McIntyre Estate v. Ontario (Attorney General), (2002) 164 O.A.C. 37 (CA)

• Judge: O'Connor, A.C.J.O., Abella and MacPherson, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 17, 2002
• Jurisdiction: Ontario
• Citations: (2002), 164 O.A.C. 37 (CA);2002 CanLII 45046 (ON CA);61 OR (3d) 257;218 DLR (4th) 193;[2002] OJ No 3417 (QL);116 ACWS (3d) 527;164 OAC 37;23 CPC (5th) 59

McIntyre Estate v. Ont. (A.G.) (2002), 164 O.A.C. 37 (CA)

MLB headnote and full text

Temp. Cite: [2002] O.A.C. TBEd. SE.011

Ronald McIntyre by his estate representative Maureen McIntyre (applicant/respondent in appeal) v. Attorney General of Ontario (appellant) and The Advocates' Society and The Ontario Trial Lawyers' Association (interveners)

(C36074)

Indexed As: McIntyre Estate v. Ontario (Attorney General)

Ontario Court of Appeal

O'Connor, A.C.J.O., Abella and MacPherson, JJ.A.

September 10, 2002.

Summary:

The McIntyre Estate, as represented by Maureen McIntyre, sued Imperial Tobacco and Venturi Inc. for damages for the wrongful death of Ronald McIntyre. At the outset of the litigation, Maureen McIntyre sought a declaration that a proposed contingency fee agreement with her lawyers was not prohibited by the Champerty Act (1897).

The Ontario Superior Court, in a decision reported [2001] O.T.C. 128, granted the declaration. The Attorney General of Ontario appealed, arguing that the Champerty Act constituted an absolute prohibition of all lawyers' contingency fee agreements.

The Ontario Court of Appeal allowed the appeal. The court held that contingency fee agreements were not per se contrary to the Champerty Act. However contingency fee agreements that provided for the payment of fees that were unreasonable or unfair were agreements that had an improper motive and came within the prohibition in the Act. The court held that it was premature to address the issue of the reasonableness and fairness of the proposed agreement in this case and, therefore, the applications judge should not have granted the declaration. Rather than dismissing the estate's application, the court stayed the application on the basis that it was premature.

Barristers and Solicitors - Topic 3126

Compensation - Agreements - Contingent fees - General - The McIntyre Estate sued Imperial Tobacco and Venturi Inc. for damages for the wrongful death of Ronald McIntyre - At the outset of the litigation, the estate representative sought a declaration that a proposed contingency fee agreement with her lawyers was not prohibited by the Champerty Act (1897) - The applications judge granted the declaration - The Attorney General of Ontario appealed - The Ontario Court of Appeal allowed the appeal - The court held that although contingency fee agreements were not per se contrary to the Champerty Act, such agreements that provided for the payment of fees that were unreasonable or unfair were agreements that had an improper motive and came within the prohibition in the Act - The court held that it was premature to address the issue of the reasonableness and fairness of the proposed agreement in this case and, therefore, the applications judge should not have granted the declaration.

Barristers and Solicitors - Topic 3126

Compensation - Agreements - Contingent fees - General - The Ontario Court of Appeal held that the historic rationale for the absolute prohibition on lawyers' contingency fee arrangements was no longer justified - The court stated further that " ... the advantages to the administration of justice from permitting properly regulated contingency fee agreements in the form of increased access to justice are compelling. Indeed, there is a strong case to be made that the continuation of a per se prohibition against contingency fee agreements actually tends to defeat the fundamental purpose underlying the law of champerty - the protection of the administration of justice and, in particular, the protection of vulnerable litigants ... it is no longer necessary or desirable to deem contingency fee agreements per se champertous. Neither the contingent nature of a fee agreement, nor the fact that the lawyer's fees may be paid from the recovery in an action, without more, ought to constitute an improper motive or officious intermeddling for purposes of the law of champerty." - See paragraphs 70 to 72.

Barristers and Solicitors - Topic 3126

Compensation - Agreements - Contingent fees - General - The Ontario Court of Appeal held that it was no longer necessary or desirable to deem lawyers' contingency fee agreements per se champertous - The court, per O'Connor, A.C.J.O., stated that "to be clear, I am not suggesting that contingency fee agreements can never be champertous. Rather, I conclude only that contingency fee agreements should no longer be considered per se champertous. The issue of whether a particular agreement is champertous will depend on the application of the common law elements of champerty to the circumstances of each case. A court confronted with an issue of champerty must look at the conduct of the parties involved, together with the propriety of the motive of an alleged champertor in order to determine if the requirements for champerty are present." - See paragraph 75.

Barristers and Solicitors - Topic 3126

Compensation - Agreements - Contingent fees - General - The Ontario Court of Appeal stated that "when considering the propriety of the motive of a lawyer who enters into a contingency fee agreement, a court will be concerned with the nature and the amount of the fees to be paid to the lawyer in the event of success." - The court also agreed that "the suggested compensation may or may not be fair and reasonable, depending upon the outcome of the litigation in light of the difficulty of the case, as well as the time and expenses incurred. Counsel should be well rewarded if the litigation is successful, for assuming the risk and costs of the litigation. The compensation however should not be a windfall resembling a lottery win." - See paragraph 76.

Barristers and Solicitors - Topic 3126

Compensation - Agreements - Contingent fees - General - The Ontario Court of Appeal stated that s. 28 of the Solicitors Act did not prohibit contingency fee agreements - Section 28 provided that: "nothing in sections 16 to 33 gives validity to a purchase by a solicitor of the interest or any part of the interest of his or her client in any action or other contentious proceeding to be brought or maintained, or gives validity to an agreement by which a solicitor retained or employed to prosecute an action or proceeding stipulates for payment only in the event of success in the action or proceeding, or where the amount to be paid to him or her is a percentage of the amount or value of the property recovered or preserved or otherwise determinable by such amount or value or dependent upon the result of the action or proceeding." - See paragraphs 86 to 88.

Barristers and Solicitors - Topic 3126

Compensation - Agreements - Contingent fees - General - The Ontario Court of Appeal held that although contingency fee agreements were not per se contrary to the Champerty Act, such agreements that provided for the payment of fees that were unreasonable or unfair were agreements that had an improper motive and came within the prohibition in the Act - The court discussed the criteria that should be used in assessing the reasonableness and fairness of fees in a contingency fee agreement - See paragraphs 81 to 85.

Barristers and Solicitors - Topic 3126

Compensation - Agreements - Contingent fees - General - [See fifth Contracts - Topic 6761 ].

Common Law - Topic 3224

Variation - Judicial variation - To meet changing circumstances - [See fifth Contracts - Topic 6761 ].

Contracts - Topic 6761

Illegal contracts - Agreements contrary to public policy - Champerty and maintenance - General - The Ontario Court of Appeal reviewed the history of the Champerty Act (1897) - See paragraphs 18 to 21.

Contracts - Topic 6761

Illegal contracts - Agreements contrary to public policy - Champerty and maintenance - General - The Ontario Court of Appeal reviewed the common law of champerty and maintenance and set out four general principles relating to these concepts - See paragraphs 22 to 35.

Contracts - Topic 6761

Illegal contracts - Agreements contrary to public policy - Champerty and maintenance - General - Section 1 of the Champerty Act (1897) provided that "champertors be they that move pleas and suits, or cause to be moved, either by their own procurement, or by others, and sue them at their proper costs, for to have part of the land in variance, or part of the gains." - The Ontario Court of Appeal interpreted s. 1 - The court discussed the problems of interpreting such an old statute and held that s. 1 should be interpreted as incorporating the common law requirements relating to who should be considered a champertor (e.g., for there to be maintenance at common law, the person allegedly maintaining an action or proceeding had to have an improper motive) - See paragraphs 36 to 47.

Contracts - Topic 6761

Illegal contracts - Agreements contrary to public policy - Champerty and maintenance - General - The Ontario Court of Appeal held that lawyers' contingency fee agreements do not per se contravene the Champerty Act - However, contingency fee agreements that provided for the payment of fees that were unreasonable or unfair were agreements that had an improper motive and came within the prohibition in the Act - See paragraphs 1 to 80.

Contracts - Topic 6761

Illegal contracts - Agreements contrary to public policy - Champerty and maintenance - General - The Ontario Court of Appeal rejected the argument that any changes to the law relating to champerty in Ontario must come from the legislature, not the courts - The court held s. 1 of the Champerty Act embodied the common law principles relating to who is a champertor and that the development of the common law was a matter for the courts - The court noted that there were well-established principles governing judicial reform of the common law - Having regard to these principles, the court held that the current circumstances in the administration of justice in Ontario were such that the courts should take a fresh approach to the application of the common law to contingency fee agreements - See paragraphs 67 to 69.

Cases Noticed:

Frind v. Sheppard, [1940] 4 D.L.R. 455 (Ont. C.A.), revd. [1941] 4 D.L.R. 497 (S.C.C.), refd to. [para. 25].

Davidson Tisdale Ltd. v. Pendrick et al. (1997), 32 O.T.C. 302; 18 C.P.C.(4th) 164 (Gen. Div.), affd. (1998), 116 O.A.C. 53; 31 C.P.C.(4th) 164 (Div. Ct.), refd to. [para. 25].

Findon v. Parker (1843), 11 M. & W. 675; 152 E.R. 976 (Exch.), refd to. [para. 26].

Fischer v. Kamala Naicker (1860), 8 Moore Ind. App. 170 (P.C.), refd to. [para. 26].

Newswander v. Giegerich (1907), 39 S.C.R. 354, refd to. [para. 26].

Colville v. Small (1910), 22 O.L.R. 33 (H.C.), affd. (1910), 22 O.L.R. 426 (Div. Ct.), refd to. [para. 26].

Neville v. London Express Newspaper Ltd., [1919] A.C. 368 (H.L.), refd to. [para. 26].

R. v. Goodman, [1939] S.C.R. 446, refd to. [para. 26].

Monteith v. Calladine (1964), 47 D.L.R.(2d) 332 (B.C.C.A.), refd to. [para. 26].

S. v. K. (1986), 55 O.R.(2d) 111 (Dist. Ct.), refd to. [para. 26].

Smythers v. Armstrong (1989), 67 O.R.(2d) 753 (H.C.), refd to. [para. 26].

Giles v. Thompson; Devlin v. Baslington, [1993] 3 All E.R. 321; 156 N.R. 182 (H.L.), refd to. [para. 26].

Buday et al. v. Locator of Missing Heirs Inc. (1993), 68 O.A.C. 97; 16 O.R.(3d) 253 (C.A.), refd to. [para. 28].

Trepica Mines Ltd. (No. 2), Re, [1963] 1 Ch. 199 (C.A.), refd to. [para. 30].

Thai Trading Co. v. Taylor, [1998] Q.B. 785 (C.A.), refd to. [para. 30].

Galati et al. v. Edwards Estate et al. (1998), 77 O.T.C. 215; 27 C.P.C.(4th) 123 (Gen. Div.), refd to. [para. 31].

Stribbell v. Bhalla (1990), 73 O.R.(2d)748 (H.C.), refd to. [para. 31].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 36].

Goodyear Tire & Rubber Co. of Canada Ltd. v. Eaton (T.) Co., [1956] S.C.R. 610, refd to. [para. 45].

Bayer Aktiengesellschaft et al. v. Apotex Inc. (1998), 113 O.A.C. 1; 82 C.P.R.(3d) 526 (C.A.), refd to. [para. 45].

Solicitor, Re (1907), 14 O.L.R. 464 (H.C.), refd to. [para. 49].

Wallersteiner v. Moir (No. 2), [1975] Q.B. 373 (C.A.), refd to. [para. 50].

Trendtex Trading Corp. v. Credit Suisse, [1980] 1 Q.B. 629 (C.A.), refd to. [para. 50].

Hughes v. Kingston Upon Hull City Council, [1999] Q.B. 1193 (Eng. Div. Ct.), refd to. [para. 50].

Robinson v. Cooney (1999), 95 O.T.C. 58; 29 C.P.C.(4th) 72 (Gen. Div.), refd to. [para. 50].

Awwad v. Geraghty & Co., [2000] 1 All E.R. 608 (C.A.), refd to. [para. 50].

Bergel & Edson v. Wolf, [2001] O.T.C. 26; 50 O.R.(3d) 777 (Sup. Ct.), refd to. [para. 53].

Finlayson et al. v. Roberts et al. (2000), 136 O.A.C. 271 (C.A.), refd to. [para. 53].

Coronation Insurance Co. v. Florence, [1994] S.C.J. No. 116, refd to. [para. 55].

Wylie v. Cox (1853), 15 How. 415, refd to. [para. 58].

Clyne v. Bar Association of New South Wales (1960), 104 C.L.R. 186 (H.C.), refd to. [para. 60].

Sheehan v. Sheehan (1990), 13 Fam. L.R. 736 (Aust. Fam. Ct.), refd to. [para. 60].

Friedmann Equity Developments Inc. v. Final Note Ltd. et al., [2000] 1 S.C.R. 842; 255 N.R. 80; 134 O.A.C. 280, refd to. [para. 68].

Cohen v. Kealey (1985), 10 O.A.C. 344; 26 C.P.C.(2d) 211 (C.A.), refd to. [para. 82].

Statutes Noticed:

Champerty Act, R.S.O. 1897, c. 327, sect. 1, sect. 2 [para. 16].

Solicitors Act, R.S.O. 1990, c. S-15, sect. 28 [para. 87].

Authors and Works Noticed:

Bacon, Matthew, A New Abridgement of the Law (7th Ed. 1832), vol. 2, pp. 27, 29 [para. 18].

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), p. 87 [para. 36].

New York State Bar Association, The Lawyer's Code of Professional Responsibility (2002), generally [para. 58].

Ontario, Legal Aid Review, A Blueprint for Publicly Funded Legal Services (1997), vol. 1, pp. 218 to 225 [para. 63].

Counsel:

Janet E. Minor and Sean Hanley, for the appellant;

Douglas Lennox, for the respondent;

Terrence J. O'Sullivan and Rochelle S. Fox, for the intervener, the Advocates' Society;

James Vigmond and Brian Cameron, for the intervener, the Ontario Trial Lawyers' Association.

This appeal was heard on April 17, 2002, before O'Connor, A.C.J.O., Abella and MacPherson, JJ.A., of the Ontario Court of Appeal. O'Connor, A.C.J.O., delivered the following decision for the Court of Appeal on September 10, 2002.