimonial dispute is void unless approved by the court. (5) A lawyer may apply to the court for approval of a contingency fee agreement for services relating to a matrimonial dispute and section 66(7) to (9) applies. [6] There is no statutory definition of the term "matrimonial dispute" and the question is whether "matrimonial" was intended to encompass only matters arising out of legal marriages or can be interpreted to include marriage-like common-law relationships. In the case at bar, the petitioner co-habited with the proposed defendant for over twenty years, and she used his surname, but they were not legally married. [7] The word "matrimonial" standing alone is defined in Black's Law Dictionary as "of or pertaining to matrimony or the estate of marriage". "Matrimony" is defined in The Concise Oxford Dictionary as: "1. The rite of marriage. 2. The state of being married." The strict reference to legal marriage seems to soften when the adjective "matrimonial" modifies nouns such as "cohabitation" or "domicile"; Black's defines "matrimonial cohabitation" as: "The living together of a man and woman ostensibly as husband and wife. Also the living together of those who are legally husband and wife. . .". Black's defines "matrimonial domicile" as: "Place where parties live together as husband and wife either actually or constructively". [8] The word "matrimonial" has frequently been used in legislation in this Province and in the Rules of Court as part of a phrase. "Matrimonial action" was a defined term in the Rules of Court until it was repealed and replaced effective September, 1998 with the term "family law proceeding". While effective, "matrimonial action" meant "an action under the Divorce and Matrimonial Causes Act reprinted as chapter 118, R.S.B.C. 1960, or under the Family Relations Act." Currently, the term "family law proceeding" means "a proceeding in which relief is claimed under the Family Relations Act or the Divorce Act (Canada), and includes a proceeding for judicial separation or nullity". [9] The Divorce and Matrimonial Causes Act (repealed in 1972) and the current Divorce Act have no application to matters arising outside of a legal marriage. The definition of "spouse" in the Family Relations Act includes persons in a marriage-like relationship of at least 2 years. However, the application of this definition is limited under the Act. While the 1997 amendments to the Family Relations Act broadened the definition of "spouse", Parts 5 and 6 of the Act continue to be excluded from the operation of the definition. [10] The Family Relations Act had no application to property disputes between unmarried persons until the 1997 amendment that added s. 120.1. This section provides that Parts 5 and 6 of the Act apply to agreements and to property covered by agreements between unmarried spouses where the agreement would constitute a marriage agreement or a separation agreement if the spouses were married. Subsection 120.1(3) states: (3) In applying Part 5 or 6 for the purposes of this section, a reference to "marriage" in part 5 or 6 must be deemed to be a reference to a marriage-like relationship between the spouses who are not married to each other. [11] The 1998 amendments to the Rules of Court not only replaced the defined term "matrimonial action" with the new defined term "family law proceeding", but also replaced Rule 60, entitled "Matrimonial Proceedings" with Rule 60 entitled "Divorce and Family Law". There has thus been a broadening of the terminology used in the Rules to more accurately reflect the subject matter of the proceedings enabled by the Family Relations Act or the Divorce Act. However, in the absence of an agreement which would invoke s. 120.1 of the Family Relations Act, a property dispute based on the common-law cause of action of resulting and constructive trusts would not be governed by Rule 60 and the subsequent rules referring to family law proceedings. [12] One consequence of that exclusion is that Rule 60(21) (formerly Rule 60(12)), enabling an order for payment of costs or security for costs, is not available in the constructive trust proceeding. This raises a policy issue which the legislature would have potentially considered in allowing contingency fee agreements to provide a means of access to justice for impecunious persons, and a consideration which would provide a rationale for restricting and controlling such agreements in the case of matrimonial or family law disputes. [13] Counsel referred me to a useful discussion of contingency fees in G. MacKenzie, Lawyers and Ethics (Toronto: Carswell, 1993) at p. 12-1 to 12-12. At page 12-3 of this work the author states: The most compelling reason for permitting contingency fees is that they provide a means of access to justice for persons of modest means who cannot otherwise afford the high cost of litigation. Contingency fees are great equalizers of legal resources between rich and poor. Means tests applied by legal aid plans make ineligible for assistance a great many middle class people who cannot finance a lawsuit. Contingency fees enable such people to use the present economic value of their possible future recovery to hire a lawyer, and thereby satisfy the perceived need for greater accessibility to legal services by the middle class. Of the rationale for restrictions, the author states, at p. 12-7: Jurisdictions that allow contingency fees impose restrictions on the type of cases in which contingency fees are permitted. In such jurisdictions lawyers are generally prohibited on policy grounds from charging a contingency fee in either matrimonial or criminal cases. In matrimonial cases the fear is that to provide lawyers with such an economic incentive to win might prevent the reconciliation of estranged spouses, thus offending the public policy favouring the maintenance of marriages. A second reason for prohibiting contingency fees in matrimonial cases is that the parties' emotional state will often be a barrier to their ability to appreciate the meaning, consequences, and possible alternatives to contingency fee contracts. Where the matrimonial relationship is already severed but the division of property remains in issue, neither justification for the prohibition retains its force. In some American cases in which only the division of property has been in issue, an exception to the prohibition against contingency fees has been recognized on the ground that in such circumstances a contingency fee is unobjectionable. (footnotes and references deleted) [14] One might quibble with the accuracy of the last paragraph quoted as one cannot always assume that concerns about the parties' emotional state should abate simply because the matrimonial relationship has been severed. Nevertheless, these considerations suggest that there may have been a sound basis in policy to exclude property disputes between former common-law spouses from the statutory restrictions on contingency fee agreements. [15] There are written decisions of this court that use the phrase "matrimonial dispute" to describe disputes between unmarried persons in a marriage-like relationship; (see: Roering v. Nicholson (25 October 1996), Prince George Registry, 32868 (B.C.S.C.); Lundberg v. Hanlon (19 October 1998), Kelowna Registry, 39282 (B.C.S.C.); Stanley v. Henning (1987), 19 B.C.L.R. (2d) 348). However, these cases all involved, at least in part, claims which appear to have been made under the Family Relations Act, and would therefore have fallen within the definition of "matrimonial action" in the Rules effective until September, 1998, when it was replaced with the defined term "family law proceeding". [16] In looking at analogous legislation in other jurisdictions, it is noteworthy that, in contrast to the limited definition of "family law proceeding" in our Rules of Court, the Queen's Bench Act, R.S.S. 1978, c Q-1, s.2 states: (f.l)"family law proceeding" means a cause or matter, whether based on statute law, common law or the inherent jurisdiction of the court, pursuant to or with respect to: (i) The Children's Law Act; (ii) The Family Maintenance Act; (iii) The Matrimonial Property Act; (iv) the Divorce Act (Canada); (v) The Enforcement of Maintenance Orders Act; (vi) The Reciprocal Enforcement of Maintenance Orders Act, 1983; (vii) the determination of parentage or other family relationships; (viii) custody or guardianship of, or access to, a child; (ix) maintenance of a spouse, child or other person; (x) the division of property between spouses, former spouses or persons who have lived together as spouses; (xi) judicial separations; (xii) annulments; (xiii) sections 25 to 28, 34, 35, 38 and 41 of this Act; (xiv) The Adoption Act; (xv) The Child and Family Services Act; (xvi) the Homesteads Act, 1989; (xvii) The Dependants' Relief Act; (xviii) The International Child Abduction Act; (xix) The Marriage Act; (xx) The Parents' Maintenance Act; (xxi) The Victims of Domestic Violence Act; (xxii) any other Act that confers jurisdiction on the Family Law Division; (xxiii) any other proceeding heard in the Family Law Division [17] Indeed, it appears to be the intention of the Saskatchewan Legislature to capture a much broader range of proceedings under the term "family law proceeding", than that enunciated in the British Columbia Rules of Court under either the old definition of "matrimonial action" or the new definition of "family law proceeding". Most importantly, the Saskatchewan Legislature has expressly included in the definition of "family law proceeding": "matters based on common law with respect to. . .the division of property between. . .persons who have lived together as spouses". [18] From this comparative analysis, one may infer an intention on the part of the British Columbia Legislature to exclude common law proceedings, such as constructive trust actions, from the scope of these definitions. [19] The "matrimonial dispute" prohibition on contingency fees first appeared in the Legal Profession Act of British Columbia in 1987, and there has not been a great deal of judicial consideration of the provision since that time. Arguably, in light of the recent amendments to the Rules of Court and the Family Relations Act, s. 67(4) and (5) of the Legal Profession Act should now be read to include the analogous term "or a family dispute". However, in my view, if the term "family dispute" is to be read in, it should be limited by the definition of "family law proceeding" as set out in R. 1(8) of the current Rules of Court. [20] Where common-law spouses bring a dispute under the Family Relations Act, it is deemed to be a "family law proceeding", and thus qualifies for an order of security for costs pursuant to R.60(21). Therefore, a prohibition on contingency agreements in such a case would be reasonable and would conform with policy objectives which encourage the reconciliation of long-term relationships and discourage the making of such agreements during an impaired emotional state. However, where common-law spouses bring a dispute under the law of trusts, it would not be deemed to be a "family law proceeding", and as such would not qualify for an order of security for costs pursuant to R.60(21). In such a case, a prohibition on contingency agreements could cause an undue hardship on the impecunious party to an action, who may have no other recourse to justice. [21] While this approach tends to create a distinction between those common-law disputes dealing with family-related issues such as custody and maintenance, and those dealing solely with property issues, it is arguably a reasonable approach from a policy perspective since the justifications for any prohibition have been removed. This approach seems to be consistent with policy objectives discussed above by MacKenzie. Moreover, it also seems to fall in line with the intentions of the legislature in having expressly excluded property claims of common-law spouses from Parts 5 and 6 of the Family Relations Act, unless the parties have come within the terms of s. 120.1 of the Act, and in not including them in the definition of "family law proceeding" in the Rules of Court. [22] In my view, interpreting of the word "matrimonial" to include common-law relationships would have very serious policy implications. It could open the floodgates to challenges targeting the word "matrimonial" in a variety of legislative instruments. It could be argued that, by such an interpretation, these provisions should be directly applicable to all common-law relationships. This could defeat the intention of the Legislature or Parliament where the term "matrimonial" may have been selected to expressly exclude the application of the provision to common-law relationships, in accordance with the historical use of the word as applying to the state of marriage. [23] The modern legislative trend is to replace the potentially ambiguous term of "matrimonial" with a more generic reference such as "family" where a broader meaning is intended. In the absence of a constitutional challenge to the provisions of the Legal Profession Act, it is appropriate and preferable to leave to the legislators the task of evolving legislative terms in an orderly fashion. As such, the only declaration that is appropriate in this case is as set out below. [24] I conclude that the petitioner's contingent fee agreement is not in respect of a matrimonial dispute and is not prohibited or restricted by s. 67(4) of the Legal Profession Act. [25] Once again, the petitioner is reminded of his continuing rights under sections 68 and 70 of the Legal Profession Act to have the agreement examined by the registrar of the court for fairness and reasonableness and to have his lawyer's bill reviewed. "I.C. Meiklem, J." The Honourable Mr. Justice I.C. Meiklem