Executive Summary: Key Legal and Evidentiary Issues

• Compliance with Rule 10.7(4) of the Alberta Rules of Court was central to determining the enforceability of the contingency fee agreements (CFAs).

• The CFAs were not served on Mikisew within the required 10-day period, and no affidavit of service was timely sworn.

• The chambers judge treated the breach as a technical irregularity without prejudice; the appellate court disagreed and found it substantive.

• The failure to serve the agreements timely deprived Mikisew of its 5-day statutory termination right under Rule 10.7(5).

• Rath did not apply for an extension under Rule 13.5, nor did it notify Mikisew of the implications of the service.

• The Alberta Court of Appeal held the CFAs unenforceable due to non-compliance with mandatory procedural rules.

Background and facts

This case arises from two contingency fee agreements (CFAs) entered into by Mikisew Cree First Nation (Mikisew) and Rath & Company (Rath) in connection with legal claims under Treaty 8, including unpaid annuities and education underfunding. The CFAs were approved through Band Council Resolutions (BCRs) and dated October 17, 2019, with additional BCR activity occurring in June 2020. Both agreements were purportedly executed by Mikisew leadership and Rath. However, the exact timing and procedural compliance regarding these agreements became the subject of dispute.

Rule 10.7 of the Alberta Rules of Court sets out strict procedural requirements for CFAs, including execution, witnessing, service within 10 days (Rule 10.7(4)), and a 5-day termination right post-service (Rule 10.7(5)). While the agreements were eventually sent to Mikisew by registered mail on September 2, 2020, this occurred well beyond the 10-day period after the latest alleged execution date in June 2020. The cover letter did not indicate that the agreements were being served in accordance with Rule 10.7(4), nor did it highlight Mikisew’s rights under Rule 10.7(5). The affidavit of service was sworn only in May 2022—long after the service and after Mikisew filed for review under Rule 10.14.

Although affidavits of execution were signed in June 2020 by a third party, their connection to the specific documents and execution dates was unclear. On September 14, 2020, Mikisew acknowledged receipt of the agreements. Mikisew later terminated the CFAs in September 2021 and filed for review in March 2022.

Lower court’s ruling

The chambers judge (2023 ABKB 321) held that although the service did not comply with Rule 10.7(4), there was no prejudice to Mikisew because it ultimately received the CFAs and was sophisticated enough to understand their legal rights. He concluded the delay was a technical irregularity that caused no harm and found the CFAs enforceable.

The appeal and outcome

The Alberta Court of Appeal allowed the appeal and found the CFAs unenforceable. The Court held that Rule 10.7(4) requires strict compliance to ensure clients are afforded their 5-day “cooling off” period under Rule 10.7(5). The Court rejected the chambers judge’s view that absence of prejudice justified excusing the delay. Instead, it emphasized that the purpose of the rule is to protect clients from being unknowingly bound to CFAs without a chance to reconsider.

The Court also criticized the lack of any application under Rule 13.5 to extend time and noted the affidavit of service was sworn almost 18 months later. It further observed that the documents sent in September 2020 did not notify Mikisew of the consequences of service under the rule. These combined factors led the Court to conclude that the failure was not a technical irregularity but a substantive non-compliance.

The Court held that condoning such non-compliance would undermine the policy behind the rules, which are designed to mitigate the information imbalance between clients and lawyers and promote access to justice. Consequently, the Court declared the CFAs invalid and unenforceable. The decision turned exclusively on the Rule 10.7(4) issue, rendering it unnecessary to consider the second ground of appeal regarding expiry of contingencies.

The appeal was allowed and the CFAs were declared unenforceable. No cost award or monetary direction appears in the appellate reasons.