Judge lays into insurance lawyer

An Ontario judge has laid into a Burlington, Ont. lawyer for charging excessive fees that “dwarf the judgment” and referring her client to a litigation lender that charged an “unconscionable” rate of interest

Kathy Chittley-Young represented a woman injured in a motor vehicle accident. The action initially claimed $1.25 million in damages in 2003, but the parties agreed to reduce that amount to $750,000 ahead of the trial, and the final settlement was just $375,000 after the plaintiff was found 50-per-cent responsible for the crash. Chittley-Young claimed her costs were $560,000, plus another $230,000 in disbursements.

“The plaintiff, a woman of modest means, who suffered serious injuries in a motor vehicle accident causing permanent impairment, is now faced with another burden of unimagined proportions — a second catastrophic event — her legal costs. The legal costs and disbursements incurred and claimed by Ms. Chittley-Young produce a result that is contrary to the fundamental objective of access to justice,” wrote Ontario Superior Court Justice John Murray in his Aug. 31 costs decision.

Murray was struck by the number of hours docketed on the case: almost 800 hours for Chittley-Young; another 500 for Steven Kenney, a senior lawyer charged at a higher rate than Chittley-Young, but used in a junior counsel role, plus almost 400 hours of work by law clerks, for a total of 1,700 hours.

“The aggregate time spent on this file by plaintiffs’ lawyers and their clerks would equal the annual docketed hours for many successful lawyers,” Murray wrote.

He eventually awarded costs to Chittley-Young on a partial indemnity basis of $104,000.

The claim for disbursements was cut to $120,000 after Murray disallowed Chittley-Young’s claims for mileage and telephone usage. He also refused to include $90,000 in unpaid interest on a loan the plaintiff took out to fund the litigation.

Chittley-Young argued the $150,000 loan, taken from a company called Lexfund Inc. in November 2009, when the potential return was still more than $1 million, was necessary to get the case to trial as she could not afford to carry the disbursements. The effective annual rate of the loan was 51 per cent, so that after 24 months, the plaintiff would have owed more than $200,000 in interest, according to the judgment.

“The interest rate on the loan obtained by the plaintiff for disbursements is unconscionable. It is turning the world on its head to assert, as does Ms. Chittley-Young, that this is an access to justice issue and that ordering interest payments on the Lexfund is reasonable,” Murray said. “This loan agreement does not facilitate access to justice. This loan agreement does nothing to advance the cause of justice. It is difficult to believe that any lawyer would refer a vulnerable client to such a lender.”

Free newsletter

The Canadian Legal Newswire is a FREE weekly newsletter that keeps you up to date on news and analysis about the Canadian legal scene. A separate InHouse Edition is delivered every two weeks, providing targeted news and information of interest to in-house counsel.

Please complete the form below to receive the weekly Canadian Legal Newswire and/or the Canadian Inhouse Legal Newswire.

Recent articles & video

Quebec taking harsh line on cannabis edibles

Will the conversation catalyzed by the Law Society of Ontario mean the end of articling?

Copyright law: set for an overhaul?

Corporate Counsel Survey 2019 closes on Monday, Aug 26

When Legal Aid is a political prop, Access to justice suffers

The subsidiary entity exposure conundrum

Most Read Articles

Canadian Judicial Council seeks leave to SCC in Girouard case

The Ontario government is destroying university legal clinics

Quebec taking harsh line on cannabis edibles

Will the conversation catalyzed by the Law Society of Ontario mean the end of articling?