Court analyzes ‘exceptional circumstances’ for awarding premium costs on contingency fees

Michelle chose a contingency fee as the basis for the retainer of counsel. The agreement provided that her initial lawyer, Christopher Moore of Christopher Moore Professional Corporation in Ottawa, would receive 10 per cent of any award; Connolly Obagi would receive 15 per cent of any award “together with any and all costs recovered.”

Court approval of the agreement was required both because Taylor was a person under a disability and because counsel’s compensation included costs recovered in addition to the contingency fee. The Solicitors Act prohibits the inclusion of this type of “premium” unless a court is “satisfied that exceptional circumstances apply.” The legislation, however, does not define “exceptional circumstances.”

Earlier in 2019, the Ontario Court of Appeal considered the issue in Almalki v. Canada, a case that involved Abdullah Almalki’s detention and torture in Syria, and the alleged complicity of the Canadian government in that detention and torture.

In holding that “exceptional circumstances” existed, the court listed the following as appropriate for consideration:

• The factual and legal complexity of the litigation;
• The substantial financial risk assumed by counsel;
• The importance of the litigation to the parties and the public; and
• The immense resources expended by counsel in achieving a very good result.

But as Justice Sylvia Corthorn saw it, the challenges faced by counsel in the instant case, including liability issues, were those “frequently faced by plaintiffs’ counsel in personal injury litigation” and therefore “alone do not give rise to ‘exceptional circumstances’.” Nor did the fact that counsel carried the file for several years, put in a significant amount of work and incurred significant expense create such circumstances.