Tallcree First Nation v Rath & Company

In the Court of Appeal of Alberta

Citation: Tallcree First Nation v Rath & Company, 2022 ABCA 174

Date: 20220511

Docket: 2003-0179AC;

2103-0093AC

Registry: Edmonton

Between:

Tallcree First Nation

Respondent

(Appellant)

- and -

Rath & Company and Jeffrey R.W. Rath

Appellants

(Respondents)

_______________________________________________________

The Court:

The Honourable Justice Frans Slatter

The Honourable Justice Thomas W. Wakeling

The Honourable Justice Kevin Feehan

_______________________________________________________

Memorandum of Judgment of the Honourable Justice Slatter

And the Honourable Justice Feehan

Dissenting Memorandum of Judgment of the Honourable Justice Wakeling

Appeal from the Decision by

The Honourable Justice D. Lee

Dated the 8th day of October, 2020

Filed the 27th day of October 27, 2020

(2020 ABQB 592, Docket: 1803 05262)

Appeal from the Decision by

The Honourable Justice D. Lee

Dated the 26th day of March, 2021

(2021 ABQB 234, Docket: 1803 05262)

Appeal from the Decision by

The Honourable Justice D. Lee

Dated the 9th day of June, 2021

(2021 ABQB 440, Docket: 1803 05262)

_______________________________________________________

Memorandum of Judgment

_______________________________________________________

The Majority:

[1] The issue on these appeals is the reasonableness of a contingency fee agreement for legal

services entered into by the parties, and the related issue of the fee to which the appellant lawyers

are entitled.

[2]

Tallcree First Nation issued an Appointment for Review of the contingency fee agreement

it had entered into with Rath & Company. The Review Officer concluded that the agreement was

reasonable, and that the resulting fee was not “unexpectedly unfair”. A chambers judge reversed

that decision, concluding that the contingency fee agreement was unreasonable: Tallcree First

Nation v Rath & Co, 2020 ABQB 592. In subsequent proceedings, the chambers judge determined

that a fair fee for the services provided would be $3 million: Tallcree First Nation v Rath & Co,

2021 ABQB 234. The chambers judge subsequently dismissed an application that he recuse

himself and direct a rehearing: Tallcree First Nation v Rath & Co, 2021 ABQB 440. All three of

those decisions are under appeal.

Facts

[3]

Tallcree First Nation is one of the signatories of Treaty 8. That Treaty includes a covenant

to provide each band who signed the treaty with a list of agricultural implements and supplies (e.g.,

axes, hoes, reapers, plows, oxen, seed, ammunition, twine). The signatories took the position that

the Treaty also included an implied covenant that Canada would assist the bands in adapting to a

new economic lifestyle so as to render them economically self-sufficient. The underlying claim

which is the subject of the contingency fee agreement is that these “Agricultural Benefits” were

not provided in accordance with the terms of the Treaty.

[4]

The potential Agricultural Benefits claim, identified as early as 2000-2001, was ultimately

advanced by approximately 21 First Nations who had signed Treaty 8, including Tallcree First

Nation. In about 2005 the face value of these claims was said to be between $42,500 and $51,000

per band member. Various law firms were retained to pursue the claims. In about 2008 Tallcree

First Nation retained Ackroyd & Company, who also represented about seven other First Nations,

on a fee-for-service basis. Rath & Company was retained at some point to represent Sturgeon Lake

Cree Nation.

[5]

In 2008 the Specific Claims Tribunal was established under the Specific Claims Tribunal

Act, SC 2008, c. 22 to expedite the resolution of claims over 15 years old: s. 14. The First Nations

diverted the Agricultural Benefits claims into that process, which had certain advantages. Canada

would not refuse to negotiate a claim on the basis that a limitation period had expired (s. 19), and

Page: 2

the statute provided a fixed timeline for processing claims. If the claims could not be resolved, the

First Nations could take them before the Specific Claims Tribunal rather than the ordinary courts.

[6]

The Specific Claims procedure involves several steps:

(a)

The First Nation must submit a claim that meets a minimum standard of

particularity (s. 16(2)(a)). The Minister will advise the First Nation if the minimum

standard has been met, in which case the claim is said to be “filed with the Minister”

(s. 16(2)(c), (3)).

(b)

Once the claim has been “filed”, the Minister has three years to research the claim

and assess its validity (s. 16(1)(b)). If the Minister is satisfied with the assessment

of the claim, then it will be “accepted for negotiation”. If this does not happen

within three years, the First Nation can wait for the Minister’s assessment.

Alternatively, after three years, or if the claim is rejected, the First Nation can file

its claim with the Specific Claims Tribunal (s. 16(1)(a), (b)).

(c)

(d)

Once the claim has been “accepted for negotiation”, there is a further three year

window within which Canada and the First Nation can explore settlement. If a

settlement is not achieved, the First Nation can file its claim with the Specific

Claims Tribunal (s. 16(1)(d)).

The Specific Claims Tribunal has the jurisdiction to issue final binding decisions

with respect to all claims that are referred to it (s. 32, 36).

[7]

Since all of the 21 First Nations who were making Agricultural Benefits claims had signed

the same Treaty 8, there was obviously a considerable overlap in Canada’s acceptance of the

validity of the claims. The logical inference from the record is that Canada was processing these

claims as a group. Mr. Cardinal, Tallcree First Nation’s business manager, recognized that since

Tallcree First Nation was one of the smaller First Nations involved, its claim would be

“piggybacked” on the claims of the larger First Nations that were represented by Ackroyd &

Company.

[8]

Ackroyd & Company submitted an Agricultural Benefits claim on behalf of Tallcree First

Nation on June 25, 2013. The claim was accepted as “filed” by the Minister on August 14, 2013

and placed under “assessment”. The settlement that was ultimately achieved, and that formed the

basis of the disputed contingency fee, was based on this claim.

[9]

Under the Specific Claims protocol, the Minister had until August 14, 2016 (3 years) to

assess the claim, and either “accept it for negotiation”, or reject it (supra, para. 6(b)). However,

before that deadline arrived, Tallcree First Nation became dissatisfied with the lack of

communication from Ackroyd & Company about the progress of the claim. They approached

Rath & Company to take over the file. In October 2014 Rath & Company agreed to take the file

Page: 3

on a contingency fee basis and sent a draft contingency fee agreement to Mr. Cardinal. That

agreement, however, was not signed until one year later, October 14, 2015.

[10] Mr. Rath commenced working on the file. A federal election was held, and on December 8,

2015 the new Prime Minister stated publicly that a new approach would be taken to settling treaty

claims and that First Nations’ rights “are not an inconvenience but rather a sacred obligation”.

Although the three year deadline for the Minister to assess the claim was not yet up, on

December 9, 2015 Mr. Rath issued a statement of claim in the Federal Court. On December 10,

2015 Mr. Rath wrote a lengthy letter to the responsible Ministers demanding that the Tallcree First

Nation’s claim be recognized and paid. Tallcree First Nation made a settlement offer of $83.5

million.

[11] Canada’s response to the statement of claim was that it was not possible to litigate while

negotiating under the Specific Claims procedure: s. 15(3)(a). As a consequence, the Federal Court

proceedings were placed in abeyance.

[12] On August 8, 2016 Canada accepted Tallcree First Nation’s claim for Agricultural Benefits

“for negotiation”. This was six days before the expiry of the three-year research and assessment

period. The related claim that Canada would assist the bands in adapting to a new economic

lifestyle so as to render them economically self-sufficient was not accepted for negotiation. On

February 2, 2017 Canada made a $57.6 million offer of settlement. This offer was apparently based

on a formula related to the number of band members and was consistent with offers made to the

other signatories of Treaty 8. It appears that the claims of all the other 20 First Nations who had

made Agricultural Benefits claims were settled at about the same time on the same formula,

although the Tallcree First Nation’s claim was one of the last to be resolved.

[13] Mr. Rath explained the advantages of the offer to the Chief and Council of Tallcree First

Nation. When the Council found it to be acceptable, Mr. Rath then invested a considerable amount

of time explaining the settlement offer to the members of the Tallcree First Nation and answering

their questions. He helped organize the ratification process and prepared the documentation

necessary. The offer was ultimately accepted and ratified by the members of the Tallcree First

Nation in July 2017. Mr. Rath then dealt with the distribution of the settlement proceeds to the

individual members of the Tallcree First Nation under the terms of a trust agreement.

[14] To summarize, a number of events were said to affect the reasonableness of the

contingency fee agreement and the resulting fee. In summary, the immediate chronology of the

events behind these appeals is:

August 14, 2013

October 15, 2014

August 4, 2015

Agricultural Benefits claim accepted as “filed” by the Minister.

First draft of contingency fee agreement provided.

Federal election called.

Page: 4

October 14, 2015

Contingency fee agreement signed, essentially unchanged from the

first draft, but without compliance with R. 10.7(3) and (4) (affidavit

of execution and service).

October 19, 2015

October 23, 2015

Federal election held; government changes.

Tallcree First Nation Council resolution authorizing Rath &

Company to negotiate.

December 8, 2015

New Prime Minister states publicly that a new approach will be

taken to settling treaty claims and that First Nations’ rights “are not

an inconvenience but rather a sacred obligation”.

December 9, 2015

Statement of claim issued.

December 10, 2015 Mr. Rath writes to the responsible Ministers demanding that the

Tallcree First Nation’s claim be recognized and paid. A settlement

offer of $83.5 million is made.

January 26, 2016

Canada says a claimant cannot litigate and negotiate at the same

time. Statement of claim placed in abeyance.

June/July 2016

August 8, 2016

August 14, 2016

Mr. Rath meets with Minister’s special adviser and Prime Minister.

Canada accepts part of the claim for negotiation.

Three year deadline for assessing claim would have expired if claim

had not been accepted for negotiation.

August 31, 2016

Tallcree Council resolution accepting offer to negotiate.

Contingency fee agreement re-executed to comply with R. 10.7(3)

and (4).

February 2, 2017

May 15, 2017

$57.6 million offer of settlement received from Canada.

Tallcree Council agrees to present the $57.6 million settlement offer

to the First Nation’s members for ratification.

July 21, 2017

Ratification Officer confirms ratification of $57.6 million settlement

by Tallcree First Nation’s members.

Page: 5

The Contingency Fee Agreement

[15] As noted, Ackroyd & Company had been working on the Agricultural Benefits claim for

about eight years on a fee-for-service basis. When Tallcree First Nation became dissatisfied, they

approached Rath & Company, which agreed to take on the file on a contingency fee basis.

[16] The draft contingency fee agreement was provided on October 15, 2014. Tallcree First

Nation attempted to retain other counsel to advise them on the agreement but were unable to do

so. Their relationship with their standing counsel was in transition, and they were unable to identify

other counsel to assist. Therefore, while Mr. Cardinal acknowledged that they were aware that they

were entitled to have the agreement reviewed, that did not happen.

[17] The contingency fee agreement that was ultimately signed one year later, on October 14,

2015, was essentially the same as the draft previously provided. There was no attempt made by

Tallcree First Nation to negotiate the terms of the agreement and specifically the compensation to

be paid. Mr. Cardinal acknowledged that it was open to them to negotiate the fee.

[18] The contingency fee agreement provides that Rath & Company would be compensated

based on a percentage of any settlement amount that was recovered.¹The percentage would

increase, based on the stage at which resolution was achieved:

20% was payable in the event of resolution before any examinations for discovery or cross

examinations on affidavits;

30% was payable after commencement of questioning or filing of any interlocutory

motions, up to 60 days before the commencement of trial;

35% was payable after 60 days before the commencement of trial.

Tallcree First Nation was responsible for disbursements, which would be billed periodically. If the

agreement was terminated, services would be paid for on a fee-for-service basis based on hourly

rates set out in the agreement.

[19] At the time that the contingency fee agreement was signed, Tallcree First Nation

understood that the face value of the Agricultural Benefits claim was between $50 million and $80

million. It was accordingly easy to calculate that a 20% fee would be in the range of $10 million

to $16 million.

¹Under R. 10.15 the retainer agreement and the other documents filed for the review are to remain confidential. A

limited reference to them is necessary to provide context for these reasons for decision, but as the appellants point out

it was inappropriate for the chambers judge to attach a copy of the retainer agreement to his reasons.

Page: 6

[20] Rule 10.8 of the Rules of Court provides that the validity and enforceability of a

contingency fee agreement depends on compliance with the formal provisions in R. 10.7. The

contingency fee agreement as first signed on October 14, 2015 was not in compliance. Even though

the contingency fee agreement was re-executed on August 31, 2016, it is not clear if full

compliance with the Rules was ever achieved. The respondent, however, did not strongly contest

the validity of the agreement, and in the end, this issue does not affect the outcome of these appeals.

The Review of the Retainer Agreement

[21] Under the Rules of Court, retainer agreements and lawyer’s accounts are subject to review

by a Review Officer:

10.9 The reasonableness of a retainer agreement and the reasonableness of a

lawyer’s charges are subject to review by a review officer in accordance with these

rules, despite any agreement to the contrary.

The reasonableness of the retainer agreement must be assessed “. . . based on the circumstances

that existed when the retainer agreement was entered into”: R. 10.19(2). Hindsight may not be

used.

[22] Since both a retainer agreement and the account can be reviewed for reasonableness, it is

possible that a contingency fee agreement might be found to be reasonable but the account

subsequently rendered unreasonable. In fact, the contingency fee agreement in question provided

that the final account “may be adjusted up or down to a fair and reasonable amount having regard

to such factors as the nature, complexity, time and effort required, value, importance and urgency

of the matters involved and the results achieved on your behalf”. It also confirmed that the

agreement “and any account rendered under it, or both” could be reviewed by a review officer.

[23] On March 15, 2018 the respondent issued an “Appointment for Review of Retainer

Agreement/Lawyer’s Charges” in a modified version of Form 42 of the Rules of Court. That Form

includes four boxes that can be checked off to show the scope of the requested review. The

respondent only checked off one box: “the retainer agreement(s) that is required to be served with

this notice of appointment”. It did not check off the third box: “the lawyer’s account(s) is required

to be served with this notice of appointment”. Rath & Company accordingly took the view that

only the reasonableness of the retainer agreement (not the account) was questioned.

[24] The Review Officer held a full day hearing on September 6, 2018. Both Mr. Cardinal and

Mr. Rath gave unsworn evidence, in accordance with the practice generally followed. While the

general circumstances leading up to the retainer were discussed, no details were given about the

Specific Claims procedure and the status of the claim at the time that the contingency fee

agreement was signed.

Page: 7

[25] The Review Officer considered the factors used to determine if a contingency fee

agreement is reasonable. He noted, in particular, that the Agricultural Benefits claim had been

outstanding for a significant period of time, and that how long it would take to conclude was

unclear:

. . . Before I get there, though, one observation I have is that Mr. Cardinal did state

on a couple of occasions this afternoon, maybe this morning, that the big unknown

for the First Nation was how long this was going to take. He suggested that it was

contemplated that this could take several years and that because of the length of

time involved and presumably the added work of keeping things up and moving

during that time, that that perception seemed, at least, to justify the 20 percent fee.

But, of course, at the time that the agreement was entered into or presented and so

on, it is anybody’s guess how long it is going to take. You simply don’t know. It

could take a year, two years, it could take five years. So when you are assessing

things like risk and effort and so on in determining an appropriate percentage, no

one knows exactly how things are going to unfold but you take your best guess.

One main motivating factor for Tallcree First Nation was to expedite this long-standing claim and

bring it to resolution. Mr. Rath’s representations that he had the ability and contacts to expedite

resolution was a key factor.

[26] The Review Officer referred to the case law and identified the relevant factors. The first

factor was the financial circumstances of the client, and particularly whether the client would have

been able to pursue the claim without the use of a contingency fee arrangement. He concluded that

the Tallcree First Nation “. . . has financial resources but there is some advantage to a client with

financial resources to go on a contingency basis if we think matters are going to take a long time

and they don’t have the inclination to budget for them and so on.”

[27] The second factor was the responsibility for disbursements. Under the contingency fee

agreement, the Tallcree First Nation was responsible for disbursements. They were to be billed

periodically, although Rath & Company never actually did so. The Review Officer held that the

decision to waive disbursements “may be a factor . . . that might play a bit of a role”.

[28] The third factor was the level of complexity and difficulty involved in the issues of liability

and quantum. The fourth and related factor was whether liability was disputed. The Review Officer

concluded that this was a very specialized body of law, in which few lawyers would have the

necessary experience. The complexity of the claim would be overcome by experience and

knowledge. Rath & Company had that expertise. With respect to the fifth factor, the defendant in

this case (Canada) was well represented.

[29] The sixth factor was the risk assumed by the lawyer in taking on the file. The Review

Officer concluded:

Page: 8

The risk. Mr. Rath went through a whole number of explanations of the risk. He

mentioned the fact that negotiators for the Crown could change and that could result

in starting from scratch. Ministers could change. Attitudes of the government could

change. A whole number of factors could come into play that might delay the result,

and he suggested that there may be cases, too, where the result would be less than

expected. I think in these kinds of cases, it just seems to me that, by in large, you

are going to get a settlement. Probably going to get a settlement around what other

First Nations are getting for that same thing but the challenge here was to bring this

particular First Nation up to speed and get them on par with other First Nations so

that they could participate then in kind of a joint effort and get the result quickly

(emphasis added).

The Review Officer therefore concluded that the risk of the client recovering nothing on the claim,

and therefore of the lawyer receiving nothing under the contingency arrangement, was small.

Further, the quantum was likely going to be the same as whatever was offered to the other 20 First

Nations with similar claims.

[30] Once again, the timing of resolution of the claim was thought to be the key unknown:

That brings in kind of the other element of time. You can’t predict how long, but

Mr. Rath did point out that from the outset he was brought in with the idea that he

would work to get the client up to speed with the other First Nations and get a more

rapid than expected resolution of it. If that is true and if that was understood by the

First Nation, then they can hardly complain that the 20 percent was too high because

the matter unfolded in far less time than we expected. It does seem to me that that

was the strategy. . . .

Here Rath & Company did focus on that area of concern, namely the timing of resolution.

[31] How much time the lawyer ultimately spent on the file was irrelevant hindsight, although

it was clear that this file (like many) would have cost the client less if it had been done on an hourly

basis. The Tallcree First Nation, however, clearly understood at the outset how much a 20% fee

might be. There had been no complaint about the fee until almost all the work was done, but: “It

is a matter of human nature, and I see it all the time . . . The client is happy with the arrangement

until the actual bill comes and then it hits them, hey, that’s a lot of money and that’s when it causes

concern”.

[32] What level of the graduated contingency fee was engaged was not an issue, because “. . .

we are dealing with the low percentage, the 20 percent. So that’s for the 20 percent is the

percentage applied to really the initial steps in getting things done”. The Review Officer observed:

Twenty percent is on the low end of contingency fee agreements. In personal injury

actions, a 20 percent fee, if you see one, would be applied to cases where liability

Page: 9

is not in issue. It is a clear-cut case. You are going to win, you know, it is just a

matter of how much work it is going to take to get there and then you go up from

there.

As far as success, the resolution was a good one.

[33] While the resulting fee was high, and might be seen as being unreasonable, the Review

Officer stated:

. . . I must give substantial deference to the contingency agreement. Agreement is

agreement. Twenty percent was specified in the agreement. Twenty percent was

repeated or the fact that it was a 20 percent contingency fee agreement was

repeated. The First Nation had an opportunity to get advice during that initial first

year before they signed it. So giving substantial deference means really just

respecting the agreement unless it is clearly unreasonable . . . So that is why I often

say if it is in the agreement, unless it is clearly unreasonable, I have to respect it.

Twenty percent, although it produces a high fee, I cannot say it is clearly

unreasonable.

The Review Officer concluded: “So for all of these reasons, I find that the 20 percent is reasonable

and the fee generated from the 20 percent is not clearly unreasonable. I will leave it at that”.

[34] The Review Officer’s Certificate issued under R. 10.19(4) provided:

Rule 10.19 Decision: The provision in the contingency fee agreement for the

calculation of fees was found to be reasonable and the resulting fee of

$11,518,075.00 was not “unexpectedly unfair” or clearly unreasonable on the facts

of this case. For these reasons and because a Review Officer is bound to give

substantial deference to a contingency fee agreement, the fee claimed by the Law

Firm is allowed in full.

Thus, even though the initial Appointment only requested a review of the retainer agreement, the

Review Officer also gave an opinion on the reasonableness of the resulting account.

The Appeal to the Trial Court

[35] Tallcree First Nation launched an appeal of the Review Officer’s decision to the Court of

Queen’s Bench under R. 10.26. The chambers judge reversed the decision, concluding that the

contingency fee agreement was unreasonable: Tallcree First Nation v Rath & Co, 2020 ABQB

592. While he recognized that deference should be extended to the decisions of review officers, he

found reviewable errors.

Page: 10

[36] The chambers judge considered prior decisions such as M.S. v D.M., 2014 ABQB 702 at

paras. 33-39, 601 AR 310, emphasizing that contingency fee agreements are often utilized by

vulnerable people who otherwise would not have access to justice, and summarized:

23 I conclude that given the sensitive nature of CFA’s with respect to vulnerable

members of the community and their ability to access justice, amongst other

reasons, the onus is on Rath to satisfy the Court that the CFA is fair and not

unreasonable at the time it was entered into.

The chambers judge acknowledged that the reasonableness of the retainer must be assessed as of

the time it was entered into, which circumstances he concluded were set out in Mr. Rath’s letter to

the Ministers of December 10, 2015: 2020 ABQB 592 at para. 25.

[37] Tallcree First Nation was aware of the magnitude of the fees that might be payable. It had

the opportunity to have the agreement reviewed by other counsel. The First Nation was in a

vulnerable position, because Mr. Rath had represented to the Ministers in his December 10, 2015

letter that it was “in dire economic circumstances” and required settlement money “urgently on an

emergency basis”.

[38] The critical factor for Tallcree First Nation, however, was how long it would take to resolve

the claim. The chambers judge found that Rath & Company was privy to critical information which

made it clear that a prompt resolution of the claim was possible: 2020 ABQB 592 at paras. 33-35.

If billed at normal hourly rates, the fee earned by Rath & Company would have been approximately

3% of the contingency fee: 2020 ABQB 592 at para. 36. A review of the file disclosed that the

work done was essentially paperwork and correspondence to comply with “government

administrative processes and documentation of no particular complexity or uniqueness”: 2020

ABQB 592 at para. 38.

[39] The chambers judge noted that the Review Officer had relied on the factors listed in Rusk

(Next Friend of) v Medicine Hat (City), 2001 ABQB 1020, 98 Alta LR (3d) 359, 305 AR 332. He

found reviewable errors:

(a)

(b)

(c)

The test in R. 10.9 was the “reasonableness” of the contingency fee

agreement, not whether it was “clearly unreasonable”: 2020 ABQB 592 at

para. 48.

The test was whether the resulting fee was “reasonable”, not whether it was

“unexpectedly unfair” or “clearly unreasonable”: 2020 ABQB 592 at

para. 49.

It was a reviewable error to essentially regard a 20% contingency fee as a

minimum: 2020 ABQB 592 at paras. 50-51.

Page: 11

Having found the contingency fee agreement to be unreasonable, it was necessary to fix an

appropriate fee for the work that was done. The chambers judge gave procedural directions for a

further hearing on that issue.

[40] In those subsequent proceedings, the chambers judge determined that a fair fee for the

services provided was $3 million: Tallcree First Nation v Rath & Co, 2021 ABQB 234 at para. 84.

However, while the reasonableness of the contingency fee agreement had been dealt with in the

first set of reasons, the chambers judge revisited the issue as a result of challenges raised by the

appellants. There is not always a clear division between the analysis respecting the reasonableness

of the contingency fee agreement and the reasonable fee to which the appellants were entitled.

[41] The chambers judge confirmed that the relevant date to assess the reasonableness of the

agreement was October 14, 2015 when it was signed, not October 2014 when a draft was first

circulated: 2021 ABQB 234 at para 22.

[42] The chambers judge also confirmed his view that in October 2015, the Tallcree First Nation

was in dire financial straits, based on the letter that Mr. Rath had written to the Ministers in

December 2015: supra, para. 37. While the Tallcree First Nation’s 2018 financial statements

showed that it had significant resources, he concluded those statements did not necessarily reflect

its financial position in 2015. Even though Mr. Cardinal had admitted that the Tallcree First Nation

could have funded the litigation on a fee-for-service basis, “virtually everyone who lived in Alberta

or is familiar with Alberta's economic state at the time of the CFA is well aware of the dire

economic circumstances that Rath described above”: 2021 ABQB 234 at paras. 23-26.

[43] Mr. Rath argued that he could not have known the outcome of the election at the time the

contingency fee agreement was signed, as implied by the original reasons. The chambers judge,

however, repeated that “. . . the final result of the federal election would have probably been clear

to Rath weeks/months before the time the CFA was entered into by Tallcree”: 2021 ABQB 234 at

para. 32. Mr. Rath had emphasized his political connections prior to the contingency fee agreement

being signed, and those connections turned out to be critical: 2021 ABQB 234 at paras. 33-35.

[44] With respect to the risk undertaken, Rath & Company argued that by entering into the

contingency agreement, it was binding itself “to an arrangement that could take years or even

decades of complex litigation to resolve”: 2021 ABQB 234 at para. 39. The chambers judge

concluded, however, that “all of Rath’s efforts were non-legal in nature, which involve little or no

litigation risk or involvement of Rath”. Finally, “. . . the CFA was a legal document meant to deal

with legal services performed by lawyers, which is basically not what Rath did in substance,

because his success in this CFA was largely based on political representations including to the top

political leader of the Country”: 2021 ABQB 234 at para. 69.

[45] Further, the contingency fee agreement had an “unfavourable arbitration clause” and

contemplated an early termination of the agreement: 2021 ABQB 234 at paras. 43-46, 49. The

chambers judge summarized:

Page: 12

47 Furthermore with respect to Rath’s current submission about the great risk that

he undertook pursuant to the CFA, given what we know actually occurred on the

file from the Record, and given Rath’s obvious political acumen and lobbying

abilities, plus his CFA exit strategies and a relatively harsh arbitration clause, it is

safe to conclude that Rath knew what he was doing, and what outcomes would

likely transpire during the relevant eight to ten-month period of activity. It appears

that Rath undertook little personal risk, and had a substantial likelihood of success.

. . .

62 The facts in Morrison [v Rod Pantony Professional Corp, 2008 ABCA 145,

429 AR 259, 89 Alta LR (4th) 233] are also different from the present matter

because it dealt with an individual who clearly had second thoughts or buyer’s

remorse with respect to her CFA. This is not the same issue with Tallcree who are

upset because they believed that the settlement process might take years or decades,

but in fact the total settlement process was completed in only 18 months. Tallcree

was unaware of how strong their claims to agricultural benefits were. However Rath

knew, certainly by the time of the October 2015 CFA and likely several

weeks/months before that, there was a strong chance that the Federal government

would change following the mandated October 2015 general election, and that the

new federal government would respond positively to Tallcree’s agricultural

benefits claims.

These findings confirmed his earlier decision that the contingency fee agreement was not

reasonable.

[46] The chambers judge also questioned the ability of Rath & Company to successfully pursue

the claim. He said treaty litigation could be complex and take years to resolve, but there was no

indication that Mr. Rath had ever undertaken such litigation, as all the reported cases were fee

disputes that he had with his clients, and: “At the end of the day, Rath & Company was a small

six-member firm established in 1995 operating in Priddis, Alberta, that received over $11.5 million

dollars in legal fees for eight to 10 months of activity pursuant to the CFA”: 2021 ABQB 234 at

para. 48.

[47] Although the enforceability of the contingency fee agreement had been conceded before

the Review Officer, and although the issue had not been raised, the chambers judge reflected that

the law of contracts had evolved since the contingency fee agreement was signed: 2021 ABQB

234 at paras. 54-60. However, he found it unnecessary to review the law respecting

unconscionability, the enforcement of arbitration clauses, or the duty of honest contractual

performance.

[48] Intertwined with this revisiting of the original reasons for holding that the contingency fee

agreement was unreasonable was a consideration of the quantum of the appropriate fee. Rath &

Page: 13

Company argued that the original $11.5 million fee was reasonable, or alternatively, the proper

approach was to substitute a different percentage for the 20% contingency fee.

[49] Under R. 10.19(1), once the contingency fee agreement was found to be unreasonable, the

appropriate fee was to be determined in accordance with R. 10.2:

10.2(1) Except to the extent that a retainer agreement otherwise provides, a lawyer

is entitled to be paid a reasonable amount for the services the lawyer performs for

a client considering

(a)

(b)

(c)

the nature, importance and urgency of the matter,

the client’s circumstances,

the trust, estate or fund, if any, out of which the lawyer’s charges are

to be paid,

(d)

(e)

(f)

the manner in which the services are performed,

the skill, work and responsibility involved, and

any other factor that is appropriate to consider in the circumstances.

Although that test had been applied in Rusk (Next Friend of) v Medicine Hat (City), the chambers

judge said these factors were not material considerations “because they apply when dealing with

lawyers acting as legal counsel in a typical adversarial case”: 2021 ABQB 234 at para. 67. This

file was completely different from the typical personal injury files seen by the review officers.

[50] Mr. Rath had not kept a record of the time he spent on the file, although when he

reconstructed his involvement, the resulting fee for the Rath & Company team would be about

$392,000: 2021 ABQB 234 at para. 53.

[51] The chambers judge observed that no expert evidence was presented about the quality and

complexity of the pleadings issued by Rath & Company, although that had never been raised as an

issue. He accepted that Mr. Rath had specialized knowledge in the area, but concluded that the real

causative factor in the settlement was the outcome of the election and the attitude of the new

government as reflected in the statements of the Prime Minister: 2021 ABQB 234 at paras. 28-31.

[52] The chambers judge described the work done by Rath & Company as “non-typical” and

“non-legal in nature”, involving lobbying key government decision makers rather than

conventional litigation: 2021 ABQB 234 at paras. 35-38, 40, 69. Mr. Rath’s direct involvement

was limited to an eight-month period between December 10, 2015 and August 12, 2016: 2021

ABQB 234 at paras. 37-38. The chambers judge noticed several times that Mr. Rath’s paralegal

Page: 14

was involved in the administration of the file. Further, Mr. Rath’s work had not been instrumental

in resolving the dispute, which resulted from “fortuitous circumstances and discussions at the

highest levels of the Defendant Canada”: 2021 ABQB 234 at para. 72.

[53] Although the parties had not advocated this approach, the chambers judge considered the

fees that would be charged by a real estate broker: 2021 ABQB 234 at paras. 75-77, 84. He also

considered the salaries earned by senior lawyers and judges (2021 ABQB 234 at paras. 78-81) as

well as the overhead of Rath & Company and its tax liability: 2021 ABQB 234 at paras. 82-83.

[54] As noted, the chambers judge determined that a fair fee for the services provided was $3

million, inclusive of disbursements: 2021 ABQB 234 at para. 84.

[55] The appellants were disappointed in the outcome and concerned about the analysis of the

chambers judge. They brought an application asking that he recuse himself because of a reasonable

apprehension of bias, and to direct a new hearing on the proper amount of their fees. After hearing

further argument, the chambers judge dismissed that application: Tallcree First Nation v Rath &

Co, 2021 ABQB 440.

Issues

[56] All three of the chambers judge’s decisions have been appealed, generating the following

issues:

a)

Was the contingency fee agreement reasonable?

i)

Did the decision of the Review Officer contain reviewable errors?

ii)

Did the decision of the chambers judge reversing the decision of the Review

Officer contain reviewable errors?

iii)

On a proper analysis, was the contingency fee agreement reasonable?

b)

c)

If the contingency fee agreement was unreasonable, what is a proper fee?

i)

Did the reasons of the chambers judge setting the fee contain reviewable

errors?

ii)

On a proper analysis, what was the reasonable fee?

Does the record support a reasonable apprehension of bias?

Page: 15

Reasonableness of the Contingency Fee Agreement

[57] The courts generally do not review contracts for the adequacy or fairness of the

consideration. Lawyers’ retainer agreements are in a separate category because R. 10.9 provides

that they can be reviewed for “reasonableness”. The reasons for this were summarized in Morrison

v Rod Pantony Professional Corp, 2008 ABCA 145, 429 AR 259, 89 Alta LR (4th) 233:

25 Retainer agreements are obviously in a special category. The client is

negotiating an agreement with a person (the solicitor) that the client would usually

look to for advice on such matters. In negotiating the agreement the parties are

adverse in interest, contrary to the normal state of affairs where the solicitor is

bound to represent the client's interest. There is also an imbalance of information

and knowledge, because the solicitor will be more familiar with the terms and

operations of the retainer agreement than the client. It is undoubtedly for those

reasons that solicitor-client contracts are reviewed by the court, whereas the court

will not conduct that sort of analysis of ordinary contracts. The courts will

obviously not tolerate any sharp practice by the solicitor, or any patent unfairness.

While retainer agreements might also be set aside on ordinary common law grounds, such as

unconscionability or misrepresentation, the ability to review for “reasonableness” sets retainer

agreements apart. Since “unreasonable” is a lower standard than “unconscionable”, it will seldom

be necessary to review retainer agreements on the latter ground.

[58] The reasonableness of a retainer agreement should be measured on an objective basis

having regard to the risks, facts and prospects underlying of the retainer: Morrison at para. 27(a).

Reasonableness is to be determined based on the circumstances that existed when the retainer

agreement was entered into: R. 10.19(2). An unexpectedly high fee does not necessarily mean that

the agreement was unreasonable. Clients should not routinely be able to walk away from

agreements they have made with their lawyers. In determining “reasonableness”, consideration

must be given to the interests and expectations of both the client and the lawyer: Morrison at para.

27. As the Review Officer noted, a client’s unhappiness often first manifests itself after the lawyer

has done all the work and incurred all the risk.

[59] Some of the factors commonly considered are the financial circumstances of the client, the

risks involved, the client’s knowledge of the risks and the implications of the agreement, whether

liability was admitted, the expected attitude of the defendant, the risk that the lawyer might be paid

nothing for his or her work, the amount of work likely to be involved, the responsibility for

disbursements, and the expected time that the retainer might be in effect.

Page: 16

The Decision of the Review Officer

[60] There are three overlapping challenges to the Review Officer’s analysis that the

contingency fee agreement was reasonable. The first was the suggestion that Tallcree First Nation

had to show the agreement was “clearly unreasonable” (supra, paras. 33-34):

“So giving substantial deference means really just respecting the agreement unless

it is clearly unreasonable . . . So that is why I often say if it is in the agreement,

unless it is clearly unreasonable, I have to respect it.”

“So for all of these reasons, I find that the 20 percent is reasonable and the fee

generated from the 20 percent is not clearly unreasonable. I will leave it at that.”

“The provision in the contingency fee agreement for the calculation of fees was

found to be reasonable and the resulting fee of $11,518,075.00 was not

“unexpectedly unfair” or clearly unreasonable on the facts of this case.”

The chambers judge concluded that this reflected a reviewable error, because R. 10.9 merely

requires “reasonableness”: supra, para. 39.

[61] In the quoted statements from his oral reasons, the Review Officer uses both “reasonable”

and “not clearly unreasonable” when referring to the contingency fee agreement. In the final

extract, which is from his Certificate, he only states that the agreement was “found to be

reasonable”. The balance of that quote refers to the account that resulted, not the agreement itself.

As noted, the reasonableness of the subsequent account was not squarely before the Review

Officer, and this latter comment did not reflect a reviewable error about the reasonableness of the

agreement itself: compare the chambers judge’s reasons, 2020 ABQB 592 at para. 49.

[62] The Review Officer’s use of the adjective “clearly” was unhelpful but was not likely a

sufficient reason to undermine his decision. The use of this adjective was perhaps intended to be

an observation about the burden of proof. Alternatively, it may reflect the fact that

“reasonableness” is not a fixed standard. There might be a range of retainer agreements and fees

that could be described as “reasonable”. Some would be at the high end of the range and some at

the low end, but they would all be “reasonable”.

[63] Of greater concern is the Review Officer’s connected observation that “deference must be

given to the agreement”, because “an agreement is an agreement”. Any review of a valid and

binding retainer agreement proceeds on the assumption that there was an agreement. The fact that

the client and lawyer agreed to the retainer is a given. The reasonableness of the retainer must be

measured on an objective standard, recognizing that the agreement must be fair to both the lawyer

and the client. However, it overstates the point to say that one must give the agreement any

“deference”. That would particularly be so in the case of a vulnerable client who did not appreciate

the risks and consequences of the agreement.

Page: 17

[64] The deciding point, however, is the Review Officer’s comparison of this contingency fee

agreement to the ones seen in personal injury actions, and particularly his comment that “20% was

the lowest ever seen”. Simply put, there was no relevant comparison to be made between the

present claim and a personal injury action. No personal injury action has an expected quantum of

between $50 million and $80 million. Given all of the other factors at play, particularly the risks

known at the time, it was unreasonable to simply assume that 20% was reasonable because it was

the observed floor for other unrelated agreements.

[65] While many aspects of the Review Officer’s analysis are sound, there was a sufficient basis

to review his decision that the contingency fee agreement was reasonable, although not entirely

for the reasons identified by the chambers judge.

The Analysis of the Chambers Judge

[66] Having found reviewable errors in the decision of the Review Officer, the chambers judge

conducted a fresh analysis to determine the reasonableness of the contingency fee agreement. The

appellants argue that his subsequent conclusion that the contingency fee agreement was

unreasonable is tainted by reviewable errors of fact and law.

[67] An obvious problem with the analysis is a failure to follow the “no hindsight” rule.

Rule 10.19(2) states that the reasonableness of the agreement must be determined “based on

circumstances that existed when the retainer agreement was entered into”, being October 14, 2015.

Those circumstances would include the knowledge and understanding that both parties would

reasonably have held at that time about the claim, as well as their reasonable expectations and

assumptions about future events. As the appellants point out, neither the client nor the lawyer can

be expected to be clairvoyant.

[68] The appellants argue that the reasonableness of the agreement should be decided as of

October 2014 when the first draft of the contingency fee agreement was provided. The relevant

date, however, is October 14, 2015 when the agreement was signed.²A contingency fee agreement

might be quite reasonable when it is first proposed, but as a result of a change of circumstances

become unreasonable before it is signed. The fact that the draft contingency fee agreement had

been circulated many months before it was signed is relevant, but that did not adjust the date on

which its reasonableness should be ascertained. Tallcree First Nation clearly had an opportunity

to have the agreement reviewed before it was signed but did not do so.

[69] There are several parts of the chambers judge’s analysis that assume Mr. Rath knew things

in October 2015 that he could not have known. One clear instance is in the reasons 2020 ABQB

592 at para. 24:

²The respondent did not advocate for the date the contingency fee agreement was re-executed, August 31, 2016.

Page: 18

24 The best evidence of the circumstances that existed when the CFA was entered

into on October 14, 2015 can be found in Rath’s own letter, written by him less

than two months afterwards. Rath’s letter dated December 10, 2015 to the federal

Minister of Indigenous and Northern Affairs, and to the federal Minister of Justice,

has been reproduced in its entirety as part of the Schedule A documents to this

decision.

A key component of the letter of December 10, 2015 was the statement the Prime Minister made

on December 8, 2015 that a new approach had to be taken to treaty claims: see supra, para. 10.

Mr. Rath could not possibly have known in October what the Prime Minister was going to say in

December. This error was carried forward into other parts of the analysis:

33 In hindsight, this was predictable as a result of statements made by Prime

Minister Justin Trudeau, who appeared to promise to resolve these types of claims

as soon as possible, as referenced in Rath’s December 2015 letter quoted from

earlier. Tallcree notes that all Rath ever told them was that they had close

connections to the Trudeau government. . . .

34 . . . Rath would have been aware of this fortuitous change in the attitude of the

Federal government at the time the October 14, 2015 retainer agreement was

entered into, as a fixed date election was legislated by S.C. 2000 c.9 to occur on

October 19, 2015.

This unreasonable inference was repeated in the subsequent reasons reported as 2021 ABQB 234

at para. 70.

[70] The contingency agreement was signed in the midst of a federal election. In several parts

of the analysis the chambers judge draws the related unreasonable inference that Mr. Rath would

have been able to predict the outcome of the federal election: reasons at para. 32. Perhaps some

could have or thought they could have predicted the outcome of that election. However, the

outcome of an election is never certain until the day after the vote. Further, even if savvy political

observers could speculate about the probable outcome of that election, that does not mean one

could predict that the new government would make a dramatic change in its approach towards

treaty negotiations.

[71] A further example of hindsight analysis is a reliance on the relatively minor amount of time

subsequently spent on the file: 2020 ABQB 592 at paras. 36, 50. In many situations it is anticipated

by the lawyer and the client that the fee generated by the contingency fee agreement will exceed a

fee based on hourly rates. That is to account for the risk assumed by the lawyer and the delay in

payment until resolution of the file. Arguing that the contingency fee agreement was unreasonable

at the time it was entered into based on the actual hours subsequently required is a classic form of

hindsight analysis. Contrary to what was suggested in Athwal (Litigation representative of) v

Page: 19

Mather, 2019 ABQB 801 at para. 18, 42 CPC (8th) 308 this is not a relevant factor in determining

the reasonableness of a contingency fee agreement.

[72] Of course, a lawyer working on a contingency basis is still well advised to keep time

records. If it turns out that the contingency fee agreement is unenforceable for any reason, time

records will be needed to establish a fair fee. Further, many contingency fee agreements (such as

the one involved here) provide that fees will be charged on an hourly basis in the event of

termination of the retainer.

[73] When the client initiates the review, R. 10.14(1)(b) requires the lawyer to file timesheets.

That is a universal requirement, even when only the reasonableness of the contingency fee

agreement is to be reviewed. The requirement, however, is just to ensure a complete record in

every eventuality. Filing time records does not involve any sort of admission by the lawyer that

those time records are relevant, nor does the filing of time records override the “no hindsight”

provisions of R. 10.19(2). In short, the amount of time subsequently spent on the file was an

irrelevant consideration.

[74] There are other examples of hindsight analysis. Overall the analysis is compromised by the

hindsight knowledge that its Agricultural Benefits claim was settled faster than Tallcree First

Nation’s expectations.

[75] The analysis is also undermined by palpable and overriding errors of fact. The chambers

judge concluded that the Tallcree First Nation was vulnerable and impoverished and entered into

the contingency fee agreement under economic pressure, based on the statement made in the letter

of December 10, 2015 to Canada that Tallcree First Nation was “in dire economic circumstances”,

and required settlement money “urgently on an emergency basis”: supra, para. 37. This statement

was made in a without prejudice demand letter that included a proposal for settlement. It is best

seen as a hyperbolic embellishment of the client’s claims, made in an adversarial context.

[76] At its highest, this statement would be Mr. Rath’s personal opinion, and it is in no sense

evidence of the actual financial circumstances of the Tallcree First Nation or any admission by the

appellants. The appellants subsequently produced evidence demonstrating that in 2017 the Tallcree

First Nation had an accumulated surplus of over $41 million, it wholly owned seven businesses,

and held investments in four partnerships. It had an annual income of more than $16 million per

year. Mr. Cardinal admitted that it could have funded the litigation on a fee-for-service basis.

[77] The chambers judge inferred that the financial circumstances of the Tallcree First Nation

may not have been the same in 2015 as they were in 2017. At its highest, that means that there was

no direct evidence on the record about those financial circumstances. The evidence about the

financial position of the Tallcree First Nation was under its control, and if it was alleging dire

economic straits, it could easily have introduced that evidence. In summary, it was unreasonable

for the chambers judge to prefer the bare exhortative opinion in the December 10, 2015 letter over

the actual evidence on the record. The conclusion that the Tallcree First Nation was under

Page: 20

economic pressure to enter into the contingency fee agreement as a result of impecuniosity reflects

a palpable and overriding error.

[78] The chambers judge also purported to take judicial notice of Alberta’s economic state at

the time that the contingency fee agreement was signed: 2021 ABQB 234 at para. 25. To the extent

that general economic trends can be noticed, in the face of the record it was an error for the

chambers judge to extrapolate general conditions into the specific conditions of the Tallcree First

Nation.

[79] The chambers judge questioned the nature of the services to be provided by Mr. Rath. In

his initial reasons, he described it as “simple emails” and compliance with “federal government

administrative processes and documentation of no particular complexity or uniqueness”: 2020

ABQB 592 at paras. 38, 50. In his second set of reasons, he stated:

. . . Jeffrey Rath is conducting these negotiations with the opposing party in a non-

typical manner. Rath is personally meeting with the defendant federal government

representatives . . . 2021 ABQB 234 at para. 35.

Secondly, the CFA was a legal document meant to deal with legal services

performed by lawyers, which is basically not what Rath did in substance, because

his success in this CFA was largely based on political representations including to

the top political leader of the Country, who happened to be the main decisionmaker

of the Defendant Government of Canada in this case. 2021 ABQB 234 at para. 69.

I find that these [Rusk] factors are not material considerations in this matter because

they apply when dealing with lawyers acting as legal counsel in a typical adversarial

case, which is not the case here. 2021 ABQB 234 at para. 67.

It is unclear whether the nature of the services was thought to be relevant to the reasonableness of

the contingency fee agreement or the fair quantum of the ultimate fee. On this record, it was

relevant to neither.

[80] The chambers judge took an unusually narrow view of what lawyers do. Lawyers do not

just go to court and draft contracts. In many cases, they lobby and advocate for clients, attempt to

resolve disputes before they emerge, and seek to resolve existing disputes in a non-adversarial

way. The client is often better served by a lawyer who can settle a dispute, than one who has to

take the dispute to court. It is clear from this record that one of the reasons why Mr. Rath was

retained was because of his representations that he could achieve a settlement of the Agricultural

Benefits claim without litigation. It was an error of principle for the chambers judge to consider

that the nature of the services was relevant to the issues before him.

[81] In his first set of reasons, dealing with the reasonableness of the contingency fee agreement,

the chambers judge referred to the fact that the appellants were “a small six-lawyer law firm

Page: 21

practicing in Priddis, Alberta”: 2020 ABQB 592 at paras. 36, 50. This observation was repeated in

2021 ABQB 234 at paras. 4, 48, 81. Priddis is a small community close to a number of First Nation

reserves and the City of Calgary. This factor was clearly overemphasized, even if it may have been

marginally relevant. There is no rule or presumption that small boutique law firms cannot handle

complex cases within their expertise. The appellants were retained specifically because they were

a firm specializing in First Nation’s law. The location of the appellants’ offices is likewise

irrelevant. There is no rule that smaller firms from rural locations are not entitled to the same

compensation for work that might be done by urban firms.

[82] The chambers judge also questioned the ability of the appellants to handle the Agricultural

Benefits claim:

While I appreciate that Treaty claims litigation can be very complex, and take years,

if not decades to complete, there is no indication from the Record or in his

submissions that Rath had ever undertaken such complex proceedings in the 20

years the firm had existed from 1995 to the time of the CFA. Rath’s reported cases

seem to only involve fee disputes with other First Nations, and one can reasonably

question if Rath could have ever undertaken complex Treaty litigation. At the end

of the day, Rath & Company was a small six-member firm established in 1995

operating in Priddis, Alberta, that received over $11.5 million dollars in legal fees

for eight to 10 months of activity pursuant to the CFA: 2021 ABQB 234 at para.

48.

This finding was completely inconsistent with the record. Mr. Rath’s curriculum vitae discloses

that he has specialized in First Nations law for many years. His qualifications were not challenged.

That is why he was retained.

[83] Mr. Rath had summarized his qualifications for the Review Officer:

I am regarded as being one of the leading treaty and aboriginal rights lawyers in

Canada. I have argued cases at almost every single level of Court in Canada with

regard to treaty and aboriginal rights, including the Supreme Court of Canada, all

of the major appellate courts, Alberta, Saskatchewan, Manitoba, British Columbia,

the North West Territories, as well as all of the superior courts of those jurisdictions

including -- well, including and including in the Federal Court trial division and the

Federal Court of Appeal.

The chambers judge dismissed this statement as merely being Mr. Rath’s “own testimony” and

“own assertions”: 2021 ABQB 440 at para. 15. Mr. Rath had offered to give his evidence under

oath, but the Review Officer indicated that he generally followed a more informal approach. In

any event, as noted, the appellants’ qualifications were never challenged by the respondent.

Page: 22

[84] It was also inaccurate to suggest that Mr. Rath’s qualifications depended on his “own

testimony”, to the extent that would even be unexpected. It was unreasonable for the chambers

judge to think expert evidence would be provided on these topics: 2021 ABQB 440 at paras. 19-

21. Mr. Rath provided further documentation which showed that his litigation expertise went far

beyond fee disputes with clients. The chambers judge disregarded this evidence because he could

not access the Westlaw Next database: 2021 ABQB 440 at para. 17. If asked, the appellants would

undoubtedly have provided neutral citations.

[85] It is unclear if the chambers judge thought that Mr. Rath’s expertise was relevant to the

reasonableness of the contingency fee agreement or the reasonableness of the ultimate fee.

Whichever it was, his conclusion was based on a palpable and overriding misapprehension of the

evidence, which undermined the entire analysis.

[86] The chambers judge also questioned the fairness of the contingency fee agreement because

it contained a provision dealing with what would happen if the relationship between Rath &

Company and the Tallcree First Nation terminated: 2021 ABQB 234 at paras. 44-47. Firstly, this

issue was not raised by either party. Secondly, any properly drafted contingency fee agreement

would deal with this possibility, and its presence was irrelevant to the reasonableness of the

agreement. Thirdly, this clause was never invoked because the relationship was never terminated

before resolution of the claim. The consideration of this irrelevant factor was an error of principle.

[87] The chambers judge was also critical of an arbitration clause in the contingency fee

agreement: 2021 ABQB 234 at paras. 43-47, 49, 56. The agreement provided that it and the

resulting account could be reviewed by a review officer as stipulated by the Rules of Court. It also

contained an arbitration agreement, which the parties agreed was an optional, elective dispute

resolution process. Neither party purported to trigger the arbitration clause, or argued that it was

relevant to this dispute, or unfair in the abstract. It was a reviewable error for the chambers judge

to have placed any weight on it.

[88] Contracts can be set aside if they are unconscionable, but that concept need never be

applied to lawyers’ retainer agreements. The Rules of Court provide that retainer agreements are

reviewed for “unreasonableness”, which is a lower standard than “unconscionability”. Not

surprisingly, neither party argued “unconscionability”, nor was there any argument about the “duty

of honest performance”. The chambers judge erred in speculating about whether the contingency

fee agreement was unreasonable because there had been a change in the laws governing contracts

and arbitrations: 2021 ABQB 234 at paras. 54-58.

[89] In summary, the chambers judge’s conclusion that the contingency fee agreement was

unreasonable was tainted by reviewable errors.

Page: 23

The Fresh Analysis of Reasonableness

[90] Since both the Review Officer’s and the chambers judge’s analyses of the reasonableness

of the contingency fee agreement were tainted by reviewable error, it is necessary for this Court to

conduct a fresh analysis. The factors that are generally considered were discussed supra, paras.

26-29, 59.

[91] Reasonableness must be assessed based on the circumstances at the time that the

contingency fee agreement is entered into, including the knowledge and understanding that both

parties would reasonably have held about the claim, as well as their reasonable expectations and

assumptions about future events. The key factors are:

(a)

Tallcree First Nation’s Agricultural Benefits claim had been outstanding for some

time without resolution, and there had been little apparent recent progress. Tallcree

First Nation was motivated to accelerate the process.

(b)

(c)

The claim was one of about 20 similar claims. It was unlikely that Canada would

exclude any First Nation from any settlement of the global claim.

Tallcree First Nation was one of the smaller claimants, and the strategy was that it

would “piggyback” on the other claims. Thus, the fact that Tallcree First Nation’s

claim lagged somewhat behind those of the other claimants was not unexpected.

(d)

(e)

The claimants had triggered the Specific Claims procedure. It was unlikely that

these claims would proceed through conventional litigation. Some of the claims

had been “accepted for negotiation”, meaning that they were on a track towards

settlement or hearing before the Specific Claims Tribunal.

The Specific Claims procedure has a lockstep timeline. It could take six years: three

years from filing to acceptance for negotiation, and a further three years to negotiate

settlement. However, while it was far from speedy, the procedure placed statutory

obligations and time limits on Canada to react to claims, and it gave various rights

to claimants to access the Specific Claims Tribunal.

(f)

Canada had accepted some of the individual claims for negotiation after a review

of their merits, which was a strong signal that liability was not seriously contested.

(g)

It was probable that any settlement would be based on a quantification of the claim

based on a per capita formula. The possible need for any individual First Nation to

establish quantum was remote.

[92] There are three key dates: (i) August 14, 2013, the date the Tallcree First Nation’s claim

was accepted as “filed” by the Minister, (ii) October 14, 2015, the date the contingency fee

Page: 24

agreement was signed, and (iii) August 14, 2016, the end of the three-year research and assessment

period under s. 16(1)(b) of the Specific Claims Tribunal Act. The contingency fee agreement was

accordingly signed 26 months into the 36-month research and assessment period.

[93] At the time the contingency fee agreement was signed, it would therefore have been

apparent that within 10 months Canada had to do something. Either it had to accept the claim for

negotiation, or it had to defend the claim before the Specific Claims Tribunal. Since Canada had

accepted a number of the other claims for negotiation, it would have been perceived to be highly

unlikely that the Tallcree First Nation’s claim would be rejected. If it was, the claim could be taken

to the Specific Claims Tribunal. Either way, the period of inactivity would end.

[94] Further, it was known that similar claims had been “accepted for negotiation” meaning that

the clock was ticking on the three-year period for Canada to settle the claims. Since Canada’s

research and review had disclosed merit in the claims, an offer of settlement was likely. If offers

were not made within the three-year window, those claims could be taken before the Specific

Claims Tribunal. Tallcree First Nation would piggyback along either way. As the Review Officer

correctly inferred (supra, para. 29):

. . . by in large, you are going to get a settlement. Probably going to get a settlement

around what other First Nations are getting for that same thing but the challenge

here was to bring this particular First Nation up to speed and get them on par with

other First Nations so that they could participate then in kind of a joint effort and

get the result quickly.

At the time that the contingency fee agreement was signed, prudent independent counsel would

have advised Tallcree First Nation to stay with their existing counsel and not make any decisions

about their representation until the three-year assessment window closed on August 14, 2016.

[95] Furthermore, given that the 20 other claims were being processed together, it would have

been perceived to be highly unlikely that Tallcree’s First Nation’s claim, which had deliberately

been piggybacked on the others, could somehow be leapfrogged to the front of the line for earlier

resolution. The fact that 26 months had passed since the claim was accepted as “filed” was not

unusual. As Mr. Rath put it, “. . . their researchers glom onto it and they can take - they can take

years to decide whether or not they are going to validate it”.

[96] These circumstances were known to the appellants but were not obvious to the respondent.

As the Review Officer found (supra, paras. 25, 30), timing was thought by the Tallcree First Nation

to be the “big unknown”. Mr. Cardinal stated:

. . . What we didn’t understand is the timeframe. You understand, our claim started

with Miller Thomson back in 2000, 2001, somewhere in that vicinity. We

understood in entering into this contingency fee agreement that this could

potentially take years. This could potentially take an undisclosed amount of time in

Page: 25

which case Rath & Company would have, in our view, been quite entitled to take

20 to 35 percent if they had to go to Court . . .

Mr. Cardinal also indicated that they had no idea other First Nations with similar claims were ready

to settle. If Mr. Cardinal had been briefed about the mandatory statutory timetable for resolving

Specific Claims, and the status of claims that had been made by other First Nations, he would have

been disabused of the impression that settlement would likely “take years”.

[97] These critical facts are directly relevant to the amount of risk assumed by the appellants.

Given that a number of these claims had been accepted for negotiation, the reasonable observer

would have thought at the time that liability was not seriously contested. Given the fact that Canada

had three years to settle from the date it accepted the other claims for negotiation, the reasonable

observer would have perceived it being likely that offers would be forthcoming in the near future.

The risk that offers would have been made to other claimants but not Tallcree First Nation would

have been perceived to be remote.

[98] As a consequence, the reasonable observer would have perceived as remote the risk of the

appellants earning “nothing” under the contingency fee agreement. Furthermore, the prospect of

the appellants having to advance complex litigation for years was unlikely. These claims were

going to be processed through the Specific Claims process. Much of the research, analysis, and

evidence respecting entitlement to Agricultural Benefits under Treaty 8 would have been common

to all of the other claims, requiring little incremental work for the appellants.

[99] It follows that the reasonable expectation at the time would have been that an offer of

settlement would be forthcoming in the near future. The 20% contingency would likely be

triggered with minimal additional effort or risk. Given the range of settlement being discussed, the

resulting fee would clearly be unreasonable, having regard to all of the relevant factors behind

assessing the reasonableness of the contingency fee agreement.

[100] If, contrary to expectations, no settlement had been forthcoming, it would appear that the

higher contingency fee percentages in the agreement would have been triggered. The 20%

contingency only applied up to the commencement of questioning. The 20% contingency therefore

would only realistically apply in the exact circumstances that came to pass: a resolution by

settlement in short order. The 20% contingency did not represent the risk that the file “could take

years or even decades of complex litigation to resolve”: supra, para. 44. Since early settlement

was the assumption underlying the 20% fee, this aspect of the contingency fee agreement was

clearly unreasonable. As the chambers judge pointed out, the fact that 20% might be some sort of

floor in personal injury cases was irrelevant.

[101] Some of the other perceived risks identified by the appellants were not significant. It is true

that negotiators can change, and governments can change, but once a claim is accepted for “filing”

or “negotiation” under the Specific Claims procedure, the government loses a significant amount

of control. If there is no resolution, the claimants have a direct route to the Specific Claims

Page: 26

Tribunal. Since Canada’s own research had indicated some validity in the claims, its choices were

limited. Further, the Specific Claims Tribunal is able to make binding decisions, precluding any

need to get independent approval of funding from Parliament.

[102] As the appellants correctly note, it would always be possible that the members of the

Tallcree First Nation might not ratify the settlement. But it was conceded that the Tallcree First

Nation was motivated to settle, and since the plan was to distribute the settlement funds to the

individual members, there would be a great incentive for them to approve any settlement. Further,

since Canada would have a limited ability to settle on more favourable terms with one First Nation

the prospects of any First Nation making a successful counteroffer were remote.

[103] In summary, the most likely scenario facing the parties at the time the contingency fee

agreement was signed was that a settlement was achievable in the near future. That is the

contingency that would trigger the 20% fee. That fee could accordingly be generated with little

incremental work by the appellants. Given the anticipated quantum of the claim, the resulting fee

would be unreasonable. Considered on an objective basis on the date it was signed, the contingency

fee agreement was therefore unreasonable.

The Reasonableness of the Fee

[104] Since the only issue before the Review Officer was the reasonableness of the contingency

fee agreement, he did not have to address the reasonableness of the $11.5 million account that was

ultimately rendered. His comment in his Certificate that the fee was not “unexpectedly unfair or

clearly unreasonable” was merely a passing observation.

The Chambers Judge’s Assessment of the Fee

[105] Having found that the contingency fee agreement was unreasonable, the chambers judge

held a further hearing to determine a reasonable fee. He determined that a fair fee for the services

provided would be $3 million: Tallcree First Nation v Rath & Co, 2021 ABQB 234.

[106] The appellants argue that the initial Appointment only asked for a review of the

contingency fee agreement, not their account. However, in the event that the contingency fee

agreement was found to be unreasonable, it was inevitable that the reasonable fee would have to

be determined. This was essentially a fresh issue, not strictly speaking a review of the account that

had been rendered as provided for in the contingency fee agreement based on 20% of the settlement

amount.

[107] The appellants therefore correctly argue that it was an error for the chambers judge to

restrict the type of evidence that could be produced by them at this second phase of the hearing.

The chambers judge incorrectly held that for the quantum phase of the proceedings, Rath &

Company had to meet the new evidence test in Palmer v The Queen, [1980] 1 SCR 759. Since

Rath & Company had reasonably taken the position that the hearing before the Review Officer

Page: 27

was only about the reasonableness of the contingency fee agreement, not the account, there was

no reason for them to introduce evidence at that stage about what a hypothetical reasonable fee

might be. Further, some of the new evidence was introduced to rebut inferences that the chambers

judge had drawn from the record and to address issues he had raised on his own motion.

[108] Rath & Company had to put its “best case forward” but only with respect to the actual issue

that was to be decided. The Review Officer never considered the issue of quantum, there was no

“record” on it before him, and therefore it was not possible for the determination of quantum by

the chambers judge to be “on the record”. While the chambers judge referred to the 69 pages of

evidence entered by Tallcree First Nation, he appears to have made no reference to the 753 pages

of evidence introduced by the appellants: 2021 ABQB 234 at paras. 15-16.

[109] Since the contingency fee agreement was not in play, the appellants’ fee was to be set under

R. 10.2, supra, para. 49. As noted (supra, paras. 40, 48), the analysis of the reasonableness of the

agreement and the fair fee was not always kept distinct.

[110] The appellants argue that if the 20% fee in the contingency fee agreement was

unreasonable, the chambers judge should have replaced it with a different percentage that was

found to be reasonable. The review officer or judge, however, is not obliged to rewrite a retainer

agreement to make it fair and can set a fair fee on any basis contemplated by R. 10.5(2).

[111] With respect to the time spent, the chambers judge concluded that the appellants had only

worked on the file for about 10 months: 2021 ABQB 234 at para. 37. That is inconsistent with the

uncontradicted record. The contingency fee agreement was signed on October 14, 2015. It seems

likely that Mr. Rath had already begun work on the file before the agreement was actually signed.

The appellants’ involvement continued all the way through the ratification of the settlement by the

Tallcree First Nation members in July 2017. Further, the appellants then remained involved in the

payment of the settlement funds into trust and the complex distribution of the settlement funds to

the individual members. The appellants worked on the file for at least two years.

[112] Mr. Rath did not keep a record of the hours he spent on the file. The appellants estimated

the fee that would be generated based on an hourly rate as being $391,900: 2020 ABQB 592 at

para. 36. There was no basis on this record for the chambers judge’s suggestion that the amount of

time had been overestimated: 2020 ABQB 592 at para. 37. His analysis completely ignores the

many hours spent on the ratification process and the subsequent distribution of the settlement

funds. Nevertheless, as the chambers judge pointed out, the $3 million fee that he set represented

a significant premium over the hours invested.

[113] The chambers judge made several references to the fact that some of the correspondence

had been signed by Mr. Rath’s paralegal: 2020 ABQB 592 at paras. 36, 50; 2021 ABQB 234 at

paras. 33-34, fn 1, 48. Counsel are entitled to have assistants, and in any event, Mr. Rath confirmed

that he drafted most of the correspondence himself, and it was simply signed by his paralegal to

Page: 28

expedite the process. To the extent that this factor was relevant to the quantum of the ultimate fee,

it was clearly overemphasized by the chambers judge.

[114] The chambers judge compared the fees earned by Mr. Rath to the income of a salaried

lawyer or judge: 2021 ABQB 234 at paras. 78-81. These considerations, which were raised by the

chambers judge on his own motion, were, at a minimum, overemphasized. Salaried lawyers and

judges do not suffer the risk of going unpaid for a number of years and possibly never being paid

at all. Further, there was no evidence on the record respecting the compensation of lawyers

generally.

[115] The chambers judge also made assumptions about the overhead of Rath & Company: 2021

ABQB 234 at para. 81. This factor was, at best, overemphasized. In addition, it was another issue

raised by the chambers judge on his own motion, and there was no evidence on the record to

support the inferences drawn.

[116] The chambers judge also compared the claimed legal fees to real estate commissions: 2021

ABQB 234 at paras. 75-77. Not only was this an issue raised by the chambers judge on his own

motion, there was no evidence of standard real estate commissions on the record. Further, the

economic underpinnings of a contingency fee agreement and a real estate commission agreement

are so different as to make this comparison meaningless.

[117] Finally, the income tax position of Mr. Rath and his professional corporation is not relevant

to the reasonableness of the legal fees charged. This was another issue raised by the chambers

judge: 2021 ABQB 234 at para. 83. Income taxes are assessed by the government after income is

earned, and the lawyer’s tax burden is irrelevant to the reasonableness of the fees charged.

[118] There are other problematic aspects of the chambers judge’s analysis that appear to have

affected his conclusion about the fair fee. They include his reference to the size and location of the

appellant firm (supra, para. 81), his erroneous assessment of Mr. Rath’s expertise and experience

(supra, paras. 82-85), and his narrow view of the scope of legal services (supra, paras. 79-80).

[119] Given his exclusion of relevant evidence tendered by the appellants, his overemphasis on

some factors, and his consideration of irrelevant factors, the chambers judge’s analysis of the

quantum of the fair fee cannot be sustained. A fresh analysis is required.

The Proper Quantum of the Fee

[120] Since the contingency fee agreement was not reasonable at the time it was signed in

October 2015, the appellants’ fee must be determined in accordance with R. 10.2: supra, para. 49.

However, the fact that the retainer started out with a contingency fee agreement remains relevant,

because if Tallcree First Nation had not recovered on its claim it would likely have wanted the

agreement enforced. Even though the contingency fee agreement was unenforceable, the

appellants were still exposed to some risk of receiving nothing.

Page: 29

[121] The duration of the file (at least two years) and the number of hours spent (approximately

$391,900 worth) are relevant considerations; so too are the disbursements, which were absorbed

into the fee.

[122] The appellants point out that the $11.5 million fee that was to be paid was clearly disclosed

in the ratification documentation put before the Tallcree First Nation’s members, and that 94% of

the members approved the settlement on that basis. This is not relevant, because R. 10.9 makes it

clear that the client cannot contract away the court’s ability to review a retainer agreement. A

further issue is that the Declaration of Trust does not contain the notice contemplated by

R. 10.7(2)(h) and 10.7(7) that the contingency fee agreement and the account are subject to review.

While the Tallcree First Nation’s Council was aware of the right of review, it is not clear that the

individual members were.

[123] Mr. Rath argued that there had been delays in advancing the Agricultural Benefits claim

on behalf of Tallcree First Nation, and that his involvement was instrumental in accelerating the

process. There is, however, no evidence on this record that the appellants’ involvement expedited

the resolution of the claim or resulted in a better settlement. The appellants never amended the

claim that had been “filed” by Ackroyd and Company. The original strategy was to have Tallcree

First Nation’s claim piggyback on the other claims. The appellants simply adopted the same

strategy. The 20 similar claims were being processed as a group, and there was never any realistic

prospect of the Tallcree First Nation’s claim going from the back of the line to the front. In fact,

despite the appellants’ involvement, the Tallcree First Nation received its offer of settlement from

Canada some months after a number of the other claimants.

[124] The appellants’ strategy of filing a statement of claim in the Federal Court was ineffectual.

Since negotiation through the Specific Claims process was obviously the most desirable route to

resolution, the litigation would have been of no assistance. Mr. Rath must have known that the

commencement of litigation would put an end to the Specific Claims procedure. He suggested that

filing the claim gave him access to senior officials at the Department of Justice, but there is no

indication on the record that was the case or that those officials could or did do anything to expedite

the process. In fact, the response to the statement of claim did not come from the Department of

Justice, but rather from Indian Affairs and Northern Development. Within six weeks of issuance

of the statement of claim, the litigation was put in abeyance.

[125] As noted, the contingency fee agreement was signed during the three-year “review and

assessment” period. It was ultimately accepted for negotiation six days before the expiry of that

three-year period. No response was ever received to the December 10, 2015 settlement offer of

$83.5 million. While Mr. Rath undoubtedly spoke to the Minister’s officials and the Prime Minister

in June and July 2016, there is no indication that those meetings, or anything that arose from them,

expedited the process. The process simply continued to run its course, and the claim was accepted

for negotiation on August 8, 2016. That was most likely because many similar claims had been

Page: 30

accepted for negotiation, and the deadline was looming. There is no basis for an inference that any

senior decision maker intervened to expedite the process.

[126] It is difficult to tell if the federal election and the consequent change of government had

any effect on the negotiations. Clearly the new government was receptive to the settlement of these

claims, but since the Specific Claims process had been triggered, Canada’s options were limited

by that process. In any event, while the change of government may have altered the risk profile of

the file, such consequences could not be attributed to the appellants’ work or efforts, and

accordingly do not significantly affect the fee.

[127] In the circumstances, there is a large range of fees that could be described as reasonable.

The respondent conceded before the chambers judge that a fee of between $1 million and $2

million would be appropriate. That would represent a significant premium over an account based

purely on an hourly rate. The fee of $3 million fixed by the chambers judge is generous and could

not be described as unreasonably low. On the other hand, the respondent did not file a cross appeal.

In all the circumstances, while it was based on an unsupportable analysis, there is no basis on this

record to disturb the fee of $3 million.

Bias

[128] The appellants argued that, in addition to the reviewable errors noted, the adjudication in

the trial court was tainted by a reasonable apprehension of bias. It is not necessary to address this

issue in detail, because the reviewable errors of fact and law have required a fresh analysis by this

Court.

[129] The test for a reasonable apprehension of bias is whether a reasonable person, properly

informed, viewing the matter realistically and practically, and having thought the matter through,

would think it more likely than not that the judge, whether consciously or unconsciously, would

not decide fairly. In other words, if there is an objective reasonable apprehension of bias, the judge

should recuse him or herself. Such an apprehension can arise from the reasons given by the court,

whether or not they are part of the ratio decidendi or merely obiter dictum: compare 2021 ABQB

440 at paras. 26, 28.

[130] An allegation of a reasonable apprehension of bias must be raised in a timely way. A

litigant cannot withhold such an objection to see if the result will be favourable. However, on this

record, the appellants raised the issue at the first reasonable opportunity.

[131] The appellants concede that the chambers judge correctly stated the test for an appearance

of bias, but they assert he never applied it. They fairly point out that most of the reasons at 2021

ABQB 440 do not involve an objective analysis from the perspective of the reasonable observer.

They amount to an apologia by the chambers judge as to what he, subjectively, intended to say or

mean.

Page: 31

[132] A threshold consideration is that judges should not raise new issues or arguments, at least

not without giving both parties a fair opportunity to make submissions. Raising new issues can

give the appearance that the judge is attempting to bolster the case of one side or the other: R. v.

Mian, 2014 SCC 54 at paras. 39, 42, [2014] 2 SCR 689. A related rule is that a judge is confined

to the evidence on the record and such information as may be judicially noticed in accordance with

the rules of evidence. It is not appropriate for a judge to introduce new evidence to the record or

draw inferences that are not put forward by the parties.

[133] The appellants alleged a number of reviewable errors by the chambers judge. These are

repeatedly characterized as incorrect, improper and demonstrative of a reasonable apprehension of

bias. Some findings are further described as derogatory, damaging to Mr. Rath’s reputation, and

tantamount to an allegation of fraud.

[134] Reviewable errors made by a trial judge will be corrected on appeal. For example, if the

trial judge makes a palpable and overriding error in a finding of fact, or an inference drawn from

the record, that decision will be reversed. However, reviewable errors are not the same thing as

bias. When litigation engages the performance of professionals, it is difficult not to discuss the

quality of that performance. There is no reason why a judge cannot comment on that issue, even

in a negative light. Merely because the chambers judge made findings that the appellants

demonstrated are incorrect would not cause a reasonable observer to think that bias was involved.

[135] Some of the criticized comments may be little more than a poor choice of words. For

example, the chambers judge referred to Mr. Rath as a “professional litigant”, when he is more

properly described as a “litigation professional”. An objective observer would likely not see that

as being an objectionable comment, even though it was literally inaccurate.

[136] As noted, the chambers judge made findings about Mr. Rath’s expertise that were not

supported by the record: supra, paras. 83-85. When this error was pointed out, the chambers judge

denied ever making a ruling on the appellants’ qualifications: 2021 ABQB 440 at paras. 22, 28. A

reasonable observer reading the reasons would not come to that conclusion. Even though Mr.

Rath’s qualifications had never been challenged by the respondent, the chambers judge

unreasonably blamed any misunderstanding on poor advocacy: 2021 ABQB 440 at paras. 21-25.

One can well understand why the appellants would be concerned about the impact that this

approach would have on the reasonable objective observer who was fully informed of the facts.

[137] However, as noted, the reviewable errors made by the Review Officer and the chambers

judge have been identified and corrected in this Court, making it unnecessary to issue any ruling

on the allegation of a reasonable apprehension of bias.

Conclusion

[138] In conclusion, the appellants have identified a number of reviewable errors of fact and law.

However, when a fresh analysis is completed, the contingency fee agreement was unreasonable

Page: 32

when it was signed, and a reasonable fee for the services provided by the appellants is $3 million.

The appeals are accordingly dismissed. The appellants must refund the excess fees to the client in

accordance with R. 10.27(2).

Appeal heard on February 3, 2022

Memorandum filed at Edmonton, Alberta

this 11th day of May, 2022

Slatter J.A.

Feehan J.A.

Page: 33

Wakeling J.A. (dissenting):

I.

[139] This case is about the enforceability of a contingency fee agreement that the client entered

into after a year of deliberation with its eyes wide open knowing the obligations it undertook and

an information baseline comparable to that of its counsel.

[140] As such, it is of great importance to lawyers, their clients, and the community.

[141] This appeal brings into conflict the values promoted by freedom of contract³and the

obligation courts have to ensure that the public has confidence in the legal profession by

monitoring when requested to do so the reasonableness of lawyers’ fees.⁴

[142] What are the likely consequences if a court is too quick to relieve clients of their obligations

to pay legal fees clearly stated in contingency fee agreements they understood and had sufficient

information to assess the merits of before signing?

³Capital Steel Inc. v. Chandos Construction Ltd., 2019 ABCA 32, ¶ 190; 438 D.L.R. 4th 195, 259, aff’d, 2020 SCC

25, per Wakeling, J.A. (“Freedom of contract is a fundamental value in Canada and any other society whose members’

welfare is largely dependent on a thriving free-market economy”); Tercon Contractors Ltd. v. British Columbia, 2010

SCC 4, ¶ 123; [2010] 1 S.C.R. 69, 123 per Binnie, J. (“[Canada recognizes] the very strong public interest in the

enforcement of contracts”); Cavendish Square Holding BV v. El Makdessi, [2015] UKSC 67, ¶ 257; [2016] A.C. 1172,

1278 per Lord Hodge (“the general approach of the common law [is] that parties are free to contract as they please

and that the courts will enforce their agreements”); Belmont Park Investments Pty Ltd. v. BNY Corporate Trustee

Services Ltd., [2011] UKSC 38, ¶ 103; [2012] 1 A.C. 383, 421 per Lord Collins (“autonomy is at the heart of English

commercial law”); Philips Hong Kong Ltd. v. Hong Kong, [1993] UKPC 3a, ¶ 17; [1993] 1 H.K.L.R. 269, 277 (“courts

have always avoided claiming that they have any general jurisdiction to rewrite the contracts that the parties have

made”) & Wise v. United States, 249 U.S. 361, 365 (1919) per Clarke, J. (“There is no sound reason why persons

competent and free to contract may not agree upon this subject as fully as upon any other”). See E. Farnsworth,

Contracts 313 (4th ed. 2004) (“The principle of freedom of contract rests on the premise that it is in the public interest

to accord individuals broad powers to order their affairs through legally enforceable agreements. In general, therefore,

parties are free to make such arrangements as they wish, and courts will enforce them without passing on their

substance”) & Eisenberg & Miller, “Attorney Fees and Expenses in Class Action Settlements: 1993-2008”, 7 J. Emp.

Legal Stud. 248, 249 (2010) (“In normal litigation the attorney compensation can be set by private agreement between

lawyer and client”).

⁴Harrison v. Tew, [1990] 2 A.C. 523, 530 (H.L.) per Lord Lowry (“Before the Act of 1729 [An Act for the Better

Regulation of Attornies and Solicitors], the courts had exercised inherent jurisdiction over solicitors as officers of the

court to direct taxation of their bills on the application of their clients”).

Page: 34

[143] Will it cause experienced and able lawyers to refuse to represent clients who cannot afford

to retain counsel on a pay-as-you-go basis and compromise the ability of contingency fee

agreements to promote access to justice?⁵

[144] What will the likely consequences be if a court fails to detect the harm that may be

associated with the enforcement of contingency fee agreements reasonable members of the public

may consider too one-sided?

[145] Will it cause a significant number of members of the community to refrain from retaining

counsel when it is advisable to do so? An absence of lawyers generally impairs the ability of courts

to resolve disputes in accordance with the law and expeditiously.

[146] In my opinion, the October 14, 2015 contingency fee agreement between Rath & Company

and Tallcree⁶was reasonable when it was entered into⁷– the same conclusion Review Officer

Pawlowski reached⁸– and both sides should be obliged to discharge the promises they made in it

– not just Rath & Company.⁹Tallcree promised to pay Rath & Company twenty percent of the

proceeds of its claim should it settle before discovery. The monetary value of the claim’s proceeds

was $57,590,375 and twenty percent of this amount is $11,518,075. ¹⁰

⁵Hryniak v. Mauldin, 2014 SCC 7, ¶ 1; [2014] 1 S.C.R. 87, 92 per Karakatsanis, J. (“Ensuring access to justice is the

greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most

Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford

to go to trial. Without an effective and accessible means of enforcing rights, the rule of law is threatened”) & Morrison

v. Rod Pantony Professional Corp., 2008 ABCA 145, ¶ 26; 429 A.R. 259, 266 per Slatter, J.A. (“Contingency fee

agreements are an important device for providing access to justice to impecunious clients”).

⁶Both Mr. Molstad, Q.C., counsel for Rath & Company, and Ms. Kennedy, counsel for Tallcree before the review

officer, agreed that the sole issue before the review officer was the reasonableness of the twenty percent contingency

fee. Hearing Transcript 6: 8-11. Tallcree does not allege that Rath & Company failed to comply with the contingency

fee requirements set out in rule 10.7 of the Alberta Rules of Court, Alta. Reg. 124/2010, and that the contingency fee

agreement is of no effect.

⁷Alberta Rules of Court, Alta. Reg. 124/2010, r. 10.9 (“The reasonableness of a retainer agreement ... are subject to

review by a review officer in accordance with these rules, despite any agreement to the contrary”) & r. 10.19(2) (“A

review of a retainer agreement must be based on the circumstances that existed when the retainer agreement was

entered into”).

⁸Reasons for Judgment, Hearing Transcript 139: 8.

⁹Samson Cree Nation v. O’Reilly & Assoc., 2014 ABCA 268, ¶ 17; 375 D.L.R. 4th 663, 672 per Côté, J.A. (“A retainer

contract binds”) & Gaglardi v. Gaglardi, [1983] 4 W.W.R. 752, 753 (B.C. Sup. Ct. 1983) (“[the] solicitors must be

held to their agreements. If a bonus in the event of success is contemplated, the client must be made aware at the outset

of that possibility. A deal, in other words, is a deal”).

10

Tallcree also promised to pay for the disbursements. Rath & Company incurred approximately $100,000 in

disbursements but did not ask Tallcree to pay this sum. Hearing Transcript 2: 7-8.

Page: 35

[147] Tallcree does not complain about the amount of the settlement. In fact, the settlement made

the chief and council “extremely happy”.¹¹It is difficult to complain about a settlement that is in

the range Tallcree contemplated from the commencement of the lawyer-client relationship with

Rath & Company. Nor does Tallcree complain about the twenty percent fee. Tallcree knew that

the contingency fee was twenty percent if the claim settled when it did.¹²Tallcree’s only complaint

is that Mr. Rath did such a good job that the mountain of cash Canada paid arrived too soon.

According to Tallcree’s chief executive officer, “this [settlement] happened so quickly that ... 20

percent seems outrageous”.¹³Tallcree acknowledged that it would have gladly paid Rath &

Company a much higher percentage if the case had dragged on for years and ended up in court.¹⁴

[148] Tallcree’s current position reflects a complete misunderstanding of the benefits a variable

percentage contingency fee agreement offers. The interests of both Tallcree and Rath & Company

are aligned if Tallcree recovers the sum a court orders Canada to pay Tallcree as soon as possible

or Canada agrees to pay Tallcree a sum acceptable to Tallcree as soon as possible.¹⁵Neither side’s

¹¹Hearing Transcript 78: 36.

¹²Reasons for Judgment, Hearing Transcript 134: 11-15 (“At the time the agreement was entered into, there was an

understanding on the part of the First Nation that the ultimate settlement, if it came, would be in a range of around

[$]50 million to around [$]80 million and the 20 percent was there. So it is a simple case of mathematics of applying

the 20 percent to those to kind of get an idea of what the fee would be ultimately”) & Hearing Transcript 112: 25-26

(“Q [Mr. Molstad] And [the chief and counsel] ... knew what the fee was when they signed it? A [Mr. Cardinal] They

did”).

¹³Hearing Transcript 42: 39-40. See also id. 106: 1-3 (“Mr. Cardinal: … [O]ur biggest concern is how quickly the

offer had come in that, you know, the time spent on the file, you know, we didn't feel at that time that it was, you

know, fair that that much -- that little time was invested in”) (exclusive upper case text for the speaker has been altered

in any extract from the Hearing Transcript).

14

Id. 37: 35-41 (“our claim started with Miller Thomson back in 2000, 2001, somewhere in that vicinity. We

understood in entering into this contingency fee agreement that this could potentially take years. This could potentially

take an undisclosed amount of time in which case Rath & Company would have, in our view, been quite entitled to

take 20 to 35 percent if they had to go to Court”). The percentage increased to thirty percent and thirty-five percent if

the settlement or a judgment occurred later. October 14, 2015 Contingent Fee Agreement and Terms of Engagement

of Rath & Company … Agricultural and Economic Benefits Claims. See Fitzpatrick, “A Fiduciary Judge's Guide to

Awarding Fees in Class Actions”, 89 Fordham L. Rev. 1151, 1153 (2021) (“the well-known formula that pays lawyers

a percentage of what they recover requires clients to monitor against their lawyers settling cases prematurely for a

smaller recovery than would have been obtained had the litigation continued; the lower the percentage, the greater the

need to monitor”).

¹⁵Crown Bay Hotel Ltd. v. Zurich Indemnity Co. of Canada, 160 D.L.R. 4th 186, 192 (Ont. Gen. Div. 1998) per

Winkler, J. (“A contingency fee arrangement limited to the notion of a multiple of the time spent may, depending

upon the circumstances, have the effect of encouraging counsel to prolong the proceeding unnecessarily and of

hindering settlement, especially in those cases where the chance of some recovery at trial seems fairly certain. On the

other hand, where a percentage fee … is in place, such a fee arrangement encourages rather than discourages

settlement. … Fee arrangements which reward efficiency and results should not be discouraged”); In re Enron Corp.

Securities, Derivative & “ERISA” Litigation, 586 F. Supp. 2d 732, 766-67 (S.D. Tex. 2008) per Harmon, J. (“As

explained by the Honorable H. Lee Sarokin, who independently reviewed the petition for award of attorneys' fees here

and has provided a Declaration in support of Lead Counsel's fee request, contingent percentage fee arrangements are

Page: 36

interests are advanced by an extension of the time period it takes to produce this result. Tallcree’s

interests are not advanced by a longer settlement period as opposed to a shorter settlement period.¹⁶

A longer settlement period deprives Tallcree of the benefits associated with receipt of the court

ordered sum or the agreed-upon settlement amount for a longer time than does a shorter settlement

period. Assuming a seven percent rate of return, the annual lost revenue is $4 million. The loss of

this revenue is not in Tallcree’s best interests. It goes without saying that Rath & Company, for

the same reason, wants to be paid its fee as quickly as possible.

[149] The review officer, not surprisingly, rejected Tallcree’s complaint out of hand:¹⁷

You can't predict how long, but Mr. Rath did point out that from the outset he was

brought in with the idea that he would work to get the client up to speed with the

other First Nations and get a more rapid-than expected resolution of it. If that is true

and if that was understood by the First Nation, then they can hardly complain that

the 20 percent was too high because the matter unfolded in far less time than we

expected. … [T]hat was the strategy. There seems to have been a lot of

communication between Mr. Rath's office and the First Nation. … But I can't

imagine that that strategy wasn't discussed throughout.

[150] Review Officer Pawlowski made no reversible errors in concluding that the contingency

fee agreement was reasonable.¹⁸Rule 10.9 stipulates that “[t]he reasonableness of a retainer

typical in class actions for three reasons: ‘First contingent percentage fees align the interests of claimants and lawyers

by rewarding superior performance. Second they minimize the need to monitor attorneys and to evaluate the

reasonableness of their efforts, both of which are time consuming and often difficult to do. Third, they insure that the

burden of financing the lawsuit is borne by class counsel rather than the class members’”) & Goldberger v. Integrated

Resources, Inc., 209 F. 3d 43, 48 (2d Cir. 2000) (“[a compensation formula based on total accumulated hours creates]

temptation for lawyers to run up the number of hours for which they could be paid”). See Fitzpatrick, “A Fiduciary

Judge's Guide to Awarding Fees in Class Actions”, 89 Fordham L. Rev. 1151, 1158 (2021) (“The percentage method

is better because the lawyer is not indifferent to the size or the speed of recovery; like the client, the lawyer wants a

big recovery and the lawyer wants it quickly”).

¹⁶Weir-Jones Technical Services Inc. v. Purolator Courier Ltd., 2019 ABCA 49, ¶ 134; 442 D.L.R. 4th 9, 94-95 per

Wakeling, J.A. (“Sophisticated civil process systems recognize that the public interest is best served by mechanisms

that allow a court to resolve a dispute as early in the process as is feasible and with the utilization of the least-possible

judicial and private resources”).

¹⁷Hearing Transcript 136: 29-38.

¹⁸A decision of the review officer may be set aside if the product of an unfair procedure, an error of principle, a clearly

erroneous factual determination or is inordinately high or low. Bhatnager v. Canada, [1991] 3 S.C.R. 317, 318 per

Sopinka, J. (“Rule 62 [of the Rules of the Supreme Court of Canada] authorizes a review of the decision of the

Registrar and not an appeal. A judge of this Court should not generally interfere with the decision of the Registrar

simply on the basis of a difference of opinion as to the proper amount to be allowed. Rather, there must be an error

in principle or the Registrar must be shown to be clearly wrong in the amount allowed”); Steinke v. Hajduk Gibbs

LLP, 2014 ABQB 34, ¶ 42; 581 A.R. 91, 106 per Wakeling, J. (“Neither the law firm nor the client has taken the

position that the review officer was without the jurisdiction to review the accounts in the Timberlane and Caplink

files. Nor has either side complained about the hearing procedure. Under these circumstances, the Court may only

Page: 37

agreement and the reasonableness of a lawyer’s charges are subject to review by a review officer

in accordance with these rules …”.¹⁹

[151] I would allow the appeal against the Court of Queen’s Bench order that came to the

opposite conclusion.²⁰

II.

[152] Rule 10.19(2) of the Alberta Rules of Court ²¹directs that the reasonableness of a

contingency fee agreement must be based on the circumstances that existed when it was entered

into.

vary or revoke the review officer’s decision if it reflects ‘an error of principle or whether the award is inordinately

high or low’”); Betser-Zilevitch v. Prowse Chowne LLP, 2021 ABCA 129, ¶ 13 (“The standard of review is ... governed

by the framework established in Housen v. Nikolaisen, … : Extricable errors of law and errors in principle are subject

to review on a correctness standard. To the extent that the decision requires an interpretation of the rules of court and

such interpretation is an extricable error of law, it is subject to review on a correctness standard. Where the question

is one of fact, or mixed fact and law, the standard of review is ‘palpable and overriding error’”); Mercantile Bank of

Canada v. McLennan Ross, 1988 ABCA 224, ¶¶ 11-13; 86 A.R. 311, 313 per Stevenson, J.A. (“In my view in Alberta

the primary question on review of a quantum fixed by a taxing officer is (as in many other jurisdictions) whether he

has made an error of principle, or whether the award is inordinately high or low”) & ¶ 6; 86 A.R. at 312 (“If the

quantum awarded can be said to be inordinately high or low, that is a ground of interference because it betrays an error

of principle”); Mercantile Bank of Canada v. McLennan Ross, 1987 ABCA 174, ¶ 10; 83 A.R. 322, 323 per Kerans,

J.A. (“we are of the view that the taxing officer’s award is not shockingly low”) & Fraser Milner Casgrain LLP v.

Kristof Financial Inc., 2012 ABQB 359, ¶ 17; 541 A.R. 245, 249-50 per Yamauchi, J. (“a court hearing an appeal

from a review officer’s decision may find that the review officer made a finding of fact that is clearly in error”)

(emphasis in original). The American standard of review is comparable. See Re AT & T Corp., 455 F. 3d 160, 163-64

(3d Cir. 2006) (“We review a district court’s award of attorney fees in a securities class action for abuse of discretion.

... ‘The standards employed calculating attorneys' fees awards are legal questions subject to plenary review, but ‘[t]he

amount of a fee award . . . is within the district court's discretion so long as it employs correct standards and procedures

and makes findings of fact not clearly erroneous’”).

¹⁹Alberta Rules of Court, Alta. Reg. 124/2010.

²⁰Appeal Record F26-F27.

²¹Alta. Reg. 124/2010, r. 10.19(2) (“A review of a retainer agreement must be based on the circumstances that existed

when the retainer agreement was entered into”). Section 68(5) of British Columbia’s Legal Profession Act, S.B.C.

1998, c. 9 introduces the same test: “the registrar must confirm the agreement unless the registrar considers that the

agreement is unfair or unreasonable under the circumstances existing at the time the agreement was entered into”. See

also Mide-Wilson v. Hungerford Tomyn Lawrenson and Nichols, 2011 BCSC 1440, ¶ 232 (Registrar) (“the question I

must pose is not: If the Action settled on December 9, 2008 [the day after the parties signed the contingency fee

agreement] would the contemplated fee be reasonable? Rather, I must ask myself: Whether, on December 8, 2008,

considering what the parties knew, were the contemplated fees as set out in the ... [contingency fee agreement]

reasonable?”), varied on other grounds, 2013 BCSC 374; 35 C.P.C. 7th 318, aff’d, 2013 BCCA 559; 370 D.L.R. 4th

1, leave to appeal ref’d, [2014] S.C.C.A. No. 77 & Fox v. Westpac Banking Corp., [2021] VSC 573, ¶ 151 per Nichols,

J. (“those considerations relevant to fixing a commission rate for a litigation funder at the end of a class action …

include the litigation risks of funding provided in the proceeding, which must be assessed avoiding the risk of hindsight

bias and recognising that the funder took on those risks at the commencement of the proceeding”).

Page: 38

[153] The temporal focus – the time the contingency fee agreement was entered into – is the

critical point.

[154] Justice Scalia explains why this must be the case:²²

I think it obvious that the reasonableness of a contingent-fee arrangement has to be

determined by viewing the matter ex ante, before the outcome of the lawsuit and

the hours of work expended on the outcome are definitively known. For it is in the

nature of a contingent-fee agreement to gamble on outcome and hours of work—

assigning the risk of an unsuccessful outcome to the attorney, in exchange for a

percentage of the recovery from a successful outcome that will (because of the risk

of loss the attorney has borne) be higher, and perhaps much higher, than what the

attorney would receive in hourly billing for the same case. … . It is something quite

different, however—and something quite irrational—to look at the consequences

of a contingent-fee agreement after the contingencies have been resolved and

proclaim those consequences unreasonable because the attorney has received too

much money for too little work. That is rather like declaring the purchase of the

winning lottery ticket void because of the gross disparity between the $2 ticket price

and the million-dollar payout.

[155] Rule 10.19(2) of the Alberta Rules of Court²³prohibits retrospective assessment of the

reasonableness of the fee and consideration of all the circumstances that are known at the end of

the process. ²⁴

[156] Hindsight makes everyone look like a genius.

[157] Suppose a pro football head coach, with his team ahead by three points in a high-scoring

game with one minute left to play and the scrimmage line at centre field seven yards from the first-

²²Gisbrecht v. Barnhart, 535 U.S. 789, 810-11 (2002) per Scalia, J. (emphasis in original).

²³Alta. Reg. 124/2010.

²⁴This is not the case in class actions. E.g., Union Asset Management Holding A.G. v. Dell Inc., 669 F. 3d 632, 644

(5th Cir. 2012) per Higginbotham, Cir. J. (“Given the Fifth Circuit's stance on choice of method, the district court did

not abuse its discretion by using the percentage method with a meticulous Johnson analysis. ... We join the majority

of circuits in allowing our district courts the flexibility to choose between the percentage and lodestar [the total hours

the lawyers logged multiplied by a reasonable hourly rate] methods in common fund cases, with their analyses under

either approach informed by the Johnson considerations [a number of factors, including time required, difficulty of

the questions, requisite legal skills, customary fee and experience of lawyers]”) & Fox v. Westpac Banking Corp.,

[2021] VSC 573, ¶ 148 per Nichols, J. (“A review … of a percentage fixed at an earlier time, once information

informing questions of proportionality [between the return and risk] is available, will facilitate the Court ensuring that

the percentage to which the law practice is ultimately entitled, remains appropriate”). British Columbia courts also

conduct a retrospective assessment of contingency fee agreements in non-class action retainers. Mide-Wilson v.

Hungerford Tomyn Lawrenson and Nichols, 2013 BCCA 559, ¶ 98; 370 D.L.R 4th 1, 56, leave to appeal ref’d, [2014]

S.C.C.A. No. 77.

Page: 39

down marker, calls a fake kick play – the kicker runs with the ball instead of kicking it. The coach

decides on this course for a number of reasons. First, the opponent would not expect his team to

select such a high-risk play – the coach is reputed to be an old-fashioned conservative strategist.

Second, the kicker is the best kicker in the league. He could kick the ball out of bounds within the

opposition’s twenty-yard line seven times out of ten. A typical kick would pin the opposition deep

in their end with the opportunity to run maybe four plays before the game was over. Third, the

opposition probably forgot that the veteran kicker played quarterback in college and was a good

runner. The coach is well aware of possible different outcomes – successful and unsuccessful. The

play would be a success if the kicker ran the ball down field far enough to get a first down. In this

scenario, the offence would run out the clock to preserve the victory. Or the kicker could run the

ball for a touchdown. This would end the game. The team would be up by ten points with less than

a minute left in the game. This is the best possible outcome. But the coach is a savvy veteran and

realized there were potential downsides. The kicker may be stopped short of the first down line.

This would mean that the opposition would have much better field position than if the kicker

angled the ball out of bounds at the opposition’s ten-yard line. Or the kicker may fumble the ball

and the opposition recover and run for a touchdown. This is the worst outcome. After weighing all

these considerations and quickly canvassing his coaching staff – all agree – he calls the fake kick

play.

[158] Most Monday-morning quarterbacks, if the high-risk fake kick play works out, will

announce to the world that they would have made the very same call. This is so even if they were

aghast when they realized that the kicker was not going to kick the ball. And most Monday-

morning quarterbacks will question the head coach’s ability to be a football coach if one of the

potential bad outcomes materializes, even if he or she thought it was a brilliant call when it was

obvious that a fake kick was underway.

[159] A Monday-morning quarterback’s opinion is only worth listening too if he or she voiced

opposition to the fake kick play before it happened.

[160] Same here.

[161] Tallcree never complained about Rath & Company’s fee²⁵until it had derived the benefits

of counsel’s good work and Canada had paid Tallcree $57,590,375 to settle its claim. In

complaining, Tallcree overlooks the fact that its members overwhelmingly voted in favor of a

settlement that made Rath & Company’s legal fees a first charge on the settlement proceeds,²⁶

Tallcree signed the contingency fee agreement after thinking about it for a year, and it chose not

²⁵Appointment for Review of Retainer Agreement/Lawyer’s Charges filed March 15, 2018. Appeal Record P1.

²⁶Hearing Transcript 4: 18-20 (“a settlement agreement with the Federal Crown … involves a trust agreement that

was voted on by 93 percent of the community”) & 93: 18-19 (“Mr. Rath: … the trust agreement itself sets out that our

fee is to be paid as a first charge on proceeds and our fee is 20 percent”).

Page: 40

to act on the recommendation of Rath & Company and obtain independent legal advice on the

merits of the October 14, 2015 contingency fee agreement.²⁷

[162] To continue the football analogy, Rath & Company – the fake kicker – have run for a

touchdown and Tallcree still complains. Tallcree, in essence, asserts that the kicker should have

slowed down after making a first down so that the other side would have less time to mount a

comeback. Such criticism is unfounded and unfair.²⁸

III.

[163] A court will not enforce any retainer agreement that takes advantage of a client and

undermines the reputation of lawyers in the community.²⁹

²⁷Reasons for Judgment, Hearing Transcript 133: 37-39 (“The First Nation ... just didn’t bother”).

²⁸Samson Cree Nation v. O’Reilly & Assoc., 2014 ABCA 268, ¶ 71; 375 D.L.R. 4th 663, 679 per Côté, J.A. (“The

appellant client’s desire now to change the fee bargain after the suit has ended, is doubly unfair”).

²⁹Morrison v. Rod Pantony Professional Corp., 2008 ABCA 145, ¶ 25; 429 A.R. 259, 266 per Slatter, J.A. (“The

courts will obviously not tolerate any sharp practice by the solicitor, or any patent unfairness.”); Steinke v. Hajduk

Gibbs LLP, 2014 ABQB 34, ¶ 66; 581 A.R. 91, 12-13 per Wakeling, J. (“The eighth principle directs a court ‘to ensure

that those who are obliged to pay for legal services are treated reasonably, taking into account all the circumstances’.

... This is a jurisdiction of long-standing designed to increase the likelihood persons who utilize lawyers in defending

their interests are not taken advantage of and are treated fairly by lawyers who are officers of the court”) & Walmesley

v. Booth, 26 Eng. Rep. 412, 414 (Ch. 1739) (the court will not allow an attorney who has “great power and influence

… over his client” to take advantage of his client). Ontario’s Rules of Professional Conduct explicitly guard against

exploitative contingency fee agreements. Law Society of Ontario, Rules of Professional Conduct (2000, as amended)

r. 3.6-2.1 (“(1) In determining the appropriate percentage or other basis of the contingency fee, the lawyer shall

consider a number of factors, including the likelihood of success, the nature and complexity of the claim, the expense

and risk of pursuing it, the amount of the expected recovery and who is to receive an award of costs. The lawyer shall

advise the client of these factors. (2) A lawyer who enters into a contingency fee agreement must meet the following

client disclosure requirements: (a) provide the client with the Law Society’s consumer guide titled ‘Contingency fees:

What you need to know,’ available on the Law Society’s website, and a reasonable opportunity to review and consider

it before entering into the agreement”) (emphasis added). The disclosure requirements do not apply to sophisticated

clients or to class proceedings. Id. r. 3.6-2.1(3) (“The client disclosure requirements of this Rule do not apply to an

agreement where: (a) a lawyer is retained to represent one or more persons in a proceeding commenced under the

Class Proceedings Act, 1992, as amended; or (b) either the client or any person or entity responsible for the payment

of the client’s legal fees in the matter that is the subject of the agreement is an organization that, together with any

affiliates, members of the same joint venture or any other related persons or entities, (i) employs more than 25

individuals, (ii) employs a lawyer on a full-time basis, or (iii) has assets or gross annual revenues that exceed $10

million”). Ontario caps percentage-based contingency fee agreements at 50 percent unless parties jointly obtain court

approval for a greater amount. Solicitors Act, R.S.O. 1990, c. S.15, s. 28.1(5) (“If a contingency fee agreement involves

a percentage of the amount or of the value of the property recovered in an action or proceeding, the amount to be paid

to the solicitor shall not be more than the maximum percentage, if any, prescribed by regulation”) & Contingency Fee

Agreements, O. Reg. 563/20, s. 1 (“A solicitor for a client who is a claimant shall not recover more in fees under a

contingency fee agreement than the amount recovered by the client under an award or settlement from the party or

parties against whom the claim was made, including any costs but excluding disbursements and taxes”).

Page: 41

[164] The legislative foundation for a superior court’s jurisdiction to review the accounts of

officers of the court is An Act for the Better Regulation of Attornies and Solicitors³⁰Westminster

passed in 1729. This enactment established a protocol that granted clients who objected to a bill

of an attorney³¹or a solicitor³²the right to have it reviewed by a court. An attorney or a solicitor

could not sue for an unpaid account until the taxation process was concluded.³³Long before 1729

courts, exercising their inherent jurisdiction over attorneys and solicitors as officers of the court,

ordered its officers to submit their bills to taxation.³⁴

[165] To ensure that a lawyer does not take advantage of a client in the case of a contingency fee

agreement a court must ask two questions.

[166] First, did the client have sufficient skills to adequately assess the merits and demerits of

the contingency fee agreement, and to make an informed and prudent decision as to whether the

contingency fee agreement was in its best interests?³⁵Put slightly differently, did the client have

an adequate understanding of its obligations and benefits under the agreement?³⁶

³⁰2 Geo. II, c. 23, s. 23 (U.K.).

³¹An attorney practiced in the common law courts. 397 Halsbury’s Laws of England 65 (5th ed. 2020).

³²A solicitor practiced in the courts of equity. Id.

³³2 Geo. II, c. 23, s. 23 (U.K.). The Act did not apply to barristers. A barrister could not sue for unpaid fees.

³⁴Ex p. Arrowsmith, 33 Eng. Rep. 241, 241 (Ch. 1806) (“the jurisdiction to tax the bills of attorneys and solicitors, as

officers of the Courts, subsisted long before the [1729] Statute”) & Ex p. Earl of Uxbridge, 31 Eng. Rep. 1126, 1126

(Ch. 1801) (“there was no doubt, the Court exercised this jurisdiction long before the [1729] Statute ...; which did

little more than introduce the regulations, under which the jurisdiction should be exercised”).

35

Alberta Treasury Branches v. 1401057 Alberta Ltd., 2013 ABQB 748, ¶ 44; [2014] 3 W.W.R. 180, 207 per

Wakeling, J. (“a sophisticated client has the necessary skills to protect its own interests when transacting professional

business with lawyers”) & Steinke v. Hajduk Gibbs LLP, 2014 ABQB 34, ¶ 68; 581 A.R. 91, 113 per Wakeling, J.

(“there is an increased risk that an unsophisticated consumer of legal services may be taken advantage of”).

³⁶Samson Cree Nation v. O’Reilly & Assoc., 2014 ABCA 268, ¶ 83; 375 D.L.R. 4th 663, 682 per Côté, J.A. (“The

client’s experience and sophistication is an important factor”); Morrison v. Rod Pantony Professional Corp., 2008

ABCA 145, ¶ 27; 429 A.R. 259, 266 per Slatter, J.A. (“Of relevance here will be ... the education and abilities of the

client, indications by the client that he or she understands the arrangement, and other similar factors. The key is that

the client should understand how the fee will be calculated in practical terms”); Alberta Treasury Branches v. 1401057

Alberta Ltd., 2013 ABQB 748, ¶ 44; [2014] 3 W.W.R. 180, 206-07 per Wakeling, J. (“An unsophisticated client may

expect that the court will exercise its protective function with more vigor than will be the case if the client is a regular

consumer of legal services and familiar with the issues which arise in the delivery of legal services. This is because a

sophisticated client has the necessary skills to protect its own interests when transacting professional business with

lawyers”); In re Whitcombe, 50 Eng. Rep. 56, 57 (Ch. 1844) per Lord Langdale, M.R. (“An agreement ... between a

solicitor and client for taking a fixed sum ... is an agreement which may be perfectly good; but this Court, for the

protection of parties, looks at every transaction of this kind with great suspicion. The matter may turn out to be

perfectly fair and right, still it exposes the conduct of the solicitor to suspicion, and naturally awakens the vigilance

and jealousy of this Court, seeing that one party has all the knowledge, and the other is in ignorance”) & Stedman v.

Page: 42

[167] Second, did the lawyer have relevant important information about the negotiation or

litigation process it failed to share with the client that probably would have caused the client to

come to a contrary conclusion?³⁷If so, the information deficit would be extremely problematic.

[168] These two questions do not emphasize the merits or demerits of the contingency fee

agreement itself.

[169] If a determination is made that a client did not have sufficient skills to make a prudent

decision and a lawyer failed to advise a client with these deficiencies to seek independent legal

advice on the advisability of the client signing the contingency fee agreement or suffered from an

unacceptable information deficit, the default mechanism set out in rule 10.2(1) of the Alberta Rules

of Court applies.³⁸This requires a review officer to take into account the six listed factors and

make a decision as to what is a “reasonable fee”. This is a challenging task. Rule 10.2(1) does not

Collet, 51 Eng. Rep. 1171, 1173 (Ch. 1854) (“the settlement of a solicitor’s bill by the client for a fixed sum is valid,

and will not be disturbed ... where it has been entered into fairly, and with proper knowledge on both sides”).

³⁷Almalki v. Canada, 2019 ONCA 26, ¶¶ 39-40; 431 D.L.R. 4th 357, 369, leave to appeal ref’d, [2019] S.C.C.A. No.

79 (“the motion judge acknowledged that contingency fee agreements were subject to closer scrutiny than purely

commercial contracts. She went on, after a review of the relevant evidence, to hold, at para. 21: ‘In this case however,

there is no evidence of fraud, duress, mistake of fact or unconscionability. There is no evidence of Mr. Almalki's

failure to understand the fee agreement or specifically the effect of the language of paragraph 16 [providing that, if

exceptional circumstances arise, the fee will include a portion of legal costs paid by the Attorney General, and parties

will jointly apply to obtain Court approval of this, as required by the applicable legislation].’ There is no evidence that

the plaintiffs were misled by Stockwoods. The record fully supports these findings and I would defer to them”); Re

Stuart ex p. Cathcart, [1893] 2 Q.B. 201, 204-05 (C.A.) per Lord Esher, M.R. (“By s. 9 [of The Attorneys' and

Solicitors' Act] the Court may enforce an agreement if it appears that it is in all respects fair and reasonable. With

regard to the fairness of such an agreement, it appears to me that this refers to the mode of obtaining the agreement,

and that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that

satisfies the requirement as to fairness. But the agreement must also be reasonable, and in determining whether it is

so the matters covered by the expression ‘fair’ cannot be re-introduced. As to this part of the requirements of the

statute, I am of opinion that the meaning is that when an agreement is challenged the solicitor must not only satisfy

the Court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy

the Court that the terms of that agreement are reasonable. If in the opinion of the Court they are not reasonable, having

regard to the kind of work which the solicitor has to do under the agreement, the Court are bound to say that the

solicitor, as an officer of the Court, has no right to an unreasonable payment for the work which he has done, and

ought not to have made an agreement for remuneration in such a manner”); Stedman v. Collet, 51 Eng. Rep. 1171,

1173-74 (Ch. 1854) per Sir John Romilly, M.R. (“the settlement of a solicitor’s bill by the client for a fixed sum is

valid, and will not be disturbed ... where it has been entered into fairly, and with proper knowledge on both sides. ....

[P]rovided the transaction be open and fair and without pressure, a solicitor and his client may ... agree that a fixed

sum shall be paid to the solicitor, in liquidation of his bill of costs”) & Zipchen v. Bainbridge, 2008 SKCA 87, ¶ 64;

[2008] 12 W.W.R. 397, 416 per Wilkinson, J.A. (“Freedom of contract must be respected, it is true, and lawyers must

have fair opportunity to set the conditions under which they are willing to offer their services. The courts are loath to

interfere in contingency arrangements, freely and fairly negotiated, but a solicitors' retainer is not, and never has been,

a purely commercial engagement. The so-called ‘helping professions’ are not unaccustomed to meeting higher

expectations, and in the particular circumstances of this case, those higher expectations were found to exist”).

³⁸Alberta Rules of Court, Alta. Reg. 124/2010, r. 10.18(4) (“If a contingency fee agreement is disallowed, the amount

payable to the lawyer for the lawyer’s charges must be determined under rule 10.2”).

Page: 43

identify what weight should be attached to any of the six factors or the conditions that might make

one criterion more important than the others. It invites unpredictable and inconsistent

adjudications.³⁹

IV.

[170] If a determination is made that the client had sufficient skills to assess the wisdom of

entering into a contingency fee agreement with the lawyer, or if it did not, that the lawyer

recommended that the client seek independent legal advice, and if the client suffered no

unacceptable information deficit about other key facts that adversely affected the ability of the

client to assess the merits of the contingency fee, in the absence of compelling reasons that justify

the contrary conclusion, an adjudicator must conclude that the contingency fee agreement is

reasonable.⁴⁰There is, in effect, under these conditions a presumption that a contingency fee

agreement is reasonable.⁴¹

³⁹Steinke v. Hajduk Gibbs LLP, 2014 ABQB 34, ¶ 51; 581 A.R. 91, 108 per Wakeling, J. (“It is safe to say that

adjudicators asked to apply these factors are seldom likely to come up with similar conclusions as to what is a

reasonable amount. In other words, the value of this process is not predictability and certainty”).

⁴⁰Morrison v. Rod Pantony Professional Corp., 2008 ABCA 145, ¶ 26; 429 A.R. 259, 266 (“courts should not set

aside agreements between solicitors and clients without good cause”); Steinke v. Hajduk Gibbs LLP, 2014 ABQB 34,

¶ 51; 581 A.R. 91, 108 per Wakeling, J. (“a court must hold the lawyer and the client to promises made in a retainer

agreement ... in the absence of a compelling reason not to”) & Re Braithwaite, Boyle & Assoc., 171 A.R. 76, 78 (Q.B.

Taxing Officer 1995) (“if a client, understanding the significance of [an onerous] ... clause, agrees to its terms, good

bargain or bad, I am not inclined to overturn it”). See also Re AT & T Corp., 455 F. 3d 160, 167 (3d Cir. 2006) per

Scirica, C.J. (“[The District] cited Cendant for the ‘proper standard’ that should be applied in class action lawsuits

brought under the Private Securities Law Reform Act. This standard entailed ‘afford[ing] a presumption of

reasonableness to fee requests submitted pursuant to an agreement between a properly-selected lead plaintiff and

properly-selected lead counsel,’ a presumption that would ‘be rebutted when a district court finds the fee to be (prima

facie) clearly excessive’”) & Baker, Perino & Silver, “Is the Price Right? An Empirical Study of Fee-Setting in

Securities Class Actions”, 115 Colum. L. Rev. 1371, 1432 (2015) (“we tentatively propose the following set of

arrangements to improve the [Private Securities Litigation Reform Act]’s effectiveness: 1. The lead plaintiff should

negotiate a fee when retaining counsel to handle the case; … 3. The district court should review the negotiated fee

terms before appointing class counsel and should uphold them unless they are clearly unreasonable or not the products

of arm’s-length negotiations”).

⁴¹A lawyer has an ethical obligation to charge a fair and reasonable fee. Law Society of Alberta, Code of Conduct 58

(February 20, 2020) (“[Rule 3.6-2 Commentary] In determining the appropriate percentage or other basis of a

contingency fee, a lawyer and client should consider a number of factors, including the likelihood of success, the

nature and complexity of the claim, the expense and risk of pursuing it and the amount of the expected recovery. ...

The test is whether the fee, in all of the circumstances, is fair and reasonable”) & American Bar Assoc., Model Rules

of Professional Conduct (2020), r. 1.5(a) (“A lawyer shall not make an agreement for, charge, or collect an

unreasonable fee”). A presumption of judicial impartiality is also in effect for a good reason. Yukon Francophone

School Board v. Yukon, 2015 SCC 25, ¶ 25; [2015] 2 S.C.R. 282, 297 per Abella, J. (“there is a strong presumption of

judicial impartiality”); Bizon v. Bizon, [2014] ABCA 174; ¶ 34; [2014] 7 W.W.R. 713, 728 per Wakeling, J.A. (“A

judge takes an oath to deliver justice impartially and is presumed to act in a manner consistent with that oath”) &

Brookes v. Earl of Rivers, 145 Eng. Rep. 569, 569 (Ex. 1679) (“favour shall not be presumed in a judge”).

Page: 44

[171] Clients that have sufficient skills to make informed and prudent decisions and have access

to sufficient information to make informed and prudent decisions have to accept the fact that they

alone made the decision to enter into the contingency fee agreement. No one forced them to do so.

They were the decision makers. They concluded that it was in their best interests to make the

promises recorded in the contingency fee agreement in return for the promises their lawyers made.

They must, almost invariably, be required to discharge their obligations.⁴²

[172] When does a compelling reason exist to depart from this?

[173] A court has the jurisdiction to intervene and relieve a client of the obligations it knowingly

and voluntarily entered into when it signed a contingency fee agreement if the failure to do so

would damage the public’s confidence in the integrity of lawyers and the general administration

of justice.⁴³

[174] More specifically, a court must intervene if a reasonable observer fully informed of all

relevant facts and the purposes served by contingency fee agreements and judicial oversight would

conclude that the contingency fee agreement, assessed when it was entered into, was so one-sided

that its enforcement would likely cause a significant number of potential consumers of legal

services to decline to retain counsel when it would be advisable to do so. The absence of counsel

jeopardizes the primacy of the rule of law and the ability of courts to adjudicate disputes fairly and

promptly. Courts must adopt norms that encourage litigants to utilize the services of lawyers.

[175] Judicial intervention will seldom be necessary under this test because the first two

components of the test discussed in Part III have bite. The likelihood that a client with the skillset

needed to make an informed and prudent decision about the merits of a contingency fee agreement

and with access to the information needed to make an informed and prudent decision will agree to

a contingency fee agreement that is so one-sided that it will cause a significant number of potential

consumers of legal services not to retain counsel when it is advisable to do is extremely low.

[176] This part of the test, unlike the first, focuses on the interests of the greater community –

not the client.

⁴²Morrison v. Rod Pantony Professional Corp., 2008 ABCA 145, ¶ 28; 429 A.R. 258, 267 per Slatter, J.A. (“A client

cannot without good reason be allowed to negotiate and sign an agreement, stand by and permit the solicitor to invest

his or her time and money in the file, and then at the last minute refuse to pay the negotiated compensation. Whatever

duties there are on a solicitor when entering into a retainer agreement with a client, those duties should not allow an

ungrateful client to deprive the solicitor of legitimate compensation”).

⁴³See Lewis Estates Communities Inc. v. Brownlee LLP, 2013 ABQB 508, ¶ 28 per Brown, J. (“This ... is an important

aspect of the lawyer-client relationship that is intended to foster public confidence in the administration of justice”).

Page: 45

V.

[177] I will first consider whether Tallcree had the necessary attributes to allow it to adequately

assess the merits and demerits of the contingency fee agreement and make a prudent decision as

to what course was in its best interests.

[178] There is no doubt in my mind as to Tallcree’s capacity to make a prudent decision on this

question. It had sufficient business skills to grasp the burdens and benefits of this contingency fee

agreement and decide whether the benefits exceeded the burdens and justified entering into the

agreement.⁴⁴

[179] It is noteworthy that First Nations routinely utilize contingency fee agreements to advance

large treaty claims.⁴⁵

[180] Tallcree was not a stranger to commerce and the legal profession.

[181] Nor was it an unsophisticated entity without ties to the commercial world. It owned or had

an interest in a number of businesses.⁴⁶

[182] Tallcree had dealt with lawyers on a regular basis in the past – Miller Thomson was its

counsel for over thirty years⁴⁷– and, it would be uncharitable to assume otherwise, had the

business acumen necessary to distinguish between legal fees based on the time lawyers spent on a

file and their hourly rates and a contingency and the benefits and detriments associated with each

form of retainer.

[183] Also noteworthy is the fact that Tallcree signed the contingency fee agreement on October

14, 2015, more than a year after Rath & Company delivered it to Tallcree. Tallcree had more than

⁴⁴Capital Steel Inc. v. Chandos Construction Ltd., 2019 ABCA 32, ¶ 215; 438 D.L.R. 4th 195, 263, aff’d, 2020 SCC

25, per Wakeling, J.A. (“Parties to commercial contracts have the means to look after their own interests. The public

knows this and there is no danger that their confidence in the ability of the courts to administer justice will be eroded

if courts decline to enforce contract terms only if they are oppressive”).

⁴⁵Both Mr. Rath and Ms. Kennedy confirmed this is the case. Hearing Transcript 131: 18-38 (“The Review Officer:

… You're suggesting … that there are many contingency fee agreements for … agricultural benefits settlements? Mr.

Rath: Agricultural benefits settlements, land claims, all kinds of large First Nations claims. The Review Officer: …

[T]hey have a lot of them done on contingency fee agreements? Mr. Rath: Absolutely”). See Gisbrecht v. Barnhart,

535 U.S. 789, 803 (2002) per Ginsburg, J. (“Characteristically in cases of the kind we confront, attorneys and clients

enter into contingent-fee agreements ‘specifying that the fee will be 25 percent of any past-due [Social Security]

benefits to which the claimant becomes entitled.’”).

⁴⁶Hearing Transcript 59: 40-60: 1 (“[Mr. Rath]: Tallcree [has an] … operation of several hundred million dollars

involving numerous corporations, trusts”) & id. 113: 3-4 (“[Mr. Cardinal] By the size of our First Nation, we probably

are one of the more substantial Nations in terms of financial management”).

⁴⁷Id. 114: 9-11. Ackroyd & Company had acted for Tallcree with respect to its Treaty 8 agricultural benefits claim

before Tallcree retained Rath & Company. Hearing Transcript 10: 11-14.

Page: 46

a year to evaluate its merits and demerits. Tallcree passed a band council resolution on October

23, 2015 formally authorizing the retention of Rath & Company.⁴⁸This was an agreement subject

to scrutiny by the members of Tallcree. And Tallcree signed the contingency fee agreement a

second time on August 31, 2016 to comply with the Alberta Rules of Court. All told, by the time

Tallcree signed the contingency fee agreement for a second time it had almost two years to consider

the wisdom of doing so.

[184] The contingency fee agreement is in plain English and unambiguously explained the fee

structure.⁴⁹Tallcree never suggested it did not understand the contingency fee agreement. On the

contrary, it knew exactly what its obligation would be if the settlement was in the $50 to $80

million range.⁵⁰Mr. Cardinal, Tallcree’s chief executive officer, said this:⁵¹“[E]very person on

the chief and council basically rejected the contingency fee agreement because it was excessive

and it was talked about and talked about and then that’s why it was delayed a year”.

[185] The indisputable fact is that Tallcree signed the October 14, 2015 contingency fee

agreement after the chief and council debated the wisdom of doing so extensively during a twelve-

month period with full knowledge of the promises it made to Rath & Company.

[186] That Tallcree declined to act on Rath & Company’s recommendation to secure independent

legal advice is telling. The explanation Mr. Cardinal provided for not retaining counsel to provide

independent legal advice⁵²– Tallcree did not care enough about securing independent legal advice

to devote more time to retaining counsel after initial efforts failed to readily produce a lawyer –

supports the conclusion that Tallcree did not need legal advice to protect its interests. There was

nothing stopping it from securing independent legal advice before signing the October 14, 2015

⁴⁸Appellant’s Extracts of Key Evidence 7.

⁴⁹See Samson Cree Nation v. O’Reilly & Assoc., 2014 ABCA 268, ¶ 149; 375 D.L.R. 4th 663, 691-92 per Côté, J.A.

(“The appellant client was sophisticated in its dealings with the lawyers. ... The agreements were simple. Their effect

is obvious without more elaboration”) & Morrison v. Rod Pantony Professional Corp., 2008 ABCA 145, ¶ 27; 429

A.R. 258, 267 per Slatter, J.A. (“Of relevance here will be the length of the agreement, the technicality of the language

used”).

⁵⁰Hearing Transcript 112: 25-26 (“Q [Mr. Molstad] And [the chief and counsel] … knew what the fee was when they

signed it? A [Mr. Cardinal] They did”).

⁵¹Id. 103: 12-14. See also id. 104: 40-105:1 (“the 2014 contingency, when it was presented was not signed simply

because they felt at the time percentages were too high”).

⁵²Reasons for Judgment, Hearing Transcript 133: 37-39 (“The First Nation ... may have contacted several lawyers

asking for referrals. No referrals were forthcoming and they just didn't bother”). See also Hearing Transcript 103: 12-

15 (“every person on the chief and council basically rejected the contingency fee agreement because it was excessive

and it was talked about and talked about and then that's why it was delayed a year. We took it to two different law

firms [but never retained anyone]” & id. 103: 39-104: 2 (“The Review Officer: So the bottom line is you never talked

to a lawyer about the contingency fee -- Mr. Cardinal: The bottom line is we couldn't find anybody to help us with

that”).

Page: 47

contingency fee agreement.⁵³Tallcree knew exactly what it was doing. It understood that it would

be obliged to pay Rath & Company a very large fee if its claim against Canada was resolved and

Canada paid it a very large settlement sum. This is solid evidence Tallcree was satisfied it had

sufficient business acumen to assess the wisdom of entry into the contingency fee agreement.

[187] In short, there is no doubt in my mind as to the capacity of Tallcree to make an informed

and prudent decision.

VI.

[188] This part of the judgment records the facts that must be borne in mind when assessing

whether Tallcree’s decision to enter into the October 14, 2015 contingency fee agreement was

marred by an information deficit that probably would have caused it to decline to enter into the

October 14, 2015 contingency fee agreement.

[189] They cover a variety of topics that relate to political and legal issues, as well as strategic

and business considerations.

A.

[190] The critical time for each query is the date Tallcree signed the contingency fee agreement

– October 14, 2015.

[191] How likely is it that Tallcree could establish Canada’s liability?

[192] What did Tallcree consider constituted a fair settlement range?

[193] What was the likelihood Canada would either agree to negotiate and pay a sum satisfactory

to Tallcree or a body with authority to order Canada to pay a sum to Tallcree would order Canada

to make such a payment?

[194] How much time would likely elapse before Tallcree received any payment as a result of a

settlement or a judgment of a court or the specific claims tribunal? ⁵⁴

[195] What expenditure of time and money would the parties reasonably expect Rath & Company

to make before Rath & Company could expect to be paid?

⁵³Hearing Transcript: 112: 19-20.

⁵⁴Long, Miller and Mullins v. Sawchuk, 2002 BCSC 542, ¶ 58 (“It will be the rare case that the course that litigation

will take will be known at the outset. It will often be most difficult to know, at the time the contingency agreement is

signed, with any degree of certainty how complex an action may become, whether liability will be [in] issue, the

amount that may be recovered, the risk to the law firm or the time it will take to bring the action to conclusion”).

Page: 48

[196] Was the Conservative government, led by Prime Minister Harper, opposed to settling

claims of this nature? If the Conservatives won the upcoming federal election, would it change

course?

[197] Was there likely to be a change of government at the next federal election?

[198] If the Liberal Party of Canada, under the leadership of Justin Trudeau, formed a majority

government after the next election, would it be more receptive to resolving longstanding treaty

disputes than the previous Conservative government?

[199] What protocols are established by the Specific Claims Tribunal Act?⁵⁵

[200] What skill level is necessary for a lawyer handling a file of this nature? Is the proceeding

complex?

[201] Did Rath & Company have the skills necessary to advance Tallcree’s interests under the

court processes or the protocols established by the Specific Claims Tribunal Act?

[202] Did the lawyers that represented Canada have more skills than Tallcree’s lawyers?

[203] Would the conduct of other actors besides Rath & Company affect the outcome?

[204] Did Tallcree have the resources to pay legal fees and disbursements on an ongoing basis,

if Rath & Company agreed to act on a fee-for-service basis? What were the legal fees likely to be?

Did Tallcree want to pay Mr. Rath on a time-spent basis?

[205] Did other First Nations utilize contingency fee agreements to prosecute treaty cases? If so,

how frequently?⁵⁶

[206] If Tallcree agreed to compensate Rath & Company on a fee-for-service basis, what would

the legal fees likely have been?

[207] If the likely contingency fee exceeded the likely fee-for-service fee, would the differential

have been acceptable to Tallcree?

[208] What benefits and detriments would the contingency fee agreement have bestowed on

Tallcree? Were the benefits great enough and the detriments low enough to justify paying the likely

contingency fee?

⁵⁵S.C. 2008, c. 22.

⁵⁶See Gisbrecht v. Barnhart, 535 U.S. 789, 804 (2002) per Ginsburg, J. (“Traditionally and today, ‘the marketplace

for Social Security representation operates largely on a contingency fee basis.’”).

Page: 49

[209] What minimum percentage ensures that counsel devotes the necessary time and resources

to maximize the recovery for the client?⁵⁷There is a point that best represents the accommodation

of the interests of both Tallcree and Rath & Company. A client’s interests are not served by a

contingency fee that is not high enough to cause counsel to invest the amount of time required to

maximize the client’s return. At what point is the fee too high, in the sense that a lesser percentage

would still cause counsel to devote the time and resources needed to maximize the client’s

recovery?

[210] What contingency fee comparators are there in the marketplace?

[211] What risks did Rath & Company face in doing business with Tallcree? Did Tallcree

regularly pay its bills? Would enough Tallcree members turn out to vote to constitute a valid

ratification? Would the leadership of Tallcree do something imprudent and unexpected that might

jeopardize any settlement?

[212] This is not an exhaustive list, but it is fairly thorough.

B.

[213] There is nothing in the record that remotely supports the notion that Tallcree labored under

an information deficit when compared to Rath & Company that had it not existed would probably

have caused Tallcree to decline to sign the October 14, 2015 contingency fee agreement.

[214] I am satisfied that Tallcree had sufficient information to make an informed and prudent

decision about the merits and demerits of the contingency fee agreement. While it is unlikely that

Tallcree had access to all the information Rath & Company had, there is no reason to conclude

any information Rath & Company had that Tallcree did not would have caused Tallcree to come

to a different conclusion.

[215] I am satisfied that both Tallcree and Rath & Company were on a level playing field with

respect to negotiating a retainer.

⁵⁷“Developments in the Law–The Paths of Civil Litigation”, 113 Harv. L. Rev. 1752, 1830 (2000) (“Insofar as they

pursue their own interests as financiers of legal claims, plaintiffs’ attorneys will invest resources in their cases so as

to maximize their own return ... . If the attorneys’ share of the settlement or damage award is too low, they will

underinvest in the case, which will lead to a smaller than optimal recovery for the plaintiff. If the fee is too high, then

the attorneys will attempt to maximize the expected judgment but will reap a surplus that would otherwise have gone

to the plaintiffs. Calculating the percentage necessary to maximize the plaintiffs’ net recovery requires knowledge and

experience that few plaintiffs and, in the case of class actions, few judges possess”) & Perdue v. Kenny A. ex. rel.

Winn, 559 U.S. 542, 552 (2010) per Alito, J. (“a ‘reasonable’ fee is a fee that is sufficient to induce a capable attorney

to undertake the representation of a meritorious civil rights case. … but that does not produce windfalls to attorneys’….

Section 1988's aim [that permits recovery of reasonable fees for prevailing party] is to enforce the covered civil rights

statutes, not to provide ‘a form of economic relief to improve the financial lot of attorneys’”).

Page: 50

[216] Both sides probably thought that it was more likely than not that there would be a change

in the federal government at the upcoming election. And no doubt both Tallcree and Rath &

Company anticipated that the next government would be more receptive to advancing the interests

of aboriginal communities. In making these observations, I note that neither Mr. Rath nor Mr.

Cardinal directly⁵⁸addressed these subjects in their evidence before the review officer. Common

sense allows me to draw inferences from indisputable facts.

[217] In addition, both Tallcree and Rath & Company must have known that the Minister of

Indigenous Affairs and Northern Development had not declared Canada’s willingness to negotiate

with Tallcree its Specific Claims Tribunal Act claim⁵⁹and that this was a hurdle that Tallcree had

to clear.

[218] As well, they both must have been aware as of October 14, 2015 that Canada had not

presented any settlement proposals to Treaty 8 adherents after negotiations with the Bigstone Cree

Nation concluded on December 13, 2010. Tallcree led no evidence that Rath & Company knew

when Canada would do so. And Mr. Rath’s evidence was that he did not:⁶⁰“[T]here was no ... real

prospect that this time around that these claims were going to settle any quicker ... than they had

settled on any of the previous occasions where Canada had tried to settle these claims”. Counsel

for Tallcree never even asked Mr. Rath any questions about the information he had on this topic

as of October 14, 2015, the date Tallcree executed the contingency fee agreement. As a result,

there is no evidence as to when Canada presented settlement offers to any Treaty 8 adherents other

than Tallcree – February 2, 2017.⁶¹

58

The possibility of either favorable or unfavorable government changes appear to have been within Tallcree’s

contemplation. Tallcree’s Factum ¶ 4 (“It was common ground in the proceedings before the … [review officer] that

little progress had been made in the resolution of any agricultural benefits claims throughout the tenure of the Stephen

Harper government from 2006 to 2015. In 2004 the prior Liberal administration had conducted an assessment to

determine the per person value of such claims under Treaties 5 and 8, and held some discussions on the basis of that

valuation, but those discussions were shelved following the election of the Harper government”).

⁵⁹Specific Claims Tribunal Act, S.C. 2008, c. 22, s. 16(1)(b).

⁶⁰Hearing Transcript 66: 19-22.

⁶¹A review of Crown-Indigenous Relations and Northern Affairs Canada’s Status Report on Specific Claims reveals

that eighteen Treaty 8 adherents signed their agricultural benefits settlement agreements between June 21 and

November 29, 2017 as follows in chronological order: Doig River on June 21; Saulteau on June 26; Fort McMurray

on June 27; West Moberly on June 29; Blueberry River on June 30; Sturgeon Lake Cree on July 11; Swan River on

July 13; Tallcree on July 21; Whitefish Lake on July 24; Prophet River on July 25; Athabasca Chipewyan, Black Lake

and Fond du Lac on August 15; Fort Nelson on September 28; Halfway River on October 3; Duncan’s on November

9; Mikisew Cree on November 10; and K’athlodeeche on November 29. Government of Canada Crown-Indigenous

Relations and Northern Affairs Canada, Status Report on Specific Claims. https://services.aadnc-

aandc.gc.ca/SCBRI_E/Main/Reporting Centre/External/externalreporting.aspx.

Page: 51

[219] According to Mr. Rath, Canada had settled Bigstone Cree’s Treaty 8 agricultural benefits

claim on terms that made it a very unattractive precedent to other aboriginal communities.⁶²On

December 13, 2010 Canada paid the Bigstone Cree $15,000 a person to settle its agricultural

benefits claim, as part of a larger land claims settlement.⁶³Mr. Rath reported that the agricultural

benefits settlement was not the product of real negotiations.⁶⁴

[220] Mr. Rath presented Tallcree with an action plan that appealed to Tallcree. So both sides

knew what the strategy going forward was.

[221] Tallcree hoped that Canada would either agree or be ordered to pay Tallcree to discharge

Canada’s obligations under Treaty 8 regarding unpaid agricultural benefits between $50 to $80

million and admitted that it could have figured out the legal fee Rath & Company would earn⁶⁵–

twenty percent of $50 million is $10 million; twenty percent of $80 million is $16 million.

⁶²Hearing Transcript 67: 17-31. Bigstone Cree Nation settled together treaty land entitlement and agricultural benefits

claims with Canada and Alberta. Fact Sheet – Settlement Agreement with Bigstone Cree Nation. https:

//www.canada.ca/ en/news/archive/ 2011/09/ fact-sheet-settlement-agreement-bigstone-cree-nation.html. Bigstone

Cree Nation signed the claim settlement on April 21, 2010, Alberta on December 12, 2010 and Canada on December

13, 2010. Government of Canada Crown-Indigenous Relations and Northern Affairs Canada, Status Report on

Specific Claims. https:// services.aadnc-aandc.gc.ca/ SCBRI_E/Main/ ReportingCentre/ External/ externalreporting.

aspx. See also Specific Claims Research Centre, Bigstone Treaty Land Entitlement (“In 1981, the band submitted a

claim regarding the size of the reserve lands. … Negotiations between Alberta, Canada and Bigstone Cree have been

going on since 1999. … The claim was finally resolved when a settlement agreement of $259,400,000 was reached

between the Bigstone Cree Nation, Alberta, and Canada on December 2010”). https://specific-claims.ca/

bigstone%20treaty%20land%20entitlement & First Nations Drum, “Bigstone Cree Overwhelmingly Ratify Major

Treaty Settlement” (March 19, 2010) (“The Bigstone Cree emphasize that the agreement is … the government of

Canada’s fulfillment of its responsibility as set out in Treaty 8 under the Treaty Land Entitlement clause and the

Agricultural Treaty Benefits clause”). http://www.firstnationsdrum.com/2010/03/bigstone-cree-overwhelmingly-

ratify-major-treaty-settlement/. It appears that this was the second settlement of Treaty 8 Agricultural Claims. The

first involved the Fort McKay First Nation on March 31, 2004. Government Of Canada Crown-Indigenous Relations

and

Northern

Affairs

Canada,

Status

Report

on

Specific

Claims.

https://services.aadnc-

aandc.gc.ca/SCBRI_E/Main/ReportingCentre/External/externalreporting.aspx.

⁶³Hearing Transcript, 66: 37-67: 31.

⁶⁴Id. Tallcree never challenged Mr. Rath’s assertion or led any evidence to contradict it.

⁶⁵Reasons for Judgment, Hearing Transcript 134: 11-15 (“At the time the agreement was entered into, there was an

understanding on the part of the First Nation that the ultimate settlement, if it came, would be in a range of around

[$]50 million to around [$]80 million and the 20 percent was there. So it is a simple case of mathematics of applying

the 20 percent to those to kind of get an idea of what the fee would be ultimately”); Hearing Transcript 42: 27-34

(“The Review Officer: … So you knew the range, you had the percentage so you could have sort of sorted out in your

mind what this is going to cost in the end. Mr. Cardinal: I could have sorted it out, absolutely”) & id. 37: 30-33 (“The

Review Officer: So when the contingency fee agreement was entered into, you probably know roughly what kind of

moneys are at stake here. Mr. Cardinal: I would say yes to that”).

Page: 52

[222] The review officer had no doubts about the fact that the leaders and members of Tallcree

knew from the outset that the contingency fee was twenty percent of a very large sum:⁶⁶

[T]here is absolutely no question that [the] First Nation didn't understand from the

outset that 20 percent was the fee. There is no question that they knew around the

range of recovery that was expected, and Mr. Rath reminded them on a large

number of occasions, according to Mr. Cardinal, that this is 20 percent. It is 20

percent. So they were constantly reminded of that throughout. … [T]he contingency

fee amount was referred to in the trust agreement. It was put before all of the

members of the First Nation for votes and … they voted in favour of it.

[223] Tallcree presented no evidence as to the legal fees it anticipated it may have to pay if Rath

& Company agreed to work on a fee-for-service basis.⁶⁷Ms. Kennedy, counsel for Tallcree, never

asked Mr. Rath a question on this topic. And Tallcree never asked Rath & Company to undertake

this file on a fee-for-service basis. It is obvious that Tallcree never considered this at the time⁶⁸

when it signed the October 14, 2015 contingency fee agreement.

[224] How much time did Tallcree believe it would take before Canada would agree to pay

between $50 to $80 million or be ordered to pay these very large sums? Mr. Cardinal informed the

review officer that Tallcree “believed at the time that this could potentially take years”.⁶⁹He told

the review officer that, “[n]one of the chief or council knew how many of these other Nations were

ready to settle”.⁷⁰

[225] Mr. Rath, in response to a question from Review Officer Pawlowski, explained the political

facts-of-life that suggested a prompt resolution was not just around the corner:⁷¹

[T]here was no ... real prospect that this time around that these claims were going

to settle any quicker or any better than they had settled on any of the previous

occasions where Canada had tried to settle these claims.

⁶⁶Reasons for Judgment, Hearing Transcript 137: 14-21.

⁶⁷There was some disagreement as to whether Tallcree paid Rath & Company the legal fees it owed the firm arising

from the 2008 retainer. Hearing Transcript 56: 6-13 & 101: 23-102: 35.

⁶⁸Hearing Transcript 41:30-39 (“Mr. Cardinal: … If we had known at the beginning that this is what it was going to

cost us, we would have cash managed it. It would have saved ourselves 11 million bucks. … [W] we could have wrote

him a cheque for this amount at any point in time and cash managed it, given the number of years, days, however long

it is going to take”).

69

Id. 42: 27-34. See also id 37: 35-37 (“Mr. Cardinal: … We understood in entering into this contingency fee

agreement that this could potentially take years”).

⁷⁰Id. 42: 1-2.

⁷¹Id. 66: 19-30.

Page: 53

... [Y]ou have to look at these claims in the context of the potential liability or as

Canada, you know, and their lawyers look at it, the floodgates of these claims

opening up. Even with a valuation of $42,000 per person, given the number of

treaties that contain agricultural benefits provisions, the number of individual

Indians that are involved, these claims have the potential of creating liability to the

Federal Government sufficiently to change Federal budgets. We're talking in the

tens of billions of dollars.

[226] All of this meant that more time most likely would be needed to resolve the agricultural

benefits claims on terms satisfactory to Tallcree and other aboriginal communities than actually

ended up elapsing.

[227] There is no doubt that these were very reasonable assessments.

[228] Ms. Kennedy, counsel for Tallcree before the review officer, argued that “Mr. Rath,

working for at least one other agricultural benefits claimant knew in the fall of 2015 and over early

on into 2016 that Canada was well on the way to making a settlement”.⁷²The only evidence that

she relied on to buttress this position – Mr. Rath’s December 10, 2015 letter to the Minister of

Indigenous and Northern Affairs, now Minister of Crown-Indigenous Relations, and the Minister

of Justice⁷³– provides no support for her claim. The letter emphasized that Canada “has promised

for well over a decade to settle [agricultural benefit claims under Treaty 8 [but] ... these claims

have ... languished or been opposed by Canada, including in the Specific Claims negotiation

process and before the Specific Claims Tribunal”.⁷⁴There is no factual foundation whatsoever for

the claim that on October 14, 2015, the critical date, Mr. Rath knew that “[t]his was a matter which

was closely coming to be satisfied”,⁷⁵as Ms. Kennedy maintained.

[229] When Tallcree approached Rath & Company in October 2014 asking Rath & Company to

act for it and signed the October 14, 2015 contingency fee agreement it must have been obvious

to both Rath & Company and Tallcree that many years might pass before its agricultural benefits

claim would be resolved. The review officer agreed with this assessment:⁷⁶“[A]t the time that the

agreement was entered into or presented ..., it is anybody's guess how long it is going to take. You

simply don't know. It could take a year, two years, it could take five years. [B]ut you take your

best guess”.

⁷²Id. 50: 7-9.

⁷³Id. 50: 9-11.

⁷⁴Appeal Record F22 & F23.

⁷⁵Hearing Transcript 50: 12-13.

⁷⁶Reasons for Judgment, Hearing Transcript 134: 25-29.

Page: 54

[230] Several factors support this conclusion.

[231] First, Treaty 8 was signed in 1899. More than 110 years had passed when Tallcree retained

Rath & Company to advance its agricultural benefits claim under Treaty 8 against Canada.

[232] Second, First Nations started to talk about agricultural benefits claims under Treaty 8

around 2000. Canada acknowledged very early on that it had not discharged these obligations. But

as of October 14, 2015 Canada had made hardly any progress in honoring Treaty 8 agricultural

benefits.⁷⁷And, according to Mr. Rath, the Bigstone Cree agricultural benefits payment was

nominal – Canada had extra settlement funds and the First Nation was happy to take the money.

In Mr. Rath’s opinion, the Bigstone Cree settlement was a bad precedent for agricultural benefits

claims, from the perspective of First Nations.

[233] Third, Ackroyd & Company had not made much progress by the time Tallcree approached

Rath & Company in October 2014. Ackroyd, after Tallcree retained it in 2008, submitted a claim

under the Specific Claims Tribunal Act⁷⁸sometime in 2012 or 2013.⁷⁹The Specific Claims Tribunal

Act came into force on October 16, 2008. The record does not disclose what Ackroyd & Company

did to advance the interests of Tallcree after it submitted Tallcree’s claim or why it waited so long

to file a claim under the Specific Claims Tribunal Act.⁸⁰

[234] Fourth, the negotiation path under the Specific Claims Tribunal Act presented many

potential roadblocks. The Minster of Crown-Indigenous Relations may decline to negotiate with

⁷⁷The record says very little about this. Mr. Rath addressed this point. Hearing Transcript 66: 36-67: 27. Tallcree did

not. Ms. Kennedy made a short reference to it in her submissions but she was not a witness. Hearing Transcript 15:

35-36 & 119: 19-23. Mr. Cardinal for Tallcree mentioned that he heard Ackroyd settled several other claims. Hearing

Transcript 103: 4-5.

⁷⁸S.C. 2008, c. 22.

⁷⁹It is not entirely clear when Tallcree submitted its claim. One document suggests it was May 20, 2012. Tallcree

First Nation Treaty 8 Agricultural Benefits Specific Claim Settlement Agreement, Preamble (“On May 20, 2012, the

First Nation submitted an agricultural benefits specific claim under Canada's Specific Claims Policy, alleging, among

other things, that there is an outstanding treaty obligation on the part of the Government of Canada in respect to the

provision of Agricultural Benefits pursuant to Treaty 8”). Appellant's Extracts of Key Evidence 104. This view was

shared by Mr. Rath. Hearing Transcript 64: 14-16 (“[the claim] appears to have been concluded by Ackroyd in 2012

but the record indicates that they sat on for a full year prior to filing it on May 20th, 2013”). Another suggests it was

June 25, 2013. Letter from Aboriginal Affairs and Northern Development Canada to Tallcree First Nation dated

January 26, 2016 (“The Tallcree First Nation submitted a Specific Claim, ‘Unfulfilled Promises to Agricultural

Benefits,’ through Mr. Garry Laboucan of Ackroyd LLP on June 25, 2013. This claim was filed with the Minister of

Indigenous and Northern Affairs on August 14, 2013”). Appellant's Extracts of Key Evidence 79. August 14, 2013 is

also the filing date in the Government Of Canada Crown-Indigenous Relations and Northern Affairs Canada status

report on specific claims. https://services.aadnc-aandc.gc.ca/SCBRI_E/Main/ReportingCentre/External/external

reporting.aspx.

⁸⁰S.C. 2008, c. 22.

Page: 55

Tallcree.⁸¹This may be attributable to political factors that have nothing to do with the merits of

the agricultural benefits claim. And if the minister decides to negotiate in the three-year window

the Act allowed the minister to make this decision, ⁸²the negotiations may bear no fruit. Negotiators

and ministers may change.⁸³

[235] Fifth, if Canada made a settlement offer, Tallcree may refuse to accept it or not enough

members may vote to meet the mandatory minimum certification level – fifty percent of the

members. In the period leading up to the ratification vote, Mr. Rath spent several days meeting

with Tallcree members in their own homes stressing the importance of the need to vote.⁸⁴Mr. Rath

was fearful that overwhelming community support may cause large numbers of Tallcree members

to stay home convinced the favorable outcome was not in doubt.⁸⁵There is no evidence of the steps,

if any, the leaders of Tallcree took to get out the vote.

[236] Sixth, if the claim is not settled by the negotiation option, Tallcree would have to decide

whether to submit a claim to the Specific Claims Tribunal or commence a civil action, presumably

in Federal Court. The contest path may take five or more years.

[237] Mr. Rath discussed some of these factors in his evidence before the review officer:⁸⁶

⁸¹Id. s. 16(1)(b).

⁸²Id. s. 16(1)(d).

⁸³Hearing Transcript 67: 29-33 (“A [Mr. Rath] … when you talk about risk on these claims, the risk is … the

negotiators can change on the file. That happened on this file several times. Then on top of it you have Ministers

change”).

⁸⁴Id. 87: 10-12.

⁸⁵Id. 87:15-26.

⁸⁶Id. 67: 29-68: 11. The review officer indicated that it was not his or other review officers’ practice to take evidence

under oath. Id. 53: 14-25. This is surprising. “Unless specifically authorized by statute, unsworn evidence may not be

received by the court”. S. Lederman, A. Bryant & M. Fuerst, The Law of Evidence in Canada 45 (5th ed. 2018). A

review officer makes decisions that have legal effect. Any decision of a review officer must be based on sworn

evidence. There is no statutory provision that authorizes the review officer to admit “unsworn” evidence. Such

statutory provisions exist. See Provincial Court Act, R.S.A. 2000, c. P-31, s. 36(1) (“For the purposes of a hearing,

the Court … (b) may admit any oral or written evidence that it, in its discretion, considers proper, whether admissible

in a court of law or not”) & Labour Relations Code, R.S.A. 2000, c. L-1, s. 14(5)(a) (“The Board … may accept any

oral or written evidence that it, in its discretion, considers proper, whether admissible in a court of law or not”).

Evidence that is based on agreed statement of facts or judicial notice obviously is not subject to this standard. See Re

Levine, [1960] O.J. No. 233, ¶ 2 (C.A.) per Laidlaw, J.A. (“The sole question to be determined in this appeal is whether

or not on a proceeding to tax a solicitor and client bill of costs the Taxing Officer is under a duty to hear evidence

before he decides the amount to be allowed to the solicitor for his services and issues a certificate of taxation. My

opinion is that it is his duty so to do. The compensation which the Court should allow to a solicitor for his services

when a tariff of fees is not applicable should be an amount commensurate with the value of the services performed by

the solicitor. The question – what is the value of the services – is a question of fact to be determined judicially upon

relevant evidence in each particular case. The judicial decision of the Taxing Officer should proceed from and be

Page: 56

[T]he risk is always that you are going to … have some bureaucrat that is going to

dig in [and propose an unreasonably low amount that Tallcree will not accept] …

based on such evidence. … There should be a record of evidence upon which the decision and finding of the Taxing

Officer rests. The omission to hear evidence is an error in practice and principle and in the absence of a record this

Court is not in a position to properly review the decision or to say whether it is right or wrong”); Arthur v. Signum

Communications Ltd., 16 C.P.C. 3d 38, 43 (Ont. Gen. Div. 1992) (“Sworn evidence is required on assessments of

solicitor's accounts pursuant to the Solicitors Act”) (emphasis added). See M. Orkin & R. Schipper, Orkin on the Law

of Costs § 6:57 (2d ed. release 2022-2) (“On a solicitor-and-client assessment the solicitor has the burden of proof and

the standard is on a balance of probabilities. … [T]he compensation to be allowed a solicitor is an amount

commensurate with the value of the services performed. The value of the services is a question of fact to be determined

judicially upon relevant evidence in each particular case. It follows that the solicitor must prove his or her bill in the

normal way, according to the rules of evidence”). Rule 10.17(1) of the Alberta Rules of Court, Alta. Reg. 124/2010

governs the manner which evidence is given before a review officer: “[A] review officer may do all or any of the

following: (a) take evidence either by affidavit or orally under oath, or both”. The rule authorizes a review officer to

accept evidence in three different ways. See Rusk v. City of Medicine Hat, 2001 ABQB 1020, ¶ 63; 15 C.P.C. 5th 316,

333 (“I have not been provided with ideal evidence on which to base my decision. Strictly speaking, there is no

evidence at all. No affidavits were filed, nor was any viva voce testimony presented”). But rule 10.17(1) does not

authorize an officer to admit unsworn “evidence”. This is not a fourth option. P. Salembier, Legal and Legislative

Drafting 131 (2d ed. 2018) (“The word may can be used in four different ways in legislation; it can be permissive; it

can be empowering; it can create rights; and it can indicate possibility”). It is not helpful to assert that a review officer

can discharge his or her duties without hearing evidence. Evidence is essential to the proper exercise of a review

officer’s mandate. Contra, Fraser Milner Casgrain LLP v. Kristof Financial Inc., 2012 ABQB 359, ¶ 24; 541 A.R.

245, 251 (“The Appellant argues that the review officer in this case erred when he accepted the unsworn evidence of

the Respondents during the review hearing. … [R]ule [10.17(1)(a)] is permissive, not mandatory. Thus, it was well

within the review officer's jurisdiction to accept unsworn representations when he was obtaining the information

concerning the details of the Agreement and the services that the Appellant provided to the Respondents… . … [Rule]

10.17(1)(f) does not say that the review officer must obtain this information under oath. Had the Legislature wanted

this to be the case, it could have said so”); Phillips Legal Professional Corp. v. Vo, 2017 SKCA 58, ¶¶ 50 & 64; [2017]

12 W.W.R. 779, 802 & 807 (“[Queen’s Bench Rules provide that] ‘On an assessment of costs, the assessment officer

may … take evidence by affidavit, administer oaths or affirmations and examine witnesses, as the assessment officer

considers it to be appropriate’ … . …. Evidence need not be taken; although, if the taking of evidence under oath will

assist in the conduct of an assessment, it is to be taken”) & David L. Parsons & Associates v. Reid, 502 A.P.R. 145,

148 (N.S. Sup. Ct. Tr. Div. 1998) (“The powers of the Taxing Officer … [in the Civil Procedure Rules include that]

‘… On a taxation of costs relating to a proceeding, a taxing officer may, (a) take evidence either by affidavit or viva

voce upon oath’ … . …. The Taxing Officer has discretion to require evidence under oath and he may do so on his

own initiative or he may do so upon the request of either party. It is entirely within the discretion of the Taxing Officer

which must be exercised judicially”). The review officer’s suggestion to Mr. Molstad, at the conclusion of the hearing,

that counsel need to do nothing more than make a client available also surprised me. Hearing Transcript 139: 37-39.

The part of the transcript that was the easiest to read was where Mr. Molstad asked Mr. Rath, his witness, clear

questions about key facts in issue. The questions provided order to the examination and alerted the reader to the likely

importance of the answer. A hearing before a review officer is a legal proceeding and the traditional method of proving

facts in issue should be followed. A witness should be sworn and answer questions in direct, cross and redirect

examination. Statements of fact counsel make are not evidence unless the other side admits the facts. The practice for

the assessment of inter partes costs may be different. M. Orkin & R. Schipper, Orkin on the Law of Costs § 6:57 (2d

ed. release 2022-2) (“No evidence in the formal sense is adduced on an assessment of party-and-party costs … . …

[W]here … party-and-party costs are being assessed on a solicitor-and client basis … viva voce evidence may be heard

if specifically requested by a party, but this does not impose an obligation of the assessment officer to hear viva voce

evidence. To do so is the exception rather than the rule, and the accepted practice in Ontario is to conduct the

assessment on the basis of unsworn evidence”).

Page: 57

and then on top of it the negotiators can change on the file. That happened on this

file several times. Then … you have Ministers change. … Chuck Strahl was the

Minister …, [he] agreed to an amount, and then the Minister of Indian Affairs

changed and we … got John Duncan in who [was] … formerly the head of the

Canadian Taxpayers Federation and he basically canceled the entire settlement

because in his mind there were no Indians in the country that were ever going to

get a billion dollars on his watch and that was the end of that. … [M]inisters change,

governments change.

And then … you … have the risk of having to take the claim through to referendum

… and this is no small risk, the community then has to vote yes to accept the claim.

There have been … cases … involving claims [of] … enormous magnitude … [such

as] the Calgary Railroad project, where a settlement package of almost half a billion

dollars was presented to the community of Tsu T'ina First Nation and … when it

was first put to … a vote was turned down. And, in fact, in the context of

agricultural benefits claims in the last several years, there has been other

communities that have turned down the settlements and have voted no and they

have gone back to the negotiating table.

[238] Why did Tallcree retain Rath & Company?

[239] Tallcree retained Rath & Company for three main reasons.

[240] First, Tallcree was dissatisfied with the legal services Ackroyd & Company provided⁸⁷

particularly with the pace at which Ackroyd & Company had advanced its claim over the six years

preceding October 2014, when it had carriage of the file.⁸⁸From Tallcree’s perspective, its claim

had stalled.⁸⁹Tallcree wanted a more aggressive advocate – someone who could get the attention

⁸⁷See Reasons for Judgment, Hearing Transcript 133: 23-24 (“It doesn't seem to me to be disputed that … Ackroyd

and Company ... did not prove to be satisfactory to the client”).

⁸⁸Tallcree retained Miller Thomson in 2000 or 2001 to represent it with respect to its agricultural benefits claim.

Hearing Transcript 37: 33-35. Miller Thomson was Tallcree’s counsel until 2007. Hearing Transcript 10: 19-20.

Ackroyd & Company took over the file in 2008. It filed a claim on behalf of the Tallcree Nation under the Specific

Claims Tribunal Act around May 2013. See supra note 79. Ackroyd also acted for ten other First Nations with similar

Treaty 8 claims. Hearing Transcript 10: 13-14. Tallcree signed a retainer agreement with Rath & Company on October

14, 2015. Rath & Company also acted for the Sturgeon Lake Cree Nation. Id. 50: 28-29.

⁸⁹Hearing Transcript 50: 29-32 (“Mr. Rath: … The very reason that … Tallcree [retained me] was … because the

previous lawyer … had not been communicating with Canada. Their claim was basically not moving anywhere”); 65:

3-4 (“But the fact of the matter is the claim was moving nowhere and had not been validated at the time we were

retained”) & 124: 24-25, Submissions by Mr. Molstad (“We submit that the evidence in front of you is that virtually

nothing happened until Rath & Company was retained in 2015”).

Page: 58

of Canada. It wanted this dispute resolved sooner rather than later.⁹⁰Tallcree must have believed

that Mr. Rath was the lawyer ideally suited to do this. Mr. Rath was one of Canada’s leading treaty

claims lawyers. He presented Tallcree with a plan designed to secure Tallcree a place at the

bargaining table established by the Specific Claims Tribunal Act,⁹¹just as he had done for Sturgeon

Lake.⁹²And Tallcree must have recognized that a contingency fee agreement would incentivize

Rath & Company to proceed with expedition.⁹³

[241] Tallcree must have understood⁹⁴when it retained Rath & Company that its previously filed

claim proceeded under the Specific Claims Tribunal Act. It must have known that its claim passed

the modest format test⁹⁵and was now in the system. Mr. Cardinal, Tallcree’s chief executive

officer, never stated that Tallcree functioned without the benefit of this knowledge. This meant

that Tallcree had to have appreciated that the minister had three years to assess the claim’s validity

– to decide whether to accept it for negotiation.⁹⁶The three-year deadline was August 14, 2016,⁹⁷

assuming that the format test was met as of the date of filing – the minister has six months to make

this determination.⁹⁸If the minister agreed to negotiate with Tallcree, the protocol contemplated a

⁹⁰Id. 32: 27-30 (“Mr. Rath: [T]he simple fact of the matter is that the reason we were retained was to expedite the

settlement”) & 68: 14-19 (“[Tallcree retained us] because we had a very particular strategy and an ability to move this

... forward as quickly as possible ... keeping in mind that ... [the] time, value of money potentially could be as much

as 6, 7, 8, 9 percent per annum depending on how funds are invested”).

⁹¹S.C. 2008, c. 22.

⁹²Hearing Transcript 70: 21-33 & 128: 9-19.

⁹³Crown Bay Hotel v. Zurich Indemnity Co. of Canada, 160 D.L.R. 4th 186, 192 (Ont. Gen. Div. 1998) per Winkler,

J. (“Fee arrangements which reward efficiency and results should not be discouraged”) & Goldberger v. Integrated

Resources, Inc., 209 F. 3d 43, 48 (2d Cir. 2000) (“[a compensation formula based on total accumulated hours creates]

temptation for lawyers to run up the number of hours for which they could be paid”). See Fitzpatrick, “A Fiduciary

Judge's Guide to Awarding Fees in Class Actions”, 89 Fordham L. Rev. 1151, 1158 (2021) (“The percentage method

is better because the lawyer is not indifferent to the size or the speed of recovery; like the client, the lawyer wants a

big recovery and the lawyer wants it quickly”).

⁹⁴Hearing Transcript 37: 4-9 (“The Review Officer: … [W]ould it be fair to say that … most First Nations … stay in

touch with other First Nations on these matters and have some appreciation of what's going on and who is settling

what and what stage they're at? It … seems to me common sense that you would have that kind of dialogue going on

all the time. Is that fair? Mr. Cardinal: That might be fair”).

⁹⁵Specific Claims Tribunal Act, S.C. 2008, c. 22, s. 16(2).

⁹⁶Id. s. 16(1)(b).

⁹⁷See supra, note 77 for a discussion of the date when Tallcree’s claim was filed.

⁹⁸Government of Canada, Specific claims (“Certain requirements must be met when a First Nation submits a specific

claim to Canada for review and assessment. These requirements are detailed in the Minimum Standard for Filing a

Specific Claim Submission. … Canada has up to six months to determine if the claim meets the minimum standard.

If the claim meets the minimum standard, it is filed with the Minister of Crown-Indigenous Relations and Northern

Affairs and Canada reviews the claim and makes a decision whether to accept the claim for negotiation under its

Specific Claims Policy and Process Guide”). https://www.rcaanc-cirnac.gc.ca/eng/1100100030291/1539617582343.

Page: 59

further three-year period for negotiations.⁹⁹The deadline for this stage would have been August

14, 2019. If Tallcree and Canada did not settle the claim before the expiration of this period,

Tallcree could proceed before the Specific Claims Tribunal. It would not have to. Tallcree could

continue to negotiate if Canada agreed to do so.

[242] If Tallcree chose to invoke the hearing process, there would be no guarantee anything

would happen quickly. Nothing in most legal matters happens quickly, especially in this area of

the law. The Specific Claims Tribunal’s 2020-21 Annual Report reinforces this observation:¹⁰⁰

Overall, the Tribunal remains concerned about the time it is taking to conclude

claims. On the one hand, negotiation is the preferred means of resolving claims. On

the other, the unduly lengthy process of negotiation militates against claims being

resolved in a timely way and, if negotiations fail, may result in claims not being

heard for many years after being filed with the Tribunal.

[243] My review of the 2017-2018 Annual Report of the Specific Claims Tribunal and the

Specific Claims Tribunal decisions indicates that on average 5.2 years separate the filing of a claim

before the Tribunal and the release of a compensation decision.¹⁰¹This means that Tallcree’s claim

may not have been resolved by the Specific Claims Tribunal before January 1, 2024.

⁹⁹Specific Claims Tribunal Act, S.C. 2008, c. 22, s. 16(1)(d).

¹⁰⁰Specific Claims Tribunal Canada, 2020-2021 Annual Report 14.

¹⁰¹Specific Claims Tribunal Canada, 2017-2018 Annual Report 15 (“The average time from filing of a Claim to a

decision on the merits is 3.5 years. Where Claims have been found valid in law, the average time from filing to the

ultimate resolution by an award of compensation is 5.2 years. However, these statistics do not reflect the whole picture.

For example, of the 57 claims filed between 2011 and March 2014 (active for over/or close to five years), 41 are still

before the Tribunal. Of the 41, there are 29 claims in which the parties have not yet scheduled a hearing on the merit”).

See also Specific Claims Tribunal Canada, 2019-2020 Annual Report 18 (“The Tribunal saw an uptick in settlements

in 2019-2020, with 5 claims reaching final settlement and 9 claims having a consent order issued on a preliminary

stage of the claim. However, we remain concerned about the time it is taking to conclude claims. On one hand,

negotiation is the preferred means of resolving claims. On the other, the unduly lengthy process of negotiations

militates against claims being resolved in a timely way and, if negotiations fail, may result in claims not being heard

for many years after being filed with the Tribunal”); Specific Claims Tribunal Canada, 2018-2019 Annual Report 16

(“Approximately a third of active claims before the Tribunal are now in negotiation, and proceedings have been stayed

to permit the Parties the time needed to achieve resolution. … [W]e remain concerned about the time it is taking to

conclude claims. What accounts for delay in negotiations? Through the advisory committee we know that Crown

negotiators do not arrive at the table with mandates permitting them to accept or make binding offers of settlement.

… The most that can be achieved is a ‘Memorandum of Understanding’ by which the representatives of the Parties

undertake to take such internal steps as required to make a legally enforceable agreement on the terms of settlement.

On the Crown side the approvals can take 8 months or longer”); Siska Indian Band v. Canada, 2021 SCTC 2 (the

claim was filed on May 1, 2014, heard on validity on September 10, 2018 and the Tribunal issued its decision on the

claim’s validity on February 1, 2018 and on compensation on April 9, 2021); Huu-Ay-Aht First Nations v. Canada,

2020 SCTC 4 (the claim was filed on December 18, 2013, heard on validity on November 19, 2018 and the Tribunal

issued its decision on the claim’s validity and historical losses on October 20, 2020); Ahousaht First Nation v. Canada,

Page: 60

[244] Tallcree must have known the basic timelines incorporated in this protocol. It is

inconceivable that Rath & Company would not have communicated this information to Tallcree

or that Tallcree would not have asked for it or acquired this information from some other sources

– such as other First Nations that had submitted a claim.

[245] The second reason Tallcree retained Rath & Company is this: Tallcree must have known

that Mr. Rath was a leading treaty and aboriginal rights litigation lawyer in Canada¹⁰²and was

familiar with the protocols under the Specific Claims Tribunal Act. Tallcree knew that the Sturgeon

Lake Cree Nation had retained Rath & Company to advance its claim under the Specific Claims

Tribunal Act. ¹⁰³Mr. Rath put it bluntly: ¹⁰⁴“Tallcree was [not] at the table when I was retained. I

was ... retained to get them to the table. That’s why the chief and council agreed to pay the 20

percent”.

[246] Third, Tallcree must have appreciated that Rath & Company had close ties with senior

lawyers at the Department of Justice¹⁰⁵and had impeccable political connections with the Liberal

Party of Canada.¹⁰⁶It no doubt hoped that the Liberals would unseat the government of Prime

Minister Harper at the upcoming 2015 federal election and that Mr. Rath would be able to advance

their cause at the highest political levels. In this area of the law, the political posture of the

Government of Canada is of utmost importance. It was up to the minister to decide whether to

negotiate a claim filed under the Specific Claims Tribunal Act, what position Canada would take

at the negotiating table and at what pace the negotiations would proceed.

2019 SCTC 1, judicial review dismissed 2021 FCA 135, leave to appeal to SCC ref’d, [2021] S.C.C.A. No. 333 (the

claim was filed on June 20, 2012, first heard on July 12, 2016 and the Tribunal issued its decision on the claim’s

validity on February 8, 2019); We Wai Kai Nation v. Canada, 2019 SCTC 4 (the claim was filed on June 23, 2014,

heard on validity on December 5, 2017 and the Tribunal issued its decision on the claim’s validity on November 5,

2019) & Makwa Sahgaiehcan First Nation v. Canada, 2019 SCTC 5 (the First Nation filed the claim on December 8,

2011, heard on validity on December 4, 2018 and the Tribunal issued its decision on the claim’s validity on December

13, 2019).

¹⁰²Hearing Transcript 55: 4-10 (“[Mr. Rath:] I am regarded as being one of the leading treaty and aboriginal rights

lawyers in Canada. I have argued cases at almost every single level of Court in Canada with regard to treaty and

aboriginal rights, including the Supreme Court of Canada”) & 43: 24-25 (“Mr. Cardinal: … we relied heavily on Mr.

Rath’s expertise in this area”).

¹⁰³Id. 50: 27-29.

¹⁰⁴Id. 50: 37-39.

¹⁰⁵Id. 70: 16-23 & 102: 38-41.

¹⁰⁶Id. 89: 22-24 (“[Mr. Rath]: ... [A] big part of our job is making sure that the First Nation gets paid as quickly as

possible. We had already been in contact with Ottawa, we had contacts in the Prime Minister's office”).

Page: 61

[247] This file required considerable legal skills – Canada’s lawyers are also treaty specialists –

and a lawyer able to access senior lawyers at the Department of Justice and Canada’s political

elite. Mr. Rath had these attributes.¹⁰⁷Tallcree believed that he did.

[248] In the period commencing October 1, 2014, roughly when Tallcree first asked Rath &

Company to replace Ackroyd as its counsel on the agricultural benefits file, and ending, August

31, 2016, when Tallcree signed the contingency fee agreement for the second time, Tallcree never

asked Rath & Company to enter into a fee-for-service retainer and never complained about the

twenty percent contingency.

[249] Rath & Company, given their prior experience with Tallcree, no doubt would have been

reluctant to act on a fee-for-service basis.¹⁰⁸This would give Tallcree every opportunity to contest

accounts and put Rath & Company in an unenviable position.¹⁰⁹In 2008 Tallcree retained Mr.

Rath to make an emergency application to the Federal Court.¹¹⁰The evidence of Mr. Rath¹¹¹and

Mr. Cardinal¹¹²revealed that Tallcree had not paid Mr. Rath’s approximately $50,000 fee by

¹⁰⁷Reasons for Judgment, Hearing Transcript 135: 39 – 136: 2 & 136: 8-10 (“we do have in this case a very specialized

body of law. There are not many lawyers that have experience in aboriginal law issues and the negotiation of

agreements of the type here involved. It does require a great deal of knowledge, particularly, when it comes to the

history of settlements and the kind of factors that come into play in settlement discussions. So it is complex. [The]

Crown … [has] lawyers and negotiators that certainly have experience in this area. They know what they are doing.

One needs to know how to deal with them”).

¹⁰⁸Some firms may be unwilling to agree to a contingency fee. They require a steady income stream. See Samson

Cree Nation v. O’Reilly & Assoc., 2014 ABCA 268, ¶ 134; 375 D.L.R. 4th 663, 689 per Côté, J.A. (“The appellant

client ... inquired about a contingency basis for billing. O’Reilly explained why that would be absolutely impossible

for his little law firm. He could act only by being paid for every hour worked at a certain amount per hour, no more

and no less. And he had to be paid at frequent intervals. He would not add bonuses later, and the client would not get

deductions later. Otherwise he declined to act”).

¹⁰⁹See Samson Cree Nation v. O’Reilly & Assoc., 2014 ABCA 268, ¶ 2; 375 D.L.R. 4th 663, 668 per Côté, J.A. (“these

two appeals ... [are] an attempt after almost 20 years of paid legal bills, to litigate the entire basis for billing”).

¹¹⁰Hearing Transcript 55: 24-30.

¹¹¹Id. 65: 37-40 (“[Mr. Rath:] ... the biggest risk with Tallcree is getting paid. ... [A]t the time we were retained

[October 14, 2015], we had an outstanding account that Tallcree had not paid ... for well over five years”).

¹¹²Id. 56: 39-40 (September 26, 2014 email from Mr. Cardinal to Mr. Rath) (“Tallcree is in a position to make some

inroads with regard to our account and we are prepared to bring that to the table next week”) & 101: 34-36 (“[Mr.

Cardinal]: I reached out to Jeffrey Rath because it was a bill that needed to be paid”) & 102: 6-20 (Review Officer:.

Was it fully paid of partially paid? Mr. Cardinal: Fully paid. … Review Officer: Was that paid … before Rath … and

company was engaged … Mr. Cardinal: Before”).

Page: 62

October 2014. It is not clear if Tallcree ever did and, if it did, when.¹¹³Lawyers do not consider

clients who take six years to pay their fees as prized clients.

[250] Mr. Cardinal told the review officer that ‘[i]f we had known at the beginning ... what [the

contingency fee agreement] was going to cost us, we would have cash managed it”.¹¹⁴

[251] This statement is hard to accept. First, Tallcree knew when it signed the October 14, 2015

contingency fee agreement that it promised to pay twenty percent of a number between $50 and

$80 million. Twenty percent of a very large number is a very large number. Second, as noted

above,¹¹⁵Mr. Cardinal acknowledged that Rath & Company had a Tallcree account as an accounts

receivable for roughly six years. This brings into question Tallcree’s willingness to pay its fee-for-

service legal bills.

[252] While it was expected that some time would pass before each side would reap the rewards

of the agreement, in the interim the client had no obligation to pay Rath & Company any fees for

the work it did on the client’s behalf. This is not an insignificant benefit.¹¹⁶

[253] To summarize, Tallcree had sufficient information to make an informed and prudent

decision about the wisdom of signing the October 14, 2015 contingency fee agreement.

C.

[254] Notwithstanding the prohibition in rule 10.19(2) of the Alberta Rules of Court against a

retrospective analysis from the date of a review officer hearing to determine the reasonableness of

a contingency fee agreement, it is acceptable to consider the facts that occurred after October 14,

2015 when assessing the adequacy of the facts both sides contemplated before October 14, 2015.

[255] As it turned out, Tallcree’s political and business instincts were sound. Its decision to retain

Rath & Company produced an extremely satisfactory settlement and in a much shorter period of

time than Tallcree could have realistically anticipated.

¹¹³Mr. Rath said that Tallcree never paid the bill and Mr. Cardinal was adamant that it had. Mr. Cardinal did not

provide a copy of a cancelled cheque or other proof of payment. Hearing Transcript 56: 1-13; 68: 26-34 & 102: 8-12.

Review Officer Pawlowski never decided the point.

¹¹⁴Hearing Transcript 41: 30-32.

¹¹⁵Supra, note 113.

116

Specific Claims Tribunal Canada, 2018-2019 Annual Report 18 (“This lack of timely funding impairs the

performance of the Tribunal mandates to resolve claims in an expeditious and timely manner. It is also the case that

the funding shortfalls prevent Claimants from prosecuting their Claims diligently before the Tribunal. When the

Crown makes overtures for negotiation, the claimant is put at a disadvantage. If unable to complete the preparatory

work for a hearing the time pressure for settlement vanishes”).

Page: 63

[256] It is also true that Rath & Company’s political and business instincts were outstanding.

[257] The Liberals won the October 19, 2015 federal election.

[258] Not long afterwards – December 8, 2015 – the Prime Minister declared the resolution of

treaty disputes a “sacred obligation”.¹¹⁷

[259] Both Tallcree and Mr. Rath must have interpreted this as a very positive sign that the

Liberal government intended to make resolution of outstanding treaty claims a high priority. This,

no doubt, explains the alacrity with which Mr. Rath executed the strategic plan.

[260] On December 9, 2015 Mr. Rath filed a statement of claim in the Federal Court.¹¹⁸The

Specific Claims Tribunal Act did not preclude Tallcree from taking this step.¹¹⁹He told the review

officer that this was done to catch the attention of senior lawyers in Canada’s Department of

Justice.¹²⁰In his opinion, this is precisely what happened. There is no reason to reject Mr. Rath’s

statement.¹²¹Tallcree never challenged Mr. Rath’s assessment.

[261] Mr. Rath also secured the attention of Canada’s political leaders.

¹¹⁷Statement of Prime Minister Trudeau, December 8, 2015, Gatineau, Quebec (“It is time for a renewed, nation-to-

nation relationship with First Nations peoples: one that is based on the understanding that the constitutionally-

guaranteed rights of First Nations are

a

sacred obligation that we carry forward”).

https://pm.gc.ca/en/news/statements/2015/12/08/statement-prime-minister-canada-after-delivering-speech-assembly-

first.

¹¹⁸Appellant's Extracts of Key Evidence 26.

¹¹⁹Section 15(3)(a) of the Specific Claims Tribunal Act, S.C. 2008, c. 22 did not preclude Tallcree from filing its

statement of claim in Federal Court when it did. This provision states that “[a] First Nation may not file a [specific]

claim [with the tribunal] if .... there are other proceedings before a court or tribunal other than the Tribunal that relate

to the same land or other assets and could result in a decision irreconcilable with that of the claim”. Tallcree filed its

claim under the Specific Claims Tribunal Act in 2013, with the Minister. Before filing a claim with the Specific Claims

Tribunal, it had to wait for the earlier of three years since it filed the claim with the Minister or the Minister’s decision

as to whether it will negotiate with Tallcree or obtain the Minister’s consent. Id. s. 16. The fact that section 15(3)(a)

may not be governing does not preclude the Minister from informing Tallcree that it will not negotiate with Tallcree

unless it agrees not to prosecute its statement of claim.

¹²⁰Hearing Transcript 30: 23-24 (“[Ms. Kennedy:] the Statement of Claim was … a little bit of a spur in the side of

the government to move them along”); 32: 25-30 (“Mr. Rath: We filed a statement in Federal Court. That was the only

reason the Federal Government was negotiating with Tallcree … . The strategy to expedite the settlement was filing

a claim in Federal Court, not the Specific Claims Tribunal”); 61: 12-15 (“[Mr. Rath:] We were dealing with senior

lawyers at the Department of Justice in Canada on other files where we were engaged in litigation that we were able

to use the Statements of Claim to basically … move them ahead more quickly”) & 63: 18-19 (“[Mr. Rath:] … [W]e

almost immediately began working on a Statement of Claim that was filed in the Federal Court trial division”).

¹²¹Counsel for Tallcree never challenged this statement.

Page: 64

[262] In a December 10, 2015 letter to the Minister of Indigenous and Northern Affairs and the

Minister of Justice, that Mr. Rath discussed with Tallcree before sending,¹²²Mr. Rath, in strong

terms, urged Canada to discharge its Treaty 8 obligation to Tallcree:¹²³

As you are no doubt aware, Treaty No. 8 promised the Indian Band signatories,

including Tallcree, certain defined agriculture benefits (cows, ploughs, seed,

mowing machines etc.) and economic benefits (ammunition and twine for hunting

and fishing etc.) per Band, family or individual Indian as the case may be

(“Agricultural Benefits”).

The Government of Canada has acknowledged that Agricultural Benefits under

Treaty No. 8 remain outstanding. It has promised for well over a decode to settle

these claims and … engaged its own experts.

…

… In 2005, Canada's negotiators were prepared to settle based on the figure of

$42,500/person … . However, these settlement negotiations were shelved by the

Government of Canada under Prime Minister Stephen Harper, and as a result, these

claims have since languished or been opposed by Canada, including in the Specific

Claims negotiation process and before the Specific Claims Tribunal.

…

Pursuant to Prime Minister Trudeau's statement on December 8, 2015 that “(i)t is

time for a renewed, nation-to-nation relationship with First Nations peoples, one

that understands that the constitutionally guaranteed rights of First Nations in

Canada are not an inconvenience but rather a sacred obligation”, our client's view

is that it would be not only immoral and in bad faith, but in breach of the Honour

of the Crown and the Crown’s Constitutional and fiduciary duties for the

Government of Canada to continue to withhold monies that it has acknowledged

for over 10 years are owing. In continuing to do so, the Government would continue

along the path of its predecessor in creating an unfair advantage in settlement

negotiations by withholding funds from some of Canada’s poorest citizens as a

means of extracting an unfair or unreasonable settlement on the basis of poverty

that Canada itself has created and supported through its previous refusals to honour

its “sacred obligations”.

¹²²Id. 71: 9-10.

¹²³Appeal Record F22 (emphasis in original deleted).

Page: 65

… [P]lease accept this letter as a without prejudice interim offer of partial

settlement in the amount of $83,545,816.68.

Our clients are in dire economic circumstances due to the rampant unemployment

related to the collapse of the Alberta Oil & Gas Exploration Industry. Tall Cree

First Nation requires this money urgently on an emergency basis.

[263] Mr. Rath met with the minister’s special advisor on June 6, 2016¹²⁴and the Prime Minister

on July 15, 2016.¹²⁵

[264] I suspect that the number of lawyers who practice aboriginal law that could secure an

audience with the Prime Minister could probably be counted on one hand – maybe one finger.

[265] Within weeks of Mr. Rath’s meeting with the Prime Minister – on August 8, 2016 – the

minister agreed to negotiate with Tallcree.¹²⁶This was a very important development. It meant that

Tallcree had now joined the bargaining table other First Nations were already sitting at.¹²⁷Tallcree

recognized the significance of this development – in early 2016 Canada had presented settlement

offers to some of the Treaty 8 signatories whose claims the minister had agreed to negotiate.¹²⁸

Mr. Rath noted that the chief and council were “extremely excited and extremely happy”.¹²⁹

[266] Within six months after the minister agreed to negotiate with Tallcree – on February 2,

2017 – Canada offered Tallcree $57.6 million to settle its claim.¹³⁰Tallcree was “extremely

enthusiastic about the offer”.¹³¹As it should have been. This was a huge success for Tallcree.¹³²

¹²⁴Hearing Transcript 76: 31-35(“[Mr. Rath:] we were using the political leverage that we had through our office to

obtain that meeting and to achieve the objectives we were attempting to obtain on behalf of the client”).

¹²⁵Id. 76: 37-77: 2.

¹²⁶Id. 50: 32 – 51: 2 (“[Mr. Rath:] The strategy was to file the claim in the Federal Court trial division, use that and

the fact that … I had intimate knowledge of what was going on with regard to the other file to be able to get Tallcree’s

claims validated in record time because they were not approved for a claim. They didn’t have a validated claim at the

time I was retained … . This isn’t a case where Tallcree was at the table when I was retained. I was … retained to get

them to the table. … The very reason we were retained was because of the unique expertise and ability that we had to

bully Canada into validating Tallcree’s claim and bring it to the table and getting Canada to negotiate … . They weren’t

negotiating with Tallcree”).

¹²⁷There is a saying in the political world that “if you are not at the table, you are on the menu”.

¹²⁸Hearing Transcript 75: 25-27.

¹²⁹Id. 78: 36.

¹³⁰Id. 83: 20-22.

¹³¹Id. 84: 31. See also id. 97: 38-39.

¹³²Reasons for Judgment, Hearing Transcript 138: 15 (“the results seem to be a good one”).

Page: 66

[267] Tallcree, as it was obliged to do under the settlement agreement, conducted a ratification

vote. It took place on June 21 and 28, 2017.¹³³Of the 627 votes cast, 588 were in favor of accepting

the offer and thirty-six opposed it.¹³⁴

[268] Part of the ratification process included approval of a trust agreement that directed the

trustees to pay as a first charge on the settlement proceeds the legal fees of Rath & Company “in

the amount of 20% of the Settlement Funds”.¹³⁵

[269] As well, a chartered professional accountant provided Tallcree with independent financial

advice “... with respect to the terms of Treaty 8 Agricultural Benefits Specific Claim Settlement

Agreement ... and the Trust Agreement, including dealing with the deposit of the Compensation

Balance”.¹³⁶

[270] On July 21, 2017 Tallcree, after retaining counsel other than Rath & Company to advise

it,¹³⁷signed the settlement and trust agreements.¹³⁸

[271] On January 29, 2018 Canada signed the settlement agreement¹³⁹and shortly thereafter

forwarded the settlement funds to Rath & Company.¹⁴⁰

[272] On February 15, 2018 Rath & Company submitted to Tallcree its statement of account for

$11,518,075.¹⁴¹

¹³³Hearing Transcript 87: 33-34.

¹³⁴Id. 87: 38-41.

¹³⁵Unsigned Declaration of Trust, Schedule A, Appellant’s Extracts of Key Evidence 158. Declaration of Trust dated

July 21, 2017, Schedule A. Id. 229.

¹³⁶Settlement Agreement, Schedule 5 Financial Advisor’s Certificate of Independent Financial Advice, Appellant’s

Extracts of Key Evidence 144.

¹³⁷Hearing Transcript 115: 1-22.

¹³⁸Id. 93: 10-21.

¹³⁹Id. 95: 41-96: 2. Government of Canada Crown-Indigenous Relations and Northern Affairs Canada, Status Report

on Specific Claims. https://services.aadnc-aandc.gc.ca/SCBRI_E/Main/ReportingCentre/External/externalreporting.

aspx. On July 3, 2018 the Minister of Crown-Indigenous Relations and Northern Affairs announced that “[t]his past

year, the Government of Canada and eighteen First Nations in Treaty #8 [Athabasca Chipewyan, Black Lake,

Blueberry River, Doig River, Duncan’s, Fond du Lac, Fort McMurray, Fort Nelson, Halfway River, K’athlodeeche,

Mikisew Cree, Prophet River, Saulteau, Sturgeon Lake Cree, Swan River, Tallcree, West Moberly, and Whitefish

Lake] have successfully concluded negotiated settlements to resolve their agricultural benefits claims”.

http://www.newswire.ca/en/releases/archive/July2018/03/c8266.html.

¹⁴⁰Hearing Transcript 96: 20-25.

¹⁴¹Appeal Record F21.

Page: 67

[273] All this happened within less than three years of the date Tallcree retained Rath &

Company – October 14, 2015.

[274] Was it just a coincidence that Mr. Rath was Tallcree’s counsel when this happened? Or did

Mr. Rath play a vital role?

[275] Tallcree has not convinced me that Mr. Rath did not have something to do with Tallcree’s

good fortune. Mr. Rath has convinced me that he was primarily responsible for Tallcree’s good

fortune – a totally satisfactory settlement in a relatively short time period.

[276] Taking all the circumstances into account, I am satisfied it is more likely than not that Mr.

Rath’s good counsel work caused Canada to expedite the settlement monies with all Treaty 8

signatories whose Specific Claims Tribunal Act claims the minister had agreed to negotiate.

VII.

[277] There is no compelling reason to relieve Tallcree of its obligations under the contingency

fee agreement – pay Rath & Company twenty percent of $57,590,375.

[278] The agreement is not one-sided at all and its enforcement would not cause a reasonable

observer fully informed of the relevant facts, the inherent value contingency fee agreements play

in promoting access to justice, and the purpose of judicial oversight to fear that a significant

number of potential users of legal services would not retain counsel when it was advisable to do

so.

[279] Not lost on the reasonable observer would be Tallcree’s principal ground of complaint –

Canada paid Tallcree $57,590,375 much faster than it expected – and that the client would have

gladly paid Rath & Company more than twenty percent if the case had dragged on for years and

ended up in court.

[280] No reasonable person would think less of the legal profession if this Court held that the

contingency fee agreement was reasonable and that Tallcree must pay Rath & Company what it

promised. Rath & Company secured a settlement completely satisfactory to Tallcree in less time

than Tallcree could have reasonably hoped for.

[281] I am completely satisfied that the notional reasonable observer would easily conclude that

Tallcree entered into this agreement knowing full well what it was doing – it thought about it for

a year before signing – and what the merits and demerits of the agreement were. And it was

Tallcree that declined to secure independent legal advice about the merits of the October 14, 2015

contingency fee agreement, when Rath & Company recommended that it do so, and Tallcree had

the resources to cover the costs of this advice.

Page: 68

[282] The notional reasonable observer would easily conclude that the enforcement of the

contingency fee agreement would not have any adverse effect whatsoever on any legitimate

interests of the greater community.

[283] Any reasonable member of the community with a knowledge of the important facts would

likely conclude that Rath & Company did exactly what the firm promised it would do to the

complete satisfaction of almost all members of Tallcree and be left with the dominant impression

that good lawyering can make a huge difference.¹⁴²

[284] The contingency fee Tallcree agreed to pay Rath & Company was not out of line with

court-approved counsel contingency fees in class actions in North America or their equivalents in

the United Kingdom and Australia.

[285] It was neither so high nor so low as to constitute evidence that Tallcree’s interests were not

adequately protected.

[286] Class action counsel fees are certainly an excellent comparator, if not the very best. The

sums sought are very large and the amount of time needed to resolve such claims is difficult to

predict at the outset. Good counsel are usually involved.

[287] Ontario courts routinely approve class counsel fees set at roughly one-third of the first $20

million and smaller percentages, ranging from 17.5 to 27.5 percent, for each additional unit of $20

million.¹⁴³

¹⁴²Crown Bay Hotel Ltd. Partnership v. Zurich Indemnity Co. of Canada, 160 D.L.R. 4th 186, 192 (Ont. Gen. Div.

1998) per Winkler, J. (“The resourcefulness and tenacity of plaintiffs' counsel in investigating the matter and

uncovering the existence of the bond contributed greatly to the successful resolution of the action. His extensive

preparation of the case for trial was evident. The class members will recover almost all of their initial investment, net

of fees, and the success of the settlement from their viewpoint is compelling”) & In re Enron Corporate Securities,

Derivative & “ERISA” Litigation, 586 F. Supp. 2d 732, 773-74 (S.D. Tex. 2008) per Harmon, J. (“As for Lead

Counsel's negotiations with those [large financial institutions] that did settle for over $2 billion each in what ‘was

arguably the highest stakes legal poker game ever played,’ Professor Coffee comments, ‘Few, if any, other plaintiffs’

counsel in my judgment could have pulled off such a tour de force’ and the achievement ‘is attributable in almost

equal measure to its credibility, creativity and the intensity of its commitment to this case. In my judgment, Lead

Counsel is the adversary most feared today by the defense bar in securities litigation, and that reputation played an

important role here.’ … Moreover, ‘Lead Counsel was literally litigating against the cream of the American corporate

law bar’ which ‘vastly outnumbered’ Plaintiffs’ counsel … . The Court concurs with all these observations”).

¹⁴³M. Eizenga, M. Peerless, J. Callaghan & R. Agarwal, Class Actions Law and Practice § 13.2 (2d ed. release 72

February 2022) (“percentage-based fees and block fees are regularly approved by the court”). E.g. Middlemiss v. Penn

West Petroleum Ltd., 2016 ONSC 3537 (the Court approved a 33 percent class counsel fee of $8.8 million on $26.5

million total class recovery); Reddock v. Canada, 2019 ONSC 7090 (the Court approved a 33 percent class counsel

fee of $7.03 million on $21.1 million total class recovery); Baroch v. Canada Cartage, 2021 ONSC 7376 (the Court

approved a 30 percent class counsel fee of $6.7 million on $22.25 million total class recovery); Cannon v. Funds for

Canada Foundation, 2013 ONSC 7686 (the Court approved a 30 percent class counsel fee of $9.4 million on $28.2

Page: 69

[288] The United States District Court for New Jersey recently approved class action counsel

fees of $30.94 million – 23.8 percent of a $130 million settlement fund¹⁴⁴– and $2,473,243.51 in

litigation expenses.

million total class recovery); Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v.

SNC-Lavalin Group Inc., 2018 ONSC 6447 (the Court approved a graduated class counsel fee of 32.5 percent on the

first $20 million recovered, 27.5 on the next $20 million, 22.5 on the next $20 million, and 17.5 on the amount above

$60 million for a total fee of $25.25 million that equated 22.95 percent of the total settlement of $110 million) &

Doyer v. Dow Corning Corp., [1999] Q.J. No. 6203 (Sup. Ct.) (the Court approved a class counsel fee of $10.4 million

on $52 million total class recovery – 20 percent). See also Middlemiss v. Penn West Petroleum Ltd., 2016 ONSC 3537,

¶ 19 per Belobaba, J. (“it is only through a robust contingency fee system that class counsel will be appropriately

rewarded for the wins and losses over many files and many years of litigation and that the class action will continue

to remain viable as a meaningful vehicle for access to justice”); Reddock v. Canada, 2019 ONSC 7090, ¶¶ 29 & 32

per Perell, J. (“The fairness and reasonableness of the fee awarded in respect of class proceedings is to be determined

in light of the risk undertaken by the lawyer in conducting the litigation and the degree of success or result achieved.

… Class Counsel's fee request in the immediate case should be approved. Class Counsel brought Mr. Reddock's

extraordinary high-risk action to a very substantial and significant outcome”); Cannon v. Funds for Canada

Foundation, 2013 ONSC 7686, ¶¶ 4 & 8-9 per Belobaba, J. (“I initially approved class counsel’s legal fees at the 25

per cent level (rather than the full one-third that had been agreed to in the retainer agreement) because, frankly, that’s

what other judges were doing. I reviewed several of the decisions, expecting to find persuasive reasons for capping

the legal fees at say, 20 to 25 per cent and not allowing the 30 per cent or one-third that had been agreed to in the

retainer agreement. What I found, instead, were well-intentioned judicial efforts to rationalize legal fee approvals by

discussing arguably irrelevant or immeasurable metrics such as docketed time (irrelevant) or risks incurred

(immeasurable.) …. What I suggest is this: contingency fee arrangements that are fully understood and accepted by

the representative plaintiffs should be presumptively valid and enforceable, whatever the amounts involved. Judicial

approval will, of course, be required but the presumption of validity should only be rebutted in clear cases based on

principled reasons. Examples of clear cases where the presumption of validity could be rebutted include the following:

(i) Where there is a lack of full understanding or true acceptance on the part of the representative plaintiff. ... (ii)

Where the agreed-to contingency amount is excessive. I, for one, am prepared to accept that a one-third contingency

is presumptively reasonable and acceptable. (iii) Where the application of the presumptively valid one-third

contingency fee results in a legal fees award that is so large as to be unseemly or otherwise unreasonable. I know that

I would be quite comfortable approving legal fees of $10 or even $15 million based on overall cash recoveries of $30

or $45 million. But I frankly don’t know what I would or should do as a class actions judge when the recovery is, say,

$150 million and class counsel are asking for $50 million. Although the $50 million legal fees award would be

enormous, to say the least, I really can’t think of a principled reason for not approving these larger amounts”) (italics

in original) & Brown v. Canada, 2018 ONSC 3429, ¶ 56 per Belobaba, J. (“My view today is that the Cannon /

percentage of the fund approach remains viable but should be limited to settlement amounts that are common-place,

that is, under $50 million. Cannon should never be used in the mega-fund case where the settlement or judgment is

more than $100 million. And if there is evidence before the court that the requested legal fees are excessive, unseemly

or otherwise unreasonable – whatever the amount of the judgment or settlement – the class action judge should roll

up her sleeves and examine the risk incurred to help her decide whether the amount being requested by class counsel

is indeed fair and reasonable”).

¹⁴⁴Re Allergan Generic Drug Pricing Securities Litigation, Order Awarding Attorneys’ Fees and Litigation Expenses,

Case No. 2:16-cv-09449 (CLW) (D.N.J. November 22, 2021). See also Hanlon v. Chrysler Corp., 150 F. 3d 1011,

1029 (9th Cir. 1998) (“This circuit has established 25% of the common fund as a benchmark award for attorney fees”);

In re Hyundai and Kia Fuel Economy Litigation, 926 F.3d 539, 570 (9th Cir. 2019) (“In class action cases where the

defendants provide monetary compensation to the plaintiffs, ‘courts have discretion to employ either the lodestar

method or the percentage-of-recovery method.’ … . In the percentage method, ‘the court simply awards the attorneys

Page: 70

[289] Only months ago, the Supreme Court of Victoria, in the first decision of its kind in

Australia,¹⁴⁵approved legal costs of 27.5 percent of the eventual award or settlement in a class

proceeding.¹⁴⁶This was in line with historical legal fees in class proceedings that ranged from

twenty-three to thirty percent and more advantageous than cases involving third-party litigation

funding where the legal and funding fees together ranged from thirty-seven to fifty-six percent.¹⁴⁷

In allowing contingency agreements, the legislature understood that a legal practice which litigated

a percentage of the fund sufficient to provide class counsel with a reasonable fee,’ using 25% as a benchmark”); Baker,

Perino & Silver, “Is the Price Right? An Empirical Study of Fee-Setting in Securities Class Actions”, 115 Colum. L.

Rev. 1371, 1415 (2015) (“Average fees in all [securities class action] cases with an ex ante fee agreement are 23.4%

at mean settlement values. For cases with public pension lead plaintiffs, fee awards average 24.6%”); Fitzpatrick, “A

Fiduciary Judge's Guide to Awarding Fees in Class Actions”, 89 Fordham L. Rev. 1151, 1161 (2021) (“[in antitrust

corporate class actions in the pharmaceutical industry between 2003 and 2020] … [a]lthough the fee requests ranged

from a fixed percentage of 27.5 percent to a fixed percentage of one-third, one-third heavily dominated: the average

was 32.85 percent”) (italics in original) & Eisenberg & Miller, “Attorney Fees and Expenses in Class Action

Settlements: 1993-2008”, 7 J. Emp. Legal Stud. 248, 258 (2010) (“the mean fee to recovery ratio was 0.23, or 23

percent of the class award”).

¹⁴⁵Victoria was the first Australian state – effective July 1, 2020 – to permit contingency fee agreements. Justice

Legislation Miscellaneous Amendments Act 2020, No. 22/2020, s. 5 (“After section 33ZD of the Supreme Court Act

1986 insert— ‘33ZDA Group costs orders (1) On application by the plaintiff in any group proceeding, the Court, if

satisfied that it is appropriate or necessary to ensure that justice is done in the proceeding, may make an order— (a)

that the legal costs payable to the law practice representing the plaintiff and group members be calculated as a

percentage of the amount of any award or settlement that may be recovered in the proceeding, being the percentage

set out in the order; and (b) that liability for payment of the legal costs must be shared among the plaintiff and all

group members. (2) If a group costs order is made – (a) the law practice representing the plaintiff and group members

is liable to pay any costs payable to the defendant in the proceeding; and (b) the law practice representing the plaintiff

and group members must give any security for the costs of the defendant in the proceeding that the Court may order

the plaintiff to give. (3) The Court, by order during the course of the proceeding, may amend a group costs order,

including, but not limited to, amendment of any percentage ordered under subsection (1)(a). (4) This section has effect

despite anything to the contrary in the Legal Profession Uniform Law (Victoria)’”).

¹⁴⁶Allen v. G8 Education Ltd., [2022] VSC 32, ¶¶ 86 & 93(b) (“the plaintiffs sought a Group Costs Order at the rate

of 27.5% to be set as a maximum rate, potentially subject to adjustment downward in the event a very positive outcome

outstrips any proportionality to Slater and Gordon’s [the law firm] risk or work performed. .... The proposed rate may

be varied by Court order in the future. The rate is subject only to the possibility of a downward revision in the event

that it is shown, for example, to deliver a disproportionate return to the solicitors”).

¹⁴⁷Id. ¶¶ 70-72 (“[Mr. Houston’s, the expert] final data set … comprised 54 [class proceedings that reached judgment

or settlement approval spanning 1997 and 2020] … . Mr Houston noted that the available data reflects rates of

commissions approved at the end of the process, with the benefit of after the fact assessments … . … [H]is report …

shows that: (a) half of the commissions in all captured class actions fell within the range 23% to 30% of the gross

settlement amount, while for shareholder class actions, this interquartile range was 22 to 29%; (b) for all class actions,

the mean and median commission rate was 25%, while for shareholder class actions, the mean and median was 24%;

… [F]or both legal costs and litigation funding commissions … [he] found that: (a) the interquartile range of combined

legal and litigation funding fees in historical proceedings on that data set was 37% to 56%, and for shareholder class

actions only the interquartile range was 37% to 53%; and (b) for all class actions, the median proportion of an award

or settlement deducted by funders in respect of legal and funding fees was 47%, while the mean was 46%, while in

shareholder class actions the median was 46% and the mean 44%”).

Page: 71

a class proceeding on this basis took on a risk for which it should be rewarded¹⁴⁸and that doing so

encouraged legal practices to take on these risks and in effect reduce barriers to commencing class

actions.¹⁴⁹

[290] The United Kingdom’s Parliament also recognizes the importance of percentage-based

contingency fee agreements¹⁵⁰in England and Wales as a means to increase access to justice.¹⁵¹

In 2013,¹⁵²it adopted a regulation that permits their use in civil litigation and capped fees at

¹⁴⁸Fox v. Westpac Banking Corp., [2021] VSC 573, ¶ 20 (“By incorporating the elements it does, s 33ZDA implicitly

permits the linking of risk and reward in the calculation of a group costs order. ... It follows from the text that the

calculation of legal costs in the manner permitted by s 33ZDA may properly take into account not only the value of

legal services performed, but the assumption of financial risk by the law practice. The policy reflected in the risk-

reward model was discussed in the Victorian Law Reform Commission’s Access to Justice – Litigation Funding and

Group Proceedings Report in response to which s 33ZDA was introduced, in these terms – ‘Class actions are an

appropriate forum for lawyers to absorb the risks of litigation and be rewarded for this, because the representative

plaintiff has a disproportionate exposure to the financial risk of an unfavourable outcome, compared to both the value

of their own claim and the exposure of other class members. The risk is a significant disincentive to taking on the role

and is only partly mitigated when lawyers act on a ‘no win, no fee’ basis’”). Whether the eventual recovery is

proportionate to this risk is a consideration in approving the fees. Allen v. G8 Education Ltd., [2022] VSC 32, ¶¶ 90-

91 (“because the statutory model engages with both risk and reward, it invites the question whether the costs allowed

are, among other things, proportional to the risk undertaken by the law firm in funding the proceedings. That question

is likely to assume significance on any review under s33DZA(3) [providing for subsequent amendments]. … [T]he

plaintiffs and their solicitors in particular, must be mindful of the need to assist the Court when the occasion arises for

scrutinising the appropriateness of the rate now fixed, in the future”).

¹⁴⁹Allen v. G8 Education Ltd., [2022] VSC 32, ¶ 23 (“the purpose of s 33ZDA may be broadly described in the terms

expressed in the second reading of the Bill introducing the provision, namely, to enhance justice by reducing potential

barriers to commencing class actions in the Supreme Court of Victoria”).

¹⁵⁰Ministry of Justice, Explanatory Memorandum to The Damages-Based Agreements Regulations 2013, s. 2.1 (“A

damages-based agreement … is a private funding arrangement between a representative and a client whereby the

representative’s agreed fee … is contingent upon the success of the case, and is determined as a percentage of the

compensation received by the client”).

¹⁵¹Id. s. 7.1 (“Until now, damages-based agreements have not been permitted in litigation before the courts, but their

use has developed in ‘non-contentious’ business (i.e. work which falls outside the courts), including employment

matters [before employment tribunals]. ... Lord Justice Jackson recommended that DBAs should be extended to all

areas of civil litigation. He argued that this would provide litigants with the choice of funding methods and the freedom

to choose the one that they consider is most appropriate for their case”) & Ministry of Justice, Post-Implementation

Review of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), s. 114 (February

2019) (“DBAs were proposed by Sir Rupert Jackson as an alternative funding method for civil cases, outside of

employment tribunals, to increase funding options thereby meeting the aim of promoting access to justice at

proportionate cost”).

¹⁵²The United States Supreme Court recognized the lawfulness of contingency fee agreements in 1876. Stanton v.

Embrey, 93 U.S. 548 (1876). The American Bar Association formally approved contingency fee agreements in 1908.

American Bar Association, Code of Professional Ethics § 13 (1908) (“Contingent fees, where sanctioned by law,

should be under the supervision of the Court in order that clients may be protected from unjust charges”).

Page: 72

twenty-five percent of recovery for personal injury claims, thirty-five percent for employment

matters, and fifty percent in any other civil claim.¹⁵³

[291] The contingency fee agreement benefitted both Tallcree and Rath & Company. Under its

terms their interests were aligned.¹⁵⁴There was a direct correlation between the legal fees the client

would owe the law firm and the amount Canada would ultimately pay Tallcree – the greater the

settlement proceeds the greater the law firm’s fee. And a prompt resolution of the dispute was in

the interests of both Tallcree and Rath & Company. Both sides would benefit from a large payout

made sooner rather than later.

[292] Courts that relieve clients of the obligation to discharge promises they knowingly and

voluntarily made in contingency fee agreements must be aware of the future adverse effects that

doing so causes both the lawyers who serve as counsel, their clients and the community as a whole.

Unsure of the enforceability of the contingency fee agreements, counsel may invest as little time

as is possible to resolve these files.¹⁵⁵Lawyers would do this to reduce their losses in the event a

court declines to hold a client to promises made in a contingency fee agreement and sets a fee at a

lesser rate than identified in the contingency fee agreement. Inadequate investment of time may

reduce recoveries for future clients. An adjudicator must also be mindful of the risk that in the

future excellent lawyers will be reluctant to act on a contingency-fee basis if they have had clients

who have not discharged their promises under contingency fee agreements. This can harm access-

to-justice interests.¹⁵⁶In addition, society suffers if courts are too quick to relieve promisors who

knowingly and voluntarily make commitments of the obligation to discharge them. Freedom of

contract is a bedrock value in Canada.

¹⁵³The Damages-Based Agreements Regulations 2013, S.I. 2013 No. 609, ss. 4(2) (personal injuries), 4(3) (any other

claim) & 7 (employment). This regulation is undergoing revision. Ministry of Justice, Post-Implementation Review

of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), s. 116 (February 2019)

(“Almost all respondents, across the spectrum, agreed that DBAs are rarely used and that the current DBA regulations

are not effective. There was unanimous support amongst respondents that the regulations would benefit from reform

and redrafting to ensure DBAs are a more viable funding method for a greater number of cases”).

¹⁵⁴Fitzpatrick, “A Fiduciary Judge's Guide to Awarding Fees in Class Actions”, 89 Fordham L. Rev. 1151, 1158

(2021) (“The percentage method is better because the lawyer is not indifferent to the size or speed of recovery; like

the client, the lawyer wants a big recovery and the lawyer wants it quickly. … This incentivizes the lawyer to want to

settle prematurely, even if it means a smaller recovery, so the client must monitor to ensure that does not happen. …

The lower the percentage, the greater the divergence between the interests of client and lawyer”).

¹⁵⁵See Baker, Perino & Silver, “Is the Price Right? An Empirical Study of Fee-Setting in Securities Class Actions”,

115 Colum. L. Rev. 1371, 1381 (2015) (“The unpredictability of fee cuts necessarily creates uncertainty on the part

of class counsel, who cannot reliably estimate the returns on effort”).

¹⁵⁶Id. 1373 (“Every year, class action settlements bring $10–$20 billion into federal courts. And every year, federal

judges award billions of these dollars to plaintiffs’ attorneys in payment of fees and reimbursement of expenses. The

payments are essential. But for these awards, the incentive to wage class actions–which entail enormous commitments

of time and financial resources–would disappear. One can say, without exaggeration, that federal judges enable

millions of people to obtain access to justice each year by rewarding lawyers for litigating class actions successfully”).

Page: 73

VIII.

[293] I would allow the appeal and set aside the judgment dated October 8, 2020. As a result, the

decision of Review Officer Pawlowski would be restored. It is not necessary to address the appeals

of the orders dated March 26, 2021 and June 9, 2021.

Appeal heard on February 3, 2022

Memorandum filed at Edmonton, Alberta

this 11th day of May, 2022

Wakeling J.A.

Page: 74

Appearances:

P.J. Faulds, Q.C./P.E. Kennedy

for the Respondent

E.H. Molstad, Q.C./E.L. Sopko

for the Appellants