Judge rules insurer doesn’t have to pay for ‘Ferrari’ defence

A recent judgement in Quebec Superior Court that deals with an insurer’s duty to defend has lawyers here talking — not about the legal principle involved, but the juicy comments and details about the eye-popping fees charged by some big-name Montreal lawyers.

Cirvek Fund, the plaintiff in the case was seeking reimbursement from the defender for roughly $2 million in outstanding legal fees it incurred during an epic 2009 legal battle it won in Ontario Superior Court in a case involving a real estate transaction in downtown Toronto.

In his June 12 decision in Cirvek Fund I., l.p.c. Lombard General Insurance Co. of Canada, Quebec Superior Court Justice Stéphane Sansfaçon weighed the actions of the plaintiff and the fees charged by its lawyers in the case.

“All of the lawyers who executed their mandates, whether from the firms of Davies Wards, Davies Howe, or Paliare Roland, had the experience needed to accomplish their mandate,” wrote Sansfaçon.

“However the evidence shows that the intervention [of Cirvek’s president], demanding [to change lead lawyers] added nothing to the case except the generation of additional legal fees.”

The substitution, added the judge, changed nothing because Cirvek “benefitted already from one of the best legal representations it could have hoped for.”

The judge then listed, in paragraph 192, the fees charged by the legal team of Davies Ward Phillips & Vineberg LLP for 3,780.9 hours of billed work. The judge noted the hourly rate varied between $225 and $825 an hour, and worked out to an average of $472.60.

While acknowledging the 10-per-cent volume discount given by the firm, the judge concluded the mandate given by Cirvek to its lawyers “greatly exceeded” the requirements for an adequate defence.

“The mandate given by Cirvek [was[ to do anything to win, regardless of efforts and cost,” the judge wrote. “Cirvek wanted ‘the best of the best,’ and they got it. Cirvek wanted an extremely rapid end to the litigation, and they got that too.

“In the world of automobiles, what Cirvek bought in terms of legal services was a cross between a Bentley and a Ferrari, with the price tag included. Cirvek got its cross, and is now trying to make its insurer pay.”

The judge ruled the plaintiff be reimbursed $965,000 in legal fees — less than half of what it was seeking.

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