In LC v Alberta (“LC”), the Alberta Court of Queen’s Bench considered a defendant’s application for the production of contingency fee agreements. In his reasons, Graesser J. reinforced that privilege over retainer agreements in a class proceeding is more easily overcome than in other types of proceedings.
Following certification of the class proceeding in LC, counsel for the representative plaintiff, Mr. Lee (“Lee”), brought an application for advance costs in the amount of $1.7 million. In response to the advance costs application, the defendant, Her Majesty the Queen (“HMQ”), sought and applied for the production of all contingency fee agreements.
Advance Costs are an Exceptional Remedy
Graesser J. emphasized that advance costs are rarely ordered. The test for an award of advance costs is discretionary and relates to factors set out in British Columbia (Minister of Forests) v Okanagan Indian Band and Little Sisters Book Emporium v Canada (Commissioner of Customs and Revenue). One of the factors considers whether the party seeking interim costs genuinely cannot afford to pay for the litigation, and no other realistic option exists for bringing the issues to trial. Accordingly, a relevant issue before the Court in assessing the application for advance costs was to determine whether the representative plaintiff genuinely could not afford to pay for the litigation, and no other realistic option existed for bringing the issues to trial.
The contingency fee agreement thus became relevant and material to the determination of this issue. Indeed, the Court found that Lee had waived any privilege over the fee agreement when he referred to portions of it in the affidavit opposing HMQ’s application for production, and when he put his client’s ability to pay for legal services in issue. Finding that privilege had been waived, Graesser J. ordered that the fee agreement be produced, and permitted the representative plaintiff to propose redactions.
Privilege More Easily Overcome in Class Proceedings
Graesser J. provided interesting comments respecting privilege over fee agreements in class proceedings generally, opining that:
[W]hile I do not go so far as to say no privilege exists in a fee agreement between the representative plaintiff in a class proceeding and his or her lawyer, the privilege is more easily overcome in a class proceeding than in an ordinary lawsuit.
In so stating, Graesser J. pointed to the decisions in Roth v Alberta (“Roth”), and Fehr v Sun Life Assurance Co. of Canada (“Fehr”), as being persuasive on the point of privilege. In Roth, the Court acknowledged that, traditionally, fee agreements between counsel and their clients have been regarded as privileged, but that this privilege in a class proceeding is “more illusory than real”, including because disclosure of the contents of a fee agreement will rarely prejudice the interests of the representative plaintiff. The Court in Fehr went a step further, finding that, in a class proceeding, the terms of a retainer agreement are not privileged and “ought not to be regarded as privileged as a matter of public policy.”
While Graesser J. declined to adopt the conclusion in Fehr, preferring the view that privilege exists at least until an application for approval of a fee agreement is made, LC appears to indicate that there is, at the very least, a lower hurdle for defendants who seek production of fee agreements in class proceedings, particularly where advance costs are sought by the class representative.