COURT OF APPEAL FOR BRITISH COLUMBIA
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Citation: |
British Columbia (Public Guardian and Trustee) v. Ralston, |
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2008 BCCA 372 |
Date: 20080926
Docket: CA034896
Between:
Public Guardian and Trustee of British Columbia
Appellant
And
Mariah Ralston, an Infant by her Grandmother and
Guardian Ad Litem, Marcia Lorraine Wilson
Respondents
(Plaintiffs)
And
Natasha June Ralston and Jason Ralston
Respondents
(Defendants)
And
Mary Noreen Fus
Respondent
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Before: |
The Honourable Madam Justice Saunders |
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The Honourable Madam Justice Kirkpatrick |
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The Honourable Mr. Justice Chiasson |
| J. A. Zak |
Counsel for the Appellant, The Public Guardian and Trustee |
M. M. Skorah |
Counsel for the Respondent, Mary Noreen Fus |
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Place and Date of Hearing: |
Vancouver, British Columbia |
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March 31, 2008 |
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Additional Submissions Received: |
April 7 & 14, 2008 |
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Place and Date of Judgment: |
Vancouver, British Columbia |
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September 26, 2008 |
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Written Reasons by: |
| The Honourable Madam Justice Saunders |
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Concurred in by: |
| The Honourable Madam Justice Kirkpatrick The Honourable Mr. Justice Chiasson |
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Reasons for Judgment of the Honourable Madam Justice Saunders:
[1] This appeal concerns the quantum of a contingency fee approved following an infant settlement. The Public Guardian and Trustee says the fee is excessive and should be reduced.
[2] In his reasons for judgment indexed at 2007 BCSC 637, Mr. Justice Burnyeat approved a fee of $195,872.34, 20% of the amount recovered. He also summarily set the fee payable to counsel for the Public Guardian and Trustee for preparing and attending the hearing on the quantum of the contingency fee, at $5,000.
[3] The Public Guardian and Trustee contends that this fee was more than was appropriately fair; that the judge erred in the exercise of his discretion in approving a fee greatly in excess of counsel’s customary hourly billing rate; and that the judge erred in admitting into evidence portions of an affidavit of Ms. Fus that were hearsay. Further, the Public Guardian and Trustee says the judge erred in summarily fixing his counsel’s fee without requiring a presentation of accounts.
Background
[4] The infant Mariah was a healthy 19-month old child when she was catastrophically injured in a single vehicle motor vehicle accident on August 1, 1993. Her mother, the respondent, Natasha Ralston was the driver. The injuries caused long-term deficits of a cognitive, behavioural and physical nature. Liability was never seriously in dispute. It was always apparent that damages, which were not agreed initially, would be significant.
[5] Different counsel initially acted for the plaintiff from August 1993 to November 1995. That lawyer issued the writ of summons and the statement of claim, and negotiated interim advance payments. Ms. Fus has acted for the plaintiff since November 1995.
[6] The original contingency fee agreement entered into with the plaintiff’s first lawyer provided for a fee of 30% of the amount recovered. The agreement with Ms. Fus provided for a fee of 33 1/3%.
[7] The guardian ad litem is the grandmother of Mariah. She does not oppose the fee of 20% sought by Ms. Fus.
[8] Prior to settlement of the action, no examinations for discovery were conducted, the action was not set down for trial and there was no mediation.
[9] Ms. Fus was called to the bar in British Columbia in 1980 and has practiced exclusively in civil litigation. She deposed that she did not maintain detailed time records but estimated she had spent approximately 150 hours on this file over the approximately 11 years she acted on it prior to settlement. She deposed that her ordinary hourly rate has been $250 since early 2000. At that rate, 150 hours would produce a fee of $37,500. The Public Guardian and Trustee proposed a fee based on 200 hours, that is, $50,000.
[10] In his reasons for judgment the judge described the particular difficulties of the case:
[8] In reviewing the matter, I am satisfied that there are various factors which I should take into account, including the fact that this was a difficult situation as between the plaintiff and the defendants. The defendants are the parents of the infant. The Guardian Ad Litem is the grandmother of the plaintiff and the parent of the defendant, Natasha Ralston. The parents separated in 1995. The mother moved a number of times. There were fairly extensive negotiations with the insurer regarding various matters which have arisen. I note that Ms. Fus has carried approximately $10,000 in disbursements and that she has since 1995 been responsible for the fees of the previous law firm which she indicates is in excess of $14,000.
[11] He then approved the fee proposed by Ms. Fus, saying:
[9] Taking into account those factors and other factors which are set out in the decision in Harrington (Guardian Ad Litem of) v. Royal Inland Hospital (1995), 14 B.C.L.R. (3d) 201 (B.C.C.A.), relying on the factors set out in Yule v. City of Saskatoon (1955), 16 W.W.R. 305 (Sask. C.A.), I am satisfied that I should take into account the following additional factors. First, that the damage was suffered by an infant who had no funds in her own right and whose parents were the defendants. Second, that there was nothing in evidence which would allow me to conclude the Guardian Ad Litem had the resources to obtain redress for the damages without the willingness of counsel to undertake the representation of the Plaintiff on a contingency fee basis. Third, Ms. Fus should be entitled to be well compensated in order to make up for those cases taken by her on a contingency fee basis which do not result in success. Fourth, ironically, Mr. Zak, on behalf of the Public Guardian and Trustee of British Columbia, seeks approval of his fees and the fees of the Public Guardian for review of what is proposed by way of settlement and the fees of Ms. Fus and that the estimate that I have been given is that those fees will be about or less than $20,000. I am satisfied it would be inappropriate in the circumstances to approve the fees of counsel for the Plaintiff at between $37,500 and $50,000 as is recommended by counsel for the Public Guardian and Trustee in view of the fees that will be claimed out of the proceeds by the Public Guardian and Trustee.
[10] As I would have been prepared to approve a settlement in the neighbourhood of $4 million to reflect the estimate of Ms. Fus that future care costs may approach $3 million, the percentage which would have been available to Ms. Fus if that settlement had been approved would have been in the neighbourhood of 6% to 7%. I am satisfied that the proposed fee is more than appropriately fair to both the infant and to Ms. Fus.
[12] In addition to the fee of $195,872.34 (20% of $979,361.62), there are disbursements. The disbursements include the fees payable to the previous law firm, $12,985. Including applicable taxes, the total of fees and disbursements allowed is $249,291.48.
Discussion
Fees for Plaintiff’s Counsel
[13] The Public Guardian and Trustee contends the fee is excessive and raises as a discreet issue the admissibility of one portion of Ms. Fus’s affidavit in support of the fee. I deal with this latter point first.
[14] The impugned paragraph is lengthy, and I have attached it as a schedule to these reasons. In it, Ms. Fus describes difficulties said to be encountered by service providers and statements made to her by service providers as to difficulties they were encountering dealing with the Insurance Corporation of British Columbia.
[15] The judge dismissed this objection to the evidence, saying:
-- let me cut through it. I’m going to allow consideration of the hearsay. It seems to me that without assuming that there were problems, actual problems with ICBC, it seems to me that there was time taken up by being advised that there were, and she does say directly in her direct testimony, non hearsay, that she had to deal with service providers from time to time.
[16] I see no error in the judge’s disposition of the objection. He winnowed the hearsay from the relevant content and focused upon it. While the Public Guardian and Trustee contends that exclusion of the entire paragraph would have removed all evidence of negotiations with the insurers, at most only a portion of that paragraph contained hearsay. That portion the Public Guardian and Trustee would exclude as referring to negotiations is admissible as direct evidence from Ms. Fus as to her activities on the file.
[17] I consider that the judge did not use the impugned paragraph for the truth of what others said, but rather to understand Ms. Fus’s actions and the extent of the services she rendered. It follows I would not give effect to this ground of appeal.
[18] I turn to consideration of the magnitude of the fee. At its core, the submission of the Public Guardian and Trustee is that the fee is simply too great a reward to the solicitor in circumstances in which a settlement at the policy limit of $1 million was easily and obviously achievable and that it may be said Ms. Fus did not add sufficient value to the plaintiff’s case to warrant the magnitude of fee approved. The Public Guardian and Trustee says further that the judge erred in considering, as justification for the fee, the judgment that could have been obtained had there not been a limit of $1 million in available insurance proceeds.
[19] I do not consider that it is an error of law for the approving judge to comment on the maximum judgment that might have been recovered. It is simply a touchstone, and may help to put a settlement and the quantum of fees in perspective. Of course, where, as here, that amount was not collected and if was known early on that it was unlikely to be collected, I would not expect much weight, if any, to be given to this factor.
[20] In the case before us, the judge may have given this feature more prominence than was warranted by the circumstances. However, this does not deal with the real issue before us – is the fee excessive?
[21] The factors to be considered on an application for approval of fees are set out in Harrington (Guardian ad litem of) v. Royal Inland Hospital (1995), 14 B.C.L.R. (3d) 201, 131 D.L.R. (4th) 15 (C.A.). There Mr. Justice Hinds, speaking for the majority, considered a number of factors, which included:
1. the financial circumstances of the plaintiff;
2. the risk to the law firm where it carries disbursements;
3. the complexity of the issues;
4. the experience and skill of defendant’s counsel;
5. the experience and skill of plaintiff’s counsel;
6. the risk assumed by plaintiff’s counsel that there would be no pay for effort expended;
7. the time expended by plaintiff’s counsel;
8. the importance of the case to the plaintiff; and,
9. whether the settlement is a good settlement.
[22] He said, in commenting in general on contingency fee remuneration at p. 269:
A solicitor who undertakes the prosecution of a difficult case, the prospects of which are uncertain due to various issues such as liability, causation or damages, is entitled to be well compensated in the event the case is brought to a successful conclusion. Such remuneration must be substantial, but not exorbitant, in order to make up for those cases taken by the solicitor on a contingency fee basis which do not result in success.
[23] In Usipuik v. Jensen, Mitchell & Co. (1986), 3 B.C.L.R. 283, [1986] 5 W.W.R. 41 (S.C.), Madam Justice Southin observed (at p. 297):
In approaching the question of the fairness of any particular contract for fees on a percentage basis, one must remember that there are many kinds of personal injury cases: motor vehicle accidents, medical and other professional malpractice, products' liability, occupiers' liability and no doubt other kinds which do not, at the moment, occur to me. Medical malpractice cases are notoriously difficult and expensive to pursue. Expert witness fees in themselves can run to many thousands of dollars.
But actions for negligence in the operation of a motor vehicle may or may not be risky or difficult. Sometimes there is an issue of liability; frequently there is not. Sometimes there is a real difference of opinion on the proper amount of damages between the plaintiff and the Insurance Corporation of British Columbia; sometimes, there is very little.
[24] The appellant says that the judge failed to reflect: a) the fact that this was a straightforward, as contrasted with complex, case; b) that it did not require a great degree of assessment or investigation to determine that the infant’s claim was significant; c) that there was virtually no risk of non-recovery and Ms. Fus knew this when she was engaged; d) there was similarly little risk that Ms. Fus would not recover her disbursements; e) the minimal level of disbursements expended by Ms. Fus, apart from payment of the fees and disbursements of previous counsel, indicates that Ms. Fus did not “finance” the action to any significant extent; f) the effort expended over the 11 years Ms. Fus had conduct of the file does not justify a highly premiumed reward; g) there was delay concluding the file, in that Ms. Fus did not proceed with reasonable dispatch; h) there is some question of the degree of skill possessed by Ms. Fus as evidenced in her correspondence with another lawyer she retained.
[25] The Public Guardian and Trustee also raises as a relevant factor the needs of the infant which are depleted by the fee, notes that the matter was never set for trial, and says the level of fee is not consistent with previous jurisprudence.
[26] Counsel for Ms. Fus supports the fee, saying that the case was more complex than the Public Guardian and Trustee asserts, and that the efforts of Ms. Fus resulted in a more advantageous settlement than had been offered by the Insurance Corporation of British Columbia.
[27] He notes that the defendant placed restrictions upon the communications between the grandmother as guardian ad litem and the mother as defendant which created a complex family dynamic that required the knowledgeable and sensitive approach of Ms. Fus. He disputes the appellant’s view of Ms. Fus’s expertise, and contends that in consulting other counsel she demonstrated professional responsibility. Last, he focussed upon the quality of result, obtained in the time frame desired by the guardian ad litem who was seeking to preserve the family bonds in what was a troubled circumstance.
[28] It is to be observed, firstly, that the approval of counsel’s fee is a matter of discretion. Only if there has been an error of principle, or no weight or insufficient weight was given to relevant consideration may this Court interfere: Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, 88 D.L.R. (4th) 1.
[29] I will say at the outset that there is no basis at all to the criticism of Ms. Fus’s expertise because she consulted outside counsel. Ms. Fus is a sole practitioner practising law in a city in the interior of British Columbia. While a lawyer in a multi-person firm may simply walk into the office next door to ask a colleague a question, that possibility is not open to a sole practitioner. In any case, if the lawyer consulted is from a different firm, consultation will be constrained by client privilege and professional confidentiality unless there is some proper, ethical basis for the communications that draws in the consulted lawyer to the sphere of client privilege. It would be regressive, in my view, to criticize counsel for seeking outside assistance, and corrosive of the professional responsibility that is demonstrated by a lawyer seeking advice of others, to denigrate Ms. Fus in these circumstances. I conclude there is no basis whatsoever upon which to find Ms. Fus lacked knowledge or was deficient in her carriage of the case.
[30] I am persuaded, however, that the judge failed to give sufficient weight to the degree of recovery the fee represents, that is, it does not take into account the fact that the time spent by Ms. Fus, no matter how efficient and highly skilled, was not great. This is not a matter of criticism of Ms. Fus’s performance, but a reflection of the relative ease with which the maximum amount collectible was reflected in a settlement proposal, without discovery, without expenditure on expert reports, and without setting the matter for trial.
[31] In Harrington, Mr. Justice Thackray as the trial judge, in his reasons for judgment at (1994), 89 B.C.L.R. (2d) 165, 22 C.P.C. (3d) 113 (S.C.), in reducing a fee to 11.5%, opined in a judgment upheld by this Court:
An hourly rate of $300 would result in a fee of approximately $72,000. That hourly rate is what senior counsel might hope to bill on significant cases. To double that figure to account for the contingency risks must surely represent as much as any segment of the profession or the public would consider to be fair remuneration. I am of the opinion that a fair and reasonable fee is $175,000.
[32] It is relevant, as the judge said in this case, that the plaintiff could not have proceeded without a contingency fee agreement, and that the successful cases finance the unsuccessful ones. However, degree of risk, the level of effort expended, and the nature of and complexity of the legal issues must also be considered.
[33] I conclude that the fee approved by the judge did not sufficiently reflect all relevant factors, and the fee should be reduced.
[34] Allowing for the fact that Ms. Fus did not keep meticulous track of her time and likely has underestimated the effort she expended over 11 years, and adjusting for the long delay in reaching a stage she could present her fees (a temporal factor in accordance with the instructions of the guardian ad litem), but acknowledging that settlement was reached at, in procedural terms, an early stage, and the time spent on the file was not great, I would fix the fee at $120,000, plus disbursements.
The Fees of Counsel for the Public Guardian and Trustee
[35] The judge set the fee available to the Public Guardian and Trustee for counsel at $5,000. In doing so he first referred to Duchene (Guardian Ad Litem of) v. Woolley, 2002 BCSC 1878, and then said:
[13] Accordingly, I am not satisfied that the fee to conduct the statutory review would include the cost of the submissions which have been made regarding the proposed fee of Ms. Fus. In this latter regard, I am satisfied that I can set a fee summarily as was done in Duchene, supra, and that I can take into account the position taken on behalf of the Office of the Public Guardian and Trustee in deciding what the appropriate fee should be in this case. In Duchene, supra, the recommended range of fees was $650,000 to $750,000 with Beames J. deciding the reasonable fee would be $900,000. What I have is a submission by the Public Guardian and Trustee that the fees should be allowed in the neighbourhood of $37,500 to $50,000. Having allowed fees, disbursements and government taxes of approximately $250,000, I am asked to deal with an estimate provided by counsel for the Office of the Public Guardian and Trustee of fees of something less than $20,000.
[14] Having in mind the fact that nothing has been brought to my attention which would allow me to conclude that Vancouver counsel, in-house or otherwise, would not be available by the Office of the Public Guardian and Trustee to speak to this matter in order to avoid the cost of having counsel from outside Vancouver attending, and taking into account the relative success of the Office of the Public Guardian and Trustee in their submissions regarding the costs of counsel for the Plaintiff, I will set the legal fees, disbursements and government taxes available by the Public Guardian and Trustee out of the funds available to the Plaintiff at $5,000.
[15] MR. ZAK: Well, thank you, My Lord. I’m not suggesting anything otherwise, other than the reason the file was transferred to Kamloops was that’s where Ms. Fus is practising law. I’m practising law there. That’s where the matter was, so.
[16] THE COURT: I had understood she was in Fort St. John but, even though Ms. Fus now practises in Kamloops, I am satisfied that the amount that I have set for the fees of the Office of the Public Guardian and Trustee remains appropriate.
[36] Before this Court the Public Guardian and Trustee contends that the judge lacked jurisdiction to summarily set counsel's fee when an account had not been rendered and no request was made for such an order. He contends as well that the judge erred in law in considering as a factor the relative degree of success of the Public Guardian and Trustee. He says the proper test is whether the challenge to the fee was brought in the proper fulfillment of his duties: Chong (Guardian Ad Litem of) v. Royal Columbia Hospital (1997), 36 B.C.L.R. (3d) 112, 18 E.T.R. (2d) 168 (S.C.).
[37] The respondents say the judge had authority to summarily fix the fee, that no objection to the procedure was taken before the judge, and that no error was made, either in process or in substance, in the order setting the fee.
[38] In my view, the order relating to the amount available to the Public Trustee and Guardian for counsel’s fees must be set aside. The degree of success is not a factor that should be considered on such a matter. Rather, the question is whether the Public Guardian and Trustee was properly fulfilling his statutory duties. In this the question of whether the position of the Public Guardian and Trustee is unreasonable will be a consideration.
[39] In Chong, Mr. Justice Taylor said, in a passage with which I agree:
[20] I consider that it would be inappropriate were the Public Trustee to be indemnified only if successful in having the Court approve a reduced fee of an infant plaintiff's counsel. If that were the principle on which such fees were to be paid it would introduce the concept of "loser pays" into this assessment which I conclude is inconsistent with the Public Trustee's function under s. 31. That function is to be of assistance to the Court in providing representation of the infant's interests independent of those of the infant's parents. While I would not foreclose the possibility of disentitlement to indemnification where an unreasonable position is taken by the Public Trustee, given the discretionary provision of s. 9 of the Infants Act, that is not the case before me.
[21] What really distinguishes this case from others is that there has been no benefit conferred upon the infant's estate by virtue of Mr. Manson's efforts, as the fees were approved as presented. In my view, while that may provide the basis to argue against indemnification on the principle that the loser must pay, that concept does not apply in the context of the s. 31 mandate of the Public Trustee and her counsel, given that the role of counsel is to assist the Court by stepping into a role that may conflict with the position of the guardian, who might approve the fee.
[22] Here, the position taken by the Public Trustee was one which, if accepted by the Court, would have assisted the infant. The position of the Public Trustee cannot be said to have been unreasonable; it was merely a position that was not accepted in the Court's approval of a reasonable proposed fee.
[40] The Public Guardian and Trustee is required by s. 40 of the Infants Act, R.S.B.C. 1996, c. 223, to review all proposals for settlement presented on behalf of an infant arising out of personal injury claims. Section 10 provides for indemnification in these terms:
10 The court may direct that the costs of
(a) a proceeding commenced by the Public Guardian and Trustee, or
(b) a proceeding in which it is necessary or expedient for the Public Guardian and Trustee to attend
be taxed and paid either out of the estate of the infant or by any other person who is a party to the proceeding.
[41] In this case the position advanced by the Public Guardian and Trustee was not unreasonable. Even without success in this Court, the magnitude of the fee approved by the judge, in relation to the amount of time spent on the matter by Ms. Fus, was properly reviewable by the court, in view of the best interests of the infant.
[42] In my view the order limiting the amount available for the Public Guardian and Trustee for legal fees should be set aside.
[43] Further, and in any event, such a summary order should not be made absent detailed accounts having been submitted and presented to the court (or to the Registrar in a taxation).
Conclusion
[44] For the reasons above, I would set aside the order fixing the fee of Ms. Fus and substitute therefore an order fixing her fee at $120,000 plus disbursements. I also would set aside the order fixing the amount that may be paid out of the settlement proceeds for counsel for the Public Guardian and Trustee in respect to this matter.
“The Honourable Madam Justice Saunders”
I AGREE:
“The Honourable Madam Justice Kirkpatrick”
I AGREE:
“The Honourable Mr. Justice Chiasson”
Schedule A
26. The bulk of the hours spent on this file involved attempting to facilitate and secure appropriate Part 7 Benefits from ICBC together with ongoing contact with Mariah and her mother, and with the maternal grandmother/litigation guardian. Natasha moved a number of times, in Prince George, and then to various places in Alberta, to Fort St. John, and back to Prince George. ICBC Rehab would not accommodate or recognize that Mariah was in another province with a different set-up and e.g. kept insisting that the school district must supply an aide, as is done in BC. On the tort end, the position taken was that the parents must provide for their child, and should move back to BC, or buy the extra pair of shoes to accommodate the splints, and that failure to mitigate would be vigorously pursued, despite their lack of finances and that they were the named defendants. A number of times Natasha’s residences were out of town, and caused transportation difficulties. ICBC Rehab would not fund services. After application in chambers, an advance of $2,000 was made to ‘front’ the rehabilitation expenses. Most of the service providers found it too challenging to do the paperwork for invoicing required by ICBC, and some quit because of that. Some were eventually persuaded to start again. Some also told me (repeatedly) that Rehab put a lot of pressure on them to report directly and provide information about Mariah to Rehab without telling me, as they were usually retained directly by Rehab. They found it very uncomfortable. There were very many changes in Rehab workers assigned to Mariah’s file, some of whom wanted to start right at the beginning as if it was a new file, on one memorable occasion saying it was too hard to read through the file as it was too big. Their expectation was that I (rather than my assistant) could spend an hour or two on the phone when they called to take them through the file and bring them up to date. Some times we did that, or else nothing would happen for Mariah as we ‘refused to cooperate’. One in particular was extremely resentful that I had hired the rehabilitation consultant firm she usually used and spent a lot of time trying to ‘take over’ that firm’s services to Mariah. Part of the frustration for the workers was that at one point Natasha was on her own, and very needy and asked for services not related to Mariah’s needs. That would be billed to me, and I would once again have to explain that ICBC would not authorize reimbursement, however difficult Natasha’s circumstances were. I was not allowed to communicate directly with Natasha at that time, and she called a number of times complaining that her lawyer would not talk to her.