Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Contracts – Breach – Interpretation – Termination – Barristers and solicitors – Whether the Court of Appeal’s decision, seemingly as a matter of law, has altered the allocation of risk under contingency agreements in that it supports implying a default rule that clients bear the risk of unilateral decisions of the lawyer, even when those decisions are found to have repudiated the agreement – Whether the approach, if applied to the interpretation of other contingency fee agreements, risks undermining the important role of these agreements in securing access to justice – Whether the decision of the Court of Appeal undermines the holding in Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, that for a clause to continue to bind an innocent party after an accepted repudiatory breach, the court must find that the parties intended it to continue to apply – Whether the Court of Appeal decision minimizes the consequences of a repudiatory breach on the breaching party, in a way that can only encourage such breaches – Whether the Court of Appeal’s decision risks creating a line of jurisprudence inconsistent with Gordon Capital’s guidance.

The applicant BDO Dunwoody LLP (“BDO”) retained the respondent law firm to pursue certain civil claims on behalf of BDO and its two senior members, on a contingency fee basis. The retainer agreement contained a termination clause which gave BDO the right to cancel, with or without cause, the law firm’s services. In that event, BDO and its two members would be jointly and severally responsible to pay the value of all services to date.

The law firm prepared and issued a statement of claim. Subsequently, a judge of the Superior Court dismissed the action against several defendants and struck many of the causes of action. The law firm recommended that BDO appeal, but not having appeal counsel at that time, recommended retaining separate counsel for that purpose. An argument arose as to who would pay for the services of appeal counsel. BDO took the position that it was the law firm’s responsibility and treated the law firm’s refusal to pay as repudiation of the agreement. BDO advised the law firm that it accepted repudiation and directed the law firm not to take any further steps in the matter. The law firm took the position that BDO’s direction amounted to a cancelation of services.

The appeal was substantially successful. The law firm subsequently delivered an account to BDO in the amount of $427,891.57. BDO did not pay. The law firm commenced an action seeking a judgment in that amount. BDO brought a summary judgment motion to dismiss the action. The law firm also brought a motion seeking judgment in the amount of $427,891.57.