The firm represented the client in an accident benefits claim and a potential tort claim
The Ontario Superior Court of Justice has dismissed an application by a law firm seeking a charging order against a former client in a dispute over legal fees.
The firm, Alam Law Firm Professional Corporation, had represented the client in an accident benefits claim and a potential tort claim before their professional relationship ended. The court found that the law firm did not meet the criteria for a charging order under the Solicitor's Act or its inherent jurisdiction.
The client retained the law firm in December 2022 under a retainer agreement that included provisions for the firm to recover disbursements as a first charge on any settlement. The agreement also required that settlement funds be directed to the firm and placed in trust. Throughout the representation, the firm retained experts and conducted investigations on behalf of the client, incurring expenses in the process. However, in November 2024, the solicitor-client relationship broke down. The law firm confirmed the termination of the retainer agreement and advised the client that an invoice for legal services and disbursements would be forthcoming. The parties had not settled the accident benefits claim at the time, and the client had not initiated a tort action.
The firm sought a charging order under s. 34 of the Solicitor's Act, claiming entitlement to a first charge on any proceeds recovered by the client. It initially sought an order directing the insurance provider to pay the firm directly from any settlement funds but later abandoned that request during the hearing. The total account presented by the firm amounted to $23,907.04, though it indicated a willingness to reduce the amount to $18,869.36.
Under s. 34 of the Solicitor's Act, a solicitor may be granted a charge on property recovered or preserved in Superior Court proceedings. However, the Superior Court ruled that claimants must bring accident benefits claims under the Statutory Accident Benefits Schedule (SABS) before the Licence Appeal Tribunal (LAT) rather than the Superior Court. Citing Ryan Naimark Professional Corporation v. Lilly, 2023 ONSC 1690, the court confirmed that SABS claims do not qualify for charging orders under the statute.
The court also considered whether it had the inherent jurisdiction to grant a charging lien. The court found that the firm did not meet the necessary criteria because the evidence failed to show that its work led to the recovery or preservation of property for the client. While the firm had assisted in moving the client to a different benefits category, which may have increased entitlement, the financial impact remained unclear. The court concluded that the firm's efforts did not establish a direct financial recovery sufficient to justify a lien.
Additionally, the court noted that s. 62 of SABS voids all benefits assignments except in limited circumstances. Granting a charging lien in this case would circumvent legislative restrictions on the assignment of accident benefits. Even if the firm had met the legal criteria, the court would have exercised its discretion to deny the request. The court ultimately dismissed the application for a charging order against the client.
