Pioneering Law Firm Contingency-Fee Collections with the Bank of Nova Scotia
I supervised the legal work of Todd Christensen for The Bank of Nova Scotia’s Regional Collection Centre in Ottawa, Ontario back in 1994-1995.
We were impressed with the results he achieved in the pilot we did with him. The collection agencies we usually used for the files assigned him regularly settled the claims for a discount and often generated complaints from our customers whose business we hoped to win back when times were better for them. On files agencies would have compromised, Todd recovered not only 100 percent of the amount owing, but also collection costs. And we had not one complaint from our customers about how he treated them.
When Todd announced he was leaving the practice of law to join a consulting firm to gain business experience, we were disappointed. When he contacted me in the May of 2003, I was pleased to meet with him, confirm that we had been impressed with his results nearly a decade before, and encouraged him to return to his collections law practice armed with the business experience he had gained. When Todd asked me why I was willing to help him and be a positive reference for him, the answer was simple. I believe what Todd is doing will fundamentally change the way debt collection is done in Canada and have a positive impact on the entire credit industry.
Leading the Development of Law Firm Collections with DRN Commerce (now FCT Default Solutions)
When Todd approached me, I offered him a trial as one of the firms we used. A year into the scheduled 18-month pilot, he had delivered impressive results. His firm was collecting two to three times as much as the average of the other four law firms we used in Ontario. We dismissed the lowest performing law firm, giving all its business to Todd’s firm. At the end of the 18 months, we boosted Christensen Law Firm’s share. . . to 80 percent, the maximum we will allow.
Wayne McLeish, B.A., LL.B, President & CEO, DRN Commerce Inc. (now FCT Default Solutions)
Enforcing Large-Balance Delinquent Debts in Court on a Contingency Basis
Collectrite Credit Bureau Collections referred our office to the Christensen Law Firm after recovering $42,000 of a $140,000 delinquent debt owed to us by a commercial customer. It became clear that the customer had no intention of paying our office and our only options were to take legal action, or to walk away. Due to the poor results that we had in the past with paying lawyers by the hour, we were leaning towards writing off the remainder of the debt.
Collectrite encouraged us to talk to Mr. Christensen and he assessed the case. He concluded that our customer had the financial ability to pay, but was just trying to avoid payment. Mr. Christensen then put his money where his mouth is and offered to work on a contingency fee basis and charge only for upfront court costs. We therefore hired his firm.
Our customer then chose to spend our money on a lawyer to fight us, rather than pay our bill. They were hoping we would settle for a discounted rate, rather than pay legal costs to go after them. They assumed we were paying Mr. Christensen by the hour and would fold, but he was true to his word and didn’t charge any fees; just a percentage of what he recovered. Mr. Christensen first won a motion summary judgment on our behalf in Superior Court.
Our customer then appealed the judgment to the Ontario Court of Appeal and at the same time filed a new and separate lawsuit, as an intimidation tactic, which made false allegations against us. Mr. Christensen defeated both the appeal and the improper lawsuit.
Even though our customer’s bad behavior eventually led to their demise and bankruptcy, Christensen Law Firm recovered $117,000 on our original debt of $98,000.
Using Christensen Law Firm not only obtained the money that was owing to us; but it also gave us the satisfaction to see someone who had lied to us, cheated us and made false accusations against us; be held accountable and proven wrong in court.
Tom Smith, Registered Insurance Broker, John F. Smith Insurance Brokers (1982) Inc.
Pioneering Litigation Collections Program for the largest open-access toll highway in North America
Our firm pioneered the collection litigation program for the largest open-access toll highway in North America in 2008 and in short order became their primary collections law firm with recoveries dwarfing those of other law firms they have employed.
Winning an Ontario Appeal Court Ruling Allowing Credit Granters to Recover Collection Expenses
Everybody told us it couldn’t be done; that Ontario courts were too pro-debtor to indemnify creditors for their actual debt-collection expenses including the contingency fee paid to their lawyers. Our view, that we argued successfully many times in the court of first instance, was that as between the creditor, who had done nothing wrong, and the debtor, who had breached his agreement, refused to pay despite our investigation showing the ability to do so and forced the creditor to enforce its claim in court, the intransigent debtor should pay the cost of collecting the debt including the lawyer’s reasonable contingency fee.
When presented this way, the trial-level courts generally agreed to hold the debtors accountable for the actual legal collection expenses. When a couple of judges disagreed, we appealed their decisions. The appeal court, the Ontario Divisional Court, overturned the decisions of those judges in three appeals of those two judges heard together in Capital One Bank v. Matovska, 2007 WL 2602217 (Ont. Div. Ct.),  O.J. No. 3368, 2007 CarswellOnt 5605. The Divisional Court affirmed this ruling on collection expenses in Capital One v. Toogood, 2013 ONSC 5440 (Ont. Div. Ct.) (sub nom. Capital One Bank v. Wright), 2013 CarswellOnt 12424.
Requiring Ontario Small Claims Court Judges to Grant Contractual Interest Rates
Small Claims Court judges in Ontario were regularly refusing to grant creditors the interested rate the debtors had agreed in writing to pay. They mistakenly believed the Ontario Courts of Justice Act granted them authority to do this. Our firm corrected this misconception and won an appeal court ruling requiring judges to grant the contractual rate of interest. The initial decision was in Capital One Bank v. Matovska, 2007 WL 2602217 (Ont. Div. Ct.),  O.J. No. 3368, 2007 CarswellOnt 5605. The Divisional Court affirmed this ruling in Capital One v. Toogood, 2013 ONSC 5440 (Ont. Div. Ct.) (sub nom. Capital One Bank v. Wright), 2013 CarswellOnt 12424 and Capital One Bank (Canada Branch) v. Hussey, (June 26, 2012), Lindsay 31-12 (ONSC Div. Ct.).
Initiating the Practice of Conducting Ontario Small Claims Court Trials by Affidavit
One of the barriers to creditors enforcing claims in court was the inconvenience and expense of providing a witness for trials. Our position was that it was unnecessary, that the claim was for a debt that was proven by documents, by business records, and that a claim could be proved without a single live witness. This was contrary to the accepted practice by both advocates and judges in Small Claims Court. In Ontario, we pioneered winning trials without any witness, winning the first favourable ruling on the point in Sears Canada Bank v. Charlie Rice, (January 11, 2008), Burlington 564/07 (ON SC) Case Here. We now routinely conduct contested trials by way of affidavit and the practice has been supported in subsequent reported cases: Winters v. Turner, 2009 CarswellOnt 8159 (ON SC) at para. 15 and Woolcott v. Rocheleau, 2010 CarswellOnt 4345 (ON SC) at para. 9.
Replacing Ineffective Sheriff’s Sale Enforcement Process in Ontario with Judicially-Supervised Sale of Real Property
Despite the Supreme Court’s refreshing decision in Royal Bank of Canada v. Trang,  2 SCR 412, 2016 SCC 50 reviving it, the sheriff’s sale process in Ontario remains expensive and ineffective. Trang reversed the Ontario Court of Appeal’s decisions in Citi Cards Canada Inc. v. Pleasance, 2011 CarswellOnt (ON CA) and Royal Bank of Canada v. Trang, 2014 ONCA 883, 2014 CarswellOnt 17254. These decisions held that because of privacy legislation, the mortgage holder was not required to provide the sheriff’s office with a discharge statement without a court order, then set conditions that make obtaining one impracticable. Even before the Court of Appeal’s decision in Citi Cards, the practise had long been to not enforce a writ of seizure and sale by selling a judgment debtor’s real estate, but rather to just file a writ of seizure and sale and then sit on it, waiting for the judgment debtor to sell or refinance the property. As mortgage lenders are not required to conduct an execution search prior to renewing mortgages, writs can go unpaid indefinitely.
Sheriff’s sales are rarely done because (1) the sheriff requires a hefty deposit to initiate the process to cover advertising and the sheriff’s office hiring its own lawyer to supervise the auction process ($7,000 in our local county last time we checked), and (2) even if a bid came in that covered the claims of execution creditors, the sheriff could and often did decline to accept the bid as too low and thus against the debtor’s interests. In this case, the time and money was gone with no appeal and one had to start the process again, putting up another large deposit.
The solution CLF implemented is to enforce judgments for money against real property by way of a judicially-supervised sale. This process is conducted under court order by a judicial officer utilizing a real estate broker and the MLS (Multiple Listing Service) rather than a sheriff’s auction. This has been the process in British Columbia since 1997 and our firm on September 9, 2015 won a court ruling adopting the approach in Canaccede International Acquisitions Ltd. v. Abdullah, 2015 ONSC 5553, 2015 CarswellOnt 13623. The Supreme Court’s decision in Trang is in full harmony with this, as Justice Broad put it, “evolution and improvement in the common law”.
Click here for an article written by Mr. Christensen on the enforcement options published in The Lawyers Weekly. Click here for a paper written by Mr. Christensen on the same topic.
Simplifying and Speeding Writ Pay-outs in Collection Matters
Based on many years of handling thousands of Writ of Seizure and Sale of Land payouts for our clients, we have promoted innovations and efficiencies in closing real estate transactions from which our clients are paid all or part of the money owed to them. Click here for an article written by Mr. Christensen on the topic published in The Lawyers Weekly.