Carscallen LLP litigator Paul E. Reid successfully represented his clients in a recent matter before Court of King’s Bench Justice C.M. Jones in Calgary1Guardian Law Group v LS, 2021 ABQB 591.. At issue in this matter was whether Guardian Law Group (“Guardian”) had been validly retained by an individual, RL, to represent RL at a capacity hearing, and the requirements that must be met by counsel to be validly retained to represent an individual in the context of that individual’s own capacity hearing.
RL initially retained Guardian to challenge a determination that he lacked capacity to manage his financial affairs. RL’s ability to retain counsel was challenged. However, RL’s challenge was ultimately settled before the hearing could take place. Guardian subsequently brought a claim against LS, in her capacity as RL’s guardian and trustee, for payment of legal fees incurred while purportedly representing RL, which LS opposed on the grounds that RL lacked the capacity to retain Guardian, and the retainer agreement could be rendered null and void at her option.
Although the Reasons for Decision of Justice Jones do not resolve the ultimate dispute between the parties, they do provide guidance to the legal profession and clarity on the legal test for enforceability of a lawyer’s retainer agreement where the client’s capacity is in issue.
In canvassing the relevant law, Justice Jones largely adopted Carscallen LLP’s submissions in setting out the test for determining whether a client has the capacity to enter into a retainer agreement with counsel (and if so, whether such agreement should be voided):
- Did the client, at the time of entering into the retainer agreement, have the capacity to understand its terms and form a rational judgment of its effect on his or her interests.
- Did the lawyer know that the client lacked capacity, and more specifically
- Were there sufficient indicia of incapacity known to the lawyer to establish a suspicion that the client lacked the requisite capacity?
- If yes, did the lawyer take sufficient steps to rebut a finding of actual or constructive knowledge of incapacity?
Justice Jones also noted that other equitable considerations may still apply, and this test only applies to determining whether a client had capacity to retain counsel, or whether a defence of incapacity exists. The full decision of Justice Jones can be read online here.
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- 1Guardian Law Group v LS, 2021 ABQB 591.