Thompson v. Thompson et al., 2007 SKCA 142

• Judge: Jackson, Richards and Wilkinson, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: September 05, 2007
• Jurisdiction: Saskatchewan
• Citations: 2007 SKCA 142;(2007), 302 Sask.R. 311 (CA)

Thompson v. Thompson (2007), 302 Sask.R. 311 (CA);

      411 W.A.C. 311

MLB headnote and full text

Temp. Cite: [2007] Sask.R. TBEd. DE.004

Merchant Law Group (third party respondent/appellant/respondent by cross-appeal) v. Darlene Adele Thompson (Martin)

(petitioner/respondent/appellant by cross-appeal) and Ian Keith Thompson (respondent) and The Law Society of Saskatchewan (intervenor)

(No. 1201; 2007 SKCA 142)

Indexed As: Thompson v. Thompson et al.

Saskatchewan Court of Appeal

Jackson, Richards and Wilkinson, JJ.A.

December 4, 2007.

Summary:

The plaintiff entered into a bonus fee agreement with the Merchant Law Group (Merchant) to represent her in a divorce. Three months after trial, the plaintiff applied for a declaration that the fee agreement was neither fair nor reasonable and for an order that the statement of account be referred to the local registrar for assessment.

The Saskatchewan Court of Queen's Bench, in a decision reported at 268 Sask.R. 111, held that the agreement was fair and reasonable but the agreement that Merchant receive taxable costs was unfair. The plaintiff was entitled to keep any costs awarded to her. The plaintiff's application for an order that the statement of account be referred for assessment was dismissed. Merchant filed an appeal. The Law Society of Saskatchewan applied for intervenor status in the appeal.

The Saskatchewan Court of Appeal, per Jackson, J.A., in a decision reported at (2007), 304 Sask.R. 227; 413 W.A.C. 227, allowed the application on a limited basis. The plaintiff cross-appealed and applied to admit fresh evidence on the appeal. The fresh evidence showed that the plaintiff's formal offer to settle in the divorce action had never been served.

The Saskatchewan Court of Appeal admitted the fresh evidence and, on the basis of that, determined that the fee agreement was unfair, premised, as it was, on the express understanding that a formal offer of settlement was to be immediately served. The agreement was void for unfairness. The appeal was dismissed and the cross-appeal was allowed to the extent of referring the bill for taxation by the local registrar to determine a reasonable fee on a quantum meruit basis.

Barristers and Solicitors - Topic 661

Duty to court - General principles - Duty to comply with Rules of Court - [See second Barristers and Solicitors - Topic 1552 ].

Barristers and Solicitors - Topic 1552

Relationship with client - Duty to client - General - Duty to follow client's instructions - In a divorce action, a wife entered into a fee agreement with her counsel, Merchant Law Group (Merchant), under which Merchant would receive a bonus of 60% plus any costs awarded to the wife if she was successful at trial - Success was defined as obtaining a judgment as good as or better than an offer the wife made during a pretrial settlement conference - The wife was "successful" - The legal account was satisfied from family property proceeds - Three months later, the wife applied for a declaration that the fee agreement was neither fair nor reasonable - A chambers judge held that the agreement was fair except regarding costs - Merchant appealed - The wife cross-appealed and applied to admit fresh evidence which showed that her offer to settle had never been formally served, contrary to her express instructions - Merchant admitted that the offer had deliberately not been formally served as a tactical manoeuver to increase the chances of recovering double costs - Merchant sought leave to submit material explaining the Queen's Bench Registrar's practices that influenced his decision - The Saskatchewan Court of Appeal admitted the evidence and declined Merchant's request - Merchant's motivation to withhold the offer was immaterial - Merchant deliberately ignored his client's express instruction and did so in an effort to protect the firm's pecuniary interests to the prejudice of the client's interests in concluding an amicable settlement - On the basis of that, the fee agreement was void for unfairness - See paragraphs 47 and 50.

Barristers and Solicitors - Topic 1552

Relationship with client - Duty to client - General - Duty to follow client's instructions - In a divorce action, a wife entered into a fee agreement with her counsel, Merchant Law Group (Merchant), under which Merchant would receive a bonus of 60% plus any costs awarded to the wife if she was successful at trial - Success was defined as obtaining a judgment as good as or better than an offer the wife made during a pretrial settlement conference - The wife was "successful" - The legal account was satisfied from family property proceeds - Three months later, the wife applied for a declaration that the fee agreement was neither fair nor reasonable - A chambers judge held that the agreement was fair except regarding costs - Merchant appealed - The wife cross-appealed and applied to admit fresh evidence which showed that her offer to settle had never been formally served, contrary to her express instructions - Merchant opposed the application, submitting that it was immaterial whether or not he served the formal offer of settlement because the firm was entitled to any costs awarded under the terms of the fee agreement - The Saskatchewan Court of Appeal rejected the argument - Merchant made a deliberate decision contrary to the client's express instructions - The decision was influenced exclusively by the firm's financial interests - The Rules regarding formal offers were designed to encourage settlement and avoid the significant expenses of trials - Merchant had undermined that process - The evidence was admitted - On the basis of that, the fee agreement was void for unfairness - See paragraphs 44 to 45 and 50.

Barristers and Solicitors - Topic 3044

Compensation - Agreements - General - Requirement that agreement be fair and reasonable - In a divorce action, a wife entered into a fee agreement with her counsel, Merchant Law Group (Merchant), under which Merchant would receive a bonus of 60% plus any costs awarded to the wife if she was successful at trial - Success was defined as obtaining a judgment as good as or better than an offer the wife made during a pretrial settlement conference - The wife was "successful" - The legal account was satisfied from family property proceeds - Three months later, the wife applied for a declaration that the fee agreement was neither fair nor reasonable - A chambers judge held that the agreement was fair except regarding costs - Merchant appealed - The wife cross-appealed and applied to admit fresh evidence which showed that her offer to settle had never been formally served, contrary to her express instructions - Merchant admitted that the offer had deliberately not been formally served as a tactical manoeuver - The Saskatchewan Court of Appeal admitted the fresh evidence and, on the basis of that, determined that the fee agreement was unfair - The agreement was fashioned on the basis of, or in contemplation of, an entirely different litigation/trial strategy than the one ultimately pursued - The ramifications of Merchant's deliberate and undisclosed decision would never be known - The agreement was void for unfairness - A reasonable fee was to be determined by assessment on a quantum meruit basis - See paragraph 50.

Barristers and Solicitors - Topic 3044

Compensation - Agreements - General - Requirement that agreement be fair and reasonable - [See both Barristers and Solicitors - Topic 1552 ].

Barristers and Solicitors - Topic 3245

Compensation - Taxation or assessment of accounts - Limitation period - In a divorce action, a wife entered into a fee agreement with her counsel, Merchant Law Group (Merchant), under which Merchant would receive a bonus of 60% plus any costs awarded to the wife if she was successful at trial - Success was defined as obtaining a judgment as good as or better than an offer the wife made during a pretrial settlement conference - The wife was "successful" - The legal account was satisfied from family property proceeds - Three months later, the wife applied for a declaration that the fee agreement was neither fair nor reasonable - A chambers judge held that the agreement was fair except regarding costs - Merchant appealed - The wife cross-appealed and applied to admit fresh evidence which showed that her offer to settle had never been formally served, contrary to her express instructions - The Saskatchewan Court of Appeal admitted the fresh evidence and, on the basis of that, determined that the fee agreement was void for unfairness - In light of the fresh evidence admitted, the bill was referred for taxation under s. 67 of the Legal Profession Act on the grounds that special circumstances existed justifying taxation beyond the 30-day limitation period - See paragraph 51.

Barristers and Solicitors - Topic 3305

Compensation - Measure of compensation - Bonus - [See first Barristers and Solicitors - Topic 3044 ].

Practice - Topic 9031

Appeals - Evidence on appeal - Admission of "new evidence" - In a divorce action, a wife entered into a fee agreement with her counsel, Merchant Law Group (Merchant), under which Merchant would receive a bonus of 60% plus any costs awarded to the wife if she was successful at trial - Success was defined as obtaining a judgment as good as or better than an offer the wife made during a pretrial settlement conference - The wife was "successful" - The legal account was satisfied from family property proceeds - Three months later, the wife applied for a declaration that the fee agreement was neither fair nor reasonable - A chambers judge held that the agreement was fair except regarding costs - Merchant appealed - The wife cross-appealed and applied to admit fresh evidence which showed that her offer to settle had never been formally served, contrary to her express instructions - The Saskatchewan Court of Appeal admitted the evidence - The evidence was relevant and could reasonably have affected the result - The chambers judge had concluded that justice was achieved by declaring unenforceable the provision entitling Merchant to retain any costs recovered - She might not have considered this result fair and reasonable had she been aware of Merchant's deliberate and undisclosed decision to withhold service of the wife's formal offer and had she had the opportunity to consider the potential impact on cost recovery - See paragraph 49.

Practice - Topic 9031

Appeals - Evidence on appeal - Admission of "new evidence" - In a divorce action, a wife entered into a fee agreement with her counsel, Merchant Law Group (Merchant), under which Merchant would receive a bonus of 60% plus any costs awarded to the wife if she was successful at trial - Success was defined as obtaining a judgment as good as or better than an offer the wife made during a pretrial settlement conference - The wife was "successful" - The legal account was satisfied from family property proceeds - Three months later, the wife applied for a declaration that the fee agreement was neither fair nor reasonable - A chambers judge held that the agreement was fair except regarding costs - Merchant appealed - The wife cross-appealed and applied to admit fresh evidence which showed that her offer to settle had never been formally served, contrary to her express instructions - Merchant opposed the application, asserting, inter alia, that the evidence was not "fresh" as it would have been discoverable earlier by the wife with due diligence - The Saskatchewan Court of Appeal admitted the evidence - To exercise due diligence, one had to be aware that a meaningful issue existed - Here, the wife had no reason to doubt Merchant's express written assurance that the offer would be immediately served - Unless put on notice that a potential problem existed, one's eye was hardly drawn to the presence or absence of a service stamp on a document - See paragraphs 41 to 42.

Cases Noticed:

Thorstad & Danyliuk v. Isley, [1993] 6 W.W.R. 181; 110 Sask.R. 100 (Q.B.), refd to. [para. 30].

Speers v. Hagemeister (1974), 52 D.L.R.(3d) 109 (Sask. C.A.), refd to. [para. 32].

Maitland v. Drozda, [1983] 3 W.W.R. 193; 22 Sask.R. 1 (C.A.), refd to. [para. 42].

Sandstrom & Scott and United Chemicals Ltd., Re, [1989] 5 W.W.R. 690; 74 Sask.R. 59 (C.A.), refd to. [para. 52].

Counsel:

E.F. Anthony Merchant, Q.C., for the appellant;

Daniel P. Kwochka, for the respondent;

Thomas J. Schonhoffer, Q.C., for the intervenor.

This appeal and cross-appeal were heard on September 5, 2007, by Jackson, Richards and Wilkinson, JJ.A., of the Saskatchewan Court of Appeal. Wilkinson, J.A., delivered the following written reasons for judgment for the court on December 4, 2007.