Fund for all, so are legal fees: decision

Six scallop fishermen ordered to pay share of legal costs in Straight of Belle Isle compensation case

Six scallop fishermen in the Straight of Belle Isle felt like bycatch in court decisions that lumped all 83 scallop fishing licence holders in that area — whether active or not — in the same pot regarding a Nalcor compensation fund provided for loss of fishing grounds associated with undersea electricity transmission cables from the Muskrat Falls project.

A 2016 Newfoundland and Labrador Supreme Court decision — later upheld on appeal — had ordered that the approximately $2.5-million compensation fund was to be divided equally among the 83 licence holders and not just the 12 active fishermen over a 30year period, as was previously negotiated by the Fish, Food and Allied Workers (Ffawunifor) union.

Thus, all 83 licence holders — including the six who objected — would also share equally in paying the 15 per cent in legal fees.

The six fishermen complained that they didn’t support the position of the other 77 licence holders, did not sign any consent form to be represented by the law firm Goodland Buckingham, and thus shouldn’t have to pay legal fees to the lawyers who won a judgment that they claim is not in their best interest.

The issue of the legal fees ended up in a hearing before what is known as a taxation master appointed by the Newfoundland and Labrador Supreme Court. The master appointed to oversee the hearing was lawyer James Oakley.

Oakley’s decision filed on Dec. 14, 2017 ruled the six fishermen are subject to paying the same legal fees as the other 77 in the group.

The background of the case is seated in controversy.

Nalcor and the FFAW had negotiated compensation to be paid by Nalcor to licensed Area 14 scallop harvesters due to a section of the scallop fishing grounds being permanently closed around the transmission cables and associated rock berms. (Fishing Area 14 is located in the Strait of Belle Isle, between the southern coast of Labrador and the Northern Peninsula.)

The story drew a lot of media attention when it was learned that the FFAW had already reached an agreement with Nalcor before the union circulated consent forms to the affected fishermen. Most scallop licence holders did not like the deal the FFAW struck and how the union planned to administer it. Thus the licence holders took the case to court against the FFAW and won.

Oakley’s decision on the legal fees notes the majority of fishermen claimed the FFAW breached its fiduciary duty to the scallop harvesters, based on a failure to consult and failure to inform harvesters of the nature and progress of negotiations with Nalcor.

The original agreement between the FFAW and Nalcor involved compensation of about $2.5 million to be held in a fund to be administered by the FFAW and paid out to active scallop harvesters only over a period of 30 years. There were about 12 active scallop harvesters out of the total of 83 licence holders.

The six scallop fishermen — Boyd Mitchelmore, Sydney Mitchelmore, Michael Gibbons, Gerald Genge, Harvey Genge and Jarvis Walsh — were active scallop fishermen who supported the FFAW’S negotiated deal. They claimed it was not in their best interest to have the fund paid out to all 83 licence holders, and they should not have to pay legal fees.

The courts ordered the compensation to be divided into 83 equal shares, and the total contingency (legal) costs of 15 per cent to be divided into 83 equal shares.

“At issue in the taxation is the 1/83 of the contingency fee in the solicitor fee account issued to each of the six persons,” Oakley noted. “There was no issue raised with respect to the solicitor fee accounts issued to the other 77 Fishing Area 14 scallop licence holders.

“(The six) submit that they did not sign the contingency fee agreement, that the contingency fee agreement was not signed by anyone on their behalf and (lawyers) did not represent their interests in the court proceeding. (The six) maintain that they were never clients of David Goodland, QC, or his law firm, and therefore they should not have to pay any fee, or if any fee is payable, it should not be a contingency fee based on the contingency fee agreement.”

Oakley ruled that the six licence holders are bound by the court order whether they signed the contingency fee agreements or not because they benefit from the judgment.