Murphy v. Tapp, (2008) 326 Sask.R. 213 (QB)

• Judge: Currie, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: October 22, 2008
• Jurisdiction: Saskatchewan
• Citations: (2008), 326 Sask.R. 213 (QB);2008 SKQB 420

Murphy v. Tapp (2008), 326 Sask.R. 213 (QB)

MLB headnote and full text

Temp. Cite: [2008] Sask.R. TBEd. DE.006

In The Matter Of Daniel Tapp, Barrister and Solicitor

And In The Matter Of a Bill for Professional Services Rendered by the Said Daniel Tapp to Lance Murphy

Lance Murphy (applicant) v. Daniel Tapp (respondent)

(2003 Q.B.G. No. 187; 2008 SKQB 420)

Indexed As: Murphy v. Tapp

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Currie, J.

October 22, 2008.

Summary:

Murphy retained Tapp, a lawyer, to appeal the discontinuation of income replacement benefits from Saskatchewan Government Insurance. Tapp was successful at trial and on appeal. Tapp received fees, disbursements and taxes totalling $144,113.86. Murphy received a total of $66,263.44. He applied for a determination of Tapp's fees and disbursements, either under a retainer agreement or on a quantum meruit. He also requested an order that Tapp pay the solicitor and client costs of the application.

The Saskatchewan Court of Queen's Bench held that neither of the written retainer agreements was enforceable and determined the fees and disbursements on a quantum meruit. A fair and reasonable amount for fees was $80,000, plus (at current tax rates) GST and PST. The court fixed disbursements at $14,027.85, plus GST. In the result, the court directed Tapp to return to Murphy the sum of $41,897.25. The court awarded Murphy party and party costs.

Editor's Note: For related cases between Murphy and Saskatchewan Government Insurance, see 2007 SKQB 238; 297 Sask.R. 165 (allowing Murphy's appeal of SGI's decision); 2007 SKQB 467; 306 Sask R. 211 (awarding double party and party costs of the action to Murphy); and 2008 SKCA 57; 310 Sask.R. 149 (dismissing SGI's appeal, with costs).

Barristers and Solicitors - Topic 3044

Compensation - Agreements - General - Requirement that agreement be fair and reasonable - On a determination of a lawyer's fees and disbursements, either under a June 2005 and a January 2007 retainer agreement or on a quantum meruit, the Saskatchewan Court of Queen's Bench stated that "[t]he guiding decision on the topic of determining a lawyer's fees is Zipchen v. Bainbridge, 2008 SKCA 87 ... . In that case Madam Justice Wilkinson reviewed the issues arising in the course of such a determination. Flowing from that review, on this application the following questions arise with respect to the June 2005 and the January 2007 agreements: (a) Did the parties enter into an agreement? (b) If so, is the agreement fair? (c) If so, is the agreement reasonable? (d) If the answer to any of the above questions is "no", then what should be the amount of the accounts on a quantum meruit?" - See paragraph 39.

Barristers and Solicitors - Topic 3044

Compensation - Agreements - General - Requirement that agreement be fair and reasonable - A lawyer (Tapp) put new contingency fee terms to his client (Murphy) in January 2007, which Murphy agreed to - The agreement provided for the payment of fees as follows: 50% of amounts recovered, less monies recovered for costs, plus a $5,000 bonus - The trial began March 5, 2007 - Murphy said that the agreement was signed on the eve of trial, and accordingly under unfair circumstances - The Saskatchewan Court of Queen's Bench set the agreement aside on the basis that it was unfair within the meaning of s. 64(3) of the Legal Profession Act - In the context of the progress of a court action, and in the circumstances, Murphy accurately characterized the negotiation as having taken place on the eve of trial - Murphy was out of money, and needed a resolution of his claim - Any new lawyer taking on the case would not have been in a position to conduct a two-week trial, with expert medical evidence - Despite Murphy being a sophisticated negotiator, Tapp was bargaining from the position of power - Tapp pressured Murphy into signing the agreement by opening the discussion of retainer terms at a time when Murphy had no choice but to agree to Tapp's terms - The agreement was brought about in an unfair manner, as Tapp took undue advantage - See paragraphs 59 to 67.

Barristers and Solicitors - Topic 3044

Compensation - Agreements - General - Requirement that agreement be fair and reasonable - A retainer agreement provided for a 50% contingency fee - The client applied for a determination of the lawyer's fees and disbursements and asked the Saskatchewan Court of Queen's Bench to rule that the 50% contingency fee was unreasonable - The court could not make that determination - Specifically, whether a 50% contingency fee was reasonable depended on the circumstances of the case and also on the amount to which the 50% was applied - In this case, the court could not determine the amount to which the 50 percent was applied - Further, the court noted that, in some complex cases, 50% could be reasonable - See paragraphs 68 to 70.

Barristers and Solicitors - Topic 3132

Compensation - Agreements - Contingent fees - Modification or cancellation or departure from agreement (incl. premiums) - The parties signed a retainer agreement in January 2007 - It provided that "[t]he fees which will be charged in this matter, and which shall be paid from the proceeds of any settlement or judgment, are set out as follows: (a) 50% of all amounts recovered less all amounts paid for fees, disbursements, and less monies recovered for solicitor client costs plus a $5,000.00 bonus" - The parties intended the client to receive the solicitor and client costs without any fees being calculated on them - The agreement, however, did not address whether any awarded party and party costs would be included in or excluded from the lawyer's fees - The party and party costs of the trial amounted to $29,737.52 - The Saskatchewan Court of Queen's Bench concluded that the January 2007 agreement was not enforceable - First, the parties did not turn their minds to the matter, having assumed there would be an award of solicitor and client costs - Second, there was doubt whether the fees would be calculated on party and party costs - The parties did not have a meeting of the minds - The manner of calculating the fees remained unresolved - The court concluded that the parties did not, in fact, reach an agreement in January 2007 - See paragraphs 47 to 53.

Barristers and Solicitors - Topic 3132

Compensation - Agreements - Contingent fees - Modification or cancellation or departure from agreement (incl. premiums) - In June 2005, Tapp agreed to represent Murphy on a contingency basis, and they signed a retainer agreement in June 2005 - The agreement provided for a 50% contingency fee - In late 2005, Murphy and Tapp agreed to renegotiate the contingency fee - Tapp put new contingency fee terms to Murphy in January 2007, which Murphy agreed to - The Saskatchewan Court of Queen's Bench concluded that the January 2007 agreement was not enforceable, and considered whether the parties fell back on the June 2005 agreement - The court concluded that Murphy and Tapp were left with no retainer agreement - They did not leave the June 2005 agreement in place until they might succeed in agreeing on new terms - Rather, they agreed that the June 2005 agreement was not effective - Therefore, having failed to reach an enforceable agreement to replace it, they were left with no retainer agreement - This led the court to an assessment on a quantum meruit basis - See paragraphs 71 to 74.

Barristers and Solicitors - Topic 3137

Compensation - Agreements - Contingent fees - Duty to client - The Saskatchewan Court of Queen's Bench considered the leading jurisprudence with respect to the duty on a lawyer to make certain that a client executing a contingency agreement clearly understood what the agreement meant - See paragraph 50.

Barristers and Solicitors - Topic 3304

Compensation - Measure of compensation - Quantum meruit - Reasonable charges - The Saskatchewan Court of Queen's Bench stated that, in making a quantum meruit determination, the court must consider the nine factors set out in Zipchen (2005); namely, (1) the time and effort expended by the solicitor; (2) the complexity and importance of the matter; (3) the amount of responsibility assumed by the solicitor; (4) the degree of skill and competence demonstrated by the solicitor; (5) the charges of other solicitors of the same standing at the bar; (6) the amount of money involved; (7) the importance of the transaction to the client; (8) the results obtained; and (9) the ability of the client to pay - See paragraph 75.

Barristers and Solicitors - Topic 3304

Compensation - Measure of compensation - Quantum meruit - Reasonable charges - Murphy retained Tapp to appeal the discontinuation of income replacement benefits - Tapp achieved success at both trial and appeal, recovering $157,950.64, plus costs of $40,040.88 - Tapp received fees, disbursements and taxes totalling $144,113.86 - Murphy received a total of $66,263.44 - He applied for a determination of Tapp's fees and disbursements - The Saskatchewan Court of Queen's Bench concluded that a fair and reasonable amount for fees was $80,000 and fixed disbursements at $14,027.85 - The amount compensated Tapp adequately for substantial work and for achieving success in a complex matter - The amount was fair to Murphy, given his need to defer payment of legal fees and the range of contingency fee that he had been prepared to pay (50%) - Specifically, the court considered the "Zipchen factors", including the following - The amount might exceed a million dollars if benefits were payable for the balance of Murphy's working life; the immediate award totalled $106,102.59; the issues were important; and the medical issues were complex - Tapp represented Murphy through three mediation sessions, three pre-trial conferences, the trial and the appeal; the trial ran the equivalent of eight days - Tapp had preferred to be paid on a fee for service basis; the contingency fee arrangement allowed Murphy to succeed in the litigation - Tapp shared the risk of Murphy's claim - See paragraphs 75 to 81.

Contracts - Topic 1205

Formation of contract - Offer - What constitutes an offer (incl. counter-offer) - [See Contracts - Topic 1210 ].

Contracts - Topic 1210

Formation of contract - Offer - Revocation of offer - General - A lawyer (Tapp) and his client (Murphy) exchanged several emails relating to Tapp's legal fees - Starting on March 3, 2007, Tapp proposed a new fee arrangement - Murphy sent a response to Tapp, with a proposal of his own - On March 4, Tapp rejected that proposal and advanced a counterproposal, which he described as a counter offer - On March 13, Tapp advanced a proposal similar to his March 4 proposal, and added: "... I will not do any work in relation to solicitor client legal fees unless and until you accept the terms of this offer. You will not know the amount involved until we reach a[n] agreement ..." - Murphy did not accept the proposals - On March 19, Tapp emailed another fee arrangement proposal to Murphy - The next day, Tapp sent a further email, this time by way of replying to Murphy's March 3, 2007 email - He wrote: "Lance: I accept this Offer. We now have a contract." - Murphy promptly responded: "No we do not have a contract ...", to which Tapp replied: "I think we do have a contract. You made the offer and I accepted it ..." - The Saskatchewan Court of Queen's Bench held that no agreement was reached - When on March 4, Tapp counter-offered, the March 3 offer was no longer available to be accepted - Thus, Tapp's March 20 purported acceptance of it was not effective - See paragraphs 21 to 23, 44 and 45.

Contracts - Topic 3664

Performance or breach - Repudiation - What constitutes repudiation - A lawyer (Murphy) and his client (Tapp) signed a retainer agreement in January 2007 - Beginning in early March 2007, about a week after the trial had concluded and the trial judge had reserved his decision, Tapp wrote to Murphy, denying the validity of the agreement - He said that the agreement was unfair, unreasonable and that Murphy had badgered him into agreeing to its terms - The Saskatchewan Court of Queen's Bench held that the January 2007 agreement was not enforceable - Tapp's conduct amounted to a repudiation of the agreement, and Murphy, by his conduct, accepted the repudiation, electing to treat the agreement as discharged and bringing this application to determine the fair and reasonable amount of his accounts - See paragraphs 54 to 57.

Contracts - Topic 3665

Performance or breach - Repudiation - Effect of acceptance of repudiation - [See Contracts - Topic 3664 ].

Practice - Topic 7103

Costs - Party and party costs - Special orders - Conduct by party - [See Practice - Topic 7454 ].

Practice - Topic 7454

Costs - Solicitor and client costs - Entitlement to - Improper, irresponsible or unconscionable conduct - Murphy retained Tapp to appeal the discontinuation of income replacement benefits by Saskatchewan Government Insurance (SGI) - Tapp was successful at trial and on appeal, and received fees, disbursements and taxes totalling $144,113.86 - Murphy received a total of $66,263.44 - He applied for a determination of Tapp's accounts and requested an order that Tapp pay the solicitor and client costs of the application - Murphy alleged that Tapp maximized his fees in total disregard for his client's interests, when Murphy was in desperate financial circumstances - Murphy was largely successful on the application - The Saskatchewan Court of Queen's Bench awarded Murphy party and party costs - Murphy's characterization of Tapp's conduct related to his conduct in the course of litigation against SGI., not in the context of the application - Solicitor and client costs would not normally arise in these circumstances - While Tapp behaved inappropriately by sometimes making himself difficult to deal with, he did not bear all the responsibility for the sometimes antagonistic relationship - Murphy's tactics included threats and claims of vulnerability and ignorance - Further, Murphy barely acknowledged the benefit that he received as a consequence of Tapp's efforts - See paragraphs 82 to 88.

Cases Noticed:

Zipchen v. Bainbridge et al. (2008), 311 Sask.R. 90; 428 W.A.C. 90; 2008 SKCA 87, appld. [para. 39].

Simard v. Tapp (1998), 170 Sask.R. 312 (Q.B.), refd to. [para. 50].

Zipchen v. Bainbridge et al. (2005), 265 Sask.R. 243; 2005 SKQB 218, folld. [para. 59].

Siemens et al. v. Bawolin et al. (2002), 219 Sask.R. 282; 272 W.A.C. 282; 2002 SKCA 84, refd to. [para. 83].

Statutes Noticed:

Legal Profession Act, S.S. 1990-91, c. L-10.1, sect. 64(1), sect. 64(3), sect. 67(1) [para. 40].

Authors and Works Noticed:

Cheshire, Geoffrey Chevalier, Fifoot, Cecil Herbert Stuart, and Furmston, Michael P., The Law of Contract (13th Ed. 1996), pp. 38, 39 [para. 44]; 550 [paras. 55, 56].

Orkin, Mark M., The Law of Costs (2nd Ed. 1987), para. 308.1(4) [para. 68].

Counsel:

Kenneth W. Noble, for the plaintiff;

Daniel S. Tapp, on his own behalf.

This application was heard by Currie, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following judgment on October 22, 2008.