Law Times

LaW TIMeS • SePTeMBeR 21, 2015 Page 7 www.lawtimesnews.com COMMENT Questions raised about deputy judge's debt settlement activity BY MARK SILVERTHORN For Law Times S ome time in July of this year, an Ontario deputy judge who sits in the central west region launched a new law firm, Ontario Debt Law, that offers debt settlement services to Ontario residents. The law firm's debt settlement agreement states that it can assign the law firm's obligations under the agree- ment to OCCA Consumer Debt Relief Inc. Brampton, Ont.-based OCCA has been one of the largest Canadi- an debt settlement firms over the past decade. In 2014, OCCA claimed to have more than 12,000 clients. Ontario Debt Law has been carrying on business since the beginning of July. It is becoming increasingly apparent that such activities may create issues not only for Ontario's legal community but also the adminis- tration of justice in this province. A letter on Ontario Debt Law letterhead states that an Ontario lawyer described as a deputy judge owns and operates the firm. An unsophisticated individual reading this marketing letter might think that enter- ing into an agreement for legal services with Ontario Debt Law might be very advantageous because the lawyer operating it is a deputy judge. The reference to a deputy judge may lead a potential client to conclude that the courts or the Ministry of the Attorney Gen- eral approve or recommend the firm's services. The entrance of Ontario Debt Law into the On- tario debt settlement marketplace coincides with the new debt settlement regulatory regime that came into effect on July 1. Effective July 1, whenever an Ontario resident enters into a debt settlement agreement, there are significant restrictions on the fees where the debt settlement service provider is subject to the Ontario Collection and Debt Settlement Services Act. A debt settlement firm cannot charge a debt settlement client a penny in fees until a settlement is ac- tually paid out. Furthermore, the maximum fee with re- spect to a single debt is 10 per cent of the amount owing as of the date the debt settlement agreement was signed. The new regulatory regime, and in particular the significant restrictions on fees, is having a devastating impact on firms providing debt settlement services to Ontario residents. The new regulatory regime for debt settlement firms does not apply to lawyers who can bring themselves under an exemption contained in the act. Accordingly, it is much more attractive finan- cially to provide debt settlement services in conjunc- tion with a law firm than to do so on its own. A marketing letter on Ontario Debt Law's letter- head states: "We are NOT a debt settlement firm!" It would be accurate to say that Ontario Debt Law is not a firm licensed as a collection agency under the On- tario Collection and Debt Settlement Services Act. Ontario Debt Law does, however, offer services that fall within the definition of debt settlement services under the act. There are also several confusing aspects to Ontario Debt Law's letterhead. The contact infor- mation, for example, is a mystery. Several phone calls to the local number on the law firm's letterhead elic- ited a fax tone. A phone call placed after regular busi- ness hours to the toll-free number listed on Ontario Debt Law's letterhead led to a voicemail for a market- ing firm called debthelpers.ca. Ontario Debt Law's letterhead states that its address is 188 Wilkinson Rd., Unit 2, Brampton, Ont. On July 13, 2015, a photograph taken at that address reveals that the name on the door is not Ontario Debt Law but that of a Quick Connect Solutions. A sign on the door at 188 Wilkinson Rd., Unit 2, advises Canada Post to deliver mail for that address to 188 Wilkinson Road, Unit 1. That is the address for OCCA. Quick Connect Solutions' web site describes the firm as offering telephony solutions to com- panies in the marketing, credit, collections, and debt purchasing industries. The web site for debthelpers.ca includes the following statement: "Each company we work with is unique and offers several different pro- grams. One size-fit-all approaches will never help you regain your financial stability and achieve your goal of becoming debt free." OCCA and Quick Connect Solutions, in fact, have attracted the attention of the Canadian Radio-televi- sion and Telecommunications Commission. Follow- ing a CRTC investigation in 2013, OCCA and Quick Connect Solutions agreed to pay $69,000 and $11,000, respectively, in fines for making robocalls. It is not easy for a member of the public to speak to a staff member at Ontario Debt Law. Ontario Debt Law does not have a web site and would not appear to have much of a public presence at all. A member of the public, however, will receive marketing materials from Ontario Debt Law after calling a toll-free number list- ed on OCCA's web site and speaking with a counsellor. A deputy judge's recent entry into the Ontario debt settlement marketplace raises potential concerns. It would be surprising if such activities were to enhance the public's perception of either lawyers or judges in Ontario. LT Mark Silverthorn is a retired lawyer and the author of The Wolf At The Door: What To Do When Collec- tion Agencies Come Calling. He is also the founder of Comprehensive Debt Solutions Inc., a firm providing practical advice to consumers with unsecured consumer debt problems. Its web site is comprehensivedebtsolu- tions.ca. u SPEAKER'S CORNER Debate over contingency fees goes back a long time T he recent debate over whether to allow contingency fees in family law cases in Ontario is the latest instalment in a very long story. In medieval times, authorities wanted to ensure third parties didn't unduly fo- ment litigation. As a result, champerty (where a party carries on a lawsuit on its own account in return for sharing any eventual award with someone else) and maintenance (where a party, for improper motives, assists someone else to carry on litigation in which it has no interest) were both torts and crimes sanctioned by both common law and statute. Ontario has remained the province most hostile to contingency fees. It even re-enacted the medieval Champerty Act in 1897. The attorney general relied on the statute as recently as 2002 in McIntyre Es- tate v. Ontario (Attorney General) to argue that contingency fees were against public policy in the province unless specifically approved by legislation. In the United States and elsewhere in Canada, the pres- sure for change emerged much earlier. U.S. state courts rejected these prohi- bitions and approved contingency fees as early as 1824. In England, the personal in- jury lawsuits of the railway era seem to have led some solicitors to skirt the law and take cases on a contingency basis. Soon after this practice came to light at a parliamentary in- quiry, the government legislated an express ban on such fees in the Attorneys' and So- licitors' Act of 1870. Thereafter, solicitors could only receive such fees after an officer of the court had taxed the bill. The officer, however, might disregard an arrangement found to be unfair or unreasonable. Manitoba arguably received the 1870 act when it became a province but before long there was pressure for change. The attorney general of Mani- toba in 1890 was an Ontario- trained lawyer, Joseph Martin, who shepherded through the legislature an amendment to the Law Society Act essentially permitting contingency fees but without the safeguards con- tained in the English legislation. While he then moved to British Columbia in 1897 and became attorney general in 1898, the law society suspended him from practice brief ly the next year for using contingency fees. In 1901, however, he repeated his Manitoba gambit with British Columbia becoming the second province to permit contingency fees. But the provincial legislation could deal only with the civil law aspects of the issue. What about the criminal law? While the Criminal Code of 1892 didn't expressly criminalize the use of contingency fees, it considered champerty to be a common law offence under its provision preserving such crimes (the code wouldn't become a com- plete code of Canadian crimes until 1955). In 1910, the Manitoba Court of Ap- peal decided the common law crime was "obsolete" and thus the Law Society Act didn't conf lict with the federal power over criminal law. The B.C. Court of Appeal took a different view when it dealt with the same issue in 1927, but the legislation that purported to implement its decision did so in such a narrow fashion that it posed little impediment to B.C. lawyers who wished to use contingency fees. The same could apply to the narrowly worded prohibition on contingency fees contained in the Canadian Bar Association's canons of ethics in 1920. Meanwhile, back in Ontario, the province wouldn't imitate even the modest reform of the English act of 1870. The Law Reform Act of 1909 allowed contingency fees but only in non-contentious business. The province didn't expressly permit contingency fees until 1992 and then only in the context of class actions. However, it's clear that even in Ontario, lawyers were making fee arrangements with their clients that contravened the Cham- perty Act of 1897 and the Law Reform Act of 1909. In 2000, an Ontario Superior Court judge took judicial notice of the fact that almost the entire personal injury bar had acted on a contingency basis for many years. The crosscurrents within Ontario le- gal culture on this issue well illustrate the hybrid nature of the Canadian legal pro- fession with its strong attachment to its English roots and its willingness to adopt American innovations appropriate for the North American market. The Ontario at- torney general and the Law Society of Up- per Canada were long attracted to an ide- alized version of the English legal heritage based on the model of the independent barrister who was a pure professional and not a person of business. But large segments of the profession weren't so big on that ideal. They had to hustle for business in a competitive mar- ketplace where there was no solicitor's mo- nopoly on conveyancing, as in England, and fees were relatively low. Contingency fees seemed to be a way of broadening the market for legal services. The law society finally permitted contin- gency fees in the wake of McIntyre Estate but not in family law cases. Whether they would improve access to justice there is a matter for further research. LT Philip Girard is a legal historian and professor at Osgoode Hall Law School. He's also associate editor at the Osgoode Society for Canadian Legal History. His e-mail ad- dress is pgirard@osgoode.yorku.ca. That's History Philip Girard encourages readers to send us letters, but will edit them for space, taste, and libel consideration. Please provide your name, address and contact number and send all letters to: Law Times, 2075 Kennedy Rd., Toronto, Ont. M1T 3V4 E-mail: glenn.kauth@thomsonreuters.com

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