Thursday, July 12, 2012

What is reasonable and fair?

Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496 deals with section 24 provides that a court may enforce a fee agreement if it is “in all respects fair and reasonable between the parties”.  But what is reasonable and fair?  Here’s what the Court says:


[20]       In addressing the issue of fairness, Raphael provides, at para. 37, that “the solicitor bears the onus of satisfying the court that the way in which the agreement was obtained was fair”. The fairness requirement “is concerned with the circumstances surrounding the making of the agreement and whether the client fully understands and appreciates the nature of the agreement that he or she executed” (Raphael, at para. 37).  As noted above, the fairness of the agreement is determined as of the date the agreement was entered into.

[21]       In the present case, the CFA was negotiated with the PGT.  It is apparent from the materials filed by the PGT and the appellant that the CFA was fair when it was negotiated.  We note, in particular, that when it was negotiated there was considerable uncertainty as to the likely success of the claim and the extent of the investment that would be required of the solicitors to bring the action to a favourable conclusion.  Thus, in our view the CFA was fair.


[22]       The test for reasonableness was set out in Raphael, at para. 50.  The factors to be considered are:

(a) the time expended by the solicitor;

(b) the legal complexity of the matter at issue;

(c) the results achieved; and

(d) the risk assumed by the solicitor.

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