



COURT OF APPEAL FOR ONTARIO

CITATION:  Hodge v. Neinstein, 2017 ONCA 494

DATE:
    20170615

DOCKET: C62074

Hoy A.C.J.O., Gillese and Brown JJ.A.

BETWEEN

Cassie
    Hodge

Applicant (Respondent/Appellant in Cross-Appeal)

and

Gary Neinstein and Neinstein & Associates LLP

Respondents
    (Appellants/Respondents in Cross-Appeal)

Chris G. Paliare, Odette Soriano and Denise Cooney, for
    the appellant

Peter I. Waldmann and Andrew Stein, for the respondents

Paul J. Pape, Shantona Chaudhury and Andrea M. Bolieiro,
    for the intervener, the Ontario Trial Lawyers Association

Heard:  March 8 and 9, 2017

On appeal from the order of the Divisional Court
    (Justices Edward F. Then, Anne M. Molloy and Thomas R. Lederer concurring)
    dated December 9, 2015, with reasons reported at 2015 ONSC 7345, reversing the
    orders of Justice Paul M. Perell dated July 29, 2014 and November 4, 2014, with
    reasons reported at 2014 ONSC 4503, 58 C.P.C. (7th) 37 and 2014 ONSC 6366, 59
    C.P.C. (7th) 248.

Hoy A.C.J.O.:

[1]

At issue on this appeal is whether solicitors who have allegedly
    violated the
Solicitors Act
, R.S.O. 1990, c. S. 15 (the Act), are
    immune from a class proceeding brought on behalf of their former and current
    clients.

[2]

The appellants, personal injury lawyer Gary Neinstein and his firm
    Neinstein & Associates LLP (collectively the Firm), challenge the
    Divisional Courts decision certifying an application, which was brought by representative
    plaintiff Cassie Hodge against the Firm, under the
Class Proceedings Act
,
1992
, S.O. 1992, c. 6 (the CPA).

[3]

The Divisional Court certified 19 common issues. These include common
    issues relying on a breach of s. 28.1(8) of the Act.  Section 28.1(8) states
    that a contingency fee agreement (CFA) shall not include in the fee payable
    to the lawyer any amount arising as a result of an award of costs or costs
    obtained as part of a settlement in addition to a percentage fee unless certain
    conditions are met. The certified common issues also include whether the Firm
    charged interest contrary to s. 33 of the Act, and whether that amounted to a
    breach of contract or breach of fiduciary duty.

[4]

The Firm argues that the application brought by Ms. Hodge, who is a former
    client of the Firm, should not have been certified as it fails to disclose a
    cause of action, fundamentally lacks in commonality and fails the preferable
    procedure requirement. In particular, the Firm argues that ss. 23-25 of the Act
    preclude the possibility of a class proceeding against the Firm as they form a
    complete code and require individual assessments of client accounts.  The
    Firm says, even if that is not the case, the solicitor-client privilege of its
    former and current clients shields the Firm from the class proceeding intended to
    benefit those former and current clients who signed a CFA with the Firm.

[5]

Ms. Hodge cross-appeals, arguing that the Divisional Court erred by
    denying her leave to amend her
Amended
Notice of
    Application to plead the tort of conversion and failing to certify further
    common issues.

[6]

For the following reasons, I would dismiss the appeal and allow the
    cross- appeal in part. While I would dismiss the appeal, I conclude the
    Divisional Court erred in certifying one issue (common issue 3) as a common
    issue and would vary the certification order by deleting that common issue.

A.

BACKGROUND

[7]

Before turning to my analysis of the issues on the appeal and
    cross-appeal, I will provide the necessary background, including the relevant statutory
    provisions as they are key to understanding my analysis of the issues. For ease
    of reference, all relevant statutory provisions are included in the attached
    Schedule A.

(1)

Solicitors Act

[8]

Historically, lawyers in Ontario were prohibited from charging their
    clients a fee based on a percentage of damages recovered by their clients.
    Eventually, the legislature recognized that CFAs can provide access to justice
    to people of limited means. The Act was amended in 2002 to authorize
    contingency fees in certain circumstances and to provide certain protections
    for clients.

[9]

Section 28.1 sets out the circumstances in which a lawyer is permitted
    to enter into a CFA. Central to this appeal are ss. 28.1(8) and (9), as it is
    alleged that the Firm entered into CFAs that did not comply with s. 28.1(8)
    with the result that they were unenforceable pursuant to s. 28.1(9):

28.1(8)  A contingency fee agreement shall not include in the
    fee payable to the solicitor, in addition to the fee payable under the
    agreement, any amount arising as a result of an award of costs or costs
    obtained as part of a settlement, unless,

(a) the solicitor and client jointly apply to a judge of the
    Superior Court of Justice for approval to include the costs or a proportion of
    the costs in the contingency fee agreement because of exceptional
    circumstances; and

(b) the judge is satisfied that exceptional circumstances apply
    and approves the inclusion of the costs or a proportion of them.

(9) A contingency fee agreement that is subject to approval
    under subsection (6) or (8) is not enforceable unless it is so approved.

[10]

Sections 23-25 of the Act are also central to this appeal, as the Firm
    argues that they form a complete code and thus provide the only avenue
    through which Ms. Hodges claims may be pursued:

23. No action shall be brought upon any such agreement, but
    every question respecting the validity or effect of it may be examined and
    determined, and it may be enforced or set aside without action on the
    application of any person who is a party to the agreement or who is or is
    alleged to be liable to pay or who is or claims to be entitled to be paid the
    costs, fees, charges or disbursements, in respect of which the agreement is
    made, by the court, not being the Small Claims Court, in which the business or
    any part of it was done or a judge thereof, or, if the business was not done in
    any court, by the Superior Court of Justice.

24. Upon any such application, if it appears to the court that
    the agreement is in all respects fair and reasonable between the parties, it
    may be enforced by the court by order in such manner and subject to such
    conditions as to the costs of the application as the court thinks fit, but, if
    the terms of the agreement are deemed by the court not to be fair and
    reasonable, the agreement may be declared void, and the court may order it to
    be cancelled and may direct the costs, fees, charges and disbursements incurred
    or chargeable in respect of the matters included therein to be assessed in the
    ordinary manner.

25. Where the amount agreed under any such agreement has been
    paid by or on behalf of the client or by any person chargeable with or entitled
    to pay it, the Superior Court of Justice may, upon the application of the
    person who has paid it if it appears to the court that the special
    circumstances of the case require the agreement to be reopened, reopen it and
    order the costs, fees, charges and disbursements to be assessed, and may also
    order the whole or any part of the amount received by the solicitor to be
    repaid by him or her on such terms and conditions as to the court seems just.

[11]

Section 33(1) of the Act is also at issue on this appeal. While a
    solicitor may charge interest on unpaid disbursements, s. 33(1) of the Act
    provides that a solicitor may only charge interest from a date that is one
    month after the bill is delivered.

[12]

It can fairly be said that the language in the Act has created difficulties
    for lawyers and clients for many years: see, for e.g., Ontario Law Reform
    Commission,
Report on the Solicitors Act
(Ministry of the Attorney
    General, 1973). Courts have also struggled with the language, since much in the
    Act is not clear: see, for e.g.
Gilberts LLP v. David Dixon Inc.
,
    2017 ONSC 1345, [2017] O.J. No. 1037 (Div. Ct.).  The case before this court
    represents another struggle to make sense of the Act.

(2)

Facts

[13]

Ms. Hodge was injured in a motor vehicle accident in 2002. She retained
    the Firm, which specializes in personal injury litigation. Most of its retainer
    agreements are on a contingency fee basis.

[14]

Ms. Hodge signed a CFA with the Firm. It provided that the Firms legal
    fees would be equal to 25 per cent of the damages recovered on her behalf, plus
    partial indemnity costs (which would be no more than 40 per cent of the total
    recovery), plus disbursements.

[15]

In November 2006, Ms. Hodges claim for statutory accident benefits was
    settled for a total of $85,000. Greg Neinsteins evidence was that she received
    $66,089.49 in hand from this settlement and that the Firm deferred $11,250 of
    the fees it was entitled to be paid from the settlement because Ms. Hodge was
    in financial difficulty. The remainder was to be paid out of the tort
    settlement or judgment.

[16]

In April 2010, an all-in settlement of $150,000 was reached in Ms.
    Hodges tort action. She received $41,906.41 of that amount.

[17]

Gary Neinstein determined what portion of the settlement would be
    allocated to costs. The final account rendered to Ms. Hodge indicated that she
    was charged $60,326.49 for legal fees, of which $30,000 was said to be the
    party-and-party costs portion of the settlement, and $30,326.49 was the legal
    fee plus GST, and $48,924.37 for disbursements. Among other things, the
    disbursements included: $4,008.27 for photocopies; $2,791.20 for laser copies;
    $1,280.70 for scanned documents; $1,372.33 for Interest Recovery; and $200.00
    for Miscellaneous Expenses/File Closing Charges. According to the evidence, Interest
    Recovery is interest, compounded monthly, on disbursements that were incurred
    by the Firm, calculated from the date that they were incurred.

[18]

There appears to be no dispute that the CFA and the amount the Firm
    charged violated the Act in two key respects.

[19]

Most significantly, there appears to be no dispute that, contrary to s.
    28.1(8) of the Act, the Firm did not obtain approval of a judge of the Superior
    Court of Justice to include in its fee the costs obtained as part of Ms.
    Hodges settlement.

[20]

Secondly, seemingly contrary to s. 33(1), the Firm charged interest from
    the date the disbursements were incurred, and not from a date one month after
    its bill was delivered.

[21]

Ms. Hodge brought a motion to certify a class proceeding against the Firm
    on behalf of all its contingency fee clients since October 2004. In her
Amended
Notice of Application, she seeks, among other
    relief, a declaration that the Firm is in violation of the Act and breached its
    fiduciary duty to and its contracts with the class members, and an order that
    the Firm repay any amounts taken for costs in addition to a percentage of
    damages. She also alleges that the Firm charged disbursements that were
    excessive or improper.

[22]

On the certification motion, she requested that the court certify 37
    common issues.

(3)

Decisions Below

(a)

The certification judges reasons

[23]

The certification judge concluded that Ms. Hodge failed to satisfy the five-part
    test for certification under s. 5(1) of the CPA:

5.  (1) The court shall certify a class proceeding on a motion
    under section 2, 3 or 4 if,

(a)      the pleadings or the notice of application discloses a
    cause of action;

(b)      there is an identifiable class of two or more persons
    that would be represented by the representative plaintiff or defendant;

(c)      the claims or defences of the class members raise
    common issues;

(d)      a class proceeding would be the preferable procedure
    for the resolution of the common issues; and

(e)      there is a representative plaintiff or defendant who,

(i)       would fairly and adequately represent the interests
    of the class,

(ii)      has produced a plan for the proceeding that sets out
    a workable method of advancing the proceeding on behalf of the class and of
    notifying class members of the proceeding, and

(iii)     does not have, on the common issues for the class, an
    interest in conflict with the interests of other class members.

[24]

In brief, the certification judge concluded that Ms. Hodges
Amended
Notice of Application satisfied the cause of
    action requirement in s. 5(1)(a).  While he was clear that, in his view, there
    was no free-standing strict liability civil wrong for breach of sections
    28.1(8) and 28.1(9) of the
Act
 (para. 95), he was satisfied that the
Amended
Notice of Application disclosed a cause of
    action under s. 23 and 25 of the Act, and for breach of fiduciary duty and
    breach of contract.

[25]

While the certification judge found the class definition proposed by Ms.
    Hodge overly broad, he identified an alternative class definition and concluded
    Ms. Hodge had satisfied the identifiable class criterion in s. 5(1)(b) of the
    CPA. That class definition, subsequently accepted by the Divisional Court and
    set out in para. 4 of its order, is reproduced in the attached Schedule B.

[26]

However, the certification judge concluded that the common issues
    requirement in s. 5(1)(c) of the CPA was not satisfied, and Ms. Hodges motion
    accordingly failed. In his view, none of the 37 proposed common issues
    satisfied the common issues criterion, even though he acknowledged that it
    presented a low bar.  He found that the proposed class proceeding would
    inevitably lead to individual assessments of each class members claim, which could
    not be done at a common issues trial. He noted even if a breach of s. 28.1
    could be said to be a free-standing strict liability civil wrong, that would
    not overcome the common issues problem.

[27]

He also concluded that Ms. Hodges application did not satisfy the
    preferable procedure criterion in s. 5(1)(d). Individual applications under
    ss. 23 and 24 of the Act or by way of assessment were the preferable procedure;
    a class action was unsuitable because the class members claims were inherently
    individualistic; and a class proceeding would be unmanageable and inefficient.

[28]

The certification judge rejected the Firms argument that another reason
    a class proceeding was not the preferable procedure was that it would result in
    a breach of the solicitor-client privilege held by thousands of clients and
    former clients of the Firm.

[29]

He found that solicitor-client privilege was not an insurmountable obstacle
    if the proceeding were otherwise certifiable (para. 176). He indicated that if Ms.
    Hodges application had been certifiable, he would have made an order requiring
    proof of personal service of a notice of certification on class members making
    clear that class members who did not opt out of the class proceeding would be
    deemed to have waived their solicitor-client privilege. Along with the notice
    of certification he would have also required a special notice advising class
    members to obtain independent legal advice about the notice of certification.

[30]

Finally, the certification judge concluded that if the other
    certification criteria had been satisfied, Ms. Hodge would have been a suitable
    representative plaintiff.

[31]

Subsequently, he ordered Ms. Hodge to pay the Firms costs in the amount
    of $300,000, plus HST, plus disbursements of $28,758.45.

(b)

The Divisional Courts reasons

[32]

Ms. Hodge appealed the certification decision to the Divisional Court.
    She also sought leave to appeal the costs decision. At the outset of the
    appeal, she requested leave to amend her
Amended
Notice of Application to plead the tort of conversion.

[33]

The Divisional Court allowed her appeal. Molloy J. wrote for the
    majority with Lederer J. concurring.

[34]

The issues on appeal involved ss. 5.1(a) (cause of action), (c) (common
    issues) and (d) (preferable procedure) of the CPA.

[35]

Molloy J. concluded that the cause of action criterion was met. She
    agreed with the certification judge that Ms. Hodge had met the test for showing
    causes of action in breach of fiduciary duty and contract. Contrary to the certification
    judge, however, she concluded that a proceeding depending solely on s. 28.1 of
    the Act could succeed as it was arguable that ss. 23-25 of the Act do not apply
    where there is a breach of the Act that brings s. 28.1(9) into play. At para.
    95, she stated: [A]n application under ss. 23 and 24 of the [Act] is not
    available to review the validity of the [CFAs] at issue here.

[36]

Molloy J. also determined the common issues requirement was satisfied.

[37]

She disagreed with the certification judges conclusion that, even if a
    breach of ss. 28.1(8) and (9) were a free-standing wrong, it would not avoid
    the need for individualized inquiries. She concluded that whether the Firm
    complied with s. 28.1(8) and whether the CFAs were unenforceable under s.
    28.1(9) were questions common to all members of the class.  She posited that a
    common remedy might flow from a declaration that such CFAs are unenforceable.
    For example, the Firm might be disentitled to retain the costs portion of the
    fee paid to it.

[38]

She identified eight common issues arising out of the alleged
    violation of s. 28.1(8) of the Act. They are common issues 1-8 in Schedule C attached.

[39]

She also found that whether the Firm charged class members for interest
    contrary to s. 33 of the Act, whether doing so amounted to a breach of contract
    or fiduciary duty, and whether interest charged contrary to s. 33 should be
    disgorged or the Firm should be otherwise ordered to repay any amounts taken on
    account of interest were common issues. These common issues are set out as
    common issues 9-13 in Schedule C attached.

[40]

Finally, she found that whether disbursements for computer legal
    research, closing fees and storage fees allegedly charged by the Firm to its
    clients as a matter of general practice were improper because they were part of
    office overhead, and whether the rates the Firm charged its clients for
    photocopying and scanning documents were excessive, were common issues. Rates
    would be common for all clients. These common issues are set out as common issues
    14-19 in Schedule C.

[41]

I would note that while Molloy J. was in general disagreement
    with the certification judge on the common issues requirement, she did agree
    with him in one narrow respect. She agreed that an assessment under ss. 23-25
    of the Act would be so individualized that no meaningful common issues would
    emerge, although on her view arguably those provisions did not apply where an
    agreement was deemed to be unenforceable under s. 28.1(9).

[42]

Turning finally to the preferability requirement, Molloy J. concluded
    that it too was satisfied. Fundamental to her preferability analysis were her
    conclusions that (1) the certification judge erred in failing to find it was
    arguable a proceeding that relies on a breach of s. 28.1 of the Act could
    succeed and (2) there were issues that were common to the class.

[43]

She agreed with the certification judge that the solicitor-client
    privilege issue was not an obstacle to a class proceeding. She accepted that
    the procedure suggested by the certification judge was one way to avoid the
    problem although there may be others. She indicated that she would leave the
    specific manner of dealing with the problem to the case management judge. As
    there was at least one way to avoid the problem, it was not a basis for
    refusing certification.

[44]

In her view, there were considerable barriers to access to justice for
    the class members and little ability for them to address them other than
    through a class proceeding. Judicial economy also favoured a class proceeding. Another
    advantage of a class proceeding was behavior modification: a class proceeding
    would serve as a reminder to all lawyers in Ontario that the requirements in
    the Act for CFAs must be followed.

[45]

She dismissed Ms. Hodges motion to amend her
Amended
Notice of Application to plead the tort of conversion. She concluded that it
    adds nothing of substance to the proceeding as currently drafted and so it
    was unnecessary to consider it: at para. 112.

[46]

Because she determined that Ms. Hodge had satisfied the test for
    certification, she set aside the certification judges costs order.

[47]

In concurring reasons, Lederer J. agreed with Molloy J. as to the
    outcome. Like her, he concluded that it is not plain and obvious that a cause
    of action relying on a breach of s. 28.1 of the Act could not succeed and,
    accordingly, that it should be certified. Also like her, he agreed that
    decisions made pursuant to ss. 23 and 24 of the Act would be inherently
    individualistic. However, he made clear he did not agree with all of Molloy
    J.s reasoning, noting at para. 118: I do not accept that the interpretation
    by the [certification] judge of the applicable sections of the [Act] is
    necessarily wrong and Molloy J. necessarily correct. She may be.

B.

analysis OF ISSUES ON APPEAL

[48]

The Firm challenges the Divisional Courts findings on all the
    requirements for certification under s. 5(1) of the CPA except for the
    identifiable class requirement in s. 5(1)(b).

(1)

Clause 5.1(a)  cause of action requirement

[49]

The crux of the Firms argument is that Ms. Hodges application  whether
    framed as a breach of the Act, breach of contract or breach of fiduciary duty pertains
    solely to the validity, effect and enforceability of her CFA. As such, it falls
    squarely within the complete code of the Act, which precludes any common law
    action for breach of statute and requires individual assessments of client
    accounts.

[50]

As I explain, the Divisional Court correctly concluded that it is not
    plain and obvious a cause of action relying on s. 28.1 cannot succeed. And like
    Lederer J. and the certification judge, I conclude that it is not plain and
    obvious that an application under ss. 23-25 of the Act is not available to
    review the CFAs at issue in this application. I also agree with the
    certification judge and the Divisional Court that Ms. Hodges
Amended
Notice of Application discloses a cause of
    action for breach of fiduciary duty and contract.

(a)

Section 5(1)(a) test and standard of review

[51]

The test under s. 5(1)(a) of the CPA is the same as the test on a motion
    to strike for no reasonable cause of action:
Pro-Sys Consulting Ltd. v. Microsoft
    Corp.
, 2013 SCC 57, [2013] 3 S.C.R. 477, at para. 63. The test is whether,
    assuming the facts pleaded to be true, it is plain and obvious that the claim
    has no reasonable prospect of success:
R. v. Imperial Tobacco Canada Ltd.
,
    2011 SCC 42, [2011] 3 S.C.R. 45, at para. 17.

[52]

Whether the cause of action requirement is met is reviewable on a
    correctness standard of review:
Attis v. Canada (Minister of Health)
,
    2008 ONCA 660, 93 O.R. (3d) 35, at para. 23, leave to appeal S.C.C. refd,
    [2008] S.C.C.A. No. 491;
Kang v. Sun Life Assurance Co. of Canada
,
    2013 ONCA 118, 303 O.A.C. 64, at para. 27.

(b)

Cause of action relying on s. 28.1

[53]

On my reading of the case law and the relevant statutory provisions, it
    is not plain and obvious that a cause of action relying on s. 28.1 has no
    reasonable prospect of success. I agree with Lederer J. that the "plain
    and obvious bar is met.

[54]

In support of the Firms argument that ss. 23-25 preclude any action
    founded on s. 28.1. or, indeed, any other cause of action, the Firm cites the
    following cases:
Seneca College v. Bhadauria
,
[1981] 2 S.C.R. 181;
Frame v. Smith
,
[1987] 2 S.C.R. 99;
Canadian
    Alliance of Pipeline Landowners Assn. v. Enbridge Pipelines Inc.
,
2008 ONCA 227, 237 O.A.C. 200, which
    cites
Canada v. Saskatchewan Wheat Pool
, [1983] 1 S.C.R. 205.

[55]

In each of
Seneca College
,
Frame
and
Canadian
    Alliance
, the court reviewed the legislation in question and determined
    that it created a complete code or comprehensive scheme.

[56]

In
Seneca College
, the Supreme Court considered
Ontarios
Human Rights Code
, R.S.O. 1970, c. 318,
and concluded that
    it foreclosed any civil action based directly upon a breach of its terms or the
    invocation of any public policy expressed in the
Code
.

[57]

In
Frame
, the Supreme Court similarly concluded that permitting
    a father to sue the mother and her present husband for frustrating
    court-ordered access, either by creating a tort or recognizing a fiduciary duty
    arising out of a court order, may well do violence to the comprehensive statutory
    scheme [of the
Childrens Law Reform Act
]
provided by the Legislature: at p. 114.

[58]

In
Canadian Alliance
, the question was whether s. 75 of the
National
    Energy Board Act
, R.S.C. 1985, c. N-7 (NEBA), created a civil cause of
    action. It provides:

A company shall, in the exercise
    of the powers granted by this Act or a Special Act, do as little damage as
    possible,
and shall make full compensation in the
    manner provided in this Act
and in a
    Special Act, to all persons interested, for all damage sustained by them by
    reason of the exercise of those powers. [Emphasis added.]

[59]

This court concluded the answer was no. Writing for the court, OConnor
    A.C.J.O. noted, at paras. 31 and 32, that there is no nominate tort of
    statutory breach in Canada.  Relying on
Saskatchewan Wheat Pool,
[1]

he
    explained that since there is no nominate tort of statutory breach, a breach of
    statutory obligation cannot give rise to a civil cause of action unless the
    statute establishing the obligation expressly provides for a right of action. In
    the particular case, the NEBA created a complete code for the compensation of
    all persons who sustained damages from the exercise of a pipeline companys
    statutory powers.

[60]

In my view,
Seneca College
,
Frame
and
Canadian
    Alliance
are arguably distinguishable for two reasons.

[61]

First, s. 28.1 is unique in one important respect: s. 28.1(9)
    specifically provides that a CFA that is subject to approval under subsection
    (8) is
not enforceable
unless it is so approved.
    Section 28.1(9) provides
a consequence
for the
    statutory breach. Much of the relief Ms. Hodge seeks flows from that provision -
    the statutorily-prescribed consequence of the breach - and not the breach
    itself. The claimants in
Seneca College
,
Frame
and
Canadian
    Alliance
did not seek relief based on a statutorily-provided consequence
    of a breach of statute.

[62]

Second, as Molloy J. highlights, at para. 57, the declaration that Ms.
    Hodge seeks is in respect of rights under an
agreement
.
    Arguably, it is different from an action based on breach of a statutory term,
    as in
Seneca College.


[63]

If a CFA that is subject to approval under subsection (8) is not
    enforceable unless it is so approved, then, arguably, is there any need for an
    application under s. 23 to determine its validity or effect? Arguably, has s.
    28.1(9) already answered that question? And is it necessary to have the
    agreement declared void under s. 24, when s. 28.1(9) specifically provides
    that the agreement is unenforceable? In my view, the answers to these questions
    are not plain and obvious.

[64]

That said, I acknowledge that the Act does not
expressly
provide that a client may pursue civil remedies where a CFA that is subject to
    approval under subsection (8) is not enforceable unless it is so approved. In
    my view, however, it is arguable whether express language is necessarily
    required despite comments in
Canadian Alliance
that might be read as suggesting
    otherwise.

[65]

In
Canadian Alliance
, OConnor A.C.J.O. approached the question
    of whether s. 75 created a cause of action as a matter of statutory
    interpretation. As set out above, s. 75 provides that a company shall make
    full compensation in the manner provided in [the NEBA], which this court
    agreed referred to the comprehensive scheme for dispute resolution in ss. 88 to
    103 of the NEBA. The wording of s. 75 was to be contrasted with other
    provisions in the NEBA that expressly created civil causes of action for
    landowners. It was in that context OConnor A.C.J.O. stated that express
    language was necessary to create a cause of action based on a breach of s. 75.

[66]

As I have explained, s. 28.1 is unique. Not only is it unique but it
    arises in a very different statutory context than in
Canadian Alliance
.
    In contrast with the NEBA, the
Solicitors Act
does not expressly authorize
    actions but rather expressly places specific limits on when and how certain
    types of actions may be brought and, in the case of s. 23, whether an action,
    as opposed to an application, may be brought.

[67]

For example, s. 2(1) dictates when a solicitor may sue on an unpaid bill
    ([n]o action shall be brought  until one month after a bill has been
    delivered). Section 8 provides an exception to that rule, permitting an
    action to be brought although one month has not expired since the delivery of
    the bill with leave of the court. Section 6(4) imposes a leave requirement where
    a matter has been referred to assessment. And, s. 23, which is at the heart of
    this appeal, says that [n]o action shall be brought upon any such agreement
    but rather questions respecting the validity or effect of an agreement may be
    determined on an application.

[68]

Reading s. 28.1 in context of these provisions and the Act as a whole, I
    am not persuaded it is plain and obvious that the mere absence of express
    language permitting a claim based on s. 28.1 is fatal.

[69]

I also agree with Molloy J. that the line of cases relied on by the
    certification judge do not support his conclusion as to the lack of viability
    of a claim based on s. 28.1 of the Act.

[70]

On the certification judges reading, decisions of this court such as
Henricks-Hunter
    (Litigation Guardian of) v. 814888 Ontario Inc. (c.o.b. Phoenix Concert
    Theatre)
, 2012 ONCA 496, 294 O.A.C. 333, make clear that ss. 23-25 of the
    Act constitute a complete code and a CFA can only be disregarded when the court
    determines, under s. 24, that the agreement is not fair and reasonable.

[71]

In
Henricks-Hunter
, the Public Guardian and Trustee entered
    into a CFA with a law firm on behalf of Stephanie Henricks-Hunter who suffered
    serious personal injuries, including a severe traumatic brain injury, in an
    accident. The CFA provided that the firm would be paid fees of 25 per cent of
    any judgment or settlement up to $2.5 million and 20 per cent of any judgment
    or settlement in excess of that amount. Any costs recovered would be excluded
    from the CFA. In other words, there was no s. 28.1 issue.

[72]

The motion judge disregarded the CFA in fixing the fees payable to the
    firm. His only mention of the CFA was his statement that it did not bind either
    Ms. Henricks-Hunter or the court.

[73]

This court concluded that the motion judge had erred in failing to
    consider whether the CFA should be enforced and by determining the amount of
    fees without regard to the CFA. The court stated that a CFA can only be
    declared void, or be cancelled and disregarded, where the court determines that
    it is either unfair or unreasonable (para. 13).

[74]

But, as Molloy J. notes,
Henricks-Hunter
and the other cases
    referred to by the certification judge do not involve situations where a breach
    of s. 28.1(8) was said to render the agreement unenforceable under s. 28.1(9).

[75]

The only case where non-compliance with s. 28.1(8) was at issue is
Sé
guin
    v. Van Dyke
, 2013 ONSC 6576.

The certification judge concluded
    that it did not assist Ms. Hodge while Molloy J. found that
Sé
guin
favoured Ms. Hodges case. I agree with Molloy J.

[76]

In
Sé
guin
, the plaintiff brought an application for a
    declaration that the CFA with her counsel was unenforceable pursuant to s.
    28.1(9) of the Act and an order for the immediate repayment, with interest, of
    the 33.3 per cent contingency fee. She also applied for an assessment of the
    balance of her account under s. 28.1(11)(b), which, in the case of a CFA to
    which 28.1(8) applies, permits a client to apply for an assessment within six
    months after the delivery of the bill.

[77]

Counsel in
Sé
guin
consented to, and Lalonde J.
    ordered, the repayment sought by the plaintiff. He declared the CFA void and
    unenforceable. He ordered that the reasonableness of the fees charged by
    counsel be determined in the tort action, which the plaintiff and other family
    members had commenced against counsel. He distinguished
Henricks-Hunter
on the basis that it was not concerned with an agreement that breaches the Act.
    He wrote, at para. 24:

I also find that in deciding the issue in this
    case, s. 24 must be read in conjunction with s. 28; otherwise why would s. 28
    form part of the legislation? ...I do not believe, in a case such as the
    present one, that s. 24 dictates that the proper forum to deal with the CFA is
    before a Superior Court Judge who will assess the Defendants work. The breach
    here is fundamental.

[78]

I take from
Sé
guin
that it is at least arguable that
    an assessment under s. 24 is not the only remedy available where a CFA is
    unenforceable pursuant to s. 28.1(9).

[79]

Finally, it is arguable that this courts inherent jurisdiction in
    matters relating to the regulation of lawyers accounts suggests that ss. 23-25
    of the Act may not constitute a complete code. This court has held that courts
    have remedial authority beyond the four corners of the Act, drawing on inherent
    jurisdiction, in matters relating to the regulation of lawyers accounts:
Clatney
    v. Quinn Thiele Mineault Grodzki LLP
, 2016 ONCA 377, 131 O.R. (3d) 511, at
    paras. 77-79.

[80]

For these reasons, it is not plain and obvious that, to the extent the
    relief Ms. Hodge seeks in her application relies on non-compliance with s.
    28.1(8), ss. 23-25 of the Act are a complete code and her claim cannot
    succeed.

[81]

I would, however, note that in reaching that conclusion I do not rely on
    Molloy J.s reasoning that an agreement that is not compliant with s. 28.1(8)
    is not a contingency fee agreement as defined in the Act and therefore not an
    agreement within the meaning of that term in ss. 23 and 24 of the Act.

[82]

Instead I agree with the certification judge and Lederer J. that it is
    not plain and obvious that ss. 23-25 of the Act are unavailable to review the CFAs
    at issue.

[83]

Section 16(2) of the Act defines agreement for the purposes of, among
    other sections, ss. 23-25 of the Act:

agreement includes
    a contingency fee agreement.

[84]

Section 15 defines a contingency fee agreement for purposes of, among
    other sections, ss. 23-25:

contingency fee
    agreement means an agreement referred to in section 28.1;

[85]

And s. 28.1(1) provides that a solicitor may enter into a contingency
    fee agreement with a client in accordance with s. 28.1.

[86]

Molloy J.  interpreted the words an agreement
referred
    to
in section 28.1 in s. 15 as meaning an agreement
in compliance with
s. 28.1. In my view, she was arguably
    in error.

[87]

However, even if a non-compliant CFA is not a contingency fee
    agreement as defined in s. 15, arguably it is nonetheless an agreement, and
    arguably a client can avail herself of ss. 23-25 in the event of non-compliance
    with s. 28.1.

[88]

In conclusion, I agree with the Divisional Court that it is not plain
    and obvious that a claim relying on s. 28.1 of the Act is barred by ss. 23  24
    even though I reach that conclusion by a different route.

[89]

Further, whether the Act permits a client to bring a claim for
    declaratory and other relief founded on non-compliance with s. 28.1 or,
    instead, requires the client to avail herself of ss. 23-25 in the event of
    non-compliance with s. 28.1, the client can ask the Superior Court of Justice
    to review the enforceability and effect of a CFA and grant a remedy.  On that
    basis alone, it is not plain and obvious that a cause of action founded on
    non-compliance with s. 28.1 cannot succeed.  The Firms argument that an
    application under ss. 23-25 of the Act requires individual assessments of
    client accounts relates to the common issues and preferable procedure
    requirements in ss. 5(1)(c) and (d), and not the existence of a cause of
    action.

(c)

Breach of fiduciary duty claim

[90]

The Divisional Court certified the breach of fiduciary duty claim with
    respect to the interest recovery charges. Common issue 11 asks whether, if it
    is determined that the Firm charged the class members for interest contrary to
    s. 33 of the Act, the violation amounts to a breach of the Firms fiduciary
    duty.

[91]

The Firm submits that Ms. Hodge failed to plead the fiduciary duty, the
    alleged breach and resulting damage. And, in addition to arguing these claims
    are precluded by the complete code in ss. 23-25, the Firm argues a lawyer does
    not owe any duty to a prospective client when negotiating a retainer.

[92]

I do not agree that Ms. Hodges claim has no reasonable prospect of
    success on these bases.

[93]

First, reading the
Amended
Notice of
    Application generously, I am satisfied that Ms. Hodge has adequately pleaded her
    claim for breach of fiduciary duty.

[94]

Second, I am not satisfied that it is plain and obvious
    the fiduciary claim falls within the scope of ss. 23-25. In my view, it is
    arguable that a claim that the Firm has breached its fiduciary duty is not a
    question respecting the validity or effect of the CFA. A fiduciary duty claim
    looks at the relationship between the parties and the alleged fiduciarys
    conduct.

[95]

Third, common issue 11 asks whether the Firm charging the class
    members interest contrary to s. 33 amounts to a breach of fiduciary duty. At
    the time the amounts are charged, a class member is no longer a prospective client.

[96]

Thus, I agree with the certification judge and the Divisional Court that
    it is not plain and obvious that Ms. Hodges breach of fiduciary duty claim
    cannot succeed.

[97]

I would, however, flag one procedural issue.  If the breach of fiduciary
    duty claim does not fall within the scope of an application under ss. 23-25 of
    the Act, there is a question as to the basis upon which the claim could be
    brought by way of application and, if there is no basis, what should be the
    consequence.

[98]

Rule 14.05 of the
Rules of Civil Procedure
,
R.R.O. 1990,
    Reg. 194, states that a proceeding may be brought by application where
    authorized by a statute or by the
Rules
. Rule 14.05(3), in turn, lists
    nine specific circumstances in which an application may be brought.

[99]

Rule 2.01(2), however, provides that a court shall not set aside an
    original process because the proceeding should have commenced by a different
    originating process.

[100]

While I flag
    this issue here, in my view it is a question best dealt with by the case
    management judge if and when necessary to do so.

(d)

Breach of contract claim

[101]

The Divisional
    Court certified the breach of contract claim with respect to the interest
    recovery charges. Common issue 10 asks whether, if it is determined that the Firm
    charged the class members for interest contrary to s. 33 of the Act, the
    violation amounts to a breach of contract.

[102]

The Firms
    primary argument is that the certification judge and Molloy J. erred in
    concluding, without any meaningful analysis, that Ms. Hodges application
    satisfies s. 5(1)(a) for breach of contract even though the pleading does not
    allege which provision(s) of the contract were breached, a particular act or
    omission by the Firm that breached any specific contractual term, or any
    damages arising from any breach. The Firm also submits that, even if properly
    pleaded, a breach of contract claim is caught by ss. 23-25.

[103]

I agree the
    Divisional Court erred in finding that Ms. Hodge has met the test for showing a
    cause of action in breach of contract given the deficiency in the pleading.

[104]

In
Brown v.
    Canada (Attorney General)
, 2013 ONCA 18, 114 O.R. (3d) 355, this court
    held that the case management judge erred in conditionally certifying the class
    proceeding in the absence of a statement of claim that disclosed a cause of
    action. Here, the Divisional Court found that Ms. Hodge had met the test for
    showing a cause of action in breach of contract and certified common issue 10
    in the absence of a pleading that the substance of s. 33 was a term of the CFA
    and that term was breached.

[105]

That said, I
    would grant Ms. Hodge leave to amend her
Amended
Notice of Application to plead breach of contract as I do not see how granting
    leave to amend at this stage of the proceeding would result in non-compensable prejudice.

[106]

As to the
    complete code argument, I am not convinced that the proposed breach of contract
    claim would necessarily be precluded and covered by ss. 23  25, as it arguably
    would not deal with the validity of the CFA or even possibly its effect. I
    agree with the certification judge that while the Firm may have a strong
    argument that a contract claim would be caught by ss. 23-25, the argument is
    not so strong that it is plain and obvious.

(2)

Clause 5(1)(c)  Common Issues

[107]

The Divisional
    Court certified 19 common issues. They are set out in the attached Schedule C.

[108]

The Firm takes
    issue with virtually all of the certified common issues under s. 5(1)(c). Among
    other things, it argues that Ms. Hodge has failed to establish that there is
    some basis in fact that the questions are common to all class members and can
    be determined on a class-wide basis.

[109]

I am not
    persuaded that there is any basis to interfere with the Divisional Courts
    conclusion that the claims of the class members raise common issues or, with
    the exception of common issue 3, its identification of those issues. The 18
    remaining issues in my view are necessary to the resolution of the claims of
    each class member and their resolution would appear to advance the claims of
    the entire class.

[110]

I am also satisfied
    that Ms. Hodge established that there is some basis in fact that those questions
    are common to all the class members.

(a)

Common Issues Test and Standard of Review

[111]

The underlying
    commonality question is whether allowing a proceeding to continue as a class
    proceeding will avoid duplication of fact-finding or legal analysis:
Western
    Canadian Shopping Centres Inc. v. Dutton
, 2001 SCC 46, [2001] 2 S.C.R.
    534,
at para. 39;

Pro-Sys
, at para.
    108
.

[112]

The court went
    on at para. 108 of
Pro-Sys

to list the balance of the
    instructions found at paras. 39-40 of
Dutton
as to how to approach the
    common issues inquiry:

(1)

The
    commonality question should be approached purposively.

(2)

An issue
    will be common only where its resolution is necessary to the resolution of
    each class members claim.

(3)

It is not
    essential that the class members be identically situated

vis-à-vis

the
    opposing party.

(4)

It
    not necessary that common issues predominate over non-common issues. However,
    the class members claims must share a substantial common ingredient to justify
    a class action. The court will examine the significance of the common issues in
    relation to individual issues.

(5)

Success
    for one class member must mean success for all. All members of the class
    must benefit from the successful prosecution of the action, although not
    necessarily to the same extent.

[113]

At the
    certification stage, the factual evidence goes only to establishing whether the
    questions are common to all the class members:
Pro-Sys
, at para. 110.
    While there must be some basis in fact that the issues are common,
the test 
does not require that the court resolve
    conflicting facts and evidence at the certification stage, which the court is
    ill equipped to do at that stage:
Pro
‑
Sys
,
at para. 102.

[114]

Even a
    significant level of difference among the class members does not preclude a
    finding of commonality. If material differences do emerge, the court can deal
    with them at that time:
Pro
‑
Sys
,
    at para. 112;
Dutton
, at para. 54.

[115]

An appellate
    court owes considerable deference to a certification judges commonality
    analysis, and should restrict its intervention to matters of general
    principle:
Markson v. MBNA Canada Bank
, 2007 ONCA 334, 85 O.R. (3d)
    321, at para. 33.

(b)

Common Issues in this Case

Common issues 1-8: Violations of the Act
    involving costs

[116]

Common issue 1 considers whether the Firms CFAs violate the Act by
    including some share of costs awarded as part of its fee, in addition to a
    percentage of the award or settlement.

[117]

The Firm submits that common issue 1 will require a detailed and
    individualized file review to determine which clients were party to a CFA containing
    the impugned clause and it is therefore not a common issue.

[118]

I reject this argument.

[119]

Class members are restricted to persons who signed CFAs. Based on
    the sampling of CFAs in the record, and Gary Neinsteins evidence that he is
    not aware of any contingency fee retainers that do not include costs in
    addition to the percentage fee, there is some basis in fact that this question
    is common to all class members.

[120]

Common issue 4 considers whether the Firm obtained approval under s.
    28.1(8) of the Act to obtain as part of its fees any part of the costs arising
    from an award or settlement.
[2]


[121]

The Firm argues that, properly interpreted, court approval is
    required under s. 28.1(8) only if the solicitor will actually
receive
a fee that includes any amount
    arising as a result of an award of costs or costs obtained as part of a
    settlement. They refer to Greg Neinsteins evidence that the Firm often waives
    or discounts fees when rendering its accounts. For example, he deposed, while a
    particular CFA might include a provision for the payment of party-and-party costs,
    at the end of the case the Firm might not charge the client that portion of the
    compensation. Therefore, the Firm says, before answering question 4, an
    individualized inquiry as to what each class member actually paid the Firm will
    be necessary.

[122]

I reject this argument.

[123]

Common issue 4 will involve an interpretation of s. 28.1(8) to
    determine whether court approval is required before a solicitor can enter into
    a  CFA providing for the payment of a fee that includes any amount arising as a
    result of a costs award or costs obtained as part of a settlement.  The
    determination of this issue of law is necessary to the resolution of the claims
    of each class member and would appear to advance the claims of the entire
    class. Moreover, there also appears to be a common issue of fact: there is some
    basis in fact that it was not the Firms practice to obtain approval under s.
    28.1(8), at any stage.
[3]
Even if the Firms
    interpretation of s. 28.1(8) prevails, common issue 4 may not entail an
    individualized inquiry.

[124]

Common issue 3 asks whether the Firm has taken amounts arising from
    costs in an award or settlement from the class members contrary to the Act.
    Common issue 7 asks whether the Firm should be asked to disgorge all fees
    collected under any CFAs found to be unenforceable. And common issue 8 asks, in
    the alternative, whether the Firm should be ordered to repay to the class any
    amounts taken for costs in addition to their percentage fee, together with
    interest pursuant to s. 33(2) of the
Act
.

[125]

The Firm argues that common issues 3, 7 and 8 have embedded in them
    the individual issue of what the Firm actually took in payment of its account.
    It again refers to Greg Neinsteins evidence that while a CFA might include a
    provision for the payment of party-and-party costs, at the end of the case the
    Firm might not charge the client that portion of the compensation. It characterizes
    these as individual fact-driven inquiries not capable of extrapolation from one
    class member to another.

[126]

Further, it argues that Molloy J. erred in law because she made no
    reference to the extensive and well-settled jurisprudence under the common
    issue requirement of the CPA.   Rather, it submits, in paras. 78-82 she strayed
    into an irrelevant merits-based analysis.

[127]

In my view, common issues 7 and 8 are proper common issues. Common
    issue 7 considers whether a particular remedy should flow from a declaration
    that a CFA is unenforceable under s. 28.1(9). It does not entail a
    determination of the fees paid by each class member.  It asks whether whatever
    fees were paid should be disgorged.  Similarly, common issue 8 considers
    whether an alternative remedy should apply to all class members whose CFAs are
    declared unenforceable under s. 28.1(9).

[128]

I would not characterize Molloy J. as having strayed into an
    improper merits-based analysis in concluding that these are common issues.
    Rather, she provided a foundation for her determination that the certification
    judge fell into reversible error in failing to find these were common issues.

[129]

However, I agree with the Firm that common issue 3 is not a proper
    common issue.  While the record on appeal is replete with examples of final
    accounts showing party-and-party costs were payable to the firm, in addition to
    a percentage of the award or settlement, it also includes a Proposal for
    Distribution of Settlement Funds in relation to a claim for injuries arising
    out of an accident involving a lawyers son, together with an affidavit from
    the lawyer, who was his sons litigation guardian. The Proposal shows the Firm
    did not take amounts arising from costs
in
    addition

to

a
    percentage of the award or settlement: it accepted the party and party costs as
    its fee and waived its entitlement to a percentage of the amount recovered.  Although
    the lawyers affidavit makes clear that he will opt-out of the class proceeding
    on behalf of his minor son, and, therefore, his son will not be a member of the
    class, I would not discount this evidence in considering whether common issue 3
    is a proper common issue. In my view, whether the Firm actually took amounts
    arising from costs in an award or settlement contrary to the Act should be
    characterized as an individual issue.

[130]

But this does not affect my conclusion that the Divisional Court was
    correct in certifying this proceeding. The remaining common issues would be
    sufficient to meet the certification criteria. If class members are entitled to
    a declaration that the Firms CFAs are unenforceable (common issue 5) or if the
    provision in the CFAs providing for the taking of costs, in addition to a
    percentage fee, is severable (common issue 6), and if, as a result, any amounts
    taken by the Firm for costs in addition to a percentage fee should be repaid
    (common issue 8), then arguably all that remains is for a class member is to
    establish that the Firm in fact took such costs from him or her.  That would be
    a simple matter.

[131]

Finally,
    there is, in my view, another basis for concluding that issues 1, 2 and 4  8 are
    common issues.

[132]

As noted above,
    the certification judge and the Divisional Court shared the view that
    determinations under ss. 24-25 were inherently individualistic. Their
    conclusion flows from an interpretation of ss. 24 and 25 that may be overly
    narrow. In my view, it is not plain and obvious that a determination under s.
    24 of whether the agreements are in all respects fair and reasonable between
    the parties requires an individualized assessment of the relationship between
    the parties and the work performed by the Firm or that the only relief that a
    Superior Court judge can order is an individual assessment, in the ordinary
    manner.

[133]

Whether an
    agreement is fair is assessed as of the date the parties entered into the
    agreement:
Henricks-Hunter
, at para. 13. It is not plain and obvious
    to me that a court could not determine that a CFA that does not comply with s.
    28.1(8) is not in all respects fair. Arguably, this would trigger the courts
    ability to order a remedy under s. 24 without an individualized assessment of
    the reasonableness of the fee charged.

[134]

And arguably s.
    24 does not restrict a court to ordering the fees to be assessed in the
    ordinary manner. It provides that if the agreement is not in all respects fair
    and reasonable, the court may (not shall) direct the fees to be assessed in
    the ordinary manner.
Sé
guin
, discussed above, is an example
    of the court ordering a remedy other than an assessment in the ordinary manner.

[135]

Further, as I
    have indicated above, this court has held that courts have remedial authority
    beyond the four corners of the Act, drawing on inherent jurisdiction:
Clatney
,
    at paras. 77-79. Arguably, under a liberal interpretation of its remedial
    authority under s. 24 or, if insufficient, under its inherent jurisdiction, the
    court could order that any portion of the fees paid to the Firm based on costs
    be repaid.

[136]

Similar
    questions arise with respect to s. 25.

[137]

Under s. 25, even
    if the client has already paid the fees charged by the solicitor, the court may
    take various steps if it appears to the court that the special circumstances
    of the case require the agreement to be reopened.  This court has recently
    held that special circumstances in s. 25 should be read broadly to include
    any circumstances in which the importance of protecting the interests of the
    client and/or public confidence in the administration of justice, demand an
    assessment, as measured by a non-exhaustive list of factors:
Clatney
,
    at para. 86.

[138]

It is arguable
    non-compliance with the Act could amount to special circumstances requiring
    the reopening off all the agreements tainted by non-compliance and the court
    could conclude that any portion of the fees paid to the Firm based on costs be
    repaid.

[139]

In conclusion,
    it is not plain and obvious that decisions made under ss. 24-25 would necessarily
    be inherently individualistic, which provides another basis for common issues 1,
    2 and 4-8.

Common issues 9-13: violations of the Act
    involving interest recovery charges

[140]

Common issue 9 asks whether the Firm charged class members interest
    on disbursements, contrary to s. 33 of the Act.

[141]

The Firm argues that this and the subsequent related common issues
    assume that clients pay all the charges on their accounts. They say determining
    whether the class members paid the interest charges requires an individual
    assessment. They point to Czeslaw Kupnicki, a former client. After retaining
    counsel in relation to the Firms account, Mr. Kupnicki negotiated a settlement
    that involved not paying the interest and certain other disbursements the Firm
    had charged him. Accordingly, the Firm argues that common issues 9  13 are not
    proper common issues.

[142]

I reject the Firms argument. Common issues 9  11 are carefully
    framed to refer to the charging, in the sense of demanding the payment, of
    interest on disbursements contrary to s. 33 of the Act.

[143]

Common issues 12 and 13 ask whether disgorgement  in whole or in
    part  is an appropriate remedy if one or more of common issues 9  11 is
    answered in the affirmative. They are similar to common issues 7 and 8.

[144]

The class definition excludes clients who have settled any claim
    with respect to his or her account and therefore excludes Mr. Kupnicki. The
    evidence of proposed class members Ms. Hodge and Ryszard Kolbuc is that they
    paid interest recovery charges. Given that the class definition excludes
    clients who have settled claims with respect to their accounts and the evidence
    of Ms. Hodge and Ryszard Kolbuc, there is some basis in fact that the inquiries
    in common issues 9 13 are proper common issues.

[145]

If one or more of common issues 9  11 are answered in the
    affirmative, and disgorgement  in whole or in part  is found to be an
    appropriate remedy, then all that remains is for a class member to establish
    that he or she in fact paid those charges. Again, that would be a simple
    matter.

Common issues 14-19: other improper charges
    and photocopying /scanning fees

[146]

The Firm argues that common issues 14 19 dealing with other
    improper charges and photocopying/scanning fees suffer from the same problem as
    the interest issue: determining whether the client actually paid the common
    charges requires a review of each clients file.

[147]

For similar reasons to those I have articulated in relation to the
    issues regarding costs and interest recovery, in my view the Divisional Court
    was correct to certify these common issues.

(3)

Clause 5(1)(d)  Preferable Procedure

[148]

In the context of the preferability requirement, the representative
    plaintiff must show some basis in fact (1) that a class proceeding would be a
    fair, efficient and manageable method of advancing the claim, and (2) that it
    would be preferable to any other reasonably available means of resolving the
    class members claims:
AIC
, at para. 48.  The preferability requirement
    is to be conducted through the lens of the three principal goals of class
    actions, namely judicial economy, behavior modification, and access to justice:
AIC
, at para. 22;
Hollick v.
    Toronto (City)
, 2001 SCC 68, [2001] 3 S.C.R. 158, at
    para. 27.

[149]

A certification judges preferability analysis is entitled to
    considerable deference on appeal. A reviewing court should intervene only where
    the certification judge has made a palpable and overriding error of fact or
    otherwise erred in principle:
Pearson v. Inco Ltd.
(2005), 205 O.A.C. 30 (C.A.), at para. 43.

[150]

The Firm argues that the Divisional Court committed four errors in
    its s. 5(1)(d) analysis. I will address each in turn. I am not persuaded that
    these four arguments provide any basis to interfere with the Divisional Courts
    decision.

(a)

Solicitor-client privilege is not a bar to
    certification

[151]

The Firm argues that
that the Divisional Court erred in
    concluding that the class members solicitor-client privilege was not a bar to
    certification.

[152]

Solicitor-client privilege applies to confidential communications
    between a client and his or her solicitor:
Blank v. Canada (Minister
    of Justice)
,
2006 SCC 39,

[2006]
    2 S.C.R. 319, at para. 28. It has evolved from being treated as a rule of
    evidence to being considered a rule of substantive law and principle of
    fundamental justice:
Minister of National Revenue v. Thompson
, 2016 SCC 21,

[2016]
    1 S.C.R. 381, at para. 17. It recognizes that a confidential relationship
    between solicitor and client is a necessary and essential condition of our
    legal system: a lawyer cannot discharge his or her duty to advance a clients
    cause effectively unless the client may consult with the lawyer in confidence: see
Blank
, at para. 26;
Thompson
, at para. 17.

[153]

While not everything that happens in a solicitor-client relationship
    is privileged communication, facts connected with that relationship (such as
    bills of account) must be presumed to be privileged absent evidence to the
    contrary:
Thompson
, at para. 19. The privilege
    applies, regardless of the context in which it is invoked:
Thompson
, at para. 19.

[154]

In this case, the Firms principal argument is that the Divisional
    Court erred in concluding there is at least one way to avoid the problem of
    solicitor-client privilege and leaving the specific manner of dealing with the
    problem to the case management judge. They say because solicitor-client
    privilege is a substantive rule of law, the Divisional Courts failure to say
    precisely how class members substantive rights would be protected is a
    reversible error.

[155]

Further, the Firm argues there is no
efficient
    and manageable
way of protecting class members solicitor-client
    privilege when, in the context of the preferability requirement, a party
    seeking certification must show some basis in fact that a class proceeding
    would be a fair, efficient and manageable method of advancing the claim:
AIC
,
at para. 48;
Hollick
, at paras. 25, 28.

[156]

It says the Firms files going back to 2004 would have to be
    reviewed to determine whether an individual is within the definition of the
    class and such a review would, in and of itself, require a breach of privilege.
    Then, contact information for class members would have to be found and personal
    service attempted on thousands of class members. Moreover, it says there is no
    basis to conclude that personal service can be effected on all class members.
    In summary, the Firm argues the process envisaged by the certification judge is
    inefficient and unmanageable and, accordingly, a class proceeding is not the
    preferable procedure.

[157]

I do not understand the Firm to take issue with the certification
    judges conclusion that a class members decision not to opt out of a class
    proceeding can, in certain circumstances, amount to an implied waiver of his or
    her solicitor-client privilege.

[158]

I agree with the Divisional Court and the certification judge that
    the solicitor-client privilege issue is not a basis for refusing certification.

[159]

First, it was not a reversible error for the Divisional Court to identify
    one way in which the problem could be avoided  it accepted the solution
    proposed by the certification judge  and indicate that there may be other ways
    of addressing the problem. In the ordinary course, the certification judge is
    the case management judge. It is clear from the certification judges detailed
    reasons that he is alive to the issue. In my view, tying the parties to the
    precise procedure he posited in his reasons  possibly without detailed input
    from the parties  with no possibility of refinement or modification during the
    case management process would have been unwise.  In my view, the procedure will
    inevitably need to be fleshed out.

[160]

If, in the end, solicitor-client privilege issues relating to notice
    result in an unmanageable proceeding, the court retains the power under s.
    10(1) of the CPA, on a motion, to decertify the class proceeding where it
    appears to the court the certification criteria are no longer satisfied.

[161]

Second, an inquiry into whether a class proceeding is a fair,
    efficient and manageable method of advancing the claim considers more than the
    manner of giving notice of certification. It considers the entire plan for
    advancing class members claims. The inquiry also takes into account the
    importance of the common issues in relation to the claim as a whole:
Cloud
    v. Canada
(2004), 73 O.R. (3d) 401 (C.A.), at para. 74,
    leave to appeal to SCC refd, [2001] 1 S.C.R. vi. The contemplated manner of
    giving notice of certification to class members is undoubtedly more cumbersome
    and costly than usual.  But that is only one factor in the overall assessment
    of whether a class proceeding is a fair, efficient and manageable method of
    advancing the claims.

[162]

While the certification judge did not go into this detail, if the
    Firm itself reviewed its files to compile the list of class members, utilizing
    an agreed upon procedure, the identification of the class members would not
    entail a breach of those class members solicitor-client privilege. Similarly,
    it may be possible to resolve the common issues without breaching class
    members solicitor-client privilege. For example, class members names and
    other identifying information could be redacted from accounts and each account
    could be identified numerically. Further disclosure might only be required at
    the individual issues stage. There may be no need to require personal service
    on each class member.

[163]

On the Firms argument, the solicitor-client privilege of a
    solicitors clients and former clients shields the solicitor from a class
    proceeding, intended for the benefit of those clients, alleging misconduct on
    the solicitors part   even when a class proceeding is the clients only
    realistic opportunity to advance their claims.  In my view, that cannot be so.

(b)

The only realistic opportunity for the class to
    advance their claims

[164]

The Firm submits that the Divisional Court erred in concluding that
individual
    assessments were beyond the reach of the class and a class proceeding was the only
    realistic opportunity for the class members to advance their claims. The Firm
    says that conclusion was not supported by the evidence.

[165]

I reject the Firms argument.

[166]

The certification judge did not address the evidence of Ms. Hodge
    and Mr. Kolbuc that they could not pursue individual assessments. The
    Divisional Court was correct in determining this evidence properly factored
    into the preferable procedure analysis, and the Divisional Court made no error
    in its assessment of this evidence.

(c)

The Divisional Courts concern about behavior
    modification

[167]

The certification judge did not expressly consider the goal of behavior
    modification. The Divisional Court, however, considered behavior modification
    to be a significant advantage of a class proceeding. It concluded, at para.
    108, that [i]f individual clients are left to their own devices to right these
    wrongs, there will be little financial incentive for lawyers to follow the
    procedures demanded by the legislation.

[168]

The Firm says this reflects an unfair and unfounded assumption that
    the Firm (and lawyers generally) will violate their statutory duties and
    manipulate the system for personal advantage, and this unfounded assumption
    skewed its s. 5(1)(d) analysis. The Firm characterizes its alleged violations
    of the Act as technical, and not for personal advantage. It submits that the
    overriding question under the Act is whether its fees were reasonable, and say
    this litigation will establish that its fees were reasonable.

[169]

In my view, the Divisional Court made no error.

[170]

Whether or not the Firms fees were reasonable, it is alleged that
    it was not complying with the procedures stipulated in the Act for the
    protection of contingency fee clients. Moreover, from the submissions of the
    intervener, the Ontario Trial Lawyers Association, which characterizes the
    restriction in the Act on allocating any portion of the costs awarded to the
    solicitor as unworkable in practice, it appears that non-compliance with the
    Act is widespread.

(d)

The nature and scope of the individual inquiries

[171]

The Firm submits the Divisional Court erred in finding that a class
    proceeding was the preferable procedure, despite the nature and scope of the
    individual inquiries that it says are necessary to resolve each class members
    claim.

[172]

In
Cloud
, at para. 74, this court
    explained that the determination of whether a proposed class action is a fair,
    efficient and manageable method of advancing the claim requires an examination
    of the common issues in their context. The inquiry must take into account the
    importance of the common issues in relation to the claim as a whole. And, at
    para. 76, it noted that the critical question is whether, viewing the common
    issues in the context of the entire claim, their resolution will significantly
    advance the action.

[173]

The Divisional Court considered the common issues in relation to the
    claim as a whole. At para. 105, Molloy J. wrote that [o]nce the common issues
    were settled, all that would remain would be for the solicitors to establish
    what would be a reasonable fee in all the circumstances and that this might
    require individual assessments, but if so, the burden would be on the
    solicitors to establish the fairness of their fees. It would be up to the Firm
    to initiate individual assessments.

[174]

The Firm argues that the resolution of the common issues will not
    significantly advance the litigation and the Divisional Court accordingly erred
    in concluding that a class proceeding is the preferable procedure. It says
    there are remaining individual issues  whether each class members claim is
    limitation-barred and the fees the Firm charged him or her were reasonable 
    that will dwarf the common issues.

[175]

As I have said, I agree that a class proceeding is the preferable
    procedure.

[176]

I am not persuaded that the individual limitation issues should be a
    bar to certification in this case. The Firm did not expand upon its submission
    that a class proceeding is not the preferable procedure because of individual
    limitation issues. Neither the certification judge nor the Divisional Court
    refer to this issue in their reasons, and it is not clear whether it was argued
    below. In any event, this court has upheld the certification of class
    proceedings notwithstanding that there might ultimately be individual
    limitations issues:
Lipson v. Cassels Brock & Blackwell LLP
, 2013 ONCA 165, 114 O.R. (3d) 481;
Amyotrophic Lateral
    Sclerosis Society of Essex v. Windsor (City)
, 2015 ONCA
    572, 337 O.A.C. 315.

[177]

Further, as I have explained above, I am not convinced that the
    claims advanced on behalf of class members will necessarily require individual
    assessments of the reasonableness of the fees charged to each class member. And
    even if the Firm advanced a counterclaim in
quantum meruit
in response, whether in the circumstances the Firm is entitled to
quantum
    meruit
recovery might well itself be a common issue.

[178]

Finally, as I have also explained above, in my view a class
    proceeding is the preferable procedure even if common issue 3 is characterized
    as an individual issue.

(4)

Clause 5(1)(e)  representative plaintiff

[179]

In its factum, the Firm argues the Divisional Court incorrectly stated
    it did not challenge the certification judges finding that, if the other tests
    for certification were met, Ms. Hodge would be an appropriate representative
    plaintiff.  However, it does not expand upon this submission. I see no basis to
    interfere with the certification judges and the Divisional Courts conclusion
    that Ms. Hodge is an appropriate representative plaintiff.

C.

ANALYSIS OF ISSUES ON THE CROSS-APPEAL

[180]

In her cross-appeal, Ms. Hodge argues that the Divisional Court
    erred by:

1.
failing to grant her leave to amend her
Amended
Notice of Application to plead
    the tort of conversion and amend her Notice of Motion to add conversion as a
    proposed common issue and to certify as a common issue whether the Firms
    taking of costs without the prior approval of the court under s. 28.1(8) of the
    Act amounts to the tort of conversion of the class members monies; and

2.
failing to certify two further common issues in her Notice of
    Motion, in substance as follows:

a.

whether by failing to disclose information required by the Act and
    the Regulation
[
[4]
]
and by taking as part of their fees amounts arising from awards or settlements
    for costs, the Firm was in breach of fiduciary duties and obligations to class
    members (the fiduciary duty/costs common issue); and

b.

whether the conduct of the Firm warrants an award of punitive
    damages to class members (the punitive damages common issue).

[181]

I will address these alleged errors in turn.

(1)

Denial of leave to amend  tort of conversion

(a)

Background

[182]

The Divisional Court dismissed Ms. Hodges motion to amend her
Amended
Notice of Application to plead the tort of
    conversion. At para. 112, Molloy J. wrote:

[I]t adds nothing of substance to the
    proceeding as currently drafted. Whether the conduct is characterized as breach
    of fiduciary duty, breach of contract or conversion, the same factual matrix
    applies. Further, the same bottom line emerges: whether the clients are
    entitled to declaration that an agreement is unenforceable, pursuant to s.
    28.1(9) of the [Act]. It was not necessary for our analysis to consider this
    additional cause of action, and we did not do so.

[183]

Ms. Hodge argues that the Divisional Court erred in principle by
    considering whether the proposed amendment added something of substance to the
    proceeding as currently drafted and failing to apply r. 26.01 of the
Rules
    of Civil Procedure
, which provides as follows:

26.01 On motion at any stage of an action the
    court shall grant leave to amend a pleading on such terms as are just, unless
    prejudice would result that could not be compensated for by costs or an
    adjournment.

[184]

Ms. Hodge submits that she seeks to rely only on the material facts
    already pleaded in her
Amended
Notice of Application and there was nothing before the Divisional
    Court that indicated that any prejudice would flow from the requested
    amendment.

[185]

The Firm notes that Ms. Hodge is unable to direct the court to any
    case where the court has permitted a proposed representative plaintiff to amend
    its pleading to add a new cause of action on appeal from dismissal of a
    certification motion. It argues that a proposed representative plaintiff should
    not be permitted to add a new cause of action and have it certified, for the
    first time, on appeal. Moreover, it argues, the facts pleaded do not give rise
    to the tort of conversion. It says the Divisional Court was correct in not
    permitting Ms. Hodge to amend her
Amended
Notice
    of Application.

(b)

Analysis

[186]

Molloy J.s reasons for dismissing Ms. Hodges motion to amend would
    have justified declining to consider her proposed amendment on appeal, but were
    not a basis for dismissing Ms. Hodges motion without making clear that she was
    free to bring her motion before the case management judge. In my view, the
    Divisional Court erred in principle by dismissing the motion without focusing
    on whether the
Firm
was afforded procedural fairness
    and whether the proposed amendment would cause prejudice to the
Firm
.

[187]

I agree with Ms. Hodge that r. 26.01 applies. The applicable test is
    not whether the amendment will add something of substance to the proceeding.
    The guiding principle is whether prejudice would result. However, further
    considerations arise when the motion to amend is brought on appeal from an
    unsuccessful certification motion.

[188]

In
Keatley Surveying Ltd. v. Terranet Inc.
, 2015 ONCA 248, 125
    O.R. (3d) 447, at para. 45, this court made clear that it does not endorse the
    practice of recasting certification motions on appeal. Doing so undermines the
    way that certification motions should proceed through the courts. It deprives
    appellate courts of the expertise of the judges who have been assigned to hear
    these cases and requires three judges to determine issues that could and should
    have been heard by a single judge.

[189]

Nonetheless, at para. 24, this court accepted that there must be
    some latitude for consideration of issues not raised at first instance provided
    that the other party is afforded procedural fairness and is not prejudiced. It
    concluded that the Divisional Court did not err in permitting the proposed
    representative plaintiff to present a revised class definition and revised
    common issues. The change in the class definition did not deprive the defendant
    of an opportunity to respond and did not cause prejudice arising from lack of
    evidence or a proper record. And the defendant was not at any disadvantage in
    presenting arguments to the Divisional Court on the refined common issues. The
    conceptual core of the case was unchanged and the refined issues were
    substantially similar to those before the certification judge.

[190]

The class definition is usually set out in the pleadings. I take
    this court in
Keatley
to have permitted an amendment to the pleadings
    on the appeal of the dismissal of a certification motion, albeit not to add a
    cause of action.

[191]

But the Firm correctly argues the cause of action requirement is
    fundamental to a certification motion:
Brown
, at para. 44.  As
    Rosenberg J.A. wrote for the court: It is impossible for the defendant to
    meaningfully respond to an application for certification without knowing the
    cause of action. The definition of the class and the common issues depend upon
    the nature of the cause of action.

[192]

The court made these statements in concluding the case management
    judge erred in conditionally certifying the class proceeding in the absence of
    a statement of claim that disclosed a cause of action. It did not make them in
    the context of a motion by a representative plaintiff to amend its pleading on
    appeal to add a cause of action. They are nonetheless instructive in evaluating
    whether a defendant will be prejudiced if a plaintiff pleads an additional
    cause of action on appeal.

[193]

Further, this is not a case where the amendment was sought to recast
    the proceeding more narrowly to make it more susceptible to certification. It
    is different from
Keatley
.  Rather, Ms. Hodge seeks to
broaden
the scope of the proceeding by adding a cause of
    action on appeal. As the Divisional Court recognized, the amendment was not
    essential to the issue to be determined on appeal, namely whether the
    certification judge erred in denying certification. In
Keatley
, this
    court signaled its reluctance to consider issues on appeal of certification
    motions that were not raised at first instance.

[194]

In my view, in these circumstances, it was open to the Divisional
    Court to decline to consider the proposed amendment to add a cause of action.
    However, if it declined to consider the proposed amendment on its merits, it
    should have made clear that its decision did not bar Ms. Hodge from bringing her
    motion to amend before the case management judge.

[195]

While Ms. Hodge urges this court to determine the issue, I would
    decline to address it.  Neither party provided extensive submissions in this
    court regarding the viability of Ms. Hodges putative conversion claim, and
    this court does not have the benefit of reasons below considering the issue in
    detail. Consequently, this court is not well-positioned to address whether it
    is plain and obvious the claim cannot succeed. Unlike the Divisional Court,
    however, I would note that my decision is without prejudice to Ms. Hodges
    ability to raise the issue in the court below. Should Ms. Hodge wish to amend
    her pleading to include the tort of conversion, she may bring a motion before
    the case management judge.

(2)

Failure to certify two additional common issues

[196]

The Divisional Court did not explain why it did not certify the two
    additional common issues that Ms. Hodge argues should have been certified, and
    its reasoning is not clear to me. I would certify those two additional issues.

(a)

The fiduciary duty/costs
    common issue

[197]

The first additional common issue asks whether the conduct of the
    Firm  allegedly failing to disclose information required by the Act and the
    Regulation in its CFAs and taking as part of their fees amounts arising from
    awards or settlements for costs  breached fiduciary duties to class members.

[198]

As I have said above, I am not satisfied that it is plain and
    obvious that ss. 23-25 of the Act are a comprehensive code and preclude a claim
    against a solicitor for breach of fiduciary duty arising out of a CFA.

[199]

However, the Firm again argues that it is plain and obvious that it
    did not owe a fiduciary duty to class members to include the prescribed
    language in its CFAs because they were only prospective clients until the
    agreements were signed. The Firm submits that a lawyer does not owe a fiduciary
    duty to prospective clients.

[200]

I disagree with how the Firm characterizes this issue. The failure
    to ensure that the CFAs included the prescribed language is only one aspect of
    the Firms conduct considered in the proposed common issue. The disclosure part
    of the proposed common issue raises the question of whether the Firm was
    required to disclose the non-compliance
after
the class member became a
    client. In my view, it is not plain and obvious that a claim for breach of
    fiduciary duty based on the failure to disclose and the taking of costs has no
    reasonable prospect of success.

[201]

I am also satisfied that there is a common legal issue  whether, as
    a matter of law, failing to disclose that a CFA signed did not include the
    prescribed language and the taking of costs contrary to the Act amount to a
    breach of fiduciary duty. In my view, there is some basis in fact for asking
    whether the taking of costs contrary to the Act constituted a breach of
    fiduciary duty by the Firm, such that this is a proper common issue. As I have
    indicated above, the record on appeal is replete with examples of final
    accounts showing party-and-party costs payable to the Firm, in addition to a
    percentage of the award or settlement, and the only evidence of the Firm
not
taking such costs is that of someone who it appears will opt out of the class
    proceeding.

[202]

That said, consistent with my reasoning on the taking issue above,
    I agree with the Firm that whether the Firm
actually
took amounts
    arising from costs in an award or settlement contrary to the Act should be
    characterized as an individual issue.

(b)

The punitive damages common issue

[203]

Punitive damages are available for breach of fiduciary duty:
Waxman
    v. Waxman
(2004), 186 O.A.C. 201 (C.A.), at para. 586.  Here, the remedy
    sought for the alleged breach is disgorgement, rather than damages. There may
    in many cases be a strong argument against awarding punitive damages where
    disgorgement is ordered. However, in my view, it is not plain and obvious that,
    in principle, punitive damages could not be awarded in addition to disgorgement
    where, in the courts view, the fiduciarys behaviour was malicious,
    high-handed or reprehensible and this misconduct would otherwise go unpunished.

[204]

Entitlement to punitive damages can be certified as a common issue
    in a proper case. Whether a defendant has breached a fiduciary duty engages the
    same kind of fact-finding that will be necessary to determine whether punitive
    damages are justified:
Rumley v. British Columbia
, 2001 SCC 69,

[2001] 3 S.C.R. 184, at para. 34. Here, the
    alleged wrongdoing is towards the class as a group and a common class-wide
    remedy (disgorgement) is sought.  If it were found that the Firm breached its
    fiduciary duty to its clients, and disgorgement  in whole or in part  were
    ordered, it would be open to the trial judge to consider whether he or she is
    in a position to determine entitlement to and the quantum of punitive damages,
    consistent with the principles in
Whiten v. Pilot Insurance Co.
, 2002 SCC 18, [2002] 1 S.C.R. 595, or, if the Firm successfully
    advances a
quantum meruit
claim, whether this could be determined only
    after individual
quantum meruit
assessments.

[205]

For these reasons, it is appropriate to certify the entitlement to
    punitive damages as a common issue.

D.

disposition and costs

[206]

For all of these reasons, I would dismiss the
    appeal and allow, in part, the cross-appeal. While I would dismiss the appeal,
    I conclude the Divisional Court erred in certifying one issue (common issue 3)
    as a common issue and would vary the certification order by deleting that
    common issue.

[207]

Ms. Hodge was the successful party in this court and the court
    below. If the parties are unable to agree on costs, Ms. Hodge may make brief
    costs submissions not to exceed five pages, double-spaced, excluding any bill
    of costs or costs outline, to be filed within 14 days of the release of these
    reasons; the Firm may then respond with submissions of the same maximum length
    within 10 days. There will be no reply submissions.

Released: AH  JUN 15 2017

Alexandra Hoy A.C.J.O.

I agree E.E. Gillese J.A.

I agree D.M. Brown J.A.


SCHEDULE
    A: RELEVANT STATUTORY PROVISIONS

Solicitors Act
, R.S.O. 1990, c. S. 15

15. In this section and in sections 16
    to 33,

client includes a person who, as a
    principal or on behalf of another person, retains or employs or is about to
    retain or employ a solicitor, and a person who is or may be liable to pay the
    bill of a solicitor for any services;

contingency fee agreement means an
    agreement referred to in section 28.1;

services includes fees, costs,
    charges and disbursements.



16.
For purposes of this
    section and sections 20 to 32,

agreement includes a contingency fee
    agreement.



23. No action shall be brought upon any
    such agreement, but every question respecting the validity or effect of it may
    be examined and determined, and it may be enforced or set aside without action
    on the application of any person who is a party to the agreement or who is or
    is alleged to be liable to pay or who is or claims to be entitled to be paid
    the costs, fees, charges or disbursements, in respect of which the agreement is
    made, by the court, not being the Small Claims Court, in which the business or
    any part of it was done or a judge thereof, or, if the business was not done in
    any court, by the Superior Court of Justice.

24. Upon any such application, if it
    appears to the court that the agreement is in all respects fair and reasonable
    between the parties, it may be enforced by the court by order in such manner
    and subject to such conditions as to the costs of the application as the court
    thinks fit, but, if the terms of the agreement are deemed by the court not to
    be fair and reasonable, the agreement may be declared void, and the court may
    order it to be cancelled and may direct the costs, fees, charges and
    disbursements incurred or chargeable in respect of the matters included therein
    to be assessed in the ordinary manner.

25. Where the amount agreed under any
    such agreement has been paid by or on behalf of the client or by any person
    chargeable with or entitled to pay it, the Superior Court of Justice may, upon the
    application of the person who has paid it if it appears to the court that the
    special circumstances of the case require the agreement to be reopened, reopen
    it and order the costs, fees, charges and disbursements to be assessed, and may
    also order the whole or any part of the amount received by the solicitor to be
    repaid by him or her on such terms and conditions as to the court seems just.



28.1 (1) A solicitor may enter into a
    contingency fee agreement with a client in accordance with this section



28.1 (8)  A contingency fee agreement
    shall not include in the fee payable to the solicitor, in addition to the fee
    payable under the agreement, any amount arising as a result of an award of
    costs or costs obtained as part of a settlement, unless,

(a) the solicitor and client jointly
    apply to a judge of the Superior Court of Justice for approval to include the
    costs or a proportion of the costs in the contingency fee agreement because of
    exceptional circumstances; and

(b) the judge is satisfied that exceptional
    circumstances apply and approves the inclusion of the costs or a proportion of
    them.

(9) A contingency fee agreement that is
    subject to approval under subsection (6) or (8) is not enforceable unless it is
    so approved.



(11) For purposes of assessment, if a contingency fee
    agreement,

(a) is
    not one to which subsection (6) or (8) applies, the client may apply to the
    Superior Court of Justice for an assessment of the solicitors bill within 30
    days after its delivery or within one year after its payment;


(b) is one to which subsection (6) or
    (8) applies, the client or the solicitor may apply to the Superior Court of
    Justice for an assessment within the time prescribed by regulation made under
    this section



33. (1)

A solicitor
may
charge interest on unpaid fees, charges or disbursements, calculated from a
    date that is one month after the bill is delivered under section 2. R.S.O.
    1990, c. S.15, s. 33 (1).

Class Proceedings Act
,
1992
, S.O.
    1992, c. 6
:

5 (1) The
    court shall certify a class proceeding on a motion under section 2, 3 or 4 if,

(a) the pleadings or the notice of
    application discloses a cause of action;

(b) there is an identifiable class of
    two or more persons that would be represented by the representative plaintiff
    or defendant;

(c) the claims or defences of the class
    members raise common issues;

(d) a class proceeding would be the
    preferable procedure for the resolution of the common issues; and

(e) there is a representative plaintiff
    or defendant who,

(i) would fairly and adequately
    represent the interests of the class,

(ii) has produced a plan for the
    proceeding that sets out a workable method of advancing the proceeding on
    behalf of the class and of notifying class members of the proceeding, and

(iii) does not have, on the common
    issues for the class, an interest in conflict with the interests of other class
    members.  1992, c. 6, s. 5 (1).

SCHEDULE
    B: CLASS DEFINTION

A client of Neinstein
    & Associates LLP and Gary Neinstein Q.C. (the Firm) that:

(a) signed or amended a
    contingency fee agreement or arrangement after October 1, 2004, and

(b) who has paid before
    the date of certification the Firm for their legal services on the completion
    of the matter in respect of which services were provided,

(c) except a client:

(i) for whom the court
    has approved the Firms fee;

(ii) for whom the court
    has assessed the Firms account; or

(iii) that have signed a
    release or settled any claim with respect to his or her contingency fee
    agreement or arrangement.


SCHEDULE
    C: CERTIFIED COMMON ISSUES

VIOLATIONS OF THE

SOLICITORS ACT

INVOLVING COSTS

1.

Did
    the Firms contingency fee agreements violate the

Solicitors Act

by including, as the Firms
    fees, amounts arising from costs in an award or settlement in addition to a
    percentage of the award or settlement?

2.

Were
    the Firms contingency fee agreements made in accordance with

s. 28.1(1)

of the

Solicitors Act
?

3.

Did
    the Firm take amounts arising from costs in an award or settlement from the
    Class Members contrary to the

Solicitors Act
?

4.

As
    required by

s. 28.1(8)

of the

Solicitors Act
, did the Firm obtain approval from the Class
    Members to obtain as part of their fees any part of the costs arising from an
    award or settlement?
[5]

5.

Are
    the Class Members entitled to a declaration that the Firms contingency fee
    agreements are unenforceable under

s. 28.1(9)

of the

Solicitors Act
?

6.

Can
    the provision in the contingency fee agreements that takes, in addition to the Firms
    fees, all or a portion of the costs arising from an award or settlement, be
    severable?

7.

Should
    the Firm be ordered to disgorge all fees collected under any contingency fee
    agreements that are found to be unenforceable?

8.

If
    it is determined that fees collected under unenforceable contingency fee
    agreements should not be disgorged, should the Firm be otherwise ordered to
    repay to the Class Members any amounts taken for costs in addition to their
    percentage fee, together with interest pursuant to

s. 33(2)

of the

Solicitors Act
?

VIOLATIONS OF THE

SOLICITORS ACT

INVOLVING

INTEREST CHARGES

9.

Did
    the Firm charge the Class Members for interest contrary to

s. 33
of the

Solicitors Act
, including the
    Interest Recovery charges shown in their accounts for disbursements to Class
    Members?

10.

If
    it is determined that the Firm charged the Class Members for interest contrary
    to

s. 33

of the

Solicitrs Act
, does this violation
    amount to a breach of contract?
Solicitors Act

11.

If
    it is determined that the Firm charged the Class Members for interest contrary
    to

s. 33

of the

, does this violation
    amount to a breach of the Firms fiduciary duty?

12.

Should
    the Firm be ordered to disgorge all interest charged in violation of

s. 33

of the

Solicitors Act
?

13.

If
    it is determined that interest collected in violation of

s. 33

of the

Solicitors Act

should not be
    disgorged, should the Firm be otherwise ordered to repay to the Class Members
    any amounts taken on account of interest charged by the Firm?

OTHER IMPROPER
    CHARGES AND PHOTOCOPYING/SCANNING FEES

14.

Did
    the Firm charge the Class Members for Other Improper Charges without disclosing
    or obtaining agreement from the Class Members?

15.

Did
    the Firm charge the Class Members excessive rates for photocopying and scanning
    documents?

16.

If
    it is determined that the Firm charged the Class Members for Other Improper
    Charges without disclosing or Firm agreement from the Class Members, should the
    Firm be ordered to disgorge these funds?

17.

If
    it is determined that the Other Improper Charges should not be disgorged,
    should the Firm be otherwise ordered to repay to the Class Members any amounts
    taken on account of the Other Improper Charges?

18.

If
    it is determined that the Firm charged the Class Members excessive rates for
    photocopying and scanning documents, should the Firm be ordered to disgorge these
    funds?

19.

If
    it is determined that the excessive photocopying and scanning fees should not
    be disgorged, should the Firm be otherwise ordered to repay to the Class
    Members any amounts taken on account of these excessive fees?





[1]
In
Saskatchewan Wheat Pool
, the Supreme Court considered whether
    breach of a statutory duty gave rise to an independent tortious action. It
    concluded that it did not and, further, did not constitute negligence
per se
.
    Rather, proof of statutory breach, causative of damages, may be evidence of
    negligence and the statutory formulation of the duty may afford a specific and
    useful standard of reasonable conduct.



[2]
While common issue 4, as set out in the Divisional Courts order, asks whether
    the Firm obtained approval
from Class Members
to
    obtain as part of their fees any part of the costs arising from an award or
    settlement, it is clear from para. 83 of the reasons that what is meant is
    whether they obtained approval under s. 28.1(8) of the
Act
.



[3]
At para. 29, Molloy J. wrote: Except for obtaining court approval of a
    settlement for a party under disability, it is not the practice of [the Firm]
    to obtain court approval for taking a percentage fee plus costs as a fee under
    a [CFA]. [The Firm] did not provide a single example of a situation in which a
    [CFA] was approved under s. 28.1(8) of the
Solicitors Act
.



[4]
The Regulation requires a solicitor who is party to a CFA to ensure that it
    includes, among other information, a statement that, unless otherwise ordered
    by a judge, a client is entitled to receive any costs contribution or award, if
    the client is the party entitled to costs:
Contingency Fee Agreements
,
    O. Reg. 195/04, s. 3.3 (i).



[5]
While common issue 4, as set out in the Divisional Courts order, asks whether
    the Firm obtained approval
from Class Members
to
    obtain as part of their fees any part of the costs arising from an award or
    settlement, it is clear from para. 83 of the reasons that what is meant is
    whether they obtained approval under s. 28.1(8) of the
Act
.


